KPIs / Dashboard

KPIs or ‘Key performance indicators’ are combination of quantifiable values to determine whether targets are achieved OR whether the organisation is on the course of realising its vision. KPIs are used for measuring the success of organisation and its various activities.

As we have seen through this web-site, the success of organisation is dependent on success of various departments and invisible elements. Targets without clarity and regular monitoring are meaningless. There has to be some measurement criterions to evaluate the working of an activity. Monitoring through KPIs is the answer. Organisation must select KPIs suitable to its business model and monitor the same regularly.

Dashboard could be termed as one-page summary of various KPIs to evaluate the performance of the organisation. It is not necessary that detailed reports need to be analysed to arrive at conclusion; summary of keys indicators can also serve the same purpose. Dashboard can also consist of graphical details to make it easier to interpret.

Organisational / Department-wise KPIs

    • Overall Framework
        • Define the KPIs correctly → wrong measurements would give wrong results;
        • No standard list of KPIs → Organisation can create its own KPI to monitor the performance;
        • KPIs can have financial numbers OR non-financial parameters (say, number of orders dispatched on-time);
        • KPIs calculation should be simple and easy to understand;
        • There should be limited KPIs;
        • KPIs should be graphical to observe the trend over a period.
    • Organisation as a whole (purpose: to improve profits and cashflow)
        • ROI (return on investment) {net profit (divided by) investment in business};
        • Inventory turnover ratio (number of times inventory converted into turnover) → Turnover OR ‘Cost of goods sold’  (divided by) closing stock of inventory;
        • Inventory holding period → number of days inventory held → {days in a period (divided by) inventory turnover ratio};
        • Receivables outstanding period {days in a period X value of receivables (divided by) turnover};
        • Number of investors’ complaints received during the month; complaints pending to be resolved;
        • Share price movements during the month.
    • Marketing department (purpose: to increase turnover)
        • Prospects (New Customers)
            • Number of meetings held during the month with new customers;
            • Prospects pending for meeting;
            • Deal conversion rate (i.e. number of prospects converted into customers);
            • Value of orders from new customers;
            • Number of customer enquiries pending to be responded;
        • Existing customers
            • Meetings held with existing customers;
            • Repeat customers during the months;
            • Customers dropped / left alongwith reasons & feedback.
    • Production department (purpose: to produce quality goods with least wastage)
        • Production during the day vis-à-vis previous day and target for the day;
        • On-time delivery % to dispatch department {i.e. actual delivery date (divided by) order delivery due date};
        • Pending orders % {value of pending orders (divided by) total production capacity of a day};
        • Product rejection rate {product failed to get through quality tests (divided by) total production during the day};
        • Wastage % [i.e. value of wastage (divided by) total production];
        • Capacity utilisation % {production (divided by) total capacity};
        • Machines working % {number of machines working (divided by) total number of machines};
        • Estimated value of waste pending for disposal;
        • Confirmation for whether production reconciled with raw material consumption? {(number of finished products produced X weight of the product) vis-à-vis raw material consumed};
        • Production staff turnover ratio [i.e. number of production workers left during the month (divided by) total production force → reasons + feedback].
    • Personnel department (purpose: managing manpower, both new and existing)
        • Staff turnover ratio [i.e. number of staff left during the month (divided by) total employee force → reasons + feedback]
        • Number of cases pending before labour courts;
        • Labour compliances
            • On-time labour tax deposit compliance (i.e. 100% when deposited within due date; otherwise, -ive %);
            • On-time statutory returns submission compliance;
        • On-time remuneration disbursal compliance (i.e. whether remuneration distributed before target date);
        • Staff development activities carried out during the month vis-à-vis targets;
        • % of staff undergone at least one training during the last six month;
        • Penalties paid during the month.
    • Accounts department (purpose: recording and presenting of accounting information, compliances, etc.)
        • Budget vs. actual → variance analysis;
        • Receivables
            • % of receivables more than 30 days OR 90 days OR 120 days vis-à-vis total receivables;
            • % of receivables locked in disputes;
        • Tax compliance status
            • On-time tax deposit compliance of Income-tax, VAT, excise, custom, etc.;
            • On-time tax return compliance;
            • On-time tax certificate issue compliance;
            • Value of concessional forms pending to be collected;
            • Value of amount in dispute during assessment OR appellate authorities.
        • Bank balances
            • Amount of bank balances in active bank accounts and non-active bank accounts (the surplus balance in non-active bank accounts can be invested in securities timely);
            • % of bank reconciled before target date;
            • Value of amount locked in bank reconciliation beyond minimum days (i.e. cheque deposited but not credited OR amount credited by bank but not entered in bank book, etc.);
        • Loans & advances
            • Value of advances to vendors beyond 15 days for which invoices and goods are to be received;
            • Value of amount locked in loans & advances.
            • Value of amount refundable from revenue authorities (income-tax, VAT, service tax, excise, etc.) for more than 6 months;
        • On-time % of payment to vendors (i.e. payment to vendors on or before the due date);
        • Number of Audit observations yet to be resolved and its value;
    • Administration department (purpose: upkeep of assets and infrastructure)
        • Value of AMCs due for renewal;
        • Value of repair & maintenance carried out during the month on new assets and existing assets;
        • Value of assets sent out for repair but yet to be received;
        • On-time delivery of assets during inter-factory movement.
    • Quality department (purpose: ensuring the quality of goods)
        • Defective % {number of samples checked (divided by) total number of goods cleared}
        • Feedback and suggestions for improvement.
    • Purchases
        • % of vendors verified at least once during last six month {value of goods purchased from the vendors verified (divided by) total value of purchases in that purchase segment};
        • Value of purchase orders overdue for goods’ receiving;
        • Value of material requisitions pending to be ordered;
        • Number of open market price verification during the month and value of goods involved (purpose: price of high value goods must be independently verified in open market).

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