SPICE Newsletter
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This document discusses developing a dashboard of key performance indicators (KPIs) to help guide businesses. It recommends establishing KPIs that measure customer satisfaction, sales performance by channel, inventory performance, cash flow needs, and other important metrics. A KPI dashboard can visually display these critical metrics from each department on one online platform. This gives management an accurate picture of business performance while allowing them to drill down into details. Regular benchmarking of KPIs against past performance can help identify areas for improvement and increased efficiencies to drive profitability and customer retention.
SPICE Newsletter
- 1. CONTENT • Introduction • Insight Corner: Developing a Dashboard of Key Performance Indicators • On the Go - SPICE projects • Hot Jobs Insight Corner Paul M. McLeod Senior Consultant, Merchandising SPICE Technology Group Developing a Dashboard of Key Performance Indicators I’ve seen and worked for many retailers over the years who ran their businesses by the seat of their pants. While this may have worked in the past (I can’t imagine when), it must be replaced by a more sophisticated operation utilizing today's advanced technologies to help guide your business. But where on earth do you start? You need to know what drives your business... Consider for a moment the hundreds of reports and millions of data elements that are generated in your business by merchandising, marketing, fulfillment and financial systems. From all that data, what is valuable for you to know and help run your retail business? What are the key performance indicators that will tell management about customer satisfaction and service levels; whether you’re on sales plan by channel; how your inventory is performing; what your cash flow needs will be; and so on? Establishing effective management reports, KPI’s (key performance indicators) and metrics has long been a challenge. As companies grow and continue to add new channels and titles, KPI’s and Business Intelligence (BI) are key to helping top management keep a finger on the business without micro-managing. One concept worth exploring to help guide your business is a “KPI dashboard” – a series of visual KPI’s that reflect the key performance metrics from each department. How can your business benefit from introducing this concept? By improving customer service, increasing top line sales and ultimately, profitability. BI strategy and Reports development Scan based Trading for seasonal items Transportation management streamlining 3PL integration Supplier EDI rollout Specialty staffing & recruiting Supply chain score cards Master Data /New Item Article Lifecycle CIO - upper mid market retail Director, Insight & Analytics District Managers SAP - Project Managers Manager, eCommerce SAP - FI/CO, SCM, SD Analysts Forecasting & Replenishment Analysts Distribution Managers I take great pleasure in introducing our newsletter designed for leaders interested in enhanced enterprise performance management. This newsletter will bring a panel of experts together who will share more about how departmental level performance is being improved across organizations. We will also tie these newsletters to the general enthusiasm in the user community for metrics management via our popular Executive Round Table on Enterprise Performance Management discussions. I hope you will enjoy these series and find it helpful to use in your organization. We wish you all the best for 2012. Neel Sharma Managing Partner SPICE Technology Group, Inc. December 2011 Enterprise Performance Management
- 2. SPICE Technology Group, Inc. 2425 Matheson Boulevard E, 8th Floor, Toronto, ON L4W 5K4, Canada ContactUs 1-888-400-7950 www.SpiceTG.com excited@SpiceTG.com SPICE World SPICE Connect SPICE Force What is a KPI Dashboard? By dashboard, I mean a collection of KPI metrics located generally online and in one viewing platform that reflect the overall performance of the business including customer service and satisfaction, sales analysis against plan and overall profitability. When highly summarized, they give management an accurate and timely picture of the business. In order to add value, the information systems also need to provide detailed answers (the ability to drill down) as to why the various indicators are reporting what they are. You’ll also have to determine which indicators need to be plan, projection and/or actual. As an example, Merchandising metrics may include category projections (sales actual to plan); top 20 and bottom 20 selling items (by brand or category); net contribution to profit; contribution analysis for new versus repeat items and core products versus non-core products. Ultimately, your KPI dashboard must provide insights in to what is affecting profitability. Sales are obviously important, but I’m sure you can think of a retailer who had strong same store sales results, but went out of business. This is partly caused by a lack of ownership to the sales number (reality check – we all own the sales number). But there is no question that EVERYONE owns profit. Even a basic KPI dashboard can provide the answers to where profitability is slipping. Are you achieving the ROI expected in buying or marketing? What about operations? Are staffing levels driving sales? And my personal favourite, shrink. It isn’t your customer robbing you blind of profits; it’s your internal processes for receiving and distributing goods and monitoring your suppliers for “fallouts” (shipping less than what was ordered but billing for the full amount). With EBITDA numbers at less than 5% for a typical retailer, it should become clear that you need a tool to provide guidance. What are the Benefits? There’s an old engineering principle that states, “What hasn’t been measured can’t be improved.” Establishing this mindset will encourage each of the departments to improve their analysis and internal reporting. But one of the most beneficial results that will come is the ability to benchmark internally against yourself season-to-season and year-to-year. Through continual process improvement, your organization will improve the efficiencies that drive profitability and customer satisfaction and retention. There is no question that we are living in a period of great uncertainty and turmoil, so it’s more important than ever to maximize your company assets and manage your business with facts and figures – and you can do this by implementing a KPI dashboard of key enterprise performance metrics.