Refine and optimize your company's processes to maximize profits and stay ahead of competitors
In today's fast-paced business world, every business needs to have a variety of key performance indicators, or KPIs, in place to allow them to monitor progress towards important goals. KPIs are specific metrics regarding various aspects of your business. These are hard numbers and data, making it easy to compare your company's status across various time periods.
Whether you are looking to track the success of individual marketing campaigns or monitor compliance with new cost-cutting measures, KPIs can help you make sense of the data to glean the information you need. Armed with this information, your business can then make smart decisions regarding future efforts. While you can sometimes make inferences based on your experience and judgment, using KPIs is a much smarter decision for your business, and here's why.
Intuition-Based vs. Fact-Based Decision-Making
If you have been operating in your industry for a long time, you likely have a general sense of what is necessary in order to be successful. You can often rely on your own intuition and knowledge to make decisions about how your company will proceed in various situations. In many cases, your ideas and suggestions may be right on the money, but sometimes, they could be way off. In using your own intuition for corporate performance management, it can be easy to fall into the trap of letting your personal opinions and biases cloud your judgment.
By using key performance indicators instead, you won't be able to overlook certain aspects of your business that don't align with your own ideas, as you'll have hard facts and figures in front of you. This makes it much easier to make objective decisions based solely on the data. By removing personal opinions and beliefs from the equation, you'll be able to do what is truly best for your company, not simply what you think is best.
KPIs by Industry
Businesses in just about any sector can make use of key performance indicators for corporate performance management. Here's a look at how to make the most of KPIs by industry
Real Estate Management
Real estate investors and property managers can utilize KPIs to evaluate the income from various properties over time. Because property taxes, insurance rates, home values and other amounts fluctuate, it is crucial to be aware of the costs of managing each property so that you can charge appropriate rental rates in order to make a profit.
There are many steps in the product supply chain, and logistics ensures they all operate smoothly. With hard data regarding all of the stages of your supply chain, you'll be able to identify any areas that are causing delays and potentially costing your company money so that you can address and optimize them.
In the world of finance, interest rates, stock prices, bond values, tax requirements and other factors are constantly changing along with the economy. These changes are compounded when your company operates on a global scale. Staying on top of your KPIs can help you anticipate these changes so that you can make adjustments accordingly to maximize profits and minimize losses.
The insurance business can be a risky one, as your company will be gambling on those you cover. By tracking claims, payouts and other data over time, you can identify common warning signs that it will be risky to insure a particular individual or business. This way, you can protect your company from making poor decisions regarding new clients. You can also use KPIs to track agents' conversion rates and other performance data.
Your company's human resources department is responsible for more than just onboarding new employees and handling disputes. It is also tasked with managing salaries, employee benefits, vacation days and more. Your HR team can make use of KPIs to ensure your staff members are being paid fairly and encourage them to take time off to achieve work-life balance.
The retail business is all about margins, and if yours are too small, you'll have difficulty turning a profit after covering overhead expenses. By tracking your cost of goods and other expenses, you'll be able to identify areas for improvement so that you can increase your margins. You can also use KPIs to monitor customer behavior and determine which products are most appealing to them, enabling you to tailor your offerings to customer preferences.
From purchasing materials to maintaining equipment to creating products, there are many stages in the manufacturing process. Each and every one of them can be optimized through the use of KPIs. With this data, you'll be able to determine where you can cut costs in order to increase profits.
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