How to Improve Retail KPI
KPI is an acronym for key performance indicators. These measurements are used to monitor and control the performance of a business over time. They are business-specific in that they differ depending on the nature of the business; for example KPIs of a restaurant are different from those of a confectionery store. KPIs must be measurable or quantifiable in terms of numbers or percentages -- for example average sales per salesperson or customer complaints per month.
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Instructions
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Identify the main key performance for your retail business. Consider the key factors that enable your business to maintain a competitive edge over its competitors. The KPIs should be directly related to the business's goals and objectives. Key performance indicators for retail businesses include sales efficiency, customer service, inventory turnover and supply chain cycle.
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Analyze each key performance indicator that you have identified as being core to your retail business. Measure the performance of the business indicators. Analyze the sales per day, sales per salesperson and value of sales per transaction to measure sales efficiency. Carry out surveys and identify the number of customer complaints per day to determine customer satisfaction levels.
Analyze inventory turnover in terms of the number of times that the inventory cycles per month. Determine inventory lead times -- the length of time it takes to obtain inventory from suppliers. Identify supply chain costs and bottlenecks in the supply chain. Results of the analysis identify the strengths and weaknesses of the KPIs and show the overall performance of the business.
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Identify areas of weakness in each performance indicator. Hold a brainstorming session with key employees of your retail business to identify the processes that will be used to improve each performance indicator. Potential solutions for improving the key performance indicators include reducing operational costs and implementing the supply-chain operations reference (SCOR) model. This model was developed by the Supply Chain Council, a global nonprofit consortium of corporations, as the cross-industry standard diagnostic tool for supply-chain management. SCOR enables users to address, improve and communicate supply-chain management practices between the business and its suppliers.
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Implement all the changes identified and approved from the brainstorming session. Communicate the changes to all staff members and other external parties that may be affected, such as suppliers and customers. Provide employees with training where necessary to ensure they perform their roles effectively and efficiently.
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Monitor the implementation of the improvements to ensure that employees do not revert to the old practices. Create a monitoring and control system to ensure successful implementation of the improvements. Management should be responsible for the implementation process and ensure that employees within their departments adhere to the changes.
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Tips & Warnings
Markets are not stagnant. Review your KPIs regularly to ensure they are still relevant to your business and to the market.
