There are many non-financial Key Performance Indicators (KPIs) that may be relevant to your business, below we have included some of the KPIs that are commonly used to track and monitor and control Cost Management.
As with all KPIs and goals in general, ‘less is more’, so ideally you will select the handful of KPIs that are of greatest importance to the business to track and report on at top level management. The further down the organisation you go, some of the more granular KPIs are likely to be ideally for middle or junior level management and of course for staff on the ‘shop floor’.
The list below is not intended to be comprehensive; this is provided purely to help with the process of selecting those KPIs that are most relevant to your unique circumstances.
Definition: Measures how effectively resources are utilised to produce goods or services.
Importance: Higher operational efficiency reduces waste and lowers production costs.
Definition: The amount of output produced per unit of input, such as labour hours.
Importance: Indicates how efficiently labour and other resources are used.
Definition: The amount of waste generated during production processes.
Importance: Reducing waste lowers disposal costs and improves resource utilisation.
Definition: The amount of time equipment or processes are inactive due to maintenance or other issues.
Importance: Minimizing downtime increases productivity and reduces cost overruns.
Definition: The extent to which resources such as machinery and labour are used during production.
Importance: High resource utilisation indicates optimal use of available resources, reducing idle time and costs.
Definition: The total time required to complete a production process from start to finish.
Importance: Shorter cycle times increase production capacity and reduce labour and overhead costs.
Definition: The productivity level of employees in completing tasks and processes.
Importance: Higher employee efficiency reduces labour costs and improves overall operational performance.
Definition: Metrics evaluating supplier reliability, quality, and delivery times.
Importance: Effective supplier management ensures timely delivery of quality materials, reducing delays and associated costs.
Definition: The number of defects or quality issues in produced goods.
Importance: Lower defect rates reduce rework and scrap costs, improving overall cost management.
Definition: The amount of energy used in production processes.
Importance: Higher energy efficiency reduces operational costs and environmental impact.
Definition: The frequency with which inventory is sold and replaced over a specific period.
Importance: High inventory turnover indicates efficient inventory management, reducing holding costs and potential obsolescence.
Definition: The percentage of raw materials that are converted into finished products.
Importance: Higher material utilisation reduces waste and lowers material costs.
Definition: The time taken from ordering raw materials to receiving the finished product.
Importance: Shorter lead times improve responsiveness and reduce holding costs.
Definition: The extent to which production capacity is being used.
Importance: Optimal capacity utilisation reduces fixed costs per unit and increases profitability.
Definition: The consistency of lead times from suppliers.
Importance: Lower variability ensures smoother production schedules and reduces the risk of costly delays.
Definition: The extent to which production capacity is being used.
Importance: Optimal capacity utilisation reduces fixed costs per unit and increases profitability.
Definition: The frequency and impact of implemented process improvements.
Importance: Continuous process improvements enhance efficiency and reduce costs.
Definition: The percentage of products returned by customers.
Importance: Lower return rates indicate higher product quality and customer satisfaction, reducing the costs associated with returns and replacements