At CHV Group, we utilize KPIs to evaluate the success of an organization or any particular processes/strategies they are implementing. Recently, we came across a situation where one specific KPI measured our client’s Revenue in relation to Employees. This KPI was implemented as an online Sales measure to track the growth of the clients Online Sales.
After review, we noted that even though overall sales grew noticeably, the bottom line did not change. With this in mind, we investigated the costs of Manufacturing and Customer Fulfillment Costs of their Third Party Shipping/Fulfillment Company. After review, we found that it was a Break-Even Proposition at best due to the cost of the Third Party Shipping Company.
What did we learn from this situation?
This situation highlights the importance of knowing your BEP (Break-Even Point). This can be done by consciously tracking a number of factors surrounding, new customers, sales revenue, and product net margin in relation to total employee cost. A newly installed ERP System allowed our client to track this data with a simple online dashboard.