If you read about Business Performance Measurement or KPIs (Key Performance Indicators), you will be told that you should think about your KPIs. You should pick them carefully. You should align them with your organisational goals. And you will probably be told that the KPIs you use will depend very much on your own organisation.

But what KPIs should you actually use? How do you go about choosing them?

On this, the published literature is less helpful – at least in terms of Distribution KPIs. Lists exist, for example in the UK Government’s Freight Best Practice web site, and I have compiled another list here. But there is less discussion of what makes a good KPI and why.

One approach is to follow “best practice” – i.e. to copy other organisations that seem to know what they are doing. But this is limited and dangerous:

• Because what might be good for them may not be good for you. Even if they are in your industry they may have a different way of working, different order sizes and so on.
• Because “it’s best practice” encourages complacency. Who says it’s best? Could you do better if you tried?

In forthcoming blogs I will be looking at different established KPIs – where they work and where they might not and what the consequences of following them might be.

But ultimately the advice in the first paragraph is correct – the KPIs you use will depend on your organisation. So you will need a process and a framework for coming up with the KPIs you should use and analysing them for potential problems.

So where do you start?

In following articles I will develop a set of KPIs for a fictitious transport department, as a way of showing how you might do the same within your own organisation. As I go through the process I will give you a framework for selecting and analysing KPIs that should be transferrable to your own activities.

In the next article I will introduce the department and describe its operating environment, sphere of control and function.

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