Indicators for management and management for indicators

In the world of the metalworking industry, indicator management is a very serious problem. In companies that want scalability, creating and tracking performance metrics is essential to ensure processes are on the right. After all, one can only quantify what can be measured!

<<< Layouts: Strategic planning in the metalworking industry >>>

As regards this, the indicators are essential tools for modern and efficient management. Here we bring you valuable information to enjoy the benefits inherent to management indicators. If you want to understand the importance of indexes, keep reading until the end!

What is indicator management?

Indicators have the mission of communicating simply and through quantification, the results of the company. The manager trusts the evaluation of activities and gains more agility to make the necessary adjustments.

Management is based on the proper monitoring of pre-established metrics, also known as KPIs or key indicators. This is because it ensures frequent monitoring of task performance that is essential to business growth and sustainability.

<<< Step by step: How to increase productivity at the factory? >>>

Among successful entrepreneurs, there is even an expression that the market has already become a basic premise of good management: "you don't control what you don't manage and you don't manage what you can't measure."

Why is it important to manage your business indicators?

Using a simple sailing example, the finding that mismatched sails make any wind head off is very valid and pertinent. If you don't know where you're going, you're likely to get lost along the way and not get to the place you expect.

In business, the picture is not different: by not managing your company's indicators, you lose the ability to adjust processes. Therefore, moving towards the final goal becomes somewhat more difficult. Without the correct orientation, it is almost impossible to achieve the strategic objectives that have been outlined.

By having credible information about the results obtained, the manager builds a systemic vision of the organization, which gives more confidence to make important decisions prudently. In this way, the management of indicators is essential to allow the organic growth of a company.

What are the main management indicators?

Before knowing some of the most used indicators, you should bear in mind that they are of little use if they are not part of the company's strategic planning. With that said, take a deep look at the options and see which one suits your needs.

Profitability: In a nutshell, this management indicator is made up of the percentage ratio between total sales and profits. It is worth remembering that this is one of the most important numbers to understand the financial health of businesses.

Profitability is also interesting to establish a comparison with other players in the market. It is still a way to understand if the costs are too high.

Productivity: In short, productivity measures the several resources (financial, labor, space, and time) to produce a product or service. It is necessary to know how to evaluate the deliveries made to establish this calculation.

Think of a factory that made 2,000 smartphones in a month and charges a monthly operating cost of $700,000.00. Thus, each cell phone was produced for $350.00.

<<< Increase productivity in the metalworking industry >>>

This calculation can be even more precise with the detail of the costs. The use of other information, such as the space used and the number of employees, also tends to improve the estimate.

Turnover: When there is a high turnover of workers in your business, this tends to be a problem, not only for production but also for finances. Therefore, the turnover indicator should not be ignored in any case, after all, if it is too high, it may be necessary to review retention, training, and related strategies. It is obtained based on the average time that a collaborator remains in the company.

<<< Ergonomics in the workplace and increased productivity >>>

Conversion: The conversion rate shows how much of your leads and/or contacts convert into customers. For example: If your organization has a website, you would divide the number of sales by the total number of visits.

This metric is indicated for those who use several marketing strategies and need to analyze which ones offer the best results. It can be applied concerning the sending of emails, telephone calls, etc.

Average sales: The average ticket is one of the most efficient ways to interpret the dynamics of your sales machine. You can use it to track the performance of not only sellers but also the sales and the customers themselves. The calculation of the standard average ticket is made using this formula:

[billing in X months ÷ X] ÷ number of customers = average ticket 

How can you track business performance through indicators?

Now that you have understood the importance of investing in management indicators, your attention should turn to the best way to make it effective in business reality. To enjoy the benefits associated with index monitoring, managers must commit to the regular analysis process.

Then, the focus is on the effort to make access to strategic information more agile and simple, optimizing the resources needed to track the numbers. The use of an integrated system emerges as an essential factor for the effectiveness of the evaluation.

ERP software, for example, allows you to construct panels that facilitate the quantifiable visualization of predefined indicators. This solution is also useful to increase productivity in the administration of management indicators. Therefore, you invest in technology as a valuable ally in the growth of your business!