Introduction
Having the right metrics in place can help run a successful shoemaking business. By tracking, measuring, and calculating these key performance indicators (KPIs), you can quickly identify, diagnose, and resolve potential issues or areas for improvement within the business.
So what are the top seven KPI shoemaking activities you should be tracking? These are: delivery time; scrap production rate; inventory variability; customer retention rate; Activity-based cost efficiency; level of employee satisfaction; and sales per unit of production. In this blog post, we’ll discuss each metric, including how to track and calculate them to help you optimize your business performance.
1
delivery time
Definition
Delivery time is a key performance indicator (KPI) that measures the time it takes a shoe manufacturing company to deliver a product from the time an order is placed until the customer receives it. It is important for companies to track delivery time to ensure customer satisfaction and optimize production and delivery processes.
Benefits of Tracking
Tracking delivery time is important for businesses as it helps them identify areas to improve their production and delivery processes. It also allows businesses to monitor customer satisfaction levels and ensure that customers receive their orders in a timely manner. Additionally, tracking delivery time can help businesses identify any potential delays that could lead to lost orders or customer dissatisfaction.
Industry Benchmarks
The industry benchmark for delivery time varies depending on the type of product being manufactured and the industry it is in. Generally, the delivery time should be as short as possible while allowing the company to provide a quality product. For shoe manufacturing companies, the average delivery time is usually between one and five days.
How to calculate
Delivery time is calculated by subtracting the date an order is placed from the date it is received by the customer. The formula for calculating delivery time is as follows:
Calculation example
For example, if an order was placed on March 1 and received by the customer on March 8, the delivery time would be seven days.
Tips and tricks
It is important to track delivery time regularly to ensure orders are delivered in a timely manner. Moreover, companies should strive to reduce the delivery time by optimizing their production and delivery processes. This can include streamlining production processes, using automated systems to track orders, and using efficient delivery services.
Some companies also offer incentives to customers who receive their orders quickly. This can help encourage customers to order more frequently and can also be used to reward customers for their loyalty.
Scrap production rate
Definition
The scrap production rate is a key performance indicator (KPI) that measures the amount of scrap produced when manufacturing shoes. It is calculated as the ratio between the amount of scrap metal produced and the total amount of shoes produced over a certain period of time.
Benefits of Tracking
Tracking and monitoring the rate of scrap production allows shoe manufacturers to understand the performance of their production process and identify any issues or potential areas for improvement. It also allows them to measure their progress towards their goals and ensure that their production process is as efficient and profitable as possible.
Industry Benchmarks
The average scrap production rate for the shoe manufacturing industry is around 1%. This means that for every 100 shoes produced, one is scrap.
How to calculate
The scrap production rate can be calculated using the following formula:
Calculation example
For example, if a shoe manufacturer produces 10,000 shoes and 500 of them are pieces, the scrap production rate would be 5%:
KPI Tips and Tricks
- Regularly monitor the rate of scrap production to identify any changes or trends in the performance of the production process.
- Analyze scrap production rate in combination with other KPIs to better understand the production process.
- Identify and prioritize areas for improvement to reduce the rate of scrap production and increase the efficiency of the production process.
Inventory level variability
Definition
Inventory level variability (SLV) is a key performance indicator used to measure the amount of inventory variation of a shoe manufacturing company. It is used to gauge the amount of stock on hand at any given time.
Benefits of Tracking
Tracking variability in a shoe manufacturing company’s inventory can provide key insights into the effectiveness of the company’s inventory management. It allows businesses to identify where inventory levels are too low or too high and make adjustments accordingly. Additionally, SLV can provide an indication of the company’s overall supply chain efficiency and can be used to assess the accuracy of the company’s forecasting practices.
Industry Benchmarks
The ideal SLV for a shoe manufacturing business will vary depending on the size and inventory management practices of the individual business. Generally, the lower the SLV, the better, as it indicates that the company has a good drive on its inventory management and accurate demand forecasting.
How to calculate
The formula for calculating SLV is as follows:
Calculation example
For example, suppose a shoe manufacturing company has a maximum inventory level of 200, a minimum inventory level of 100, and an average inventory level of 150. The SLV can be calculated as follows:
Tips and tricks
When tracking SLV, it is important to keep in mind that the ideal SLV will vary depending on the size and inventory management practices of the shoe manufacturing company. Additionally, companies should be aware of any seasonal or cyclical changes in demand that may affect the accuracy of the SLV calculation.
It is also important to ensure that the stock levels tracked are accurate and up to date. If inventory levels are inaccurate, the SLV calculation will also be inaccurate.
Customer retention rate
Definition
Customer retention rate is the percentage of customers who continue to purchase products or services from a business over a period of time. It is an important indicator of customer loyalty and satisfaction and is an important metric for measuring how well a company provides its products and services to its customers.
Benefits of Tracking
Tracking customer retention rate provides valuable insight into how well a business is meeting customer needs. It provides an indication of customer loyalty and satisfaction and helps companies identify areas for improvement. It also helps companies determine if their marketing efforts are effective and if their products and services are competitive in the market.
Industry Benchmarks
The average customer retention rate for the footwear manufacturing industry is around 65%. However, some companies may have higher or lower rates depending on their product offering and customer base.
How to calculate
Calculation example
For example, if a shoe manufacturing company had 200 customers at the beginning of the period and 175 customers at the end of the period, the customer retention rate would be calculated as follows:
Tips and tricks the KPI
- Analyze customer retention rate over time to identify trends and areas for improvement.
- Compare customer retention rate to industry benchmarks to identify areas of opportunity.
- Develop strategies to increase customer retention rate, such as loyalty programs, discounts, and customer service initiatives.
- Monitor customer feedback to identify areas for improvement and ensure customer satisfaction.
Activity-Based Cost Efficiency
Definition
Activity-based cost efficiency is a metric used to measure production efficiency in a shoe manufacturing business. It is calculated by dividing the total costs associated with production by the number of shoes produced. This metric helps identify areas of waste and inefficiency in the production process.
Benefits of Tracking
Tracking activity-based cost efficiency helps a shoe manufacturing company identify areas to improve their production process. Tracking this metric can also help reduce costs associated with production and increase business profitability.
Industry Benchmarks
Industry benchmarks for activity-based cost efficiency in footwear manufacturing can vary depending on the type of footwear produced. Generally, an efficiency of 90% or more is considered an optimal production rate.
How to calculate
The activity-based cost efficiency of a shoe manufacturing company is calculated using the following formula:
Calculation example
For example, if a shoe manufacturing company had total costs of 0,000 and produced 1,000 shoes, the activity-based cost efficiency would be calculated as:
KPI Tips and Tricks
- Regularly monitor the activity-based cost efficiency of your footwear manufacturing business to identify areas for improvement.
- Compare your activity-based cost efficiency against industry benchmarks to ensure you are meeting or exceeding efficiency standards.
- Look for ways to reduce the costs associated with production and increase the efficiency of your shoe manufacturing business.
Level of employee satisfaction
Definition
Employee satisfaction level is a KPI metric used to measure the level of happiness and job satisfaction among staff. This is an important metric for any shoe manufacturing company because satisfied employees are more likely to be productive and stay with the organization.
Benefits of Tracking
Tracking the level of employee satisfaction helps companies identify any issues that may be causing employee dissatisfaction. This allows companies to address these issues and improve morale. Additionally, tracking employee satisfaction levels gives companies insight into how their employees feel about their job roles and responsibilities, which can help them make better decisions about people management.
Industry Benchmarks
The average level of employee satisfaction in the footwear manufacturing industry is 85%. Companies should strive to exceed this benchmark and maintain a higher level of satisfaction.
How to calculate
The level of employee satisfaction can be calculated using the following formula:
Calculation example
For example, if a shoe manufacturing company has 20 employees and 15 of them are satisfied, the level of employee satisfaction can be calculated as follows:
Tips and tricks the KPI
- Regularly survey employees to better understand their level of satisfaction.
- Solicit employee feedback on how to improve job satisfaction.
- Provide rewards and recognition to employees who perform well.
- Encourage open dialogue between management and staff.
Sales per production unit
Definition
Sales per unit of output is a performance metric used to measure production efficiency in a shoe manufacturing business. This metric evaluates the amount of sales obtained for each production unit. By tracking this metric, companies can understand their production process and identify areas for improvement.
Benefits of Tracking
Tracking sales by production unit offers many benefits to shoe manufacturing companies. This metric allows companies to accurately measure the efficiency of their production processes and identify areas for improvement. Additionally, tracking this metric can help businesses better understand customer demand and improve customer service.
Industry Benchmarks
The industry benchmark for sales per unit of production varies depending on the type of footwear produced. Generally, businesses should aim to achieve a sales ratio of at least 1.5 or higher. If the sales ratio is less than 1.5, it indicates that the production process is inefficient and needs improvement.
How to calculate
The calculation of sales per unit of production is relatively simple. The formula is:
Calculation example
For example, if a shoe manufacturing company had total sales of 0,000 and produced 10,000 units, the sales per unit of production would be calculated as follows:
Tips and Tricks for KPIs
- Regularly track sales per production unit to measure the efficiency of the production process.
- Compare the sales per unit of production metric to industry benchmarks to ensure the production process is efficient.
- Identify areas for improvement within the production process based on the sales per unit of production metric.
Conclusion
Having the right metrics and KPIs in place for your shoe manufacturing business is essential for peak performance. By tracking, measuring, and calculating these seven KPI metrics, you are able to identify, diagnose, and resolve potential issues and areas for improvement more effectively. Delivery time, scrap production rate, inventory variability, customer retention rate, activity-based cost efficiency, employee satisfaction level, and sales per unit of production are all critical performance indicators. that need to be tracked and measured to provide your business with the information it needs to make informed decisions and achieve its long-term goals.
- Home
- delivery time
- Scrap production rate
- Inventory level variability
- Customer retention rate
- Activity-based cost efficiency
- Level of employee satisfaction
- Sales per production unit