You wouldn't drive a car without a dashboard," said Peter Vincent, head of technical services at the BPIF. "So don't run a business without key performance indicators. Printers must know what they're running on, how fast they're going and where problems arise."

Vincent explained that firms must locate the areas of their business that are and aren’t making money as well as those that are providing added value. He recommended KPIs as the best way to do this.

KPIs should be based on issues specific to individual firms, and so will vary between businesses. They will help assess performance and indicate improvement objectives, and crucial performance areas to consider include finances, sales, customer service and production, he continued.

For customer service, Vincent suggested a range of possible KPIs. These included: measuring the percentage of jobs delivered on time in full; the number of complaints received per month; the cost of reworking or compensation; and the percentage of customer enquiries that are answered immediately. He looked at KPIs relevant to estimating, such as time between receiving an enquiry and the delivery of a quotation, the number of estimates made per hour by an estimator, and the estimate conversion rate.

Ensuring change
So why should printers use KPIs? Vincent argued that they indicate the difference between a firm’s actual performance and its target. They drive improvement because they are based on facts rather than guesswork, he added, and they help companies monitor and communicate business trends and to prioritise improvement activities. In turn, they will help
ensure customer satisfaction, he added.

An important KPI to consider is overall equipment effectiveness (OEE). This encompasses a range of measurements to quantify how well a manufacturing unit performs in relation to its designed capacity, which has a direct impact on return on investment.

As an example, Vincent cited a spontaneous visit to a plant during its night shift, where he found production staff playing cards instead of operating the machines. While he stressed that KPIs shouldn’t be used to find fault with employees, he explained that a keen focus on OEE would have ensured this downturn in performance had been accounted for earlier.

Printers need to structure the way they measure performance, he added. I once asked everyone at a printer to name the firm’s best customer. Almost everyone had a different response because all their answers were based on perception and they were measuring using different criteria and judging on how they felt. He advised companies to produce month-end forecasts and ensure performance reports are accurate and are up to date.

Vincent warned against the misuse of KPIs. He again emphasised that they shouldn’t be used to measure people – they are performance indicators. They should be valued as a tool for improvement rather than one for policing or for blame. Their purpose is to find practical ways to improve a firm’s operations, he added.

He concluded by reminding printers that they must be honest in their assessments. For example, a business that only uses KPIs to create a positive outlook, achieved through only measuring the areas it excels in, will not gain their full benefits. Give them a real use, said Vincent. Painting a pretty but yet unrealistic business picture will not improve or
aid performance.

THE SESSION CONDENSED
• Key performance indicators (KPIs) will differ for every business as they should be based on individual issues
• Key business areas to measure are: finance, sales, customer service and production
• They should help communicate business trends and highlight what improvements need to be made to boost performance
• Use KPIs to work out which areas of the business are making money, which aren’t and which aspects are adding value
• The KPI of overall equipment effectiveness (OEE) quantifies how well a manufacturing unit performs in relation to its designed capacity
• Use KPIs to build an honest picture of performance, not as a tool for blame or policing