KPI’s and Your Profitability

During a recent interview I completed on Dairy with Joel Hastings, I mentioned that several Key Performance Indicators (KPI’s) on dairy operations, such as Pregnancy Rate (P/R) and Days in Milk (DIM), can provide a clear reflection of your profitability.

Before you tell me this is a direct violation of “Accounting 101 principles & rules,” please allow me to explain my thinking. The work your Accountant does for you is fabulous. It’s a historical record of what you’ve done, a “Report Card,” if you will.

That report has very valuable insights into the profitability of your business. However, it’s a historical summary of what has already occurred. Let me tell you how to do better on the upcoming “exams,” so that your “Report Card” will look better, i.e. be more profitable, when it comes out at the end of the quarter or year.

I have completed a large number of consultation engagements during the past 20 years that could best be characterized as “turnaround situations.” Effectively, they all had money challenges. Frankly, with very few exceptions, they also had managerial issues.

These measurements are called Key Performance Indicators (KPI’s) for good reason. They are key to your operation’s performance. Simply stated, if your herd has a high Pregnancy Rate, you have been getting cows bred back on schedule. What happens? Your consistently large number of pregnancies will result in more fresh cows each month. In turn, these fresh cows will yield higher levels of milk, boosting your cash flow and other financial results. Keeping DIM consistently in the 160-170 day range is optimal.

All of this may appear relatively obvious, but what if your P/R isn’t 25% or greater? Please allow me to make some suggestions:

  • Talk to some people who truly understand how a Double OvaSync Program, or something similar, might work for you.
  • This is not the only system that works effectively, but it’s the best I’ve seen.
  • Discuss your needs with your Reproductive Experts, your Veterinarian, or even other dairymen who have a successful program already going, essentially people “in the know.” I’m sure you won’t regret doing so.

All Efficiency & Performance Measures, and Pregnancy Rate & Days in Milk are just two of them, will continue to be critical to your future success in the dairy industry. With the financial challenges of milk price volatility, fluctuations in feed prices & availability, and the impact of various trade wars, you definitely need to stack the odds in your favor. If your milk price is low, you’ll hopefully be shipping more milk, and if prices are rising, as they are now, you’ll be in a position to really cash in!

With this in mind, please spend some time sharpening your results on these KPI’s. You won’t regret it at all. I wish you the very best for a success-filled year!

Watch the Video Here