All businesses need a way to track how they stand against their strategic plan, profitability goals and competition. The concept of the key performance indicator, or KPI, introduced by the McKinsey & Company in the 1960s, has become the tool of choice for measuring and monitoring operational factors that determine a company's success. Because the factors that influence success vary by business type, industry-specific KPIs differ. Apparel industry companies, for example, examine their performance by segment: production, distribution, retail store or e-commerce.

Apparel Industry Players

The apparel industry includes companies that design, manufacture and sell clothing and accessories, usually wholesalers. Many wholesalers have established their own retail operations, including stores and websites, to build and control their brand. According to New York-based investment research firm Value Line, the wholesale side of the apparel industry distinguishes it from the retail industry.

Production Efficiencies

Because fabric represents as much as 70 percent of garment manufacturing cost, KPIs related to fabric use can flag potential profitability issues for factories. For example, marker efficiency, or how pattern placement for cutting limits waste, monitors resource use and should be greater than 80 percent, according to "Stitch World" magazine. A factory also can calculate the amount of fabric used for a job compared to the amount purchased for that same job. Another cost-oriented metric looks at labor cost per minute. An overall factory KPI, cut to ship, gives a reading on quality. For example, if 115 shirts were cut for an order and only 100 shipped, the factory’s 87 percent cut-to-ship ratio indicates that 13 percent of its production for that order was rejected.

To Market, to Market

Apparel wholesalers need to protect their reputation for meeting contract delivery dates to earn repeat business. Buyers use the on-time delivery KPI -- shipments made without any extensions or delays divided by the total number of shipments -- to evaluate the factories they use. A variation called “on time in full," or OTIF, considers quality and quantity of items in a shipped order as part of a wholesaler's ability to deliver.

Sales-Floor Performance

Wholesalers that also sell to customers directly through their own stores or websites typically use KPIs that focus on the financial side of their retail operations along with merchandise performance measurements. Examples of financial ratios include same-store sales for year-to-year comparisons of locations, cost of goods sold, sell-through and sales per square foot. They may look at sales by category, such as sweaters, or by style to analyze trends, or they might rely on stock-to-sales ratios to have the right amount of inventory on hand to sell a set quantity.

Clicking Success

According to online catalog software developer Publitas, e-tailers -- or electronic retailers -- have as many as 27 KPIs from which to chose, depending on what they want to measure. KPIs that online apparel retailers can use to track sales include number of site visits, conversion rate, average order size and number of transactions in a given time frame. Those with brick-and-mortar outlets may also compare in-store buying to online purchasing trends.