“What can not be measured can not be controlled”: this phrase makes perfect sense in the business world and, increasingly, managers are aware that it is necessary to evaluate each of their actions. Only with an effective follow-up of everything that goes on in a business it’s possible to apply improvement measures and achieve high levels of performance. KPI – key performance indicators – are fundamental in the process of managing, evaluating and continually improving a business. In today’s article, let’s talk about key industrial indicators and explain how they can help you in everyday life!
In any industry it is fundamental that there is continuous production monitoring, in order to analyze its efficiency and uptime. Production indicators, when properly applied, help to reduce production costs, improve productivity levels and increase profitability. Some of the most commonly used production indicators are the number of products produced, the downtime of a machine or a collaborator and hours worked in production.
These indicators give us information about stocks, liquidity, inventories, among other aspects. These are indicators that allow us to have an overview of what we have at the moment for sale, which applications are still to be completed and what our financial profitability is. The main indicators of this type are: turnover, percentage of unfulfilled orders, index of inventory for sales and percentage of orders delivered on time.
The economic indicators are transversal to all activities and have a very significant weight for the industry. These indicators give us all the information regarding the financial health of the business. The main indicators in this area are: contribution margin, profit percentage, economic break-even point, EBITDA, average ticket and amortizations.
How can these indicators help me on a daily basis?
Relevant information for conscious decisions: KPIs provide a lot of information about the company and to that extent make decision making more efficient and easier. Managers often complain about the lack of information about the company in order to be able to decide consciously and these performance indicators gain a prominent role in making decisions about the future of the company. Managers can only make assertive and sound decisions if they have a full understanding of business reality. And nothing better than KPI’s to provide all that knowledge.
More realistic and more easily met objectives: analyzing the performance of a company on a constant basis ensures that more attention is paid to meeting the objectives. An efficient process must be planned and controlled. Continuous performance monitoring plays a key role in planning and subsequent control because it provides information on processes developed by the organization. The effectiveness of any control strategy depends to a large extent on the correct suitability of developed performance metrics and KPIs.
More knowledge about business strategy: it is essential that each employee of the company or organization knows their KPIs and that they are updated with some frequency. “If we do not know where we are going, any way is good”: the same goes for companies. If we are not aware of the results we should achieve with our work, we can do anything, and this may not be in line with the organization’s overall objectives. Defining the indicators of each employee and connecting to the monitoring system is essential for obtaining a global and integrated view of the state of the company and the performance of each one. It is also important to mention that each employee should have access only to the indicators that are important for the continuation of his work, so as to have a more focused and organized day-to-day.