Jaros KPI Design and Implementation by Paul Scheibal.
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Transcript of Jaros KPI Design and Implementation by Paul Scheibal.
Jaros
KPI Design and Implementationby
Paul Scheibal
KPI Design and Implementation - Agenda
o Introductionso KPI Example – Working Capitalo KPI Design and Implementationo KPI Demonstrationo 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 COGSdifferently. 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. NegativeCCC means you sell something to a customerand get the cash for the sale before you have to pay your vendors. Each industry has publishedCCC numbers to be used as benchmarks
CCC highlights how well a company manages itssupply chain.
Dell has always been very good at this.
KPI Example – WC - Cash Cycle
Inventory
Accounts Receivable
Cash
Accounts Payable CCC
KPI Design and Implementation
KPI Design and Implementation
Reporting / Dashboards / KPI’s / Strategy
Drill Path
FSG’s
Transa
ctio
ns
Sub-Led
gers
Gener
al L
edger
KPI Data Model
FSG Data Model
General Ledger / Sub Ledger Data Model
Transactional Data Model
Rep
ortin
g / D
ashb
oard
s
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
General Ledger
Inventory Value
Sub-LedgerTransactions
General LedgerSub-LedgerTransactions
GL BalancesGL HeadersGL Lines
MTL Material TransactionsMTL Transaction Accounts
On Hand QuantitiesItem Costs
GL BalancesGL HeadersGL 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_VALUEBacklog Booked (not Shipped) 923.97818
Accounts Payable Open AP $ 8477.77635Accounts Receivable Open AR $ 42192.567Accounts Receivable Open AR (61+ Days Old) 42192.567
2-Feb PERIOD FSG - Income Statement Net Sales 21720780.55 220000002-Apr PERIOD FSG - Income Statement Net Sales 22976749.3 220000002-Jan PERIOD FSG - Income Statement Net Sales 20787848.45 220000002-Mar PERIOD FSG - Income Statement Net Sales 23600349.64 220000002-May PERIOD FSG - Income Statement Net Sales 26189956.35 220000002-Feb PERIOD FSG - Income Statement Cost of Goods Sold 11573221.78 120000002-Apr PERIOD FSG - Income Statement Cost of Goods Sold 16577141.16 120000002-Jan PERIOD FSG - Income Statement Cost of Goods Sold 12860329.29 12000000
2-May PERIOD FSG - Income Statement Cost of Goods Sold 16818850.31 120000002-Mar PERIOD FSG - Income Statement Cost of Goods Sold 16297571.77 120000002-Apr PERIOD FSG - Income Statement Operating Expenses 5954034.54 60000002-Feb PERIOD FSG - Income Statement Operating Expenses 11140687.59 60000002-Mar PERIOD FSG - Income Statement Operating Expenses 6605636.04 6000000
2-Jan PERIOD FSG - Income Statement Operating Expenses 5582273.31 60000002-May PERIOD FSG - Income Statement Operating Expenses 5439291.01 6000000
Backlog Expected Ship $ 923.97818Backlog Entered (Not Booked) 10.196
Accounts Payable Open AP (Due in 30 days) 8477.77635
Inventory KPI Drill Path
WC – Inventory Turns, DIO KPIsFSG / non-FSG
General Ledger Fact Table
Inventory TurnsDetails
Period, KPI Class, KPI Name
Period, Account Structure, Set of Books
Inventory ValueDetails
Inventory COGSDetails
Period, Account Structure, Set of Books, Item, Inventory Org, Operation Unit, Transaction Type, ….
Sub-Ledger and Transactional Details
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