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					                                Jaros




KPI Design and Implementation
            by
       Paul Scheibal
KPI Design and Implementation - Agenda




        o   Introductions
        o   KPI Example – Working Capital
        o   KPI Design and Implementation
        o   KPI Demonstration
        o   Q&A
KPI Example – Working Capital




   KPI Example – Working Capital
KPI Example – Working Capital




      Working Capital Performance KPI’s

            • Important in most businesses
            • Can get off most Income Statements
              and Balance Sheets
            • Published standards for WC numbers
              by industry
            • Dell Corporation knows WC
KPI’s in More Detail

       Working Capital Performance KPI’s

             • 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)
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
customer’s cash for 40 days.
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.
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.
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.
KPI Example – WC - Cash Cycle



                 Inventory


Accounts                        Accounts
Payable           CCC           Receivable


                    Cash
KPI Design and Implementation




      KPI Design and Implementation
Reporting / Dashboards / KPI’s / Strategy
 Reporting / Dashboards




                                      Drill Path

                                     KPI Data Model

                                     FSG Data Model

                          General Ledger / Sub Ledger Data Model

                                 Transactional Data Model
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
Breakdown of Inventory KPIs



                        WC – Inventory Turns, DIO




         Cost of Goods Sold                         Inventory Value




                     Sub-Ledger                                   Sub-Ledger
 General Ledger                               General Ledger
                     Transactions                                 Transactions

   GL Balances    MTL Material Transactions     GL Balances      On Hand Quantities
   GL Headers     MTL Transaction Accounts      GL Headers       Item Costs
   GL Lines                                     GL Lines
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
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
Inventory KPI Drill Path


Period, KPI Class,             WC – Inventory Turns, DIO KPIs
KPI Name                              FSG / non-FSG



Period, Account Structure,
Set of Books                      General Ledger Fact Table




           Inventory COGS                 Inventory Value                  Inventory Turns
               Details                        Details                          Details

                             Sub-Ledger and Transactional Details

                             Period, Account Structure, Set of Books, Item,
                             Inventory Org, Operation Unit, Transaction Type, ….
KPI Model – Benefits




       •   Simple Approach
       •   KPI’s in Multiple Dashboards
       •   Single Version of the Truth
       •   Have underlying Drill Details
       •   Self Documenting
KPI Demonstration




           KPI Demonstration
Main Dashboard with KPIs




       Click
       here
Drill to AR Aging Summary




                            Click
                            Here
Drill to Open Receivables Summary




                        Click Here
Drill To AR Invoice Details
KPI Design and Implementation – Q & A




                  Q&A

				
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posted:11/23/2011
language:English
pages:24