KPIs to Guide Manufacturers’ COVID-19 Recovery
Particularly during times of disruption, key performance indicators (KPIs) can help manufacturers monitor business performance and make proactive decisions that optimize outcomes in line with management’s strategy. Driver-based planning and analysis help to boil down financial outputs into meaningful operational insights that are actionable in times of uncertainty. As companies begin to plan for 2021, they need to consider KPIs across functional areas to create targets that will be successful in a shifting business environment. Furthermore, management teams should also take inventory of their current processes to unlock data-driven decision-making on a day-to-day basis across their business. The following KPI considerations are a sampling of factors that will help spur driver-based discussions within your organization.
Visibility into Prospecting & New Business
As manufacturing companies experience ambiguity in their business environments, their customers are also operating in a new and changing landscape. One of the key considerations for companies in 2021 will be to gauge new opportunities and changes in customer demand. If the company has used digital tools to assist in prospecting new business and maintaining customer relationships, such as a customer relationship management system (CRM), it is time to consider investing time and resources into cultivating those relationships. Regardless of whether the company is leveraging digital tools, a driver-based sales plan is critical to any organization, and especially to manufacturing companies. Sales forecasts may come up short due to a number of factors, including customer order cuts, pricing negotiations, or other considerations. Understanding these root-causes is especially vital to manufacturing companies given volume planning can affect resourcing and relevant cost considerations for operations.
Production, Warehousing, and Shipping Interplay
As supply chains recover from a fractured state, your organization will have to implement the best strategy in terms of supply chain and fulfillment optimization. Tracking real-time core metrics across purchasing, production, and warehousing intertwined with targets and relevant financial impacts can pinpoint areas of opportunity that supply chain leaders can proactively optimize operations. From raw materials to finished goods, a more granular view of inventory turns and days on-hand can help reduce the inefficiency of tying up cash in slow-moving or excess inventory on an ongoing basis.
Tracking Safety & Wellness of Employees
Businesses need to prioritize the health and safety of their employees in this business landscape. To help this to be successful, tracking incidents over time, such as injuries or OSHA violations can help illuminate broader trends and areas that may need additional attention as operations continue to flex to meet demand requirements. In addition to production-related incidents, other employee-related KPIs are critical to maintaining the organization’s overall wellness and engagement. As such, organizations should consider tracking employee departures and turnover by functional areas to help identify if any additional resources need to be deployed to maintain talent within the company.
Final Thoughts & Tips for Future Planning
The above are just a few of the KPIs that may be important to consider while creating a successful strategy for 2021. Ongoing monitoring of KPIs against targets helps companies to analyze performance and provide a measurable path to successful execution of your recovery strategy. We are here to help in identifying key areas that will affect performance in the years to come as well as other issues that will arise as recovery efforts are employed to combat the effects of the COVID-19 pandemic.
Contact us for information about the strategic financial planning and analysis function in the current environment. For up-to-date information, please see our COVID-19 resource center.
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