Another contribution from our Italian guest columnist, Antonello Vilardi.
by Antonello Vilardi (ITALY, RETAIL WATCH - www.retailwatch.it)
The benefits cannot be observed and evaluated only on an economic and financial. In fact, we would lose the most useful and important point: the strategic dimension that relates to the fields of efficiency, service quality and customer satisfaction.
Certain critical accounting escape, but require prompt action to be defined after point measurements and systematic.
To the rescue come the KPI that have practical utility in ensuring the effective exercise of a virtuous way in the measurement of the performance of parts of the business (store, sector, department).
They are, after all, simple information, but have the distinction of being:
"CRITICAL" because they serve as the basis for management decisions;
"SYNTHETIC" because they translate quickly variables simple or compound (sales, sales per worker employed, sales by number of hours worked, sales per square meter of exhibition space, sales per square meter of space overall, and so on…);
"SIGNIFICANT" because they give meaning to the phenomena that tend to represent;
"PRIORITY" because for each level strategic, management or operational they are essential to the healthy cycles of planning and control.
Ultimately, using the KPI you have a "method" that can be used to measure business phenomena in time and space, but also to define objectives and monitor the pursuit, through periodic comparison of variances; the method is support for interpreting more easily the fair and impartial judge who is the "number," also allows taking timely actions that are deemed necessary corrections.
It should be clear, the pure analysis of the accounts is less complete and more obscure.
Abandon it, even if only partially and a decisive step towards confidence in KPI means choosing to evolve to modern dimensions and organized, to invest in the equipment information, training and competence of interpreters.
It also means cost, effort, expense to redirect a mental character.
But what measure exactly, what needs to be monitored in an organized and systematic?
1. EFFICIENCY (productivity and unit costs);
2. LEVEL OF SERVICE (response times to customer requests);
3. QUALITY PROCESS (according to "output" than expected).
What is the purpose?
1. Increased profitability;
2. Increase operational efficiency;
3. Understanding of customer needs;
4. Increased customer satisfaction (the effect that flows from point 3);
5. Increase in the number of customers (such effect that comes from points 3 and 4);
The following example, referring to point 2 above mentioned, calls into question the daily hourly productivity per employee of a supermarket which aims to work to keep the business sustainable without causing disruption and without redundancies spending.
In this case the key performance indicators require to calibrate the volume of the daily hours worked within a "range" that does not exceed the "parameter 105" and does not fall below the "parameter 95".
It has chosen "95" as a minimum below which there would recover extremely profitable, but with the dangerous sacrifice of causing disruption to customers and in the overall image of the store.
It is selected "105" as the maximum above which there would be waste of time in relation to operations real.
Evidently the ideal number of hours daily in between ("100").
By way of example, then…
if the store, sector or department collects € 25,000 per day, according to this methodological model, should benefit from the total hours are variable between 238.10 and 263.16. The number of "heads whole" (actual employees within the organization contracted to work part-time and / or full time) participating in the two reference values tend to be adapted to the case.
Essentially then, in this case, proceeding with 250 hours a day was consistent with its operations; but if you act with 290 hours you spend too much in relation to what it collects (productivity index = "86.21"), if you work 190 hours (productivity index = "131.58") the gain is excessive, derailing in abuse and threatening to seriously jeopardize the quality of the service and the overall arrangement.