Key performance indicators (KPIs) are defined as measurable values that demonstrate how effectively a business meets its objectives. They help managers evaluate how their dairies are doing at given points in time.
KPIs are also essential in helping each employee understand what is important to the success of his or her job.
I was first exposed to KPIs about 20 years ago. At that time, many dairies were transitioning from all-family labor to employing multiple workers. KPIs helped managers keep track of all areas of the dairy with accurate data. But that data pool was much smaller than it is on today’s dairies.
Things have changed. We now get nearly infinite information on financial, safety, feed, youngstock, reproduction and overall cow health. I recently saw a program that offered 66 different monitoring tools for mastitis alone. This data load can be overwhelming.
However, the potential value of KPIs hasn’t changed. Identifying and tracking a few simple yet critical KPIs can prevent farm managers from becoming bogged down in analysis and losing sight of what’s important to their operations. The following five components are essential to incorporating KPIs on today’s dairies.
1. Data must be accurate
Inaccurate data is useless. Too often, we hear producers say, “We have really had a ton of (fill in the blank) lately.” Challenges include off-feed cows, mastitis, retained placentas, lame cows, slow milkers, empty bunks, etc.
Further review of the records often yields a different story, which presents a problem. Are events recorded properly? Is an issue being misdiagnosed?
Holding people accountable for meeting KPIs can only be done properly if what we are measuring is accurate and timely. If you can’t measure it, you can’t monitor it.
2. Keep it simple
KPIs are not meant to track everything that happens every day on a farm. Three to five KPIs are sufficient for employee reviews. This is also a sufficient amount for monthly meetings with the nutritionist, veterinarian and management team.
For example, a farm’s calf team may choose to track:
- DOA calves
- Percent of calves with total serum protein below 5.5 grams per deciliter
- Percent of calves treated prior to weaning
- Average rate of gain
If accurate, this data should provide a solid snapshot of how well calves are managed. If expectations for these four KPIs are not met, more research can be done to identify why and how to improve.
Now imagine if the same dairy also established three to five KPIs for the parlor, transition cow, feed and reproduction teams. Accurate data reviewed monthly or quarterly should provide a good snapshot of the dairy’s current performance.
3. Know what’s important and communicate it
Farming is a business and, given current markets, it’s not the easiest business climate to navigate. It’s especially difficult to navigate if your whole team does not know in what direction it’s moving.
On a yearly basis, every dairy manager should assess where the operation is and where he or she wants it to be in the next 12 months and more. Team managers should define goals for their respective areas, and they should have specific plans, timelines and budgets for meeting those goals.
Owners can “drive the bus” by building a culture that empowers managers to make decisions based on the farm’s stated goals. For example, if a goal is to achieve a 30 percent pregnancy rate, the reproduction team will need to establish KPIs to assess progress and attain that goal. They may select percentage of eligible cows inseminated and the breeders’ conception rate as two KPIs that help predict future pregnancy rate.
Just as importantly, the reproduction team and transition cow team need to be on the same page. If the fresh cow team’s KPIs are not met in July, then the reproduction team may fall behind in September and October.
Think of it like building a house. The farm is the house, and it is made up of several walls or teams. Each KPI is a brick that reinforces the strength of that wall. When managers make the best decisions for their respective areas, it strengthens the entire structure without people wasting their time and resources focusing on areas outside of their expertise.
Furthermore, when teams communicate effectively with each other, everyone works cohesively toward the same goal and recognizes how their actions impact others.
4. Does everyone understand the ‘why?’
Change becomes much easier when people understand why change is necessary. For example, harvesting greater than 50 percent of the milk in the first two minutes of milking is an easy KPI for the parlor team. It’s essential to teat health, rapid milkout, decreased mastitis and improved milk production.
However, if a milker is told to “just follow the routine,” achieving this KPI quickly becomes dependent on how the milker observes his or her coworkers’ performance and what he or she thinks will be the easiest way to milk cows. But what if compensation bonuses are tied to milk flows? What if the milker understands how much easier his or her job is with less disruption to the routine caused by mastitis cows?
This is the responsibility of a manager. If you set KPIs, you should be able to explain them in detail to the people who affect the outcome. If you can’t explain its value, it’s probably not a good KPI.
5. Is the KPI measured by lagging or leading indicators?
Lagging indicators record a change, are easy to measure and are hard to improve or influence. Conversely, leading indicators influence change but are often harder to measure. Leading indicators often make sense in retrospect but only become clear after a lagging indicator proves the point.
For example, a KPI on any dairy would be to finish milking on time because it has a profound effect on milk production and dry matter intake as well as employee morale and performance. The time finished milking is a lagging indicator; it’s easy to measure but doesn’t show the team how to improve.
Instead, a leading indicator would be whether the number of cows in pens is divisible by the number of cows on one side of the parlor. Are you partially filling a side several times throughout a milking? If so, you are wasting space and time, and won’t meet the expectation of this KPI.
Another example of a leading indicator is whether the maintenance team follows protocols to proactively reordering parts. This KPI will also be missed if the parlor shuts down for maintenance issues. In this case, management needs to understand why parts were not on hand, and perhaps remind maintenance employees of their role in the efficiency and success of the parlor process.
Efficiency has a dollar sign
In this dairy climate, efficiency in every aspect of the dairy becomes critical. Well-informed employees who understand what to do and how their performance will be measured provide the best chance for success on the dairy.
Owners and managers need to work closely with key staff and service teams to identify KPIs that easily provide them ways to measure performance and productivity. Use leading indicators to identify opportunities for improvement. Make time to communicate with all teams to select KPIs that have the biggest effect on profitability and monitor them closely.
- Dairy Field Service Specialist
- Vita Plus Corp.
- Email Peter Coyne