Does everything in business come down to units per hour? Time is our most precious resource and therefore, productivity can be boiled down to the value-added per unit of time, right?
We have been tracking our Key Performance Indicators (KPIs) for each company weekly for over a year now. We recently stepped up to a daily report per person. As a result we are able to view KPI/hour/person. This is pretty insightful stuff, right?
We are also now monitoring our backlog of KPI units. With the KPI/hour and the Backlog in KPI units we can estimate the lead time if you order now. How long until we get to you (if order stays the same?)
Then we establish a target backlog range –what is “low” unit count in the backlog? And what is our target “high” KPI unit figure? But wait…isn’t a higher backlog better? No, not necessarily. We have to meet or exceed customer expectations. If they want it done tomorrow and we are booked out 5 weeks that might be a problem for them. They may look elsewhere. Also, is that a problem for the business? Where is our sweet spot in the marketplace? Precisely how fast are we? How fast do we want to be?
We have been grading and rating our customers also. Each customer is scored on a 3 question survey we conduct internally. If the combination scores high they get additional resources. If they score low enough they are considered misfit and denied service. Why? They reduce our KPI/hour. If we take on your type of work we reduce our availability for our best customers.
We evaluate machines and additional people based on their contribution to the units/hour, also. This greatly simplifies investment and expansion decisions.