When an entrepreneur begins his journey, his focus is to manufacture products of high quality and make sure it’s bought by large number of consumers. He puts a lot effort to drive up sales and support it with robust and reliable operations which can support the growing demand of customers.

While he does all this, he keeps an eye on overall business performance by keeping an eye on metrics such as Revenues, Production Volume, Cash Flow, Gross Margin, Cash Burn Rate etc. These are what I call the “business metrics” as they help to help to ascertain the overall business performance.

However, a successful business outcome needs to be supported by a robust operations department. By operations I am referring to the part of the business that produces goods and services.

An SME/MSME, would call these functions in various names such as production, manufacturing, kitchen (in a hotel), back-office (in service company) etc. This is the heart of the business wherein raw material gets transformed to finished goods which are sold to the customer.

A business owner or an SME/MSME CEO keen to have a sustainable business needs to have a well-oiled operations function that is not only productive but also to provide quality products to the customer. So, how does a business-owner know his operations function is managed well and is capable of consistently meeting the customer needs.

This is where metrics come into play. They not only help to ascertain the health of the operations, but also trigger initiatives that can improve competitiveness. When there are metrics, you know “where you are”, and you know “where you want to go”.

But, what metrics should a small business owner install? After all measurement requires resources and it may not always be possible to put in place a comprehensive measurement in a single go. It can sometimes be a challenge for an SME/MSME to decide which metrics to focus on, given the maze of metrics that could possibly be tracked. A business owner should known which set of metrics he should track that gives him an overview of how effectively he is meeting customer requirements.

Here, is my recommendation. Don’t get lost in maze. Focus on the fives Fs or five metrics that can help to ascertain operation’s performance which impact customers and competitiveness.

The five Fs stand for Fitness, Fulfilment, Fast, Flexibility and Fare. Let me explain each one of them in detail:

1. Fitness: This refers to whether a product or service is fit for the purpose of the customer. This is essentially about quality and ensuring that defect-free products reach the customers. Examples of product and service quality metrics are: per cent defectives, error percentage, etc.

2. Fulfilment: This measures the organization’s ability to meet the quantity requirements of customer within the committed time. One common metric that is commonly used here is percentage of deliveries “on time in full”.

3. Fast: This is how quickly a business can meet the customer’s orders. This is the lead time between the customer placing an order and when it gets delivered to him.

4. Flexibility: This is the ability to meet the varying needs of the customer and the operations teams’ ability to make it happen.

5. Fare: One of the meanings of the word “fare” is money paid for taking a journey in a public transport. Well, here the word “fare” represents the cost towards producing goods and service. The objective of any business is to do things cheaply and price it aptly so that it’s competitive in the marketplace.

Having installed the 5Fs, small business owners may realize that they are not performing as desired. So, on which metrics should a small business owner focus? It may not be possible to work on improving all the metrics at the same time. So, the primary focus should be to improve Fitness or Quality of products that are going to the market. Once this problem is in control, the focus should be on improving Fast and Fulfilment metrics. Having got these three metrics in order, the focus should be on  ..

(Debashis Sarkar is an Author and Founder of Proliferator Advisory & Consulting and Proliferator Academy. He works with the C-suite to make their businesses Customer Centric and Operationally Excellent. To know more about him, please visit: www.debashissarkar.com)