KPIs
Ambition: Suppliers are paid on time and without hassle, so we take the early-payment discount and nobody has to chase us any more.
KPI 1
Step 2: objective
Step 3: make it measurable
Step 4: your KPI
Average lead time from receipt to payment of a purchase invoice from 30 days to 14 days, by 31 December 2026; measured weekly from Accounting system, outstanding items report. Owner: Team lead, finance administration.
KPI 2
Step 2: objective
Step 3: make it measurable
Step 4: your KPI
Share of purchase invoices processed right first time from 83% to 95%; measured weekly from Count in the accounting system (invoices without a correction entry).
- Achievable needs an owner, and discussed with the people who do the work.
- Time-bound needs a date in the future and a measurement frequency.
Not SMART yet
- Fill in the missing letters for each KPI; under every KPI you can see what is still missing.
How to sharpen a KPI
- Define the ambition. In plain words: where do you want to get to? A KPI without an ambition above it becomes an end in itself.
- Formulate the objective in timeliness, quality or cost. Those are the three things a customer notices. Also choose who notices it: customer, financial, employee or process.
- Make it measurable. Name what you measure (the indicator), in which unit, where you stand now (the baseline), where you want to get to, by when, how often you measure and where the figure comes from. And who guards it.
- Check it against SMART. Specific, Measurable, Achievable, Relevant, Time-bound. The A cannot be ticked off at your desk: it comes out of the conversation with the people who do the work.
When do you use it?
At the start of an improvement project, as soon as the problem is clear: the KPI is the yardstick that tells you later whether it worked. And after that every day, as part of the work: measure in short cycles (daily or weekly), discuss the results in the daily stand-up, and adjust when the answer to "are we doing things right?" is no.
Common mistakes
- A goal as the indicator. "Increase customer satisfaction" is not a KPI. "Share of customers who rate us 8 or higher" is; the direction sits in the target.
- No baseline. Without knowing where you stand now, every target is a guess, and you cannot show afterwards what the improvement delivered.
- Too many KPIs. Nobody steers on more than five. Keep it simple.
- Measuring monthly. Then you only see after a month that things are going wrong. Choose a frequency at which you can still adjust.