Looking for some operations KPIs and metrics?
Operational KPIs and metrics help COOs, heads of operations, and operations managers get a clear understanding of how their operations are performing to ensure their business is on the right track.
But which metrics should you be tracking? And most importantly, how should you track them so you can make data-driven decisions at any given moment?
In this article, we will cover how to measure operational performance and highlight the key performance indicators (KPIs) for every aspect of your operations. We will also show you the best and easiest way to track your operational metrics in 2023.
💡Scroll or skip straight to the part you’re most interested in by clicking on the link below:
- What Are Operational KPIs?
- Why Are Operational Metrics and KPIs Important?
- How to Measure Operational Performance?
- Financial KPIs for Operations Manager
- Customer KPIs for Operations Manager
- Operational KPIs for Manufacturing
- Operational KPIs for Logistics
- Operational KPIs for HR Managers
- Operational KPIs for Marketing Managers
- How to track KPIs with Cascade?
- Achieve Operational Excellence with Cascade 🚀
What Are Operational KPIs?
Operational KPIs are quantifiable metrics that help evaluate business performance. They're crucial for monitoring the efficiency of day-to-day operations, from production to customer service. With KPIs, you gain valuable insights into key areas of your operations, allowing you to make data-driven decisions that lead to success.
Why Are Operational Metrics and KPIs Important?
By tracking KPIs for operations, COOs, heads of operations, and operations managers can monitor their progress toward achieving specific goals, identify areas for improvement, and make real-time data-driven decisions to optimize their operations.
Operational metrics are important for the following reasons:
- They help you align operational processes with the business strategy. By measuring and tracking the right metrics directly tied to business objectives, you can ensure that business operations support the overall strategy.
- They increase accountability and ownership among your employees. By providing a clear and objective way to measure business performance, employees will know what expectations to meet and take ownership of their work.
- They help you communicate progress to stakeholders. By tracking and reporting on operational metrics and KPIs, you can demonstrate your commitment to continuous improvement and keep management informed of your performance.
- They help you identify underperforming areas in your operations and immediately react if necessary. This real-time visibility helps you build resilience and flexibility to quickly adapt to challenges and opportunities.
How to Measure Operational Performance?
Measuring the performance of your operational plan involves determining the appropriate KPIs that will accurately gauge how close you are to achieving your overall vision and goals. There are various operational metrics that you can use, but you should only select the most impactful ones that will help you meet your strategic objectives.
When determining and prioritizing your KPIs, you can follow various strategic models. Here are two simple and effective models:
- Balanced scorecard: It helps you organize KPIs into four focus areas: Customer, Financial, Internal Processes, and Learning & Growth.
- Cascade model: It’s a strategic planning model that links your KPIs to relevant business objectives. It’s simple and easy to implement, making it suitable for any organization regardless of size and industry. Its simplicity also guarantees a seamless execution.
Combined with Cascade’s intuitive KPI tool, implementing these strategic models is a piece of cake. We’ve intentionally integrated them into the platform, so you can spend less time worrying about tracking your KPIs and focus more on executing your strategies.
In Cascade, you can link your KPIs with strategic objectives. This gives your team clarity on why certain metrics are crucial to track and how they impact the overall business objectives. No matter which model you use, Cascade helps you gather the most accurate data so you can create KPI reports in record time for the management board.
Now that you have a winning strategic model, here are different KPIs you should track for operational efficiency.
Financial KPIs for COO and Operations Manager
Operational actions will always directly impact your company’s financial health. Staying on top of the following financial KPIs will help you manage resources and processes to increase efficiency, reduce costs, and improve the bottom line.
- Gross Profit Margin: Generally expressed in percentages, gross profit margin indicates the amount of revenue after subtracting a company's cost of goods sold (COGS) from its net sales. By tracking this KPI, operations managers can gain insights into the company's cost structure and identify areas where they can reduce expenses or improve efficiency.
- Accounts Receivables Turnover: This operational KPI measures how efficiently you collect customer payments. It’s calculated by dividing net credit sales by the average accounts receivable balance.
- Accounts Payable Turnover: This KPI measures how quickly you pay off your suppliers. It’s calculated by dividing total purchases by the average accounts payable balance.
- Working Capital: A financial metric that measures the amount of money a company has available to fund its day-to-day operations. It’s an important metric for COOs to monitor because it provides insight into the company's ability to manage its cash flow effectively.
- Operating Cash Flow: This KPI measures the cash your company generates from its operations. It’s calculated by subtracting the operating expenses from the operating revenue. This KPI is essential for assessing your company's financial health and ability to fund future growth.
📚Recommended read: Financial KPIs - 12 Key Finance Metrics You Should Be Tracking
Customer KPIs for COO and Operations Manager
In a highly competitive business landscape, exceeding customer expectations is crucial to beat the competition. Tracking critical customer KPIs helps you understand how well your company is meeting customer needs and if you’re on the path to building long-lasting customer relationships.
- Customer retention rate: This measures the percentage of customers who continue to do business with your company over time. This is an essential metric for gauging customer loyalty and the overall effectiveness of your organization’s customer service and support.
- First contact resolution (FCR): This measures the percentage of customer inquiries or issues resolved on the first contact with customer support. This is an essential metric for customer satisfaction, as it indicates how well you can address customer needs in a timely and efficient manner.
- Customer satisfaction: This KPI measures customers’ satisfaction level with your products or services. This is a critical metric for gauging customer loyalty and brand reputation. It can be measured through surveys, customer feedback, or other methods.
- Net promoter score (NPS): This measures how likely customers are to recommend your company to others. It’s a widely used KPI in the customer service industry. It is often used to assess customer loyalty and the overall customer experience.
- Churn rate: This measures the percentage of customers who stop doing business with your company over a given time period. A high churn rate can be a warning sign that your company is not effectively meeting customer needs.
Operational KPIs for Manufacturing
Manufacturing KPIs measure the output of your production line and determine the productivity of your entire operational workflow. Monitoring these key metrics will help you spot areas for improvement so you can make changes rapidly and maintain your competitive edge.
- First Pass Yield (FPY): FPY is a measure of the quality of your company’s manufacturing process. It measures the percentage of products correctly manufactured the first time through the production process without requiring rework or scrap.
- Cycle Time: This is the time it takes to produce a unit of a product from start to finish. Measuring cycle time is crucial because it can help you identify areas where there are bottlenecks in the production process that are causing delays.
- Capacity Utilization: This KPI measures how well your manufacturing facility utilizes its production capacity. It can help you identify areas where the production process can be improved to increase efficiency. It’s calculated by dividing the actual output by the maximum possible output.
- Throughput: This metric measures the rate at which a manufacturing system can produce finished goods over a specific period of time. It’s typically measured in units per hour, day, or week. This metric helps your production team determine if they can meet production deadlines.
- Machine downtime rate: This is a crucial metric for operations teams that measures the amount of time that production equipment is not functioning as planned. By tracking this metric, operations managers can identify areas for improvement in maintenance and repairs, ultimately improving overall productivity and profitability.
📚Recommended read: Manufacturing KPIs - Some Commonly Used KPIs For You To Track
Operational KPIs for Logistics
Supply chain and logistics are complex aspects of any business but remain the most fundamental component of a successful operation. Using operational KPIs, you can determine bottlenecks before they become more significant problems and create measures to address them. Here are the most important metrics for logistics operations.
- On-time delivery: This measures the percentage of orders delivered on or before the promised delivery date. This KPI helps you monitor delivery performance and ensure customer satisfaction.
- Order accuracy: This measures the percentage of orders shipped without errors or issues, such as missing items or damaged products. A high order accuracy indicates a well-run logistics operation that delivers quality service to customers.
- Transportation Costs: This KPI tracks the total cost of moving goods from one location to another, including costs associated with shipping, freight, fuel, and other transportation-related expenses. By tracking this KPI, you can identify areas where transportation costs may be higher than expected and take steps to optimize your supply chain and reduce costs.
- Warehousing Costs: This KPI tracks the total cost of storing goods in a warehouse, including expenses related to rent, utilities, labor, and equipment. By tracking this KPI, you can identify areas where warehousing costs may be higher than expected and take steps to optimize your warehouse operations and reduce costs.
- Receiving cycle time: This measures the time it takes to receive and process incoming goods shipments. It includes the time from the shipment’s arrival to its put-away in storage or processing for outbound delivery. A shorter receiving cycle time can help improve inventory accuracy and reduce delays in order fulfillment.
Operational KPIs for HR Managers
Employees are the lifeblood of any company. Without them, your strategies will never be accomplished. Tracking the right operational KPIs for human resources ensures you maintain high employee satisfaction and keep the right talents crucial to successfully achieving your goals.
- Employee turnover rate: This measures the percentage of employees who leave your company over a given period of time. A high turnover can be costly in terms of recruitment, training, and lost productivity.
- Employee engagement rate: This measures the percentage of employees engaged and motivated in their work. Engaged employees are more likely to be productive, contribute to a positive workplace culture, and stay with your company for the long term.
- Absenteeism rate: This measures the percentage of scheduled work time employees miss due to unplanned absences. High absenteeism rates can impact productivity and increase the workload on the remaining staff.
- Time to fill: This measures the average time it takes to fill a job vacancy from when it is posted. A shorter time to fill can help ensure that your company has the necessary talent to meet business needs.
- Time to productivity: This measures the time it takes for new employees to reach full productivity levels in their roles. By tracking time to productivity, you can identify areas where onboarding and training processes can be improved to help new hires ramp up more quickly.
📚Recommended read: HR KPIs - The 12 Key HR Manager KPI Examples
Operational KPIs for Marketing Managers
Organizations spend a lot on marketing campaigns without fully understanding if these campaigns are achieving their desired results. The following marketing KPIs will help you determine whether a campaign is worth it or not.
- Conversion rate: The percentage of website visitors who complete a desired action, such as filling out a form or making a purchase.
- Cost per acquisition (CPA): The cost of acquiring a new lead. This metric is sometimes confused with customer acquisition cost, which measures the cost of acquiring new customers.
- Customer lifetime value (CLV): The total amount of revenue a customer is expected to generate for your business over the course of your relationship.
- Social media engagement: The level of activity on your company's social media accounts, including likes, comments, shares, and follows.
- Marketing ROI: The amount of revenue generated by your marketing campaign or activity compared to the cost of running that campaign.
📚Recommended read: Digital Marketing KPI Examples - 12 Digital Marketing Metrics to Track
How to track KPIs with Cascade?
Cascade is the ultimate strategy execution platform that empowers businesses to execute their strategies flawlessly. Our powerful tool comes with a range of features, including extensive KPI dashboards, real-time data integration, and analytics capabilities.
Whether you’re a COO, an operations manager, or a CEO, Cascade provides the tools you need to make data-driven decisions and achieve your goals.
Here’s how you can track KPIs in Cascade:
1. Get your free operational plan template
Sign up for Cascade and download your operational plan template. The template will help you define your goals, objectives, and KPIs to measure success.
Here’s a preview of your template:
2. Customize your data
While the Cascade template comes pre-filled with some examples, you have the power to customize your data and metrics to ensure they are relevant to your specific business needs.
3. Integrate Cascade with your data sources
With Cascade, you have two options to track your KPIs: manually and automatically.
The latter option is far more efficient, as it simplifies data collection and ensures you're working with accurate and up-to-date data.
By integrating Cascade with your favorite business tools, such as Excel, Google Sheets, or your CRM, you can easily import your KPI data and keep your team in the loop.
No more worrying about manual data entry or inaccuracies—let Cascade take care of the hard work for you.
4. Bring in your team
Send an invite to your team members to collaborate on shared KPIs and ensure everyone is on the same page.
With Cascade, you can assign roles and responsibilities, set up notifications, and communicate with your teams in one place.
5. Start tracking your KPIs with dashboards
Cascade's powerful dashboards provide real-time visibility into your KPIs and allow you to quickly identify areas that need attention.
With customizable widgets and drag-and-drop features, you can easily visualize and analyze performance metrics to improve operational efficiency.
Achieve Operational Excellence with Cascade 🚀
Stop struggling with messy spreadsheets and frustrating reporting processes. Instead, streamline your operations with automation and straightforward KPI reports.
Cascade brings simplicity and clarity to the process using KPI dashboards and reports that are intuitive for everyone to use. By having a real-time overview of your key metrics and access to the latest data, you’ll be able to gain critical insights into your operations and adapt quickly to drive continuous improvement.
To help you get started, we've created a free operational plan template that includes a range of KPI examples tailored to different operational teams. With this template, you'll be well on your way to optimizing your processes and driving long-term success.