In modern businesses, it’s important to use data to measure success and get the insights needed for a long-term business. One of the most important things a manager can do is figure out what is working and what isn’t. This can help cut costs, figure out how well a business is doing, and compare it to organisational goals. Companies can use data to stay competitive in the market if they set clear operational metrics and evaluate performance.
Today, we’ll focus on operational efficiency KPIs that can bring the most value to the overall growth of the business by answering the most important business question: “What can I do to do better?”
But let’s start with the basics of how a business works and give you the tools you need to analyse your own KPIs. We’ll focus on examples from a specific industry and company department that a business can use to improve itself. We will talk about examples from marketing, retail, human resources, sales, logistics, IT project management, and customer service that can improve operational efficiency and cut costs. But first, let’s go through about what operational key metrics are and how they are used in business.
An operational KPI is a measurable value that shows how the business has changed in a shorter amount of time. They are used in many industries to keep track of organisational processes, make them more efficient, and help businesses understand and think about the results.
Retail KPIs that fall under the operational category, like the order status, which we’ll talk about in more detail later, are important to check every day because you’ll get a better idea of how your order is doing in real-time, such as whether it’s been shipped, cancelled, received, or is still in the packaging process. Depending on the industry and function, you will want to track the right KPI at the right time.
How are Strategic and Operational Metrics Different?
Using metrics and KPIs to track performance is a complicated process that can be hard to understand for organisations. Before we get into our list of 10 powerful operational KPIs examples, let’s look at what these metrics mean for a business. We will do this by showing how strategic and operational performance measures are different.
To do this, it is also important to know how metrics and key performance indicators (KPIs) differ. Simply put, KPIs track the progress of the company’s long-term goals, while metrics track the progress of the different steps taken to reach those goals. This brings us to the main difference between strategic and operational processes.
On the one hand, strategic indicators track the main, long-term goals of a company. Like increasing sales by a certain percentage in a certain amount of time. On the other hand, operations indicators show how different activities that help reach that strategic goal are going. For example, the lead conversion ratio, the net profit margin, or the lead-to-opportunity ratio, just to name a few.
To have a successful analysis process, it is important that strategies and operations metrics are directly linked. This is because keeping track of KPIs at different levels makes it easy to find ways to improve and make sure goals are being met. For example, if your strategic goal is to improve customer satisfaction and you aren’t getting where you want to be, you can look at smaller operational metrics to figure out which part of the strategy isn’t working and why.
10 Examples of Operational Metrics
Even though there are many operational indicators to choose from, a business needs to be careful about which ones are the most important and valuable. So, we will talk about some examples of operational metrics that can be used in business processes and list the most important ones, with the help of business analytics tools.
- Marketing: Is my marketing budget on track?
A clear overview of performance can help marketing managers and professionals come up with a complete marketing strategy based on data. Changes will be reported to the marketing team, which can then tweak the campaign and make sure it stays on budget.
- Human Resources: Is our productivity optimal?
The absenteeism rate measure should be watched because it may impact a company’s financial health, but more significant since it can give insight into the various causes and reasons for absence. This may then be utilised to enhance corporate operations and productivity, hence reducing expenses. A complete HR report may use all of the efficiency required to build and maintain a sustainable staff in an organisation.
- Retail: How is my online sales performance performing?
A retail dashboard presenting operational indicators that monitor online sales success. Taking a closer look at the causes of returns may help you identify inefficiencies in your operations and eliminate them to prevent dissatisfied customers and additional expenses.
- Sales: What should I monitor in sales?
Leads don’t always become opportunities, and proposals don’t always result in wins, but the monitoring process of your indicators may quickly determine whether the organization’s overall performance is on track and progressing as expected.
- Logistics: What is the effectiveness of my transportation system?
Monitoring the fleet efficiency on a granular performance level – how much is on the move and how much is in maintenance – will allow you to acquire the data required to develop a sustainable plan or to determine whether the KPIs are on track.
- IT: Is my project on track?
The overview of project management can give you fast and accurate information that will help you run your business smoothly. As a result, costs will go down because any changes will be easy to see on your IT dashboard.
- Customer service: How is my team doing regarding customer service?
The customer service performance of the team is crucial to the commercial success of organisations that want to thrive in today’s competitive environment. The significance of knowing what metrics are in the company, particularly customer service, rests in the capacity to respond quickly, access information instantaneously, and ensure that each individual receives the appropriate information at the appropriate moment.
- Manufacturing: What is the effectiveness of my production process in manufacturing?
In the industrial sector, operational effectiveness is crucial. Having a comprehensive understanding of data such as the production volume matched with the quantity order and your machine’s capabilities will help you assess your readiness to meet your production objectives and apply the most productive techniques.
- Finances: Is our cash management efficient?
The Cash Flow Statement is crucial for determining whether your firm has sufficient funds for payroll since it reveals how much money entered and exited the organisation.
- Healthcare: Are we offering decent healthcare?
Last but not least, we have a healthcare dashboard that monitors operational hospital performance data. With this sort of real-time data access, management may identify patterns and possibilities for improvement to guarantee that the institution provides exceptional patient care.
We’ve explained what key metrics are, and focused on operations management metrics. Now you have the tools to choose from a number of operational KPI examples, make changes based on your role in a company, and create an operational metrics dashboard with all the information you need to make your business successful in the long run.