09 Nov How to Transition into Real Time KPIs
Pressures and responses to such concerns as globalization, performance margins, integrating supply chains, and balancing costs with customer service have produced voluminous amounts of data at previously unthinkable levels. Data has increased in resolution as many plant and supply chain operating metrics are now measured in minutes vs. hours or hours vs. days. Further, measurement types have increased as hundreds of data points within a supply chain have given way to thousands. As a result, some believe the issue is quantity of information when the real focus should be faster insight.
On its website, IBM reports that businesses generate 2.5 quintillion bytes of data. In addition, “Big Blue” notes that 90 percent of the data in the world has been created in the last two years. With this enormous and ever-growing volume, deriving insights used for decision-making has become almost impossible without a systemic methodology that can analyze data without drowning in it. Whose job is this? The entire organization’s—from executives to middle management, to supervisors and hourly employees. Using a team approach, companies can focus on how to use data to create a culture of continuous improvement.
Data is most valuable when used to improve a competitive position. This occurs when companies focus on such business-critical concerns as identifying the most profitable customers, determining the most difficult products to manufacture and deliver to customers, and quality issues that can cause customer payment delays that negatively impact working capital.
Real-time Key Performance Indicators (KPIs)
Real-time KPIs are business metrics that provide relatively quicker insight than standard KPIs in which business performance are reviewed on a monthly or quarterly basis. With a quarterly review, for example, the wrong activity or behavior could be occurring for the entire three month period before action can be taken. Some resulting problems include:
- The business could be making a poor quality product for one full quarter.
- A manufacturing plant could be falling behind schedule.
- Customers could be re-allocating their business to competitors due to lagging customer service issues.
At the heart of these issues is the accuracy of KPIs and the need for them to be real-time. As recently as five years ago, management based its KPIs on the “50-slide business process deck.” While a useful method at the time, this approach is no longer the case. In the past, KPIs might have been discussed, but it wasn’t until weeks later that actions were taken. With advances in technology, including mobile devices, organizations can now leverage real-time KPIs prior to such meetings. As a result, meetings can be more action-oriented.
To ensure KPIs can benefit the entire organization and improve decision making, the management team must re-think KPIs. One way to accomplish that is to reduce the number. A second way is to eliminate working with metrics across all time horizons (annually, quarterly, monthly, daily, hourly), and rely on today’s mobile and network infrastructure to use a subset of KPIs in real-time.
The shift lends itself to a “Shallow-Dive Approach” instead of a deep dive into the ocean of data. The shallow-dive approach provides an instantaneous look and insight into the areas where deep diving may be warranted.
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