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What are KPIs?

A key performance indicator (KPI) is a specific measure of an organization's performance in some area of its business. It is a very general concept, with different implementations depending on the type of business and goals of the organization.

Examples of KPIs may include such things as the percentage of deliveries made on time, total inventory at any given time, distribution costs as a percentage of total sales, accuracy of invoices sent to clients, or lead time for a product.
The purpose of KPIs is to give a business quantifiable measurements of things it has determined are important to its long-term success. Identifying the most important KPIs is the first step towards realizing increased profitability and efficiency for most businesses. For KPIs to be useful, they must be consistently quantifiable, have an established correlation to the area of the business in need of improvement, and not give false readings.

- KPIs are utilised to track or measure actual performance against key success factors.
  • Key Success Factors (KSFs) only change if there is a fundamental shift in business objectives.
  • Key Performance Indicators (KPIs) change as objectives are met, or management focus shifts.
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