kpi handbook implementation on bizforce one

Key Performance Indicator

Implementation on Bizforceone

Written By FujitsuBizforceOne implemented by BMI Company

Version 1.0

Introduction

With the objective to provide a quality consulting service through Real Time Management (RTM), Company continually seeks new ways to improve its methodology. Hence, the adoption of Data Analysis.

This manual aims to introduce Data Analysis as an additional service to the RTM Consulting Solution Suite.

Intended Users

This manual is intended for the use of BizforceOne consultants who will conduct the RTM consulting services.

Topics Covered

Following is the coverage of this manual.

Data analysis overview

Requirements prior to data file preparation

Guidelines for data file preparation

Details of standard file templates for data collection

Simulations and Computations for data analysis

Conventions

The following conventions are observed in the tables used in this manual.

Bold, texts enlarged Results of simulation

Italic Variable names

CAPITALIZATION Column names

… Data in between columns

Table of Contents

Introduction 2

Purpose of data analysis 4

Requirements prior to data file preparation 5

Guidelines in Data File Preparation 6

Data File Templates 7

Forecast vs. Actual Order 8

Actual Order vs. Production Plan 13

Production Plan vs. Production Good Result 17

Sales Order vs. Shipment 20

Delivery Order vs. Billing 27

Sales vs. Cost 30

Inventory vs. Sales vs. COGS 33

Inventory Adjustment 36

Finished Goods Movement 39

Finished Goods Composition 44

Days Receivable 48

Days Payable 51

Production Line Result 54

Production Process Defect 56

Demand vs. Supply 59

Index 63

Purpose

To be able to cope up with the dynamic changes of the market environment, a business may need to assess its current performance at a certain time. The way to accurately assess its present condition is to do data analysis.

Data Analysis is a technique to measure the business’ condition. Study is based on the business’ actual transactions and processing records.

It involves three major activities: 1) data collection 2) validation and 3) simulation.

Data Collection makes use of file templates for the functional units to complete. These file templates are distributed to various departments depending on the information required. For example, The Sales Division is required to fill up Sales Order vs. Shipment template. In this instance, it is the Sales Division who can provide the information on orders and deliveries as sales is their responsibility in the organization.

For the data analysis to be credible, data inputs should likewise be credible. Data Validation is the activity which checks the accuracy of the data collected. It may involve observing at the work place and discreetly questioning department staff.

Simulation involves manipulation of the data collected and computations by employing performance indicator tools. Performance indicators are those empirical data points that indicate how well, or poorly, an entity is performing against preset goals and objectives. Normally, in business or strategic planning, a company will set targets over a specified period that the business believes are attainable and track performance over time to those targets or objectives.

The following discussions focus on file templates usage and the corresponding performance indicator computations.

Requirements

For the data collection to be organized and complete, certain key information must be gathered.

Prior to giving assignments, it is important to know the organizational structure. This can somehow give a picture of how business is being run. In addition, responsibilities for the file template preparation can be identified.

When the team leaders and members who will do the file preparations have been identified, data collection and its importance should be explained to them. Also, activities, responsibilities and schedule should be clearly discussed.

Another key point is to gather the team members and discuss among them the business’ product lines and how these are being classified. Classification or product groupings should be based on the strategic business units. It is important to come up with just one understanding on this aspect. Moreover, codes and names for raw and sub materials, goods, customers and vendors should be uniform across different functional units or departments. To add, terminology should be clarified to have uniform understanding among the group. This is to enable accurate data comparisons even from different file templates.

Finally, data sources, availability and volume should be considered. This is to set realistic target schedule.

Guidelines

File templates differ in information requirements. Understandably, data contents and sources also vary. Following are the general rules in filling up the files.

File templates must be properly labeled. Headers such as template name, month, year and/or period covered must be indicated.

All transactions/data reflected in the file should be complete. Data analysis studies trends and performance, thus, requiring full data over a year or a month.

Tolerance factors, whether in percentages or fixed values, should be based on standards resulting from collaborative discussions among member of top management.

Some file templates require quantities. In a template, these quantities should consistently use the same unit of measure.

There should be no changes in the file format. However, if due to unavailability of data, certain columns or spaces may be left blank.

Do not summarize. If the report requires daily transaction, it should reflect actual daily transactions.

Consolidate. One file template may be prepared by different people, departments or divisions due to organizational structure or project assignments. However, data should still be consolidated to a single file.

Files submitted should be soft copy (Excel).

Data File Templates

In this section, file templates are discussed in detail.

In each sub section, the standard template is shown as it is given to the client for them to fill up. There follows the definitions of field items in the standard template. Then, the standard template completed by the client is manipulated by the consultant. The result is shown as the simulated file for data analysis. From here, the procedure for file manipulation is discussed. After which, computation of the key performance indicator (KPI) is given. Data analysis results may be presented in various ways. But, for this documentation, an illustration is shown to sample one of the possible presentations.

Forecast vs. Actual Order (KPI_001)

This file template reveals comparison of the monthly forecasted quantity against the monthly actual orders for the whole year. This requires whole year’s data. Ideally, data needed should be six (6) months backwards and six (6) months forward.

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this reportTolerance

Percentage (%) Percentage An allowance for acceptable variations from specified measure. This standard is set by management and must be shown in percentage form.

No. Integer Short term for number; this is a sequence number assigned for each line starting from 1 up to the last entry line.

Product Group Text Major division or classification of products the company sells. This can be used as the primary sort key to organize the entry list.

Product Text Goods produced and sold by the company. List all products that fall under the same Product Group together.

Customer Text Individual or group that buys the product directly from the company with the purpose to either use/consume the product or re-sell/distribute to other parties.

Forecast Quantity A projection made by the Marketing or Sales Group of a Company on the number of goods that is planned to be sold within a specified period. Fill up all months as required.

SO Quantity Short term for Sales Order, which refers to a company's internal document that is issued so as to record, identify and trace all orders placed by each of their customers. This field requires the total number ordered by the customer for each product within a specified period as added up from the Sales Order forms. Fill columns up to the current month only.

Go to BizforceOne to view Sales forecasting data:

And sales Order posted on BizforceOne system

Simulated Template

Simulation

1. ITEM a. Add a SCORE column after each month.

2. ITEM b. Compare Forecast and Actual Order. If the difference is within the given

tolerance, then SCORE is ‘1’, otherwise, ‘0’.

3. ITEM c. Add SUB-TOTAL row after each Product Group. Get the total number of forecast

and sales order per product group for each month. Sub-total also applies to the SCORE

column.

4. ITEM d. Add FORECAST ACCURACY row after SUB-TOTAL row. Refer to the KPI formula on

how to come up with the Forecast Accuracy value.

5. ITEM e. Add FORECAST REALIZATION row after FORECAST ACCURACY row. Refer to the KPI

formula on how to come up with the Forecast Realization value.

6. ITEM f. Add GRAND TOTAL row after the last FORECAST REALIZATION row. Add the sub-total

values of forecast and sales order, as well as the score to come up with the Grand Total.

NOTE: The sort-key mix may vary using the columns for Product Group, Product and

Customer in order to arrive at better, more significant data analyses. At any rate, the rows

and computations for SUB-TOTAL, FORECAST ACCURACY and FORECAST REALIZATION must still be

added accordingly.

Select KPI_001 as follow

KPI Computation

Following are the KPI’s, which may be derived from this template:

1. Demand Forecast Accuracy

This computation is used to compare the number of times forecast and actual SO matched within a given quantity tolerance compared to the total number of product group, product or customer.

Formula:

Number of Correct Forecast Items (within tolerance)

----------------------------------------------------------------------------------------------------------- X 100%Number of Forecast Items

Number of Correct Forecast Items – refers to the total number of comparisons or transactions that has a SCORE of ‘1’.

Number of Forecast Items – refers to the total number of comparisons or transactions.

2. Demand Forecast Realization

Total Actual Order Quantity Per Product Group----------------------------------------------------------------------------------------------------------- X 100%

Total Forecast Quantity

Total Actual Order Quantity Per Product Group – refers to the sub total of Sales Order. It is the total number of products ordered by the customers.

Total Forecast Quantity – refers to the quantity projected by the Marketing or Sales Group of a company on the number of goods that is planned to be sold within a specified period.

Note: The Demand Forecast Realization may be analyzed by Product or by Customer using Product or Customer as sort key.

Actual Order vs. Production Plan (KPI_002)

This file template reveals comparison of the monthly production plan quantity against the monthly actual orders for the whole year. This requires whole year’s data. Ideally, data needed should be 6 months backwards and ahead.

BizforceOne Production Planning:

Select the Production Planning Schema and filter parameters as needed then click Update:

Actual Order can be collected through

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this reportNo. Integer Short term for number; this is a sequence number

assigned for each line starting from 1 up to the last entry line.




SO Quantity Short term for Sales Order, which refers to a company's internal document that is issued so as to record, identify and trace all orders placed by each of their customers. This field requires the total quantity ordered by the customer for each product within a specified period as added up from the Sales Order forms. Fill columns up to the current month only.

Plan Quantity The number of products that has to be manufactured within a specified period as projected by the department in-charge of production planning for the company. Fill up all months as required.

Simulated Template

Select KPI_002 as follow:

Simulation


2. ITEM b. Compare Actual Sales Order and Production Plan. If the difference is within a

given quantity tolerance, then SCORE is ‘1’, otherwise, ‘0’.

3. ITEM c. Add SUB-TOTAL row after each Product Group. Get the total number of Sales

Order quantity and Production Plan quantity per product group for each month. Sub-

total also applies to the SCORE column.

4. ITEM d. Add GRAND TOTAL row after the last product group’s SUB-TOTAL. Add the sub-

total values of Sales Order quantity and Production Plan quantity, as well as the

score to come up with the Grand Total.

NOTE: The sort-key mix may vary using the columns for Product Group, Product and

Customer in order to arrive at better, more significant data analyses. At any rate, the

rows and computations for SUB-TOTAL must still be added accordingly.

KPI Computation


1. Demand : Production Plan (D:PP) Ratio

This computation is used to compare the number of time production plan and actual SO matched within a given scrap quantity tolerance compared to the total number of sales order.

Formula:

Number of Matching Items (Quantity) Between SO and Production Plan ----------------------------------------------------------------------------------------------------------- X 100% Number of items of SO

Number of Matching Items (Quantity) Between SO and Production Plan - refers to the total number of comparisons that has a SCORE of ‘1’.

Number of items of SO – refers to the total number of comparisons.

Production Plan vs. Production Good Result (KPI_003)

This file template reveals comparison of the monthly production plan quantity against the monthly production (net of rejects) for the whole year. This requires whole year’s data. Ideally, data needed should be 6 months backwards and ahead.

Production Plan can be get from Inventory Budget Entry as data entry above;

For production good result, in BFO, we see “Inventory Ledger” as:

Select “Analyze” on Menu and select “Analysis By Document”

Filter Document Type as MFG Issue

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this reportNo. Integer Short term for number; this is a sequence number




Plan Quantity The number of finished products that have to be manufactured within a specified period as projected by the department in-charge of production planning for the company. Fill up all months as required.

Result Quantity Actual number of finished products manufactured within a specified period, excluding those with defects. Fill columns up to the current month only.


Simulation


2. ITEM b. Compute for the SCORE. Refer to the KPI computation for the formula.

3. ITEM c. Add SUB-TOTAL row after each Product Group. Get the total of Production Plan

quantity and Actual Production result per product group for each month. Sub-total also

applies to the SCORE column.

4. ITEM d. Add GRAND TOTAL row at the end of the transaction. Add the sub-total values of

Production Plan quantity and Actual Production result, as well as the SCORE to come up

with the Grand Total.

KPI Computation


1. Production Performance (Realization)

This computation is used to determine Good Output against Good and Rejected Input per product group/ product/ customer.

Formula:

Production Result---------------------------- x 100% Production Plan

Production Result- refers to the total number of items produced that meets the specified quality

Production Plan – refers to the total number of items planned to be manufactured for aspecific period.

NOTE: If score exceeds 100%, this is subject for investigation due to overproduction.

Sales Order vs. Shipment (KPI_004)

This file template reveals delivery performance per product group, product and customer. This file requires the whole year’s transaction records.



Filter Document Type as Shipment

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this reportMonth Enter the month range covered by this reportTolerance

Qty (%) Percentage An allowance for acceptable variations from specified measure. This standard is set by management and must be shown in percentage form.

Day(s) Integer An allowance for acceptable variations from specified measure. This standard is set by management and is a fixed value.


Product Group Text Major division or classification of products the company sells.

Product Text Goods produced and sold by the company.Customer Text Individual or group that buys the product directly from

the company with the purpose to either use/consume the product or re-sell/distribute to other parties.

Sales Order

SO# Alphanumeric A unique number that identifies each SO form. SO is the short term for Sales Order, which refers to a company's internal document that is issued so as to record, identify and trace all orders placed by each of their customers.

Order Date Date The date when the SO was created or when the order was placed by the customer.

Order Qty Quantity The number of items ordered by the customer for each product in the SO

Due Date Date The date indicated in the SO to refer to when the order is expected or was promised to be delivered to the customer

ShipmentDO# Alphanumeric A unique number that identifies each DO form. DO is

the short term for Delivery Order, also called Delivery Receipt (DR), which refers to a company's internal document that is issued so as to record, identify and trace all orders that had been served and delivered to each of their customers. In this report, this refers to the specific DO issued to serve the SO. There may be several DOs for one SO.

Shipment Date Date The date when the DO was created or when the order was delivered to the customer.

Shipment Qty Quantity The number of items delivered to the customer for each product in the DO


Simulation

1. ITEM a. Add a Delivery Performance SCORE column after the last column.

2. ITEM b. Compare Shipment Date and SO Due Date. If shipment date is within days

tolerance, give a Delivery Performance SCORE of ‘1’, otherwise, ‘0’.

3. ITEM c. Add a FILL RATE SCORE column.

4. ITEM d. Compare SO Qty with Shipment Qty. If shipment qty is within percentage

tolerance, SCORE is ‘1’, otherwise, ‘0’.

5. ITEM e. Add a CODI TOLERANCE SCORE column.

6. ITEM f. Compare Shipment Date with SO Due Date, and Shipment Quantity with Order

Quantity. If result of Shipment Date and SO Due Date is within day tolerance, and result

of Shipment Quantity and Order Quantity is within quantity tolerance, then, give a CODI

TOLERANCE SCORE of ‘1’, otherwise, ‘0’.

7. ITEM g. Add an ORDER FULFILLMENT LT DAYS column.

8. ITEM h. Compute for the ORDER FULFILLMENT LT DAYS by comparing Shipment Date and SO

Date. Refer to the KPI formula on how to come up with the Order Fulfillment Lead Time

Days value.

9. ITEM i. Add SUB-TOTAL row after each Product Group. Sub-total applies to SO Quantity,

Shipment Quantity, Delivery Performance Score, Fill Rate Score, CODI Tolerance Score

and Order Fulfillment LT Days.

10. ITEM j. Add GRAND TOTAL row at the end of the transaction. Add the sub-total values of

SO Quantity, Shipment Quantity, Delivery Performance Score, Fill Rate Score, CODI

Tolerance Score and Order Fulfillment Days to come up with the Grand Total values.

KPI Computation


1. Delivery Performance

This computation is used to compare Shipment Date and SO Due Date matched within a given day tolerance compared to the total number of sales order.

Formula:

Number of Items shipped on time---------------------------------------------------------------------- X 100%Number of item due (as of original promise date)

Number of Items shipped on time – refers to the total number of comparisons that has a SCORE of ‘1’.

Number of item due (as of original promise date) – refers to the total ordered quantity.

2. Fill Rate

This computation is used to compare the quantity shipped on time with the number of items due.

Formula:

Number of Items shipped on right quantity---------------------------------------------------------------------------------------------- X 100%

Number of items due

Number of Items shipped on right quantity – refers to the total number of comparisons that has a SCORE of ‘1’.

Number of items due - refers to the total ordered quantity.

3. CODI (Complete Order Delivery Index)

This computation is used to compare Shipment Date versus SO Due Date, and Shipment Quantity versus SO Quantity that match within a given day and quantity tolerance compared to the total number of sales order.

Formula:

Number of Items shipped on time (within quantity and time tolerance) --------------------------------------------------------------------------------------------------------- X 100% Number of items due (as of original promise date)

Number of Items shipped on time (within quantity and time tolerance)- refers to the number of transactions that meets the delivery and quantity requirement given the tolerance.

Number of items due (as of original promise date) - refers to the total ordered quantity.

4. Order Fulfillment LT

This is the number of days that the SO cycle is completed from the time the order was placed to the time the products were shipped to the customer.

Formula:

Shipment Date - Sales Order Date

Shipment Date – refers to the exact date when the transfer of items from the manufacturer to the customer takes place.

Sales Order Date – refers to the exact date when the order was created.

Delivery Order vs. Billing (KPI_005)

This file template requires listing of deliveries and corresponding billing information. This will reveal average billing days.

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this report

Month Text Enter the month range covered by this reportNo. Integer Short term for number; this is a sequence number


Product Group Text Major division or classification of products the company sells.

Product Text Goods produced and sold by the company.Customer Text Individual or group that buys the product directly from

the company with the purpose to either use/consume the product or re-sell/distribute to other parties.

ShipmentDO # Alphanumeric A unique number that identifies each DO form. DO is

the short term for Delivery Order, also called Delivery Receipt (DR), which refers to a company's internal document that is issued so as to record, identify and trace all orders that had been served and delivered to each of their customers.

Shipment Date Date The date when the DO was created or when the order was delivered to the customer.

Shipment Qty Quantity The number of items delivered to the customer for each product in the DO

BillingInvoice # Alphanumeric A unique number that identifies each Invoice form. An

Invoice refers to a company's internal document that is issued to the customer as billing advise/notice for the goods that had been delivered. In this report, this refers to the specific Invoice that was issued for the DO.

Invoice Date Date The date when the Invoice was created.Invoice Qty Quantity The number of goods the customer has received, for

which he is being billed for payment.

Simulation

1. ITEM a. Add BILLING DAYS column after the last column.

2. ITEM b. Compute for the BILLING DAYS by comparing Invoice Date and Shipment Date.

Refer to the KPI formula on how to come up with the Billing Days value.


KPI Computation


1. Billing Days

This computation is used to compare Invoice Date and Shipment Date

Formula:

Invoice Date - Shipment Date

Invoice Date – refers to the date when the billing invoice was created.

Shipment Date - refers to the date when the order was delivered to the customer.

Sales vs. Cost (KPI_1006)

This file template reveals comparison of sales price against cost of goods sold. Profit from operation per product group, per product, and per customer may be derived from this.

In BFO, sales price is defined in:

When posted to the system, we can see data on Inventory Ledger with Document Type is MFG Isssue (see above).

Standard Template

Field Description

Year Text Enter the prior and the current year, as 2 consecutive years will be covered by this report





Previous YearSales Price Amount The amount of money for which the quantity of

products were sold by the company and bought by the customers for the specified months of the previous year.

COGS Amount Short term for Cost of Goods Sold, this refers to the total expenses incurred by the company per product to produce the required quantity during the months specified for the previous year.

Current YearSales Price Amount The amount of money for which the quantity of

products were sold by the company and bought by the customers for the specified months of the current year.

COGS Amount Short term for Cost of Goods Sold, this refers to the total expenses incurred by the company per product to produce the required quantity during the months specified for the current year.

Simulation

1. ITEM a. Add a PFO column after COGS for every month and year.

2. ITEM b. Compute for PFO. Refer to the KPI formula on how to come up with the Profit

from Operation value.


KPI Computation


1. PFO (Profit From Operation)

This computation is used to compare Sales Price and Cost of Good Sold.

Formula:

Sales Price - Cost of Good Sold

Sales Price – refers to the amount of money for which the quantity of products were sold by the company and bought by the customers for the specified months of the current year.

Cost of Good Sold – refers to the total expenses incurred by the company per product to produce the required quantity during the months specified for the current year.

Inventory vs. Sales vs. COGS (KPI_1007)

This file template requires 3 types of information: inventory, sales and cost of goods sold. Data, which is in monetary value, may be collected from the Finance group. Note that scrap must not be included in the table.

In BFO, we can get Inventory data from Inventory Ledger with document Type and link to the production order (with Routing and BOM) as document Type:MFG Issue: Finished goodsTransfer out, Transfer In: Item in transit MFG Consumption: Raw material -> we can link to Item category, Group… in order to classify as main raw material, sub material…

Standard Template

Field Description

Year Format: YYYY Enter the year covered by this reportInventory

Finished Goods Amount The total value of completed products that are ready for sale to clients but are still in stock for each month

Goods in Process

Amount The total value of the products that have undergone partial processing but are not yet fully completed by production for each month

Raw Material Amount The total value of unprocessed items that are kept in stock which are on stand-by for conversion to finished product for each month

Sub Material Amount The total value for each month of items in stock that have undergone partial processing either within the company or from a vendor, and which can be used for conversion to finished product or sold to customers who will use them for further conversion processes.

Goods in Transit

Amount The total value of goods or products that the company is accountable for but are not physically within its premises because they are being transported either into the company or out to customers, warehouses or branches during the end of each month

Others Amount The total value of items that are kept on stock which do not fall in any of the categories given above, but still impacts cost for producing the company’s products

Total Inventory Amount The sum of all Inventory categories given above by month

Total Sales Amount Total Net Sales by month.Total COGS Amount Short term for Cost of Goods Sold, this refers to the

total expenses incurred by the company by month to produce the products

Simulation

1. ITEM a. Add a TOTAL ITR column after the last column and fill-up. Refer to the KPI formula

on how to come up with the Total Inventory Turnover Ratio.

2. ITEM b. Add an IV COMPOSITION column and fill-up. Refer to the KPI formula on how to

come up with the Inventory Composition value.

3. ITEM c. Add a DAYS INVENTORY column and fill-up. Refer to the KPI formula on how to

come up with the Days Inventory value.


KPI Computation


1. Inventory Composition

Formula:

(FG or GIP or RM or SM or GIT or Others) --------------------------------------------------------- X 100

Total Outstanding Inventory

Best presented as a pie chart, which contains portions of Finished Goods, Goods in Process, Raw Materials, Sub Material, Good in Transit, and Others.

2. ITR (Inventory Turnover Rate)

This formula is used to calculate the rate of inventory turnover in terms of number of times in a year.

Formula:

Annual Cost of Good Sold --------------------------------------------------------- X 12

Outstanding Inventory

Annual Cost of Good Sold – refers to the total expenses incurred by the company to produce the products for the year covered.

Outstanding Inventory – refers to the raw material, work in process, and finished goods.

3. Days Inventory

This computation is used to compare Annual Cost of Goods Sold over accumulated total number of current inventory for 365 days.

Formula:

365-----------------------------------------

Inventory Turnover Rate (ITR)

NOTE: Business trend may be presented as a line graph, which plots Total Inventory,Total Sales, and Total COGS per month.t of Good Sold – refers to the total expenses incurred by the company to produce the produor the year covered.ntory Outstanding – refers to the raw material, work in process, and finished goods.

Inventory Adjustment (KPI_10071)

Inventory Adjustment requires latest stock taking records of non-finished goods such as raw materials, sub materials and goods in process. Tolerances may be in percentage or in quantity or both. If due to unavailability of the adjustment value, this column may be left blank. Business’ inventory accuracy may be derived from this data.

In BFO, we can get Inventory data from Inventory Ledger with document Type “Negative/Positive Adjustment”:

Standard Template

Field Description

As of date Date The date as of the latest stocktaking from which this inventory report will be derived.

Tolerance Percentage or Integer

An allowance for acceptable variations from specified measure. This standard is set by management and must be shown in percentage form or fixed value.


Item Type Text Classification of materials, supplies or goods other than Finished Goods

Item Text Name or term used to identify the stockSub Group Text Further classification, if any, for easier identification

of inventory itemsQty Quantity Short term for quantity, this is the on-hand balance of

items in the perpetual inventory records before the stocktaking.

Adjustment Qty Quantity The number of items that were added or subtracted to the balances in the perpetual inventory records to match the physical count of items

Adjustment Value Amount Amount equivalent of the adjusted quantity

Simulation

1. ITEM a. Add a SCORE column after the last column.

2. ITEM b. Compare Qty and Adjustment Qty, if result is within a given tolerance, give a

score of ‘1’, otherwise, ‘0’.

3. ITEM c. Add a SUB-TOTAL row after each Item Type. Get the Total Inventory, Adjustment

Quantity, Adjustment Value and Score per item type in this column.

4. ITEM d. Add a GRAND TOTAL row after the last item type’s SUB-TOTAL. Add the sub-total

values of the Total Inventory, Adjustment Quantity, Adjustment Value and Score in this

column.


KPI Computation


1. Inventory Accuracy

This computation is used to determine how many item records have been correctly recorded for the period.

Formula:

Number of Correct Items ------------------------------------------------------- X 100%

Number of Items

Number of Correct Items – refers to how many items during the inventory stocktaking had matching balances in the perpetual record given the tolerance

Number of Items – refers to the total number of items or comparisons.

Finished Goods Movement (KPI_1008)

Finished Goods Movement plots down inventory balances of finished goods. The file also identifies location status of the finished goods. It requires the latest month’s stock taking result.

In BFO, we can get Inventory data from Inventory Ledger with full document Type:Requisition from VendorShipment to CustomerPositive/negative adjustmentTransfer in/outMFG issueMFG consumptionItem KitReturned Shipment to VendorReceipt from CustomerShipment for outsourcingReceipt from OutsourcingInternal Shipment/internal Receipt to subsidiariesUitility

Standard Template

Field Description

Year/Month Text The year and month covered by this report. Select a

recent month that has normal conditions only.Tolerance Percentage or

IntegerAn allowance for acceptable variations from specified measure. This standard is set by management and must be shown in percentage form or fixed value.




Beg Bal Quantity Short term for Beginning Balance, this is the on-hand quantity of each product at the beginning of the month.

Production ResultGood Quantity The number of finished goods produced without

defects within the monthReject Quantity The number of products with defects

ReworkIn Quantity The number of defective items brought in for repair or

re-work processesOut Quantity Quantity of items that were found to be defective but

had been successfully repaired and added to the total finished goods within the month

Customer ReturnIn Quantity The number of items returned by the customer within

the month due to defects or mismatches against their order specifications

Out Quantity The number of items that were sent out to the customer to replace those that they returned

Shipment Quantity The number of items actually sold and delivered to the customers within the month

Adjustment+ Quantity The number of items that were added to the balances

in the perpetual inventory records to match the physical count of items

- Quantity The number of items that were subtracted to the balances in the perpetual inventory records to match the physical count of items

OthersIn Quantity The number of items that had been brought into the

company to add up to the inventory for reasons other than those given above

Out Quantity The number of items that had been sent out of the company to decrease the inventory for reasons other than those given above

End Bal Quantity Short term for Ending Balance, this is the resulting on-hand quantity of each product at the end of the month.

Simulation

1. ITEM a. Add a SCORE column after the ADJUSTMENT column.

2. ITEM b. Compare ADJUSTMENT column with the TOLERANCE value. If Adjustment value is

within the given tolerance, then score is '1', otherwise, '0'.

3. ITEM c. Add the score at the end to come up with the SUB-TOTAL values. SUB-TOTAL also

applies to the Beginning Balances, Production Result – both Good and Reject, Rework –

both In and Out, Customer Returns – In and Out, Shipment Quantity and Ending

Balances.


KPI Computation

1. Inventory Accuracy

This computation is used to get the inventory accuracy by comparing the adjustment quantities with the given tolerance.

This computation is used to determine how many item records have been correctly updated for the period based on the adjustment quantities.

Formula:

Number of Correct Items--------------------------------------------------------------------------------------- X 100%

Number of Items

Number of Correct Items – refers to how many items during the inventory stocktaking had matching balances in the perpetual record given the tolerance.

Number of Items – refers to the total number of products listed.

2. Productivity/Yield Rate

This computation is used to get the percentage of products without defects compared to the total number products produced.

Formula:

Good Inventory -------------------------------------------------------- X 100%

Good Inventory + Reject Inventory

Good Inventory - refers to the number of products that are in good condition.

Reject Inventory - refers to the number of products with defects.

3. Return Ratio

This computation is used to get the percentage of customer returns compared to the total number of Sales Order documents given in the Sales Order documents vs Shipment template.

Formula:

Number of Customer Returns -------------------------------------------------------- X 100%

Number of Sales Order Line

Number of Customer Returns – refers to the total number of products returned by the customer due to defects or mismatches against their order specification.

Number of Sales Order Line – refers to the number of Sales Order documents issued during the year.

Finished Goods Composition (KPI_1009)

Finished Goods Composition aims to reflect the stock consumption based on forecasts. It requires the latest month’s stock taking result. In cases when forecasts are made on a weekly basis, the N+1 shall be treated as W+1. In such case, the performance indicator Forward Consumption will be on a weekly basis instead of monthly.

In BFO, we link the two data as follow:1. The forecasting data:

2. Inventory Ledger data

Standard Template

Field Description

Year/Month Text The year and month covered by this report. Select a recent month that has normal conditions only.




Stock on Hand (N) Quantity The number of finished goods in stock. N represents the selected month

ForecastN + 1 Quantity Projected stock of finished goods available for the

following month, N + 1N + 2 Quantity Projected stock of finished goods available two

months after, N + 2N + 3 Quantity Projected stock of finished goods available three

months after, N + 3

Simulation

1. ITEM a. Add an MFC by PRODUCT column after the last column.

2. ITEM b. Compute for the Weighted MFC. Subtract the forecasted quantity for the first

month (N+1) from stock on hand (N). If the result is sufficient enough to cover the second

month’s forecasted quantity, subtract the forecasted quantity for the second month (N+2)

from the result. Then, divide 2nd months result by third month’s forecasted quantity. If, for

instance, a negative result arises during the computation on first or second month, divide

the result of first month or second month by the third month’s forecasted quantity.


KPI Computation


1. Weighted MFC (Monthly Forward Consumption)

Compute how many months will the stock on hand last, assuming that the monthly forecast quantity are actual orders.

Example:

a. Aug Sep Oct NovN N+1 N+2 N+3On hand F/C F/C F/C

1000 700 400 200

WMFC (1st month) = 1000 – 700 = 300 ~ 1 month

WMFC (2nd month) = 300/400 = 0.75 ~ 0.75 month

WMFC = 1 + 0.75 ~ 1.75 months

b. Aug Sep Oct NovN N+1 N+2 N+3On hand F/C F/C F/C

1000 400 500 400

WMFC (1st month) = 1000 – 400 = 600 ~ 1 month

WMFC (2nd month) = 600 – 500 = 100 ~ 1 month

WMFC (3rd month) = 100/400 = 0.25 ~ 0.25 month

WMFC = 1 + 1 + 0.25 ~ 2.25 months

2. MFC (Monthly Forward Consumption)

This can be used instead of the weighted MFC, in cases when the available data is for one month forecast only.

Formula:

Finished Goods Stock On Hand Quantity (month N)--------------------------------------------------------------------------------------- X Month

Forecast Quantity (month N+1)

Finished Goods Stock On Hand Quantity – refers to the number of finished goods in stock. N represents the selected month.

Forecast Quantity (month N+1) – refers to the projected stock of finished goods available for the following month.

Days Receivable (KPI_1010)

Days Receivable template lists customers’ year to date total sales and outstanding receivable as of the last month end.

In BFO, we get data from master data customer in order to know Sales Group (Customer Template), Credit terms and link to the Customer Ledger to know Oustanding Receivables and also Year-to-date Sales Amount.

Standard Template

Field Description

As of date Date The cut-off date, preferably of the most recent month-end data available



Sales Group Text Group of people in charge of sales to whom the customer is assigned. This can also be the classification of sales transaction.

Credit Term Text Agreement regarding payment of customer to the company for the products they bought, including the mode of payment and the number of days the payments will be due

YTD Sales Amount

Amount The total amount of sales per customer from the start of the year up to the present

Outstanding Receivable

Amount The total unpaid amount still due from the customer as of the cut-off date

Simulation

1. ITEM a. Add a GRAND TOTAL row at the last row of the transaction list.2. ITEM b. Get the total value of YTD Sales Amount as of the date specified3. ITEM c. Get the total value of Outstanding Receivable as of the date specified.


KPI Computation


1. Days Receivable

This computation is used to compare One Year Sales Amount against Outstanding Receivable

Formula:

Outstanding Receivable--------------------------------------- X No. of days Year-to-date Sales Amount

Outstanding Receivable – refers to the total unpaid amount still due from the customers as of the cut-off date

Year-to-date Sales Amount – refers to the total amount of sales for all customers from the start of the year up to the present.

No. of days – refers to the number of days from the start of the year up to the report cutoff.

2. Cash-to-Cash Cycle Time

This computation is used to determine the number of days to convert receivables to cash.

Formula:

Days Inventory + Days Receivable - Days Payable

Days Inventory – refers to the number of days of finished goods stored in a location. Its computation can be derived from the Inventory vs Sales vs COGS template.

Days Receivable – refers to the number of days before a company converts it’s receivable to cash. Its computation can be derived from the Days Receivable template.

Days Payable - refers to the number of days before a company pay it’s debt to the vendor. Its computation can be derived from the Days Payable template.

3. Working Capital

This computation is used to determine the amount invested in a business.

Formula:

Inventory Amount + Receivable Amount – Payable Amount

Inventory Amount – refers to the amount of items stocked in a location. Its computation can be derived from the Inventory vs Sales vs COGS template.

Receivable Amount – refers to the unpaid amount of sales from the start of the year up to the present. Its computation can be derived from the Days Receivable template.

Payable Amount – refers to the amounts still due to the supplier as of the cutoff date. Its computation can be derived from the Days Payable template.

Days Payable (KPI_1011)

Days Payable template lists year to date total purchases for each supplier and the corresponding unpaid amount as of the last month end.

In BFO, we get data from master data Vendor in order to know Purchase Group (Vendor Template), Credit terms and link to the Vendor Ledger to know Oustanding Payables and also Year-to-date Purchase Amount.

Standard Template

Field Description

As of date Date The cut-off date, preferably of the most recent month-end data available


Supplier Text The person or company from whom the company purchases all its requirements to produce their goods

Purchase Group Text Classification of items purchased from suppliersCredit Term Text Agreement regarding the company’s payments to its

suppliers, including the mode of payment and the number of days the payments will be due

YTD Purchase Amount

Amount Total amount the company has purchased from start of the year up to the present

Outstanding Payable

Amount The total unpaid amount still due to the supplier as of the cut-off date

Simulation

1. ITEM a. Add a GRAND TOTAL row at the last row of the transaction list2. ITEM b. Get the total value of YTD Purchase Amount as of the date specified3. ITEM c. Get the total value of Outstanding Payable as of the date specified.


KPI Computation


1. Days Payable

This computation is used to compare One Year Purchase Amount against Outstanding Payable.

Formula:

Outstanding Payable--------------------------------------------- X No. of days Year-to-date Purchase Amount

Outstanding Payable – refers to the amount still due to the supplier as of the cut-off date.

Year-to-date Purchase Amount – refers to the total amount the company has purchased from the start of the year up to the present.

No. of days – refers to the number of days from the start of the year up to the report cutoff.

2. Cash-to-Cash Cycle Time

This computation is used to determine the number of days to convert receivables to cash.

Formula:

Days Inventory + Days Receivable - Days Payable

Days Inventory – refers to the number of days of finished goods stored in a location. Its computation can be derived from the Inventory vs Sales vs COGS template.

Days Receivable – refers to the number of days before a company converts it’s receivable to cash. Its computation can be derived from the Days Receivable template.

Days Payable - refers to the number of days before a company pay it’s debt to the vendor. Its computation can be derived from the Days Payable template.

3. Working Capital

This computation is used to determine the amount invested in a business.

Formula:

Inventory Amount + Receivable Amount – Payable Amount

Inventory Amount – refers to the amount of items stocked in a location. Its computation can be derived from the Inventory vs Sales vs COGS template.

Receivable Amount – refers to the unpaid amount of sales from the start of the year up to the present. Its computation can be derived from the Days Receivable template.

Payable Amount – refers to the amounts still due to the supplier as of the cutoff date. Its computation can be derived from the Days Payable template.

Production Line Result (KPI_1012)

The file template requires the production records and aims to measure the productivity of a particular line or machine. The data needed covers one month only. This month chosen for analysis should be a normal or regular production month, without much down time.

In BFO, we get data from Work Center and Production Order Finished in order to know detail about Production Line (Work Center Code)

To get produced item (finished goods), the Finished Production Order below:

Standard Template

Field Description

Year/Month The year and month covered by this report. Select a recent month that has normal conditions only.

Production Line Text The manufacturing technique that involves a series of consecutive processes, each of which performs a portion of the work required for the manufacture or assembly of a product or part of a product.

Date Date The date when the production job was doneShift The work shift when the production job was done.

There may be several shifts for each date.Product Text Goods produced and sold by the company. In this

report, refers to the specific product that was processed for the production job. There may be several types of products processed using the same Production Line during one shift.

Setup Time Minutes How long it took Production to prepare the Production Line before the actual process was started. Add up the setup time if there were several jobs for the same product during one shift.

Running Time Minutes How long it took Production to produce the output. Add up the running time if there were several jobs for the same product during one shift.

Qty (good) Quantity The total number of products without defects that had been produced in the production line for one shift.

Simulation

1. ITEM a. Add a SUB-TOTAL row after each Production Line.

2. ITEM b. Get the total Setup Time, Running Time and Good Quantities per Production Line

3. ITEM c. Add a GRAND TOTAL row at the end of the transaction list

4. ITEM d. Add all the sub-total values of Setup Time, Running Time and Good Quantities to

come up with the Grand Total.


KPI Computation


1. Production Line Utility

This computation is used to determine the utilization of production lines.

Formula:

Line Usage Time(setup + run time)

----------------------------------------------------- X 100%Total Time

Line Usage Time – refers to the total setup and run time of the production line.

Total Time – refers to the total available working time

Production Process Defect (KPI_1013)

Production Process Defect lists the number of defects per process. The template aims to study the defect ratio of production lines in terms of processes. The file template covers daily defect records over a regular production month.

In BFO, we get data from Production Order Finished in order to know detail about Production Line (Work Center Code). Scrap % and Scrap Quantity is recorded for defect quantity Item

Standard Template

Field Description

Year/Month Text The year and month covered by this report. Select a

recent month that has normal conditions only.Production Line Text The manufacturing technique that involves a series of

consecutive processes, each of which performs a portion of the work required for the manufacture or assembly of a product or part of a product.

Product Text Goods produced and sold by the company. In this report, refers to the specific product that was processed for the production job. There may be several types of products processed using the same Production Line during one shift.

Date Date The date when the production job was done

Shift The work shift when the production job was done. There may be several shifts for each date.

Expected Qty Quantity The projected number of items that can be produced per production job. Add up the quantities if there were several jobs for the same product during one shift.

DefectProcess 1 Quantity The number of products that were defective or

damaged during the first processProcess 2 Quantity The number of products that were defective or

damaged during the second processProcess N Quantity Number of products that were damaged during the

succeeding processes. N refers to other processes included in the production line, and thus means that additional columns must be added depending on the number of processes the Production Line has. Enter into each column the corresponding number of defective or damaged items found.

Total Quantity The sum of the quantity of defective products as indicated in the previous columns.

Output Qty Quantity The total number of products without defects that had been produced in the production line for one shift.

Simulation

1. ITEM a. Add a TOTAL row at the end of the transaction.2. ITEM b. Add the Expected Quantity, Number of Defects for all processes and number of

good items produced to come up with the TOTAL value.Select KPI_013 as follow:

KPI Computation


1. Process Defect Ratio

This computation is used to determine the number of defective items produced as against the combined total of good and rejected input.

Formula:

Process Defect Quantity--------------------------------------------------- X 100%

Total Input (good + reject)

Process Defect Quantity - refers to the number of items that are not in good condition after processing.

Total Input (good + reject) – refers to the number of items produced per production job. Add up the quantities if there were several jobs for the same product during one shift.

Demand vs. Supply (KPI_1014)

Demand vs. Supply template lists all products with the corresponding inventory count, production plan, and actual orders. It covers one regular month’s transactions. This aims to analyze the stock ratio of the business’ products.

In BFO, Demand (sales planning/forecasting and Suppy from Production (internal SCM) is recorded in sales planning/forecasting data above and production Supply is collected from Inventory Ledger with Document Type as MFG issue.

Filter Document Type as MFG Issue

Standard Template

Field Description

Year/Month Text The year and month covered by this report. Select a recent month that has normal conditions only.



Stock Ratio Decimal or Percentage

The level of stock per product that the company has set to be maintained. Inventory lower than this level prompts the company to produce more of the product.

Stock on Hand Quantity The number of finished goods in stock.

Demand Quantity Total orders of customers for the product.

PlanQty Quantity The number of products that has to be manufactured

within the month for each Production Line as projected by the department in-charge of production planning for the company.

Production Line Text The manufacturing technique that involves a series of consecutive processes, each of which performs a portion of the work required for the manufacture or assembly of a product or part of a product.

ActualQty Quantity Actual number of items produced within the month for

each Production Line.Production Line Text The manufacturing technique that involves a series of

consecutive processes, each of which performs a portion of the work required for the manufacture or assembly of a product or part of a product.

Simulation

1. ITEM a. Add MSR (Monthly Stock Ratio) column after Actual Production Line column.2. ITEM b. Input the MSR value. Refer to the KPI formula on how to come up with the Month

Stock Ratio value.


KPI Computation

1. Monthly Stock Ratio

Formula:

Stock OH - Demand + Production Result Quantity ---------------------------------------------------------------------------------- X Stock Ratio

Stock OH - Demand + Production Plan Quantity

Stock OH – refers to the quantity of finished goods in stock.

Demand – refers to the total orders of customers for the product.

Production Result Quantity – refers to the actual number of items produced within the month for each Product Line.

Production Plan Quantity – refers to the quantity of products that has to be manufactured within the month for each Production Line as projected by the department in-charge of production planning for the company.

Stock Ratio – refers to the level of stock per product that the company has set to be maintained. Inventory lower than this level prompts the company to produce more of the product.

Appendix: Key Performance Indicators

No. KPI NameFormular Code

1 Billing Days Invoice Date – Shipment DateKPI-0

2 Cash-to-Cash Cycle Time Days Inventory + Days Receivable – Days PayableKPI-0

3CODI (Complete Order Delivery Index)

No. of items shipped on time(within quantity & time tolerance)--------------------------------------------- x 100% No. of items due

KPI-0

4 Days Inventory 365------------------------------------------ Inventory Turnover Rate (ITR)

KPI-0

5 Days Payable

Outstanding Payable ------------------------------------------- x 365 Year-to-date Purchase Amount

KPI-011

6 Days Receivable Outstanding Receivable -------------------------------------- x 365Year-to-date Sales Amount

KPI-010

7 Delivery PerformanceNo. of items shipped on time-------------------------------------- x 100% No. of items due

KPI-0

8Demand Forecast Accuracy

No. of Correct Forecast items (within tolerance)--------------------------------------- x 100% No. of Forecast items

KPI-0

9Demand Forecast Realization

Total Actual Order Quantity-------------------------------------- x 100% Total Forecast Quantity

KPI-001

10D:PP (Demand:Production Plan) Ratio

No. of matched items(SO & Production Plan)-------------------------------- x 100% No. of checked items

KPI-002

11 Fill Rate

No. of items shipped on right quantity-------------------------------------------------- x 100% No. of items due

KPI-0

12 Inventory AccuracyNo. of Correct items(within tolerance)----------------------------- x 100%No. of items checked

KPI-0

13 Inventory Composition

Inventory by Type (FG or GIP or RM or SM or GIT or Others)--------------------------------------------------------- x 100% Total Outstanding Inventory

KPI-009

14ITR (Inventory Turnover Rate)

Annual Cost of Goods Sold------------------------------------- x 12 months Outstanding Inventory

KPI-0

15MFC (Monthly Forward Consumption)

FG Stock On Hand as of month N---------------------------------------------- x monthForecast Quantity for month N+1

KPI-0

16 Monthly Stock RatioStock OH - Demand + Production Result------------------------------------------------------- x Stock RatioStock OH - Demand + Production Plan

KPI-0

17 Order Fulfillment LT Shipment Date – Sales Order DateKPI-0

18PFO (Profit from Operation)

Sales Price – Cost of Goods SoldKPI-0

19 Process Defect Ratio Process Defect Quantity------------------------------------- x 100%Total Input (Good + Reject)

KPI-013

20 Production Line Utility

Line Usage Time(setup + run)------------------------ x 100%Total Time

KPI-0

21Production Performance(Realization)

Production Result------------------------ x 100% Production Plan

KPI-0

22 Productivity /Yield Rate Good Inventory------------------------ x 100% Good + Reject

KPI-0

23 Return RatioNo. of Customer Returns--------------------------------- x 100%No. of SO lines

KPI-0

24 Working Capital Inventory + Receivable – PayableKPI-0

kpi handbook implementation on bizforce one

Technology

monthly forward

undergone

primary sort

integer short

original promise

significant

total expenses

called delivery