While I generally avoid making broad generalisations about people, I do believe that individuals can be divided into two groups: those of us who embrace data, analysis, and a robust scorecard, and those who cringe at the mere mention of KPIs, viewing business buzzwords like ‘benchmarking’ and ‘metrics’ as threats to creativity and intuition. Unsurprisingly, I’m among the former group, and I’m here to persuade you to join us.

Have you ever examined your business results and found yourself wondering how you arrived at a particular outcome? Perhaps you’ve been taken aback by a sudden influx of consumer complaints, even though you believed everything was well under control. It’s possible that your business has experienced a Lost Time Injury (LTI), yet you haven’t had any safety-related concerns reported for months. What you might be witnessing is a business culture heavily reliant on lag indicators with a noticeable shortage of lead indicators.

What is lead and what is lag…

Lead indicators are predictive or proactive performance metrics that provide information about activities or factors that can influence future outcomes.

Lag indicators are retrospective or reactive performance metrics that measure the outcomes or results after an activity or process has occurred.

When it comes to food safety and quality:

  • Lead indicators are drivers of business growth through increased consumer satisfaction. For example, when a brewery checks that their bright beer tank results are in specification before packing i.e. “Are we making progress toward what we set out to make?”
  • Lag indicators are critical to consumer retention. For example, when a business measures how many consumer complaints they received for the month compared with the previous month i.e. “Did we achieve what we set out to make?”

Combining lead indicators with lag indicators provides a holistic approach to managing your business and allows for more informed decision-making.

In the ideal scenario, both types of indicators paint a complete picture of your business’s performance. For instance, a maintenance team may track the hours allocated to both preventative maintenance and reactive maintenance, possibly even specific to critical equipment. If the percentage of time spent on reactive maintenance significantly outweighs that on preventative maintenance, it signals a need for adjustments. This could involve more frequent servicing or replacement of parts and consumables, or a re-evaluation of the grade and quality of consumables and lubricants. Identifying the root cause enables meaningful actions to be taken, leading to improved reliability and output.

Another great example is in the area of people safety management. Over the last decade or so, ‘Days without a Lost Time Injury’ (LTIs) has become a popular metric for operational businesses, often displayed with pride at entrance gates and reception doorways. However, could this metric be the ultimate lag indicator? After all, it signifies that a worker has already sustained an injury to the extent that they cannot attend work. The question then becomes: What significance does this metric hold in isolation, and more importantly, what kind of safety culture does it foster?

In my many years of working in operational environments, I’ve encountered employees who continued to work despite being injured or failed to report an injury out of fear of breaking the company ‘Days LTI-free’ record and letting their team down. In these cases, the metric had unintended consequences.

However, when you combine the LTI metric with lead indicators such as hazards and near misses reported, the percentage of reported hazards that are rectified, the number of first aid treatments and non-lost time injuries a clearer picture of the safety culture in your business emerges.

Deciding what to measure…

When businesses ask me about what they should be testing I pretty much always reply with “It really depends on what you want to achieve”. You should never measure anything just because others are doing it. Everything you and your team spend their precious time measuring and tracking should be working towards the outcomes your business is specifically hoping to achieve.

When it comes to quality, a great place to start it the classic value proposition:

Val

Quality is an essential part of the value proposition formula because it directly influences the perception of a product or service by customers. It plays a crucial role in determining whether customers are satisfied with what they receive and whether they are willing to pay for it.

Ask yourself:

  • How do you fare vs your competitor?
  • What gives you the edge?
  • If there’s a factor that gives you the edge, do you measure it?

The key areas to focus your resources on should be directly related to your value proposition, both in terms of customer satisfaction and customer dissatisfaction.

Consumer Complaints, A Cautionary Tale…

It’s often cited that 96% of dissatisfied customers refrain from lodging a complaint. While this statistic is widely acknowledged, I’ve always used a rough guideline of one in ten as a common rule of thumb.

Depending on the nature of your product, consumers may not complain about less tangible faults such as “Freshness” and off flavours compared with more tangible faults such as broken glass, flat beer. Choosing instead to not buy the product again rather than go to the trouble to try and articulate their experience.

If your business relies heavily on consumer complaints as a performance indicator, it’s essential to examine how accessible and encouraging your complaint process is for consumers. Consider what steps you can take to empower and encourage consumers to report even those faults that require a higher level of articulation.

Final Thoughts…

“The canary in the coal mine is a timeless reminder that early warning signs should never be ignored.”

In conclusion, the journey to understanding and harnessing the power of lead and lag indicators is one that can truly transform your business. As discussed, the interplay between these metrics can illuminate blind spots and reveal opportunities for improvement. When deciding what to measure, always keep your business objectives in mind. Don’t measure something just because it’s a trend; ensure that every metric aligns with your unique goals.

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Measuring & Tracking Quality for Success

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