Presentation on theme: "Jaros KPI Design and Implementation by Paul Scheibal."— Presentation transcript:
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
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
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)
KPI - Accounts Receivable Working Capital Math 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.
KPI - Accounts Payable Working Capital Math 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 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.
Reporting / Dashboards / KPIs / Strategy Drill Path FSGs Transactions Sub-Ledgers General Ledger KPI Data Model FSG Data Model General Ledger / Sub Ledger Data Model Transactional Data Model Reporting / Dashboards
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-Ledger Transactions General Ledger Sub-Ledger Transactions GL Balances GL Headers GL Lines MTL Material Transactions MTL Transaction Accounts On Hand Quantities Item Costs GL Balances GL Headers 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_VALUEPERIOD_TYPEKPI_CLASSKPI_NAMEKPI_ACTUAL_VALUEKPI_PLANNED_VALUE BacklogBooked (not Shipped) Accounts PayableOpen AP $ Accounts ReceivableOpen AR $ Accounts ReceivableOpen AR (61+ Days Old) FebPERIODFSG - Income StatementNet Sales AprPERIODFSG - Income StatementNet Sales JanPERIODFSG - Income StatementNet Sales MarPERIODFSG - Income StatementNet Sales MayPERIODFSG - Income StatementNet Sales FebPERIODFSG - Income StatementCost of Goods Sold AprPERIODFSG - Income StatementCost of Goods Sold JanPERIODFSG - Income StatementCost of Goods Sold MayPERIODFSG - Income StatementCost of Goods Sold MarPERIODFSG - Income StatementCost of Goods Sold AprPERIODFSG - Income StatementOperating Expenses FebPERIODFSG - Income StatementOperating Expenses MarPERIODFSG - Income StatementOperating Expenses JanPERIODFSG - Income StatementOperating Expenses MayPERIODFSG - Income StatementOperating Expenses BacklogExpected Ship $ BacklogEntered (Not Booked) Accounts PayableOpen AP (Due in 30 days)
Inventory KPI Drill Path WC – Inventory Turns, DIO KPIs FSG / non-FSG General Ledger Fact Table Inventory Turns Details Period, KPI Class, KPI Name Period, Account Structure, Set of Books Inventory Value Details Inventory COGS Details Period, Account Structure, Set of Books, Item, Inventory Org, Operation Unit, Transaction Type, …. Sub-Ledger and Transactional Details
KPI Model – Benefits Simple Approach KPIs in Multiple Dashboards Single Version of the Truth Have underlying Drill Details Self Documenting