Key Performance Indicators

As the new financial year FY2025-26 unfolds, many domestic manufacturing leaders are gearing up for what lies ahead amidst volatility arising from trade tensions. This is not just another year. It’s perhaps our most defining season yet. The question is: shall we play it safe, or shall we aim for greatness?

To rise above the noise, to outpace the competition, and to inspire people from shop floor to boardroom, we need more than plans. We need KPIs that guide us in the right manner. We need a system where every department is not just performing but transforming.

Today I will share my thoughts on how to make FY26 the year you not only meet your numbers but redefine what’s possible with these most common KPIs.

The Purpose of KPIs

KPIs (Key Performance Indicators) are our business’s compass. They tell us where we’re headed, how far we’ve come, what’s working and where the cracks are

This year, set them high enough to ignite ambition and surround them with smart buffers to absorb the unknown.

Sales & Marketing: Like Archers Aiming Beyond the Bullseye

• Number of Offline and Online Reach – Total number of people exposed to our messaging.
• Engagement (Offline and Online) – Number of meaningful interactions like clicks, comments, inquiries.
• Leads in Pipeline or Sales Funnel – Number of potential customers at various stages.
• Expected Revenue (from Prospects & Offers) – Forecasted income based on active leads and quotations.
• Price Change Rate for RM Compensation – Adjustments in prices to account for raw material changes.
• Order Book & Conversion Rates – Confirmed orders and how effectively leads convert to customers.
• Actual Revenue & Market Share – Revenue realized and our standing in the overall market.
• Receivables & Payment Collections – Money owed and successfully collected from customers.

Production & Maintenance: Like a Well-Oiled Race Car

• Workplace Organisation (5S) – Standardisation of the shop floor to enhance productivity.
• Jishu Hozen Compliance – Operator-led maintenance and cleanliness adherence.
• 24×7 Constraint Utilisation – Efficiency of key bottleneck machines around the clock.
• OTIF Delivery, FPY, Defectives – On-time delivery, first-pass quality and defect ratios.
• Work-In-Progress (Min/Avg/Max) – Inventory status of semi-finished goods.
• MTTR/MTBF, Maintenance Compliance – Equipment downtime and reliability.
• Productivity & Energy/Water Usage – Output per resource consumed.
• Consistency of Daily Work Management – Discipline in daily routines and visual controls.

Quality Assurance & Safety: Like a Castle’s Watchtower

• Audit Compliance, Customer Complaints – Frequency of audits passed and complaints received.
• Unmitigated Risks from all Risk Registers – Known but unresolved strategic and operational risks.
• Warranty Costs, GRR, Cgk/Cmk/Cpk – Product reliability, measurement accuracy, and process capability.
• 8D and ICA/RCA/CAPA Status – Structured problem-solving and corrective/preventive actions.
• Organisational Excellence Maturity – Benchmarking overall business excellence through for example, the doHow® Dialogue Maturity Assessment.
• Safety Metrics, Calibration, Waste Disposal – Incident rates, equipment accuracy, and waste management practices.
• Stakeholder Satisfaction Level – Perceived value by customers, employees, and partners.

Sourcing & Supply Chain: Like an Orchestra with Spare Instruments

• Customer OTIF Delivery and Forecasting Accuracy – Timely deliveries and precision in demand prediction.
• Vendor Performance (OTIF, Quality, Price Change) – Supplier reliability and responsiveness.
• Ageing of RM/FG, Inventory Accuracy – Shelf-life of stock and record accuracy.
• Inventory Turn Ratio or Inventory Coverage – Efficiency of the flow of products to customers.
• PR to PO Time, Fullkit Availability – Speed and completeness in material procurement.
• Rolling Plan Consistency and Fulfilment – Stability and success of forward-looking plans.
• Capacity Utilisation & Surprise Escalations – Use of plant capacity and handling sudden spikes.

Finance & IT: Like Air Traffic Controllers

• Cash Flow, Payables, Variance from Plan – Cash movement, obligations, and budget alignment.
• Real-time Dashboards, Cost Reduction – Digital visibility and saving opportunities.
• Server Health, Automation of Reports – IT performance and reduced manual workload.
• Payables/Receivables Ageing – Efficiency of cash conversion cycles.
• Server Backup and Health – Data safety and operational continuity.
• IT Cost per ₹ Revenue – Digital expense efficiency.
• EBIDTA/Gross Profit – Financial strength and profitability.
• Fixed Cost Reduction – Efforts to lower ongoing operational expenses.
• Working Capital Turn Ratio or Working Capital Coverage – Efficiency of Business Operations.

HR & Admin: Like Gardeners of a Thriving Forest

• Manpower Planning, Attrition, Recruitment TAT – Staffing alignment, retention, and hiring speed.
• Role Descriptions and Competency Analysis – Defined expectations and skill match.
• 1-on-1 Interactions and HR Improvements – Engagement and continuous people practices development.
• Health Checks, Training, Recognition – Employee wellness, growth, and morale.
• Performance Appraisals & Engagement – Timeliness and quality of reviews.
• Housekeeping Maturity, Employee Vibes – Cleanliness and workplace atmosphere.

Product/Process Development: Like Inventors in a Workshop

• Design & Sample Turnaround – Speed of concept to first prototype.
• OTIF of First Production Series – On-time delivery of the first product batch.
• Actual vs. Planned Cycle Time/Setup Time – Time accuracy in production.
• Planned vs. Target ₹/Piece – Cost-effectiveness of planned production.
• Value-Enhanced Products – Innovations that increase perceived customer value.

This is our moment. Let us use our KPIs not just as indicators but as igniters. This week I will end my article with just the list of KPIs for us sleep over and next week I will share my thoughts on the stretch and buffer.

How have you defined and deployed this year’s KPIs?

Happy Reading!