Driving to the Effective Enterprise With KPI's Michael Hennessey Director, Solution Consulting, QAD...
-
Upload
theresa-caldwell -
Category
Documents
-
view
217 -
download
0
Transcript of Driving to the Effective Enterprise With KPI's Michael Hennessey Director, Solution Consulting, QAD...
Driving to the Effective Enterprise With KPI's
Michael HennesseyDirector, Solution Consulting, QAD
Explore 2012
2
The following is intended to outline QAD’s general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, functional capabilities, and should not be relied upon in making purchasing decisions. The development, release, and timing of any features or functional capabilities described for QAD’s products remains at the sole discretion of QAD.
Safe Harbor Statement
Driving to the Effective Enterprise with KPI's
3
• Session overview - Learn how QAD's KPI's, Metrics, best practices and
analytical tools can help monitor and drive to the effective enterprise.
• Speaker - Michael Hennessey
• Focus- Concept and details around QAD’s KPI framework
• Objectives- Alignment of customer business objectives with Key
Performance Indicators- Provides KPI framework for identifying best practices- Establishes a closed-loop monitoring on performance
improvement with a dashboard and metrics
Overview
Driving to the Effective Enterprise with KPI's
4
Where every business process is working at peak efficiency and
perfectly aligned to the company’s strategic goals.
The Effective Enterprise
Driving to the Effective Enterprise with KPI's
5
‘Five essential questions’ to ask about an organization:
• What is our mission?• Who is our customer?• What does the customer value?• What are our results?• What is our plan? Peter Drucker
The First Questions:
Driving to the Effective Enterprise with KPI's
6
• Our mission is to "Be the best in the eyes of our customers, employees and shareholders.“ American Standard
• Undisputed Marketplace Leadership. Hershey
• We will be the easiest pharmacy retailer for customers to use. CVS
• Workforce diversity gives us access to a world of different ideas and perspectives. XXX XXX is committed to maintaining a corporate culture where men and women of all ages, races, physical abilities, preferences and backgrounds are treated with dignity and respect. At XXX XXX we recognize that when diversity is valued and respected the results are improved service, customer satisfaction and a positive community image. We believe our employees make a world of difference and work to maintain an environment where diversity and inclusion is a critical component of our success. Our Diversity Vision To build a high performing environment where individual differences and contributions of employees, customers and business partners are respected and valued, the result of which is a business organization where fairness, trust and integrity govern relationships and the way we do business.
What is Our Mission? Examples
Driving to the Effective Enterprise with KPI's
7
Delivering the Effective Enterprise
Driving to the Effective Enterprise with KPI's
Plan
DesignOperational
Model
Do
Implement Operational Model
Check
Measure Results, Monitor
Performance
Act
Refine & Strive for
Improvement
The Deming Model
“Certainly we want good results, but management by results is not the way to get good results…work on the causes of results”
8
• KPI’s monitor the effectiveness of end-to-end business processes
• Business processes can involve many departments and business units in an organization.
• They help focus Business Operations to achieve the overall strategic goals of a company or corporation.
• Complacency can be prevented and value optimized for the end customer
Why KPI’s?
Driving to the Effective Enterprise with KPI's
9
• Measures like service levels, inventory, utilization and cash-flow averaged across the business, don’t give a clear indication as to where the problems lie and what drives Value.
• Applying a ‘cookie-cutter’ model to different processes results in averaging
• The good processes compensate for the bad, and the bad bring down the good.
Align Metrics to the Value Chain
Driving to the Effective Enterprise with KPI's
10
• Align KPIs with deliberately chosen performance results.
• Spend time working out the performance results to align KPIs with, before you worry about what the KPIs themselves will be.
• Establish KPIs that monitor:- The most important outputs that the organization
exists to produce- The greatest influences in support of the results
the organization exists to achieve.- The results of critically important steps in the
business process, the in-process drivers of its outputs.
Align KPI’s
Driving to the Effective Enterprise with KPI's
11
QAD KPI’s & Business Performance
Driving to the Effective Enterprise with KPI's
Return on Net Assets
Net Income
Net Assets
Revenue
Costs
Working Capital
Fixed Assets
COGS
R&D
SG&A
Distribution
Inventory
Receivables
Cash
Gro
wth
& P
rofi
tab
ilit
yC
ap
ital
Uti
lizati
on
QAD Key Performance Indicators (KPI’s)
Driving to the Effective Enterprise with KPI's
Growth & Profitability Capital Utilization
13
Inventory Effectiveness - KPI
Driving to the Effective Enterprise with KPI's
Description:Inventory Effectiveness measures the process of having the right part at the right place at the right time, with minimal investment to ensure that deliveries meet the customer requirements.
14
Sub-Metrics: Inventory Effectiveness
Driving to the Effective Enterprise with KPI's
Forecast Accuracy
Inventory Accuracy
Supplier Delivery Performance
Requirements Plan Accuracy
Unplanned Downtime
Schedule Achievement
Excess Safety Stock
Obsolete Inventory
Production Plan Accuracy
Certainly we want good results, but management by results is not the way to get good results…work on the causes of results
15
Business Strategies to Improve Metrics
Driving to the Effective Enterprise with KPI's
Inventory Accuracy
Inventory Turns
Safety Stock Level
Forecast Accuracy
Production Plan Accuracy
Unplanned Maintenance
Requirements Plan Accuracy
Inventory Turns
Production Plan Accuracy
Obsolete Inventory Ratio
Forecast Accuracy
Requirements Plan Accuracy
Safety Stock
Utilize Industry Forecast Data
Deploy Forecast Review Process
Deploy S&OP Feedback Loop
Solicit Varied Input
Leverage SophisticatedForecasting Systems
Historical Data
16
Strategy Enablers Within QAD Applications
Driving to the Effective Enterprise with KPI's
Leverage SophisticatedForecasting Systems
QAD Demand Management
QAD Customer Relationship Management
QAD Forecasting Application
QAD Quote Management
QAD BI, Browse, Reports
17
• Operational metrics and browses - at the operational level
• Alerts and reports - at a tactical level
• Business intelligence dashboards etc. - in aggregate
• And good consulting services to help customers ensure alignment...
QAD Tools - Analytics
Driving to the Effective Enterprise with KPI's
18
Op Metrics – Inventory Metrics
Driving to the Effective Enterprise with KPI's
19
Alerts & Reports – (Condition Out of Tolerance)
Driving to the Effective Enterprise with KPI's
20
QAD BI 3.x – Dashboard Example
Driving to the Effective Enterprise with KPI's
21
QAD BI 3.x - Inventory Dashboard ExampleDriving to the Effective Enterprise with KPI's
22
QAD BI Roadmap
Driving to the Effective Enterprise with KPI's
BI 3.7 Sept
BI 3.5 exists
BI 3.6 March
Future – 2013+
to be determined
23
• Customer Strategy:- Develop and maintain a competitive edge
through constant technical product innovation – 30% + of revenue should be derived from ‘new’ products incorporating new technologies.
• KPI: “Technology Vitality Index”• Measures the revenue generated from new
product sales (‘new product = introduced in last 4 years
• How measured: Using QAD BI 3
Customer Example
Driving to the Effective Enterprise with KPI's
24
• The value of performance measurement is evident in how it has transformed performance
• Choose a goal• Make your goal measurable by teasing out
the performance result(s) it implies• Name and describe your selected measure• Define exactly how to calculate your
measure’s values• Interpret what your measure is saying, and
understand why it’s saying that
Summary
Driving to the Effective Enterprise with KPI's
25
• Many people are on a quest to find the perfect performance measures or KPIs.
• Buy-in matters more than the perfect KPI• Collaborate to choose a few reasonably
good KPIs that they feel confident in• Start with QAD standard offerings & use the
tools available to refine existing or create new
• Engage QAD Services to help
Make a Start
Driving to the Effective Enterprise with KPI's
“It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth”
W. Edwards Deming
26
Michael A. HennesseyDirector, Solution Consulting, [email protected]
Questions & Answers
Driving to the Effective Enterprise with KPI's