In the mid-noughties a new era of professionalism started to sweep across the industry with printers – largely driven by their equipment suppliers – starting to look more intensely at what they were getting out of their machines.
This movement gathered further momentum around the start of the economic downturn with the drive to cut overheads and reduce waste. The elimination of cost through the implementation of lean manufacturing methods such as Six Sigma had never entered the industry’s psyche, but almost overnight, if you weren’t measuring and monitoring, you were in trouble, and the acronym KPI – or ‘key performance indicator’ – became an important term for large corporate litho printers and digital SMEs alike.
But some have questioned why such a useful methodology should be applied only to presses, electing to roll the same methods out company wide.
One such printer is Doug Gray, managing director of Cambrian Press.
"Today KPIs run the business, basically," he reports. "The reason for our massive success and turnaround as a company last year is that, thanks to the use of KPIs, we managed to reduce our excess costs by more than £400,000."
Another vocal KPI advocate is Anthony Thirlby, managing director at ESP. Although he concedes that there is, of course, always the danger that you can get bogged down in the numbers and suffer from what KPI experts describe as ‘paralysis by analysis’, he says many areas of a business benefit from a KPI approach: "Fundamentally, you cannot run any entity in the print environment these days without having something tangible to run your numbers by as guidance," he says. "This is too volatile a marketplace to not understand what you’re doing. You have to have a starting point and measure internally to make sure that you continuously improve what you do. Print has been for far too long an emotional business instead of a professionally run business sector."
So just what parts of your business might benefit from the introduction of KPIs and how can you successfully implement them?
HR
One of the main areas of a business outside of pure production where KPIs can easily be used is in the human resources (HR) department. According to Kirsty Mitchell, director at HR consultancy Halcyon HR, it’s really useful to have some form of benchmarking and measurement of performance of your workforce and this approach can take all manner of different guises.
"You can have KPIs around levels of absenteeism among staff," says Mitchell. "You could look at how many sick days people are taking off over a set period – say six to 12 months – and see if there are any trends. For example, are people taking lots of Mondays and Fridays off? You could then break this down into different teams throughout your company to see if there are trends within these teams."
Mitchell adds that if you do decide to monitor staff sickness levels you should always inform staff of your intentions because "if staff know you’re tracking sickness this normally makes a dramatic improvement on your sickness levels immediately. If people think nobody is looking they’re much more inclined to take a day off when they’re slightly under the weather than make the effort to come in."
Implementing KPIs around the number of sick days staff take annually is a strategy that has paid dividends for Cambrian, according to Gray. "When we had a lovely sick scheme in place we had a massive problem with absenteeism," he explains. "We worked out that we’d lost more than 400 12-hour shifts through sickness. But when we decided to stop paying people for not being here, we reduced this to less than 80 lost shifts."
The introduction of KPIs can also be a useful way of improving staff retention rates, says Mitchell. "If you’ve got high levels of staff turnover you need to start monitoring this to look at the reasons why people are leaving and see if you can spot any trends. Are they leaving within certain teams, for example? You should use exit interviews to get feedback on why people decided to leave the company.
You should also implement staff surveys as they’re a really good way of gauging employee satisfaction levels."
Mitchell says that there are a number of further different elements that could be measured and monitored by the HR team using KPIs, from the average length of service per employee, through to more basic measures like timekeeping.
"These are all good ways of assessing how the business is performing to make sure that you’re focusing on the right things and that you have the right strategies in place," she adds. "It’s a good temperature check for your business."
Customer service
ESP’s Thirlby is one of the printing industry’s leading advocates of KPIs and started rolling them out across his business back in 2006. For him they’ve played a crucial part in ESP’s success, particularly in the area of customer service. In addition to running an annual customer survey to ensure that ESP is delivering on its clients’ requirements and not just on the businesses’ own requirements, Thirlby also measures things like customer complaints and ‘on time in full’ (OTIF) levels. ESP’s OTIF currently runs at 99.2%.
Measuring the number and different types of complaints is a good starting point for any printer looking to improve its customer service levels, according to Dar Swonsen, head of lean improvement (London) at DST Output.
"You can break this down and measure complaints by client, or you can look at the overall number of complaints you receive as a business, or you can even look at the cost of the complaints to the business," says Swonsen.
But you needn’t just limit the use of KPIs to customer complaints, adds Chris Murley, sales director at PBL. "In our business we deal primarily with B2B contracts and in our customer service department we use KPIs to monitor our own performance in various other departments including pre-press, post-press, estimating and also in more general business areas including customer satisfaction, timings and quality of product confirming to ISO standard for colour."
When it comes to using KPIs within the realms of customer service, the general rule of thumb, according to lean manufacturing experts, is to measure quality, cost and delivery. "Neglecting to measure any of these individual elements could result in a failure to deliver effective customer service," says Vision In Print’s senior process improvement engineer Jean-Paul Wheater. "Therefore, delivery of the job by the original promised due date, ensuring planned profitability for the job has been achieved or beaten and ensuring an acceptable standard has been achieved, are all essential. Also, in an industry where cashflow is tight for many, ensuring invoicing accuracy and fast turnaround time is also very important."
Sales
Sales are the lifeblood of any business so there’s a compelling argument for constantly monitoring the performance of your sales force to make sure they’re measuring up to the targets that have been set. The most obvious way of doing this is to keep tabs on revenues and margins and benchmark them at set intervals against the company’s past sales performance, but there are other factors that you can measure to ensure your sales force is working efficiently.
For example, ESP’s Thirlby looks at things like average order value and estimate conversion rates. "We have a conversion split – if we don’t convert an order from a customer after the first 20 enquiries then we stop promoting," says Thirlby.
Cambrian takes a similar approach, according to Gray. "We set targets for the number of quotations produced, the value of these quotations, conversion rates, new customers, new prospects – everyone has a target to work towards."
There are numerous individual elements within the sales function that you could choose to measure using KPIs, but it’s vitally important that before heading down this road you select those functions that are most relevant to your business strategy, advises Vanessa Robinson, CIPD’s head of HR practice and development.
"This will help ensure that the right things are being measured and any things that maybe will prevent an organisation achieving its strategy will get highlighted," explains Robinson. "This is why it is very useful to spend time thinking through what are the right measures that can add value and help inform how well a particular business, or business unit, is performing, rather than routinely measuring the same things without thinking what the measures are actually telling you."
Production
If sales is the lifeblood of a business, the factory floor is the beating heart. That’s why so many printers were quick to embrace the idea of using of KPIs to monitor the efficiency of their equipment, with pretty much every print business throughout the UK today using some performance measurement across its portfolio of machines.
Thankfully for printers, most of the big equipment manufacturers offer software that automatically collates and displays performance data. For the likes of Cambrian’s Gray, the advent of this sort of technology has been a godsend for his business as he can now retrieve accurate up-to-date information throughout the company’s production chain to see what’s working efficiently and where improvements need to be made.
"What you have to do is produce accurate numbers that can’t be questioned," he explains. "We now have shopfloor data collection in real time rather than getting people to fill out sheets, so we know what’s going through each piece of equipment better than people on the factory floor do."
To focus the mind of his staff, Gray decided to attribute a cost to every part of the productiondepartment. "We found that cost grabs people’s attention," he explains. "For example, in our pre-press department we look at the total number of plates produced, how many plates were made due to swapping over presses if we have to and how many plates were remade for other reasons. So if someone cocks up a plate, or scratches one, or imposes it incorrectly, everything has a cost attributed to it. Spoilages don’t go to customers – they’re an internal cost that we have to absorb."
Gray gets his production managers to set targets for their teams at the start of each year and if they exceed the target they get a bonus, "but if they don’t, it goes down into their performance review and we ask them ‘you set the target so how come you’re not working to it?’"
The introduction of KPIs can also be a useful tool if you’re looking to add a new element to your business, according to Gareth Parker, Ricoh UK’s strategic marketing manager production print.
"If you’re a printer and you’re trying to move away from purely offering print and maybe moving more towards offering marketing services, then you could implement KPIs to report on things like the open rates of emails and cross-media performance," says Parker. "If you take this approach you’re providing proof points all the way along the lines not only to your customers, but also to in-house management that this is where you are at and this is the progress that you’re making. It can also help you identify and iron out any potential pitfalls within this new service offer, whereas before the introduction of KPIs you wouldn’t necessarily know where you were enjoying improvements and where there were problems."
Environment
Outside of pure production processes, one of the first areas that saw printers implement KPIs was the environment. That’s largely because there was an obvious crossover, with many of the environmental accreditation schemes requiring the regular measurement and monitoring of things like usage and waste generation.
Thankfully there’s lots of help available to companies who want to benchmark their environmental performance – much of it free. Envirowise (envirowise.gov.uk) has developed a specific set of KPIs for the printing industry, covering areas such as total material yield, net packaging use and VOC concentration.
Another useful KPI is the amount of kWh/m2 through your presses, which is the measure used for the
industry’s Climate Change Agreement, says Clare Taylor, founder of environmental consultancy Clare Taylor Consulting.
"Other examples could track waste generated, waste to landfill, hazardous waste and water usage," she continues. "There are a whole range of environmental issues, related back to productivity to normalise as a KPI."
A good starting point for any company looking to roll out environmental KPIs is to benchmark where the business is currently at and understand the costs associated with everything that goes on throughout the factory – from analysing energy usage through to waste management.
With the latter you’re effectively dealing with two separate streams that you can measure, says Richard Spreadbury, customer care manager at J&G Environmental.
"There’s waste that’s got value and will earn you money and waste that is going to cost you money," explains Spreadbury. "If you’re managing your waste properly you want to maximise the amount of value you get back on the waste that is worth money and reduce it on the waste that is going to cost you money. Finding the time to do this is a big problem, but if you use KPIs correctly, they’re a wonderful thing."
Whatever environmental factors you decide to monitor it’s vitally important you make sure that you’re using the most appropriate measure for your business and that it’s put in the right context, cautions Taylor.
"You want, for example, to measure energy per unit output, not just in total. Otherwise a quiet year could make you look very efficient when actually you were not. For gas used for heating only, which is not affected by productivity, you’d need to relate this to external temperatures," says Taylor.
In the case of environmental benchmarks. printers have found it particularly useful to relay information about the company’s performance to employees. This should include information about where the company has done well and where it needs to redouble its efforts, saysDST Output’s Swonsen.
"We’ve got a member of staff whose role is to look at the environment and how we can improve our impact on the environment, so she posts KPIs around the factory floor measuring things like paper wastage, electricity usage and utility usage."
Regardless of whether or not you decide to communicate your successes to employees, the only way to ensure you keep making improvements to your environmental KPIs is by keeping on top of them, adds Taylor. "You need to realise sooner rather than later that you’re going adrift so that you can correct them instantly, not at the end of the year."
You also need to constantly check that the KPIs you’ve set are suitable for your business. Situations can change so as a result you need to recalibrate KPIs when your situation or activities change, says Taylor.
