Fontana: The time is right for setting KPIs that will lead to improvements in operations
Key performance indicators are crucial for ensuring operational excellence. I think, given today’s uncertainty surrounding tariffs and supply chain changes, now might be a good time to review and perhaps set new KPIs. Before I proceed further, I would like to clarify one point. Metrics are measurements, and KPIs are goals. To establish meaningful KPIs, you need metrics, a method for measuring performance, and a clear understanding of them.
Start by reviewing your existing KPIs to ensure you are measuring the things that are most important to you today. I follow the SMART theory when it comes to KPI, since they are goals. As a refresher, SMART goals are specific, measurable, actionable, relevant, and time-based.
Seek input from your management team on areas they think need improvement. Consider seeking input from a broader base of employees on the areas they believe need improvement. You might be surprised at the insights they have into your operation, and their suggestions can help you determine what areas are most important to focus on.
Keep in mind that you can’t improve everything at once, so start with areas that will yield the biggest results, either in improving operational efficiency or reducing costs.
A word of advice: Don’t try to set KPIs for every aspect of your business. There are probably many areas where you are performing well—perhaps even better than industry benchmarks. Leave those areas alone and focus instead on areas where you are falling short.
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One of the key points to remember about KPIs is that they must be specific and measurable. The more specific the goal, the better able you are to see if you are making progress. For example, if you want to reduce your on-road breakdowns, you first need to know how many you have in a given month. Instead of setting a vague goal of reducing on-road breakdowns, set a goal of reducing on-road breakdowns by 5% within the next six months. That goal is measurable and time-based.
To improve your breakdown percentage, examine what is causing the breakdowns and then determine what changes need to be made to your maintenance and repair efforts to achieve that 5% improvement. Continuing to do what you have always done will get you the same old results. Real improvement will only happen if you take steps to change the way you operate in a specific area.
If you are not sure what a good metric is in a given area, seek out industry data that provides insight into how other fleets are doing in various aspects of their business. You should aspire to be performing at the same level as the top fleets, but it may take some time and significant changes to get there.
Keep in mind that it’s okay to take baby steps to improve your performance in key areas. Just keep pushing for continuous improvements and revise the KPI goal as you get better and better. Setting the right KPIs now can help you stay efficient and profitable during these uncertain times.
