KPIs - All Posts - Ze'ev Ronen - Business Excellence

In the current series of articles, I focus on the important KPIs every business must monitor. I have already written many articles regarding this very important issue. However, this article focuses on concisely presented KPIs with links to learn about them in greater detail.

It is widely accepted that without data and careful analysis, businesses cannot advance. Not assessing and not controlling processes is like driving a car without the ability to see the way or check how much petrol is left in the tank.

One of the immediate and daily examples for this technique, also mentioned in the book, is shaving razors. Until 1971 only one blade was commonly used. Then Gillette released a razor with two blades: one pulls the hair and the second cuts it.
Later, they added a third, and even fourth, blades. I stopped at three blades.

In this part I mean to focus with more detail on each method, and see the differences between the levels of familiarity with the method and its use, and the success it generated. As you'll see, there are methods which are widely used but fail to generate success, while contrastingly there are methods which are rarely used, but the majority of managers who've used them report success.

The subtraction used by Itamar isn’t only of a key or other accessory whose role in opening the door is eliminated. The essence is simple and smart management of the right to open the lock and enter a home, club, center, pool, etc. Instead of the subtracted key, the system utilizes an accessory most of us already have: a smartphone. I believe anyone managing a community center or using one often appreciates Nemlock's use.

Nestle is a world leader in constant improvement and striving for excellence. And the Sderot site, with approximately 650 employees, is without a doubt one of their leading sites in all aspects. Nestlé's motto, which you'll find displayed at each one of their sites and to which everybody strives, is "0 waste, 1 team, 100% employee involvement".

The CEO is in charge as far the law, the share-holders or the board of directors are concerned (meaning he's the one accountable). So he must ensure the company reaches its goals and targets, first and foremost profit and resiliency. Of course the CEO's instinct is, then, to be involved in everything, and try and personally lead all processes in the company.

Recommended frequency for discussion of indicators: I recommend all indicators' results be discussed by management once a month. At least once a week, they should be discussed in dedicated improvement teams with the relevant manager (operations, sales, finance, marketing, etc.) or their representative. Some indicators should be shortly analyzed daily, as needed.

When the team deals with sales development or debt collection, there is almost no new information on a daily basis, and so there's no need to meet daily. But work on the production floor is continuous and at the very least daily. So there are new developments every day. Should results be analyzed daily? Weekly? Monthly?

Often excitement is so overwhelming that companied start developing a new business without first examining risks and chance of success. Sometimes, we look at a business close to ours, competitors are profiting in it, and we decided to enter it and join the big players. We jump into the water, and discover too late we jumped into a red ocean.

Around the end of every year I get questions about creating a work-plan for the upcoming year. First, I'd like to point out that the very end of the year is too late to start working on a yearly-plan for the next year. Additionally, it is better to base yearly plans on a larger, multi-year plan.

One CEO once told me he often gives advance commitment for unrealistic delivery times he has no possibility of reaching. But if he doesn't commit to brief delivery times, he won't get the order.

This month will see the publication of my first book will: Manage! Best Value Practices for Effective Management. To celebrate it, I would like to dedicate this weekly article to the role of the ideal manager. 

 The CEO of that company led the business and marketing development and wanted to ensure that they would never lack product to supply orders, and therefore their warehouses were full of product that turned out to be defective.

At a major public company's plant, output was never measured. Production planning was performed on the basis of machine work hours for each product, and there was no control undertaken on this either. As the objective is to produce some kind of product, or to provide a service, we need to measure output and not the hours during which we have manufactured or planned production.

If we address the 20% of principal products manufactured (see example later on), we can attain a significant improvement in results (eg. profits). In this way, we can concentrate our efforts and resources and be decisive and efficient.

Sometimes it seems to me that CEO's are afraid to confront management members who are not maintaining objectives. Instead of demanding a plan of action to attain the objective, the CEO herself explains to herself why they haven't attained their sales, production or other objectives.

The guiding principle behind our work leads a company to improvement and does not provide it with advice.  We work this way for several reasons: Firstly, we, as people, don't like to receive advice, and therefore, improvements in work methods that are obtained as external knowledge and not as a product of internal work, shall encounter opposition or will not be implemented in the long term.

Many companies wish to improve their performance and seek strategic advice as well as marketing or organizational development strategies, and when they receive advice, opposition emerges throughout the organization and ultimately this advice remains untouched in a book.