As we head towards a new year, I have been having a number of conversations with work colleagues and ERP consultants on the subject of KPIs (Key Performance Indicators) and their effectiveness. Out of these discussions it can be concluded that there are good and there are poor KPIs.
Wearing my ERP hat a good example of this is looking at the role of a Purchase Order clerk. A logical metric to ensure they are performing and doing a full days’ work could be to measure the number of purchase orders and purchase order lines they capture in a day. In most environments this would be a poor KPI, as that could lead to more stock being ordered than you need at any one time, resulting in tied-up capital. A good KPI for a purchasing clerk could be the price they are paying for goods, as it will indicate if they have negotiated a good deal on behalf of the company.