KPI Design and Implementation - Agenda

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KPI Design and Implementation - Agenda

• Introductions
• KPI Example Working Capital
• KPI Design and Implementation
• KPI Demonstration
• Q A

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KPI Example Working Capital
KPI Example Working Capital
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KPI Example Working Capital

• Working Capital Performance KPIs
• Important in most businesses
• Can get off most Income Statements
• and Balance Sheets
• Published standards for WC numbers
• by industry
• Dell Corporation knows WC

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KPIs in More Detail

• Working Capital Performance KPIs
• CCC (Cash Conversion Cycle)
• AR - Open Receivables
• AR - Credit Sales
• AR - DSO (Days Sales Outstanding)
• AP - Open Payables
• AP - Spend or COGS
• AP - DPO (Days Purchasing Outstanding)
• INV - Cost of Goods Sold
• INV - Inventory Value
• INV - Inventory Turns
• INV - DIO (Days Inventory Outstanding)

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KPI - Accounts Receivable
Working Capital Math 101 - AR DSO Accounts
Receivables / (Credit Sales / 365) The lower the
number the better. For example, If your DSO is
40, then the average number of days it takes to
collect on receivables is 40 days. That means
your financing your customers cash for 40 days.
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KPI - Accounts Payable
Working Capital Math 101 - AP DPO Accounts
Payables / (COGS / 365) The higher the number
the better. For example, If your DPO is 40,
then the average number of days it takes to pay a
bill is 40 days. That means your vendor is
financing your cash for 40 days.
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KPI - Inventory
Working Capital Math 101 - Inventory Inventory
Turns Yearly COGS / Period End Inventory
Value The higher the number the better.
Companies calculate COGS differently. Some
annualize COGS or use rolling 12 months. DIO
365 / Inventory Turns Tells how long items sit
in inventory. Lower is better.
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KPI Cash Conversion Cycle
Working Capital Math 101 CCC DSO DIO
DPO The smaller the number the better.
Negative CCC means you sell something to a
customer and get the cash for the sale before you
have to pay your vendors. Each industry has
published CCC numbers to be used as
benchmarks CCC highlights how well a company
manages its supply chain. Dell has always been
very good at this.
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KPI Example WC - Cash Cycle
Inventory
Accounts Receivable
Accounts Payable
CCC
Cash
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KPI Design and Implementation
KPI Design and Implementation
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Reporting / Dashboards / KPIs / Strategy
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FSG What Management Knows as Truth

• Row Sets (Rows) - Dimension
• Set of Accounts (GL Balances)
• Calculation
• Period - Dimension
• Budget or Actual - Dimension
• Set of Books Dimension
• Column Sets Metric Value

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Breakdown of Inventory KPIs
WC Inventory Turns, DIO
Cost of Goods Sold
Inventory Value
General Ledger
Sub-Ledger Transactions
General Ledger
Sub-Ledger Transactions
On Hand Quantities Item Costs
GL Balances GL Headers GL Lines
GL Balances GL Headers GL Lines
MTL Material Transactions MTL Transaction Accounts
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KPI Model Single Table
KPI Column
PERIOD_VALUE
PERIOD_TYPE
KPI_CLASS
KPI_NAME
KPI_ACTUAL_VALUE
KPI_PLANNED_VALUE
KPI_PERCENT_ATTAINMENT
KPI_DRILL_ATTRIBUTE1 - 10
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KPI Model Single Table
PERIOD_VALUE PERIOD_TYPE KPI_CLASS KPI_NAME KPI_ACTUAL_VALUE KPI_PLANNED_VALUE
Backlog Booked (not Shipped) 923.97818
Accounts Payable Open AP 8477.77635
Accounts Receivable Open AR 42192.567
Accounts Receivable Open AR (61 Days Old) 42192.567
2-Feb PERIOD FSG - Income Statement Net Sales 21720780.55 22000000
2-Apr PERIOD FSG - Income Statement Net Sales 22976749.3 22000000
2-Jan PERIOD FSG - Income Statement Net Sales 20787848.45 22000000
2-Mar PERIOD FSG - Income Statement Net Sales 23600349.64 22000000
2-May PERIOD FSG - Income Statement Net Sales 26189956.35 22000000
2-Feb PERIOD FSG - Income Statement Cost of Goods Sold 11573221.78 12000000
2-Apr PERIOD FSG - Income Statement Cost of Goods Sold 16577141.16 12000000
2-Jan PERIOD FSG - Income Statement Cost of Goods Sold 12860329.29 12000000
2-May PERIOD FSG - Income Statement Cost of Goods Sold 16818850.31 12000000
2-Mar PERIOD FSG - Income Statement Cost of Goods Sold 16297571.77 12000000
2-Apr PERIOD FSG - Income Statement Operating Expenses 5954034.54 6000000
2-Feb PERIOD FSG - Income Statement Operating Expenses 11140687.59 6000000
2-Mar PERIOD FSG - Income Statement Operating Expenses 6605636.04 6000000
2-Jan PERIOD FSG - Income Statement Operating Expenses 5582273.31 6000000
2-May PERIOD FSG - Income Statement Operating Expenses 5439291.01 6000000
Backlog Expected Ship 923.97818
Backlog Entered (Not Booked) 10.196
Accounts Payable Open AP (Due in 30 days) 8477.77635
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Inventory KPI Drill Path
WC Inventory Turns, DIO KPIs FSG / non-FSG
Period, KPI Class, KPI Name
General Ledger Fact Table
Period, Account Structure, Set of Books
Inventory Turns Details
Inventory Value Details
Inventory COGS Details
Sub-Ledger and Transactional Details
Period, Account Structure, Set of Books, Item,
Inventory Org, Operation Unit, Transaction Type,
.
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KPI Model Benefits

• Simple Approach
• KPIs in Multiple Dashboards
• Single Version of the Truth
• Have underlying Drill Details
• Self Documenting

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KPI Demonstration
KPI Demonstration
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Main Dashboard with KPIs
Click here
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Drill to AR Aging Summary
Click Here
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Drill to Open Receivables Summary
Click Here
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Drill To AR Invoice Details
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KPI Design and Implementation Q A
Q A