Operations Management Key Performance Indicators

Every company hopes for seamless, efficient operations. It’s the golden dream for everyone from retailers to service providers.

In fact, 81% of marketers cite business operations efficiency as their number one strategic priority.

But operations management is no easy feat. This is because there’s a ton of data to interpret and understand, especially in today’s information-rich landscape.

And in the end, what do all the numbers we collect mean? How do you find important data and make relevant observations amongst all the noise?

The best way is to use great operations management key performance indicators.

KPIs are critical for improving efficiency in any business. No matter what your company’s selling, the use of metrics can provide valuable insight. Understanding the data helps us to create actionable business plans.

After all, you can’t have improvement if you don’t know what you’re improving on!

But when it comes to KPIs, quality over quantity reigns supreme. Rather than gathering a ton of irrelevant data, you need to focus on the best metrics that will help you better your business.

We’ve helped you out when it comes to gathering operations management key performance indicators. Here are the five best metrics to get valuable insight and improve your operations.

key performance indicators dashboardTop 5 Operations Management Key Performance Indicators

Actual Labor vs Billable Hours

When it comes to time spent on a project, not every minute spent gets charged to the client. This means you pay for additional labor costs.

Your billable hours in comparison to actual labor hours is a great efficiency metric. The project was created and the labor costs are meant to be as close to the billable hours as possible…

So where did the team add extra hours? Where is there room for improvement? Which variables were controllable? Are you appropriately charging clients?

Use the data to create actionable plans to improve your efficiency efforts.

The true financial viability of a project can be fairly summarized when using this metric. Are you actually turning a profit on your projects? Or are your labor costs squashing your margins?

Rework Costs vs Total Costs

The total cost of a project compared to the original projected cost is a great high-level KPI. But to get more department-specific, a good operations metric is the rework costs versus the total costs.

Rework is when a completed benchmark or project must be done again to meet a certain standard for quality purposes. Being aware of these costs up front is a great way to gather insight into your efficiency.

Are you able to provide a quality service or product consistently the first time? If not, you may have a critical error in the planning process which inhibits the turnout of a product or service that meets your quality standards.

Rework is an unavoidable expense. Mistakes happen. However, it can be managed to improve efficiency.

Track rework to put an operational focus on quality. Then use the metrics to minimize the impact of re-doing completed work.

To do this, identify where the most common causes of rework take place and work on improving internally.

Scheduled Project Length vs Actual Project Length

This measurement gives insight into the following potential issues:

  • Inaccurate budgeting
  • Inaccurate planning
  • Inefficient execution

It’s critical to identify if issues with efficiency are occurring in the planning process or in execution.

Your scheduled project length should be as accurate as possible. It doesn’t only benefit your organization in managing costs and optimizing efficiency, it improves customer satisfaction. Consistently being late in delivery can build a bad reputation.

If your actual project length is consistently longer than your projections, it can be an indicator of a few things.

  1. There is an error in the planning or budgeting process which consistently provides inaccuracies
  2. Execution consistently falls behind, providing insight into the organization and communication between your task teams

Use this metric to reveal where your company’s projections fall short.

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Delivery in Full Time vs Projected Delivery in Full

This metric is important to understand customer satisfaction. It provides valuable insight into whether the team met the promised expectations given to the customer.

Designing operations with the client in mind should be a focus for any team. The end goal is to provide quality service or products, but the timeline for full delivery should also be met. The ability to provide as promised speaks to the integrity of a company.

Are you consistently setting benchmarks for your customer’s needs, only to fall short?

Compare your projected project delivery in full-time to the actual time it takes to deliver in full. Inevitably, the ratio is directly correlated to your customer satisfaction. So it’s instrumental to keep track.

Think about the following when interpreting the data:

  1. Do projects repeatedly make it to a certain point before progress slows?
  2. Is it the planning or the execution process where projects get stuck?
  3. Which components take longer than others? How can they be sped up or more realistically projected?

Customer Satisfaction = NPS

If you aren’t measuring your Net Promoter Score, you’re missing out on gaining easy, valuable insight into your customer experience.

We do customer experience evaluations for businesses. Find out more here.

Net promoter score is measured on a scale from -100 to 100 and truly views your company from in the shoes of the customer.

If you are unsure how to put yourself in the shoes of your customer, Savage Consulting can help. With the mindset of the best boutique consulting firms mixed with a global consulting firm approach, we provide unique solutions to your pain points other consultants can’t.

in the shoes of you customer - customer experience consulting

The Net Promoter Score formula consistently addresses a company’s customer satisfaction and customer retention.

The 11-point scale rates your service or products from 0 to 10. Those who rate you as 0-6 are considered Detractors, those who rate you as 7 or 8 are Passives, and Promoters give the highest ratings of 9 or 10.

If you’re still curious about Net Promoter Score, check out our in-depth blog post here. It even has an NPS case study.

Improve Efficiency Now

You’re ready to start monitoring your business internally with these awesome operations management key performance indicators. Learn how you can improve your efficiency and optimize your operations by tracking:

  1. Actual Labor vs Billable Hours
  2. Rework Cost vs Total Costs
  3. Scheduled Project Length vs Actual Project Length
  4. Delivery Time in Full
  5. Customer Satisfaction

Your efficiency is the key to your company as a whole. If you aren’t sure how efficiently you’re currently running your operations, Savage Consulting can help. We work with businesses develop high performing KPI dashboards. Find out more here.

And consultations are free… find out how we can help you do a rapid business assessment, today.

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