One of the key determiners of whether a business will be successful or not is the ability of the decision-makers to analyze the data and take the next step accordingly. Most companies fail to collect and analyze data associated with the company’s performance and this halts their progress. However, all good businesses keep an eye on the special data metrics that can help them grow exponentially. Even globally successful companies such as Coke, Ford, and Google struggled with many other products because their metrics were not accurate enough.
When all the teams for a business come together and help make data-driven decisions, the chance of success goes up instantly. These teams contribute directly to gaining data related to supply chains, sales forecasts, process efficiencies, and customer trends. Timely collection and analysis of this data can guide businesses to make advantageous decisions that can later be used to scale the business. The following are a few key performance indicators (KPIs) that a company can monitor to produce better results regularly.
Most of the data a company gains is based on historical data. Information regarding sales of the previous month can help you expect a certain level of sales in the coming months. As the data regarding the sales are increased, the accuracy of the forecast improves as well. Different teams are responsible for different aspects of these forecasts. For instance, the sales team will focus on the sales forecast and the finance team can predict the financial forecast.
Time is a key factor in forecast accuracy. The more time a company spends on collecting data, the better its chance of predicting the upcoming months. Time also means the overall period that is being analyzed for the forecast.
Inventory Turnover Ratio
Knowing how much of your inventory is turning over can directly tell you whether your business is performing well or not. Analyzing inventory turnover quarterly or yearly based on the product is extremely vital. The inventory turnover ratio is determined by analyzing how many goods you have sold as opposed to the total inventory of that product. This number increases with the sales of goods and helps analyze future trends over a quarterly or yearly margin. Healthy companies have high turnover rates and they can successfully implement forecasts to scale their business.
Cost of Goods Sold (COGS)
The COGS is a vital aspect of every business. The companies that have a good understanding of this concept along with the “bleeding” can take steps to improve their efficiency. The cost of goods sold includes the total direct costs along with the indirect costs. The total direct costs refer to the cost of labor in making the product. The indirect costs refer to additional costs such as shipping, stocking, packaging, and quality control. By determining the COGS, companies can contact suppliers for better deals or choose better suppliers altogether.
All of these key performance indicators are responsible for determining whether your company is currently doing well, or if it will be able to keep this performance moving forward. Major businesses and companies keenly observe these metrics and make data-driven decisions based on them.
How To Track Your KPIs
Cloud ERP Partners understands how difficult tracking and understanding your KPIs can be, that’s why we build NetSuite custom to your company’s needs. Our team can help develop, create, and expand your metrics to help you better understand your business and your business needs. With custom dashboards, KPIs for each part of your business, and a caring and understanding staff NetSuite and Cloud ERP Partners can meet all your needs.