Industry Wise Guide To KPI

Success

How Data is changing everything

The meaning of the term KPI could have been given from the start, yet this isn't as simple an undertaking as one would suspect, because of the way that there are various ways in which the term KPI can be interpreted. For the purpose of this white paper, we for the most part incline toward an increasingly concrete, rather operational methodology, of the various term; KPIs are measurable and commonplace parameters that help measure the performance of a particular function or industry.

Essentially, we have run down the following fundamental qualities related with KPIs, they should:

Adjust to an organization's methodology – This is a critical point. In the event that there is no unmistakable connection between a KPI and an organization's business goal, at that point a KPI isn't a KPI. The marker likely could be an operational or auxiliary measurement, yet it's anything but a key exhibition pointer.

Be straightforward – A KPI should be a straightforward depiction of an organization’s performance and should convey a direct meaning. Following KPIs and tracking them can actively indicate the effectiveness of different aspects of an organization’s operations.

Be relevant – KPIs ought to adjust to various targets which are to be reached and to the mark the upper and lower limits, the two of which are a piece of the ceaseless improvement of intelligent organizations. KPIs should be relevant and tailored from the most accurate of data to give insights that enhance decision making at any organization.

Introduction

KPIs are indicators of business execution and operations. They are utilized to check execution against targets, or as benchmarks to flag zones of execution needing improvement. They are, in this way, proportions of a company's Critical Success Factors.

In any undertaking, there might be many CSFs and truly several KPIs to follow their direction. A business can easily tailor its approach to the current scenario in COVID-19, so a SWOT (Strengths, Weaknesses, Opportunities, Threats) worldview gives a method of arranging CSFs as in the Table underneath.

Real life examples of KPIs

1.Industry Knowledge: What are the numbers that must be on track in a particular industry and where does the firm under review rate with regard to industry averages? What is happening in the industry that will have an effect on the firm’s viability?

2.Business Plan Objectives: A business plan based on a strategic planning exercise will provide the key objectives for the next planning period and so determine which CSFs to focus on.

3.Targeting Selected Drivers: since it is unusual that all the drivers of any one CSF can be acted on at once it is necessary to decide which to concentrate on to achieve the stated objective. For example, increasing the customer satisfaction score could involve a range of drivers such as greater customer contact, reduced delivery errors, better installation procedures, and product design improvement. These become your KPIs for measuring how the process is going.

How to select KPIs for BCP (Business Continuity Plan)?

Core aspects of KPI measurement and Trends moving forward into 2020• Business Intelligence. Query handling, statistics, performance indicators, scorecards and dashboards to empower leaders over the association to effortlessly discover, examine and share the data they have to improve dynamic of the organization.

• Financial Performance and Strategy Management. Planning and arranging, money related solidification, score carding and system the executives, budgetary investigation and related revealing abilities to oversee and manage risk and help rearrange, structure and mechanize dynamic business processes.

• Compliance. Complete compliance and transparency into processes while maintaining legal compliances. Manage complicated cycles like O2C, P2P, R2R and create value for risk management and finance & control.

• Analytic Applications. Applications with instant and interactive graphs that help create a easy-to-interpret and easy-to-understand graphs, pi-charts, slice and dice pivot tables and much more.

Inventory Control• Average number of days finished goods on hand (time) • Days in inventory (time)• Inventory turnover ratio (%)• Ratio of slow-moving inventory to total inventory (%)

Product Quality Management• Completeness of manufacturing transfer package from R&D • Cost of rejected materials ($) • Customer complaints (or claims) per day or product (#) • Customer complaints due to damaged shipments (%) • Customer complaints caused by substandard materials or parts (%) • Damage claims per shipment ($) • Damage to in-storage products by employees (#, $) • First pass yield (#) • Inventory shrinkage as a percent of production or cost of sales personnel • Mean time between failures (time) • Defect rate (#, %)

Industry Wise Use Cases and KPIs

1. ManufacturingProduction Efficiency• Average days (hours) late divided by total production days (hours) • Average overtime hours per employee• Average production costs per unit• Average time incurred per product • Batch size• Common parts• Completeness of manufacturing transfer package from R&D • Current backlog of orders• Cycle time• Frequency of out of stock occurrences

Sales and Credit System• Average collection function expense per customer ($) • Collection function expense per customer phone call (average $) • Collection function expense per past due account over $1,000 (average $) • Past due accounts (#, $, on average per period) • Credit limit per new account ( average $) • Credit request approval / rejection decision time (average time) • Amount over 90 days past due ($) • Final demand letters sent to customers (#,$) • New account past due receivables as a percentage of total new account receivables • Past due amounts from major customers ($) • Credit applications accepted/rejected (%) • Past due accounts to total receivables (%)

KPIs for Success:

Does the use of spreadsheets cause transactional delays in my processes? Can we model future scenarios and perform "what if" analysis? How much is the organization losing due to erroneous and duplicate data?

While Most industries have slowed down , there is a sentiment of to maximize profitability. We conducted a survey with 250+ leaders across the industry and some of the key metrics that are critical for the success of the industry are as follows:

1. Cost Transparency: Inventory Planning Errors, Centralization of Procurement, Mapping key customer segments (profitability), freight and cost analytics, cost of servicing a customer (Doctor/Hospital)

2. Controller Insight: Profitability by region, Ideal Cost vs Actual Cost, Target vs Achieved Revenue, Advertisement spends, Channel segment performances

3. Process Optimization: Order To Cash, Procure To Pay, Manual Signatures on Purchase Orders and Sales Invoices, Management of Sales Workforce in Pharmaceuticals

2. Healthcare

KPIs for Success:

a) Supply Chain Management:• Cost of products or services supplied ($) • Frequency of late receipts (%) • Fulfilment accuracy (Frequency of returned purchases, ratio of rejects to total items purchased, rejects per shipment received, frequency of wrong items received) • Open purchase orders (#, $, average age) • Complaints handled correctly on the first call (%) • Product quality (% of items received having quality related defects • Quality of features of the supplier's product or service that are critical to the firm’s processes or needs) • Lead time (Required lead times) • Satisfaction with suppliers (can be measured through an internal survey similar to that used for customers) • Suppliers’ dependability index (#) • Total cost of products (including freight, set up, unfavorable payment terms, cost of excessive lead times or purchase quantities) compared to competitors of the supplier

3. Food and Beverages

KPIs for Success:

b) Stock Management• Opening Stock Quantity/Value• Closing Stock Quantity/Value• Total Deliveries Quantity/Value• Actual Food Cost Quantity/Value• Ideal Food Cost Quantity/Value• Variance Quantity/Value

c) Executive Dashboard• Revenue • Actual Food Cost• Ideal Food Cost• Variance• AFC/Revenue %• IFC/Revenue %

a) Sales Operations• Average sales per salesperson ($) • Average time from customer contact to sales response • Customer time/employee attendance • Customer visits to the company (#) • Days visiting customers (#) • Direct communications to customer per period (#, time) • Direct contact with customers per period (#, time) • Field sales management • Field salespeople (#) • Frequency of market research of products • Inbound calls taken • Number of sales (or response rate) necessary to cover costs of marketing campaigns • Outbound calls made (#) • Sales conversion (%) • Response rates from direct mail pieces and other advertising

b) Research and Development• Business development expense/administrative expense• Competition (# products introduced by competitors• Development costs (average product development costs per product) • Development speed (time to market) for new products

4. Pharmaceuticals

KPIs for Success:

• Increase in major projects count of number of projects over a specified $ value • New products introduced (#, # per person, # per period) • Patents (average. age, #pending, # received, per $ investment in R&D) • Percent of products that met customer/production needs without requiring modification • Percent of sales or profit from products in various stages of the product life cycle • Percent of revenue from target market segment • Percent of revenues generated from products developed in the last # months

c) Market Penetration• Brand recognition (percentage of potential customers who recognize company brand based on surveys) • Brand recognition (that is, the percent of potential customers who know of the company’s product or service or who think highly of it), which is generally done through surveys • Market potential ($) • Market share (that is, the company's share of total sales in the geographic areas in which it competes) done on a product or product line basis ($) • Number of channels in which the product is available (#) • Number of customers (#) • Number of new customers (#)

a) Accounts Payable• Accounts payable turnover ratio • Days in payables

b) Accounts Receivable• Accounts receivable turnover ratio • Allowance for doubtful accounts as a percentage of accounts receivable • Average age of receivables (time) • Days sales in receivables (days sales outstanding)

c) Cash Management• Amount of discount offered customers for timely remittance (%) • Average balances in non-interest-bearing accounts ($) • Average daily idle cash ($) • Average number of days bills are paid before due date (time) • Average time between receipt and deposit of funds (time) • Cash flow • Collection period (accounts receivable divided by sales per day)(time) • Delinquent payment penalties as a percentage of purchases (%) • Interest expense as a percentage of net capital (%) • Length of cash cycle (time from payment for raw materials to ultimate collection of receivables from sales) • Percentage of past due payables to total payables (%)

5. Financial Management (Cross Industry)

KPIs for Success:

d) Financial Strength and Flexibility• Average unused credit lines per source (#) • Credit rating• Debt ($)• Debt to assets ratio • Debt to equity ratio• Leverage ratio (DuPont formula)• Liabilities to equity ratio• Number of actual (potential) debt covenant and other violations (#) • Number of approved financial credit sources (#)• Ratio of used to total credit lines• Times interest earned• Total assets ($)• Total assets/employee ($)

6. Human Resource Management KPIs (Cross Industry)a) Employee Productivity• Absentee rate (time / period) • Average hours worked per week (time) • Output per employee ($, #) • Production per employee (for example, chargeable hours per team member in a professional service firm, contacts per salesperson) • Productivity statistics per employee by department • Sales per employee ($) • Sick days taken per employee (#/period) • Value added per employee (production costs net of those paid to outside suppliers)

b) Other HR Domain KPIs

Business Analytics Benefits

• Priority: Analytics is a priority in a business growth

• Efficiency: It brings operational efficiency in the enterprise

• Insight visualization: BA technologies bring creative data visualization

• Better planning: Analytical planning brings quality & relevance in the business

• Cost efficient: Better analysis will reduce overall cost and increase revenue

• Brings agility: A good analytical approach to enterprise work will make company agile

Established in 2009, Orane Consulting Pvt. Ltd is an IT Consulting Company. We are a team of 110+ dedicated professionals who are committed to meet and exceed customer expectations. Our unique technology capabilities coupled with domain understanding has enabled us to provide excellent value-driven solutions to customers across verticals. We’re authentic in our actions and approach, we have a passion for innovation, and we know that smart insights lead to better outcomes... making way for you to achieve unstoppable business intelligence. We partner with our customers to break down the barriers preventing insight-driven decision-making by transforming their data and analytics into a conduit for growth and innovation.

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