What are KPIs and why are they so important to facilitate effective business decision making ?

Sales Performance KPIs

Sales Performance KPIs

Key Performance Indicators or KPIs as they are commonly referred to, are measurements of individual business performance metrics.  For example all businesses will want to have an up to date view of the level of sales intake and overall sales order book value.

KPIs can be generated for any performance metric that you can think of.  For example suppose a business has a sales team of 10 sales execs.  As part of the sales strategy to grow the business, you ask the sales team to undertake regular sales prospecting (10 new prospects each per week).  You could then create a KPI to measure how many prospects have actually been contacted versus the target.

Using a combination of KPIs will also allow businesses great insight into business performance issues which may exist.  For example you may see that the sales order intake KPI is below target for yet when you check the prospecting KPI you see that only half of the sales team are actually carrying out the prospecting resulting in a short fall of new business.  The point is that if you don’t capture the information in the first instance then you cannot take corrective action.

So What KPIs Should Your Business Capture?

The answer to this really depends on your business and what you provide.  For example if you are a hotel then you would want to closely monitor the room occupancy levels.  A restaurant would want to keep close tabs on the number of covers and the sales of each dish.   A car dealership will likely want to now how many cars they have sold.  In addition they may have a target for the sale of extended warranties for example.

We have worked in a range of different manufacturing businesses giving us strong commercial awareness.  Here is a list of common KPIs for different functions within a manufacturing business:

Sales

  • Opportunity Pipeline Summary
  • Quote conversion ratio
  • Sales order intake (current month) & (year to date) vs Sales Budget + variation
  • Order book value
  • Order arrears
  • Sales by product group
  • Sales by customer
  • Sales by country
  • Profit margin analysis

Purchasing

  • PO Value Raised (current month) & (year to date)
  • Purchase order book value
  • Purchase order book arrears value
  • Purchase order book goods received not invoiced value
  • Summary of purchase values by product group
  • Summary of purchase values by supplier

Production

  • Work in Progress (WIP) Value
  • Completed Stock Value
  • Number of Pending Work Orders
  • Qty of Work Orders in Arrears
  • Value of stock added to WIP
  • Value of labour cost added to WIP
  • Value of Subcontract cost added to WIP
  • Summary of Time Bookings by job
  • Summary of Time Bookings by employee
  • Summary of non charge time bookings
  • Costs of completed work orders vs Sales Price (actual vs planned)
  • Number of accidents (current month) & (year to date)
  • Employee Absence Ratio

Stock Control

  • Overall Stock value
  • Value of Goods Received into Stock
  • Value of Goods Shipped to customers
  • Value of stock written off
  • Stock value by product group
  • Stock value by location
  • Stock value by supplier
  • Allocated stock value

Quality Control

  • Customer delivery performance (ontime vs late % ratio)
  • Customer rejects qty and value
  • Supplier delivery performance (ontime vs late % ratio)
  • Supplier rejects qty and value
  • Internal quality – scrap qty / cost
  • Internal quality – rework qty / cost
  • Internal quality – delivery performance (ontime vs late % ratio)

Finance

  • Invoiced value (current month) & (year to date)
  • Credit notes qty and value (current month) & (year to date)
  • Sales budget vs forecast analysis
  • Order intake vs value shipped ratio
  • Allocated stock value

How Do I Capture These KPIs Automatically?

Business Intelligence Reports can provide automated business reporting that will generate KPIs either individually or within a custom dashboard which contains multiple related KPIs.  For example a sales dashboard, production dashboard or quality dashboard.  Providing the underlying information is available within the database then we can help.

So What Are The Benefits of KPI Business Intelligence Insight ?

Commercial Benefits of Business Intelligence Solutions

Commercial Benefits of Business Intelligence Solutions

Hopefully this post clears up some of the ambiguity around what KPIs are and how they are used.  For more information around KPI reporting and BI dashboard development please call 0800 8044 310.  Alternatively request a FREE BI consultation for your business.

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Let Business Intelligence Reports Help You to Bridge The Gaps In Your Business Reporting

Bridge the Business Reporting Gap with Business Intelligence Reports

Bridge the Business Reporting Gap with Business Intelligence Reports

All businesses regardless of industry face the same day to day challenges required to monitor business performance and make correct business decisions.  To quote Benjamin Franklin, “If you fail to plan, you are planning to fail!”.  In order to make these decisions managers and directors of businesses often rely on the data provided from the various reporting tools in use by various departments within the business.  Ensuring that this data is produced in a timely manner and that the data is accurate is often a challenge for a lot of companies due to the knife and fork manipulation of data that often takes place in Excel.

Whilst operating in this way by manually manipulating data in Excel this is far from ideal, sometimes it is the only available option so businesses are forced into inefficient ways of working due to the limitations of the computer systems they are using and the reporting that is available.  This is fine when the data is actually available in some form or another.

However what do you do when you have business questions that you want to answer but have no data available to answer them?  Here are some typical questions that we often pose to managers and directors of businesses to understand what the current reporting challenges are that exist within the business:

Q: Are you happy with the information provided in your existing business reports?
Q: Are you frustrated with the lack of easy access to critical business information?
Q: Do you have business questions that you want to ask but cannot get the answers?

These questions often provoke a lot of discussion around problems which exist within the business with regard to the reporting that is currently available.  Often businesses are aware of this, the problem they have is that they do not have the resource capability or availability to manage this.

Business Intelligence Reports BI Report Development Services

Business Intelligence Reports BI Report Development Services

This is where Business Intelligence Reports can help.  Our business intelligence consultants have considerable experience of working within the I.T. and manufacturing sectors.  We have extensive knowledge of I.T. business hardware and business software.  In addition we have strong commercial awareness of the end to end business processes required to identify the reporting gaps that exist.

Our BI development team work closely with our clients to develop business reporting solutions which bridge the reporting gaps that exist.  By bridging the reporting gaps that exist businesses can ensure that they have the information they need when they need it to facilitate sound business decision making.

Here are a selection of commercial benefits which can be achieved through the implementation of business intelligence reporting solutions.

Commercial Benefits of Business Intelligence Solutions

Commercial Benefits of Business Intelligence Solutions

You can  also download a selection of business intelligence case studies which detail real life business intelligence solutions we have provided to businesses to bridge the reporting gap and the benefits these BI solutions have brought to their businesses.
If you would like Business Intelligence Reports to work with your business to help develop your business reporting capabilities to improve your Productivity, Efficiency and Profitability, please call 0800 8044 310.

Alternatively you can request a business consultation via our website:

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Megatrends by John Naisbitt (1982)

John Naisbitt is the author of book Megatrends which was pulished by Warner Books in 1982.  Although first written mainly to an American readership, Megatrends proved to be true in anticipating major shifts for the whole world.

One of the famous quotes from Megatrends states:

We are drowning in information, but starved for knowledge

More than 9 Million copies were sold in 58 countries, and it was on the New York Times Bestsellers list for two years, mostly as #1. Twenty years after its publication, Christoph Keese in the Financial Times looked back:

Once a decade, sometimes more often, a book about the economy is published that becomes a bestseller immediately and changes the relationship of people to economics. His predictions were astoundingly precise – though predictions, as Mark Twain’s one-liner says, are especially difficult if they are about the future.

# 1 New York Times Bestseller

Click here to view the John Naisbitt website

Megatrends John Naisbitt

Megatrends John Naisbitt

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How Applying The Pareto Principle Can Give Your Business Valuable Commercial Insight

The Pareto Principle states that, for many events, roughly 80% of the effects come from 20% of the causes.  The Pareto Principle which is often referred to as the 80-20 rule was named after Italian economist Vilfredo Pareto by management consultant Joseph M. Juran who suggested the principle.  Vilfredo Pareto attended the University of Lausanne and published his first paper “Cours d’économie politique.” in 1896.  In this paper Pareto demonstrated that approximately 80% of the land in Italy was owned by 20% of the population.

The 80-20 rule can be applied as a rule of thumb for most things in life including business where applying the Pareto Principle we can say that approximately:

  • 80% of a company’s profits come from 20% of its customers
  • 80% of a company’s complaints come from 20% of its customers
  • 80% of a company’s profits come from 20% of the time its staff spend
  • 80% of a company’s sales come from 20% of its products
  • 80% of a company’s sales are made by 20% of its sales staff

Therefore, many businesses can increase levels of profitability by focusing on the most effective areas of the business and eliminating, ignoring, automating, delegating or retraining the rest, as appropriate.

We can apply business intelligence techniques to quickly analyse the performance data of a business to drill-down and identify the 20% of causes (i.e. top customer accounts, best selling products, most effective use of company time and most effective sales staff) that generates the 80% of the results in the business (i.e. most sales revenue and profit).

B.I. Reports have helped businesses make sense of their underlying performance data and to allow them to focus in on the most effective 20% of their business.  If you would like to discuss how B.I. Reports to help your business you can contact us on 0800 8044 310.  Alternatively you can request a business intelligence consultation for your business.

The Pareto Principle (otherwise known as the 80-20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes.

The Pareto Principle (otherwise known as the 80-20 rule) states that, for many events, roughly 80% of the effects come from 20% of the causes.

 

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