Key Performance Indicator Monitoring

Introduction

One of the key components of any ISO Standard is the “Plan-Do-Check-Act” cycle. The Planning and Doing are common for most businesses. The Checking and Acting on the findings of such checks are often left out – to their detriment. While Key Performance Indicators (KPIs) are often cited they are not as often used fully, correctly – or even at all.

One substantial reason is the difficulty in maintaining the records and current data to support the monitoring process – let alone being able to analyse the results or realise what it is telling the organisation.

Using an automated system control approach, allows the KPIs to be identified and programmed in so that the required data is captured automatically and reported as required. This, in turn allows the Board to access the information that such KPIs provide to assist in their decision making to drive the organisation forwards – but in a way that they can actually be used sensibly.

 

Concept

This process is based around KPIs being identified within regularly submitted reports. These are automatically tracked and the summary available at a touch of a button. But actually the approach requires clear definition of not just a KPI, but all the contributory factors that clarify the meaning of changes to that KPI – and it is the combination of these that generates the information needed to strategically review what has happened/is happening.

The automated systems we offer allow the KPIs and contributory factors to be identified and mapped so that these can be reported on a periodicity required for their optimum use.

Example

Take a typical KPI: “£Sales/period”. On its own, this measure is really not helpful other than yet another marker of change in the organisation’s evolution. It goes up, it goes down – but without other information, the justification for acting on this KPI alone is minimal. Did sales go up because the product was good, or because of the major marketing campaign or because the competitor went bust and it was the only one on the shelf? Did sales go down because the product was bad, because the MD was heard to be criticising the product or because it was a particularly wet month?

 

Explanation

So to benefit from one KPI (“£Sales/period”) we need to identify the supporting parameters that clarify what movements in that KPI might mean. So, in this example, tying into “planned marketing spend in the same period/in the previous period”, “competitors’ market share”, “quality control reports in previous period” (potentially impacting the quality sold in this period), “weather conditions this period” (in the event that the product is weather dependent) and a whole range of other parameters. Clearly this could be an infinite list, but a quick review of available options will clearly identify the key drivers and on the basis of this, a reliability factor can also be calculated for the accuracy of the surrounding parameters to explain the variability in the KPI. This, in turn, allows the organisation to know how to react to changes in that KPI as and when experienced.

Some of these contributory factors are internal (quality reports) while others are external (weather) – but all can be included within the model so as to optimise the reliability of the resultant analysis.

Benefits

A system that automatically provides information on KPIs in a format that can be used to plan for the future on the basis of an understanding not just on the way the KPI has changed, but also the context of why it has changed and the reliability of how much is explained by the parameters considered, all allows for a clearer understanding of what has actually happened as opposed to what might have happened (but you are not too sure). This improvement in understanding means that decisions taken can be based on more realistic interpretation of the evidence presented.

Caution: this does not guarantee that the decisions made are automatically right – as the variability in interpretation is still a factor to be considered on an individual mind-set approach – but it does mean that a great deal of uncertainty can be removed. This leaves the individual reaction to be considered – and that is up to the individual to control (but at least they have had valid data input).

Historically this sort of tool has been available only on large and expensive systems. This means that this offering can now be attained by considerably smaller operations at minimal costs – not least as the capabilities are built in to the systems so that their ability to run ISO systems already mean they can develop this KPI data as well without much additional change.

This opens up the ability to interrogate the development parameters of a business in far more depth and with far more understanding than ever before especially when considering the smaller companies that can now take advantage of this sort of product.

 

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