What are KPIs and why should you use them?

While there are many metrics, measures or data points we can record in agriculture and horticulture production, some are more useful than others. These key measures or performance indicators help monitor a business’s performance as part of routine monitoring.

The most important KPI for any business relates to financial performance, specifically the cost of production of its output.

Some examples of financial KPIs are listed in the table below.

Financial performance is one of the four core KPIs that monitor overall business performance:

• Financial performance – unit costs
• Productivity – of the productive machine (sow, cow, ewe, soil and glasshouse area)
• Yield – FCR, tonnes per hectare, etc.
• Defects – those products that fail to make it to market (mortality or poor health)

These KPIs monitor the effective pillars of an efficient business.

A decrease in financial performance is often accompanied by a drop in one of the other pillars. By identifying the worst performing area and focusing labour in there, it can be a more efficient use of staff time.

We have a wide range of tools and services that can be used to benchmark your business and compare it to both national data and other comparable businesses.

Using KPI data to make a difference

Identify areas that need more support

There are never enough hours in the day or enough hands to get every task done. KPIs allow a unit manager or business owner to identify those areas that need the most attention and focus their labour. For example:

• Low productivity – more labour needs to be used to support the soil, sow, ewe or cow
• Yield is low but productivity high – support is most likely needed in the growing commodity, e.g. finishing pig, lamb, heifer or crop
• Low financial performance – likely to be solved by improving one of the other KPIs but can be a sign that production costs do not suit the current production strategy

Involve your staff

A KPI should always be linked to action. Regular visualisation of the current unit performance to all staff using a whiteboard (Kanban board) is a good way of encouraging staff to aim for a better or more consistent performance. Alongside the reporting or visualisation of the KPIs, an action list reinforces the link between staff action and unit performance, i.e. staff can clearly see the result of their hard work.

It should also be used as the basis of continuous improvement. Using the KPI boards and the visualisations, staff can be challenged (in a positive way) to suggest solutions to changes in KPI performance over time.

Use performance ratios for deeper insight

For those businesses that want to challenge the KPIs to show a deeper insight, performance ratios can be borrowed from other industries such as manufacturing. These include ratios such as Overall Equipment Effectiveness (OEE). This makes use of three data points or performance indicators linked to Availability (A) of the productive unit, Performance (P) of the productive unit and Quality (Q) of the output.

OEE = A x P x Q

The productive unit in each sector can be described as the element of production that produces a ‘product’ or from which the product is grown:

*That is not to ignore litres of milk, but arguably replacement heifers are a more favourable method of generating lactating cows than non-viable replacement heifers.

To get a better reflection of the lost opportunity costs produced, multiply the availability, performance and quality metrics. Producers and growers can then target one area of the business to drive up either availability, performance or quality to reduce the lost opportunity cost, be more effective with labour and increase financial gains.

The reduction of the lost opportunity costs or ‘waste’ also has significant environmental benefits lowering the carbon footprint of production.

Beef and lamb KPIs

We have a range of information and resources available for beef and lamb producers who want to explore the KPIs for suckler herds, growing and finishing beef cattle, breeding flocks, and purchased store lambs.

Pork KPIs

These pages look at the KPIs for pork producers (indoor and outdoor). They utilise national herd data to provide benchmarks as well as signposting to resources to support targeted improvements to each KPI area.

Dairy KPIs

We have a range of KPI resources available to support dairy producers, accessible through the dairy KPI pages. These are specific to the production system used, e.g. all-year-round calving has specific KPIs compared to spring or autumn block calving.

FarmBench

FarmBench is an online benchmarking tool that allows you to compare your farm to similar businesses. It helps you identify where you can improve efficiency and increase profits. Using FarmBench, you can:

• Compare agreed-upon performance indicators with local or national farmers
• Make evidence-based decisions to improve individual profitability and productivity
• Have a better understanding of your business to put you in control of your future