KPI Design and Implementation - Agenda Introductions KPI Example – Working Capital KPI Design and Implementation KPI Demonstration Q & A KPI Example – Working Capital KPI Example – Working Capital KPI Example – Working Capital Working Capital Performance KPI’s
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KPI Example – Working Capital
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.
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.
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.
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
Dell has always been very good at this.
KPI Design and Implementation
Reporting / Dashboards / KPI’s / Strategy
Reporting / Dashboards
KPI Data Model
FSG Data Model
General Ledger / Sub Ledger Data Model
Transactional Data Model
WC – Inventory Turns, DIO
Cost of Goods Sold
On Hand Quantities
MTL Material Transactions
MTL Transaction Accounts
WC – Inventory Turns, DIO KPIs
FSG / non-FSG
Period, KPI Class,
General Ledger Fact Table
Period, Account Structure,
Set of Books
Sub-Ledger and Transactional Details
Period, Account Structure, Set of Books, Item,
Inventory Org, Operation Unit, Transaction Type, ….