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Description
Gross revenue - earned is income received for goods and services during a specific period, not considering the amounts of discounts and returned merchandise (in contrary to Net Revenue, which considers these factors). Earned means that the revenues are realized and hence relevant for the income statement.
Interpretation
Gross Revenue earned is the "top line" figure of the income statement from which costs are subtracted to determine net income. It is often simplified to "List Price x Quantity" (the price of a good times the number of goods sold) though it is rarely this simple in actuality. Gross revenue is used to measure company's growth performance. If a company displays solid gross revenue growth, analysts could view the period's performance as positive even if net revenue growth or net income growth is stagnant. Conversely, high income growth would be tainted if a company failed to produce significant gross revenue growth.
Calculation Formula
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Description
Gross Revenue - Invoiced is the monetary amount of invoiced revenues during a specific period, not considering the amounts of discounts and returned merchandise. Invoiced means that the amount is posted as receivable, whereas earned revenues may not have been realized yet. For companies that do not use revenue recognition method the invoiced and the earned revenues are the same.
Interpretation
Gross Revenue is often simplified to "List Price x Quantity" (the price of a good times the number of goods sold) though it is rarely this simple in actuality. Gross revenue is used to measure company's growth performance. If a company displays solid gross revenue growth, analysts could view the period's performance as positive even if net revenue growth or net income growth is stagnant. Conversely, high income growth would be tainted if a company failed to produce significant gross revenue growth.
Calculation Formula
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Net Income
Net Income
Name Net Income
Description
Net income is a company's total earnings (or profit). Net income is calculated by subtracting costs, expenses and taxes from the total revenue.
Interpretation
Net income is sometimes called the bottom line because it is typically found on the last line of a company's income statement. It is a useful snapshot of how profitable the company is over a period of time. If a company's total expenses exceed its total revenues for a certain period, it can be said to have a net loss. If revenues and expenses should turn out to be equal, the company will have broken even. The change in net income reflects the trend of company's performance. In
general, when a company's net income is negative or is fairly low, this could suggest a myriad of problems, ranging from inadequacies in customer or expenses management to unfavorable accounting methods. Net income varies greatly from company to company and from industry to industry. Generally, comparisons are most meaningful among companies within the same industry. In addition to providing information on its own, net income is also frequently used to calculate other figures in financial ratios in order to provide further information about a company's overall health, for example, earnings per share, return on stockholder's equity. Note: As net income can be changed considerably by various items such as changes in accounting principles, special items and sales of discontinues operations, Earnings before interest and tax is more accuracy indicator when analyzing business operating performance.
Calculation Formula
Unit of Measure
Currency
Direction of improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Description
Net Incoming Orders is the monetary amount of incoming sales and service orders during a specific period, considering discounts and returned merchandise. It can be used for revenue estimates and forecasting purposes.
Interpretation
Net Incoming Orders is one of key indicators to monitor the sales activities occurring within organization. As discounts and returned are included in net incoming orders, it is more precise than gross incoming order in monitoring sales amount and comparing with net revenue invoiced later. By analyzing the trend of net incoming orders, sales organization can optimize the sales management resource, sales strategy, promotion campaign to achieve superior performance. Stable growth of net incoming orders indicates that company has good sales perspective. It shows that the product is gaining market share. If the net incoming order is steady over a period of time,
this generally means that the product has reached its maturity stage and demand is level.
Calculation Formula
Net Incoming Orders = (Gross Incoming Orders) - (Sales Deductions) + (Merchandise Returned from Credit) + (Allowances for Damaged or Missing Goods) + (Freight Out) + (Cash Discounts)
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Description
Net Operating Profit After Tax. An estimate of what a company would earn if it didn't have any debt, equal to operating income times (1 minus the tax rate). For companies which use leverage, NOPAT is an alternative measure for measuring operating efficiency. NOPAT is frequently used for calculating Economic Value Added (EVA). Net operating profit after tax (NOPAT) measures the operating profit made for all investors, both shareholders and debt holders. In contrast to EBIT, NOPAT does not take into account the tax savings which a company generates as a result of high debt.
Interpretation
NOPAT is a more accurate look at operating efficiency for leveraged companies. It does not include the tax savings many companies get because they have existing debt. It shows which profit the company would achieve in the event of pure equity financing. The justification for this is that a company creates wealth for shareholders by providing returns that are greater than the cost of capital. Therefore the management should focus on the actual returns to investors. This is the sum of the returns to shareholders and debt holders; the profit generated for shareholders plus the interest paid on debt. This is the same as the operating profit less tax. Hence the term NOPAT. A serious weakness of NOPAT is that it is distorted by the different tax treatment of debt and equity. The returns to debt and equity holders are calculated after tax, but the level of debt affects the level of tax and this is not corrected.
Calculation Formula
Net Operating Profit after Tax = (Operating Profit - Earned) * (1 - (Tax Rate))
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
This ratio compares Net Income with Net Revenue. It comes as close as possible to summing-up in a single figure how efficiently managers run the business. Also known as Contribution Margin 3.
Interpretation
Measured as Net profit divided by net revenues, often expressed as a percentage. This number is an indication of how effective a company is at cost control. The higher the net profit margin is, the more effective the company is at converting revenue into actual profit. A low-cost company in an industry would generally have a higher net profit margin. Since companies tend to sell the same product at roughly the same price (adjusted for quality differences), lower costs would be reflected in a higher net profit margin. Lower cost companies also have a strategic advantage in a competitive price war, because they have the ability to undercut their competitors by cutting prices in order to gain market share and potentially drive higher cost firms out of business. Companies clearly exist to expand their profits. But while increasing the absolute amount of dollar profit is desirable, it has minimal significance unless it is related to its source. This is why companies use measures such as net profit margin. The net profit margin is a good way of comparing companies in the same industry, since such companies are generally subject to similar business conditions. However, the net profit margins are also a good way to to compare companies in different industries in order to gauge which industries are relatively more profitable.
Calculation Formula
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
Net Revenue - earned is a monetary amount of financial revenues during a specific period, considering the amounts of discounts and returned merchandise (in contrary to Gross Revenue, which does not consider these factors). Earned means that the revenues are realized and hence relevant for the income statement.
Interpretation
Net Revenue is a crucial part of any financial analysis. It represents the total finance revenue the company collected for any goods provided and/or services performed after deducting sales return and sales discount. Stable growth of net revenue indicates that company is in goods financial standing. It shows that the product is gaining market share. If the company reports steady net revenue over a period of time, this generally means that the product has reached its maturity stage and demand is level.
Calculation Formula
Net Revenue-Earned = (Gross Revenue - Earned) - ((Sales Deductions) + (Merchandise Returned from Credit) + (Allowances for Damaged or Missing Goods) + (Freight Out) + (Cash Discounts))
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Description
The monetary amount of invoiced revenues during a specific period, considering the amounts of discounts and returned merchandise. Invoiced means that the amount is posted as receivable, whereas earned revenues may not have been realized yet. For companies that do not use revenue recognition method the invoiced and the earned revenues are the same.
Interpretation
Net Revenue is a crucial part of any financial analysis. It represents the total finance revenue the company collected for any goods provided and/or services performed after deducting sales return and sales discount. Stable growth of net revenue indicates that company is in goods financial standing. It shows that the product is gaining market share. If the company reports steady net revenue over a period of time, this generally means that the product has reached its maturity stage and demand is level.
Calculation Formula
Net Revenue-Invoiced = (Gross Revenue - Invoiced) - ((Sales Deductions) + ( Merchandise Returned from Credit) + (Allowances for Damaged or Missing Goods) + (Freight Out) + (Cash Discounts))
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
Net Revenue per Full Time Equivalent is calculated as a company's total net revenue --earned divided by the number of its full time equivalent. It shows how much revenue each regular employee generates. This ratio provides information on a company's efficiency within the peer group.
Interpretation
FTE or Full Time Equivalent is a unit of measure of an employee's or group's productivity. An FTE of 1.0 means that the person, or group of people, is equivalent to a full-time worker. A person who works half-time is counted as 0.5 FTE. FTE does not include contractual, temporary, or permanent seasonal positions. An example of group with a full-time billing manager and a clerk who assists him/her for about 10 hours/week has 1.25 FTE employees. (1 full-time + (40 hours/10 hours)) = 1.25 Net Revenue per Full Time Equivalent is basic measure of productivity. It is useful in determining whether a corporation is being run efficiently. This ratio is very industry dependent. Labor intensive businesses generally have low net revenue per FTE. When compared to the other companies within same industry, it instantly gives a relative comparison of operational efficiency. The higher the net revenue per FTE, the more efficient the operation, and therefore the more sustainable and profitable. Another way to look at this is to look at the trend of specific companies. If the revenue per FTE is stable over several years, it can be an indication that the business model is still working well. Annual increase in revenue per FTE reveals the extent of productivity growth. If the revenue per FTE is going down over time, it is an indication that the business is becoming less efficient.
Calculation Formula
Net Revenue per Full Time Equivalent = (Net Revenue - Earned) / (Full Time Equivalent)
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Description
Operating Profit - Earned resulting from substracting operating expenses from Gross ProfitEarned. It equals to the total operating result before interest, taxes and the financial result in the Income Statement. * * * * Operating Profit excludes income and expenditure from unusual, nonrecurring or discontinued activities. In the US the ratio is also known as EBIT. Note: Operating Profit is retrieved from the contribution margin analysis, while EBIT is from another data source, income statement! Therefore this KPI is listed individually. > See "EBIT"
Interpretation
Operating Profit is one of the most significant indicators of the company's profitability. It represents the profit of a company before interest expenses and income taxes. Operating Profit is more focus on the operating business itself, as it excludes income and expenditure from unusual activities, and also interest income and expense, as well as taxes related to profitability are mostly the result of factors. The figures are often used to gauge the financial performance of companies with high levels of debt and interest expenses. From absolute number perspective, it shows how much profit the company generates in order to be able to pay interest, taxes and dividends. The larger the Operating Profit value, the more profitable the company is likely to be. The growth rate of Operating Profit can be used to evaluate the company's growth. Sequential Operating Profit increase is mostly due to higher sales and better operational performance. Operating Profit decline could be mainly due to reduced revenue or increased manufacturing cost and operation costs. Based on Operating Profit, Operating Profit Margin which is the ratio of Operating Profit to sales can be calculated and used to compare Operating Profit profitability in different time periods for a same company, or compare in different companies. Also See EBIT.
Calculation Formula
Operating Profit-Earned = Total Value Resulting from Substracting Operating Expenses from Gross Profit - Earned
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
Operating Profit - Invoiced resulting from substracting operating expenses from Gross ProfitInvoiced. * * Operating Profit excludes income and expenditure from unusual, non-recurring or discontinued activities. In the US the ratio is also known as EBIT. Note: Operating Profit is retrieved from the contribution margin analysis, while EBIT is from another data source, income statement! Therefore this KPI is listed individually. > See "EBIT" Invoiced means that Operating Profit is only relevant to goods and services invoiced.
Interpretation
Operating Profit is one of the most significant indicators of the company's profitability. It represents the profit of a company before interest expenses and income taxes. Operating Profit is more focus on the operating business itself, as it excludes income and expenditure from unusual activities, and also interest income and expense, as well as taxes related to profitability are mostly the result of factors. The figures are often used to gauge the financial performance of companies with high levels of debt and interest expenses. From absolute number perspective, it shows how much profit the company generates in order to be able to pay interest, taxes and dividends. The larger the Operating Profit value, the more profitable the company is likely to be. The growth rate of Operating Profit can be used to evaluate the company's growth. Sequential Operating Profit increase is mostly due to higher sales and better operational performance. Operating Profit decline could be mainly due to reduced revenue or increased manufacturing cost and operation costs. Based on Operating Profit, Operating Profit Margin which is the ratio of Operating Profit to sales can be calculated and used to compare Operating Profit profitability in different time periods for a same company, or compare in different companies. Also See EBIT.
Calculation Formula
Operating Profit-Invoiced = Total Value Resulting from Substracting Operating Expenses from Gross Profit - Invoiced
Unit of Measure
Currency
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
Operating Profit - Ordered resulting from substracting operating expenses from Gross ProfitOrdered. The Operating Profit ordered is used to determine the Operating Profit Margin ordered. The ordered values are useful to calculate Income Statement forecasts.
Interpretation
Operating Profit is one of the most significant indicators of the company's profitability. It represents the profit of a company before interest expenses and income taxes. Operating Profit is more focus on the operating business itself, as it excludes income and expenditure from unusual activities, and also interest income and expense, as well as taxes related to profitability are mostly the result of factors. The figures are often used to gauge the financial performance of companies with high levels of debt and interest expenses. From absolute number perspective, it shows how much profit the company generates in order to be able to pay interest, taxes and dividends. The larger the Operating Profit value, the more profitable the company is likely to be. The growth rate of Operating Profit can be used to evaluate the company's growth. Sequential Operating Profit increase is mostly due to higher sales and better operational performance. Operating Profit decline could be mainly due to reduced revenue or increased manufacturing cost and operation costs. Based on Operating Profit, Operating Profit Margin which is the ratio of Operating Profit to sales can be calculated and used to compare Operating Profit profitability in different time periods for a same company, or compare in different companies. Also See EBIT.
Calculation Formula
Operating Profit-Ordered = Total Value Resulting from Substracting Operating Expenses from Gross Profit - Ordered
Unit of Measure
Currency
Direction of Improvement
Industry Relevance
Country Relevance
Description
Relation of the Operating Profit Margin to Net Revenue: Shows how efficiently a company's management has been in generating income from the operation of the business. Considers earned values. Also known as Contribution Margin 2.
Interpretation
This indicator gives information on a company's profits ability based on earned values. Increase in Operating Profit Marin is mainly due to growth of net revenue, good cost control and strong productivity, Decrease in Operating Profit Margin largely results from reduction in revenue and higher operating costs. Operating Profit Margin is most useful when compared against other companies in the same industry. The higher Operating Profit Margin reflects the more efficient cost management or the more profitable business. If no positive Operating Profit Margin can be generated over a longer period, then the company should rethink the business model. Note: This margin can be used as relative indicator for international, cross-industry comparisons. Operating Profit Margin margin, however, varies greatly between industries, as factors both net revenue and Operating Profit directly impact on the Operating Profit Margin. E.g. retailers have quite a small Operating Profit Margin as they rely on small margins accompanied with high sales volume. Other industries would have small sales volume but expect to offset that with higher Operating Profit Margin.
Calculation Formula
Unit of Measure
Direction of improvement
maximize
Industry Relevance
Country Relevance
Description
Relation of the Operating Profit Margin to Net Revenue: Shows how efficiently a company's management has been in generating income from the operation of the business. Only Considers invoiced values.
Interpretation
This indicator gives information on a company's profits ability based on invoiced values. Increase in Operating Profit Marin is mainly due to growth of net revenue, good cost control and strong productivity, Decrease in Operating Profit Margin largely results from reduction in revenue and higher operating costs. Operating Profit Margin is most useful when compared against other companies in the same industry. The higher Operating Profit Margin reflects the more efficient cost management or the more profitable business. If no positive Operating Profit Margin can be generated over a longer period, then the company should rethink the business model. Note: This margin can be used as relative indicator for international, cross-industry comparisons. Operating Profit Margin margin, however, varies greatly between industries, as factors both net revenue and Operating Profit directly impact on the Operating Profit Margin. E.g. retailers have quite a small Operating Profit Margin as they rely on small margins accompanied with high sales volume. Other industries would have small sales volume but expect to offset that with higher Operating Profit Margin.
Calculation Formula
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Description
Relation of the Operating Profit Margin to Net Revenue: Shows how efficiently a company's management has been in generating income from the operation of the business. Only Considers ordered values.
Interpretation
This indicator gives information on a company's profits ability based on ordered values. Increase in Operating Profit Marin is mainly due to growth of net revenue, good cost control and strong productivity, Decrease in Operating Profit Margin largely results from reduction in revenue and higher operating costs. Operating Profit Margin is most useful when compared against other companies in the same industry. The higher Operating Profit Margin reflects the more efficient cost management or the more profitable business. If no positive Operating Profit Margin can be generated over a longer period, then the company should rethink the business model. Note: This margin can be used as relative indicator for international, cross-industry comparisons. Operating Profit Margin margin, however, varies greatly between industries, as factors both net revenue and Operating Profit directly impact on the Operating Profit Margin. E.g. retailers have quite a small Operating Profit Margin as they rely on small margins accompanied with high sales volume. Other industries would have small sales volume but expect to offset that with higher Operating Profit Margin.
Calculation Formula
Operating Profit Margin - Ordered = (Operating Profit - Ordered / Net Revenue - Ordered) * 100%
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Tools
3. Process
Name
Description Calculates the percentage of perfect purchase orders among all purchase orders. The following criteria apply to a perfect order:
right quantitiy damage free arrives on-time arrives at the right location is filled completly on the first call is entered correctly is communicated via a customer-specific medium (e.g. EDI, fax, phone, internet etc) has no invoicing or collection errors.
Interpretation This KPI measures the ability of a vendor to deliver to the customers' wishes. Perfect Order Characteristics: has the right amount of products; is damage free; arrives on-time; arrives at the right location; is filled completly on the first call; in entered correctly; is communicated via a customer-specific medium (e.g. EDI, fax, phone, internet etc); has no invoicing or collection errors.
Calculation Formula Perfect Order Calculation: Order Fill-Rate * Order Shipping Accuracy * Damage free order percentage *On-Time Order Percentage * claim free Order Percentage * Order Entry Accuracy * Order Comm Accuracy * Order Doc Accuracy Example Perfect Order Calculation: has the right amount of products; 97% is damage free; 98% arrives on-time; 93% arrives at the right location; 96% is filled completly on the first call; 72% in entered correctly; 94% is communicated via a custoemr-specific medium (e.g. EDI, fax, phone, internet etc); 89%
Unit of Measure
Direction of Improvement
Maximize
Industry Relevance
ALL industries that want to measure their vendor compliance, e.g. Consumer Product (CP) Industry, Process Industry.
Country Relevance
Global
Tools
Description
Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories of direct and indirect materials, where direct material includes:
raw materials WIP plant FG, field FG, field samples and indirect material consists of: tangible fixed assets low value assets
consumable goods NOTE: For indirect materials IDS-TOTAL only applies as long as they are in stock only, once they are in use they are not "inventory" anymore. They turn into either "consumption" (? from a cost perspective this is likely to be assigned to SGA) or into "tangible fixed assets" (? from a cost perspective this is likely to cause the need for depreciation with the enterprise asset management function typically within financials dept.) This definition is in close alignment with SCOR 7.0. Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365).
Interpretation
The Inventory-Days-of-Supply allows to estimate for how long a stock level of a certain material will be sufficient to match upcoming requirements - basic assumption is a steady demand function.
Calculation Formula
IDS-wip [BPX:days] = SUMn (IDS_goodn-classified-as-WIP) [BPX:days] where the term of the SUM is derived from: IDS_ goodn-classified-as-WIP [BPX:days] = Stock-Value_ goodn [BPX:$]/Stock-Consumption_goodn [BPX:$/day] and with the sub-terms defined as: Stock-Value_ goodn [BPX:$] = Qty-per-Stock-Segment [BPX:UoM] x Price [BPX:$/UoM] Stock-Consumption_goodn [BPX:$/day] = Qty-per-Stock-Segment [BPX:UoM/day] x Price [BPX:$/UoM] NOTE1: The assignment of material classes to certain stock elements maybe customer specific and needs to be configurable. Details can be derived from Figure 2 and Figure 3. NOTE2: It is assumed that the product master contains:
a flag that indicates, what kind of material class a product belongs to (e.g. raw material, semifinished product, finished good etc.) a suitable price that contains actual data per period, since the stock consumption always requires a period to be specified, the lowest level of granularity will typically be a day (the calculation will always relate to the past, so the fixed data may be assumed, no more shifts will happen.)
Unit of Measure
days
Direction of Improvement
Industry Relevance
Country Relevance
GLOBAL
Tools
Description
Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories of direct and indirect materials, where direct material includes:
raw materials WIP plant FG, field FG, field samples and indirect material consists of: tangible fixed assets low value assets consumable goods NOTE: For indirect materials IDS-TOTAL only applies as long as they are in stock only, once they are in use they are not "inventory" anymore. They turn into either "consumption" (? from a cost perspective this is likely to be assigned to SGA) or into "tangible fixed assets" (? from a cost
perspective this is likely to cause the need for depreciation with the enterprise asset management function typically within financials dept.) This definition is in close alignment with SCOR 7.0.[BPX: ]
Interpretation
The Inventory-Days-of-Supply allows to estimate for how long a stock level of a certain material will be sufficient to match upcoming requirements - basic assumption is a steady demand function.
Calculation Formula
IDS-raw [BPX:days] = SUMn (IDS_goodn-classified-as-RAW) [BPX:days] where the term of the SUM is derived from: IDS_ goodn-classified-as-RAW [BPX:days] = Stock-Value_ goodn [BPX:$] / Stock-Consumption_goodn [BPX:$/day] and with the sub-terms defined as: Stock-Value_ goodn [BPX:$] = Qty-per-Stock-Segment [BPX:UoM] x Price [BPX:$/UoM] Stock-Consumption_goodn [BPX:$/day] = Qty-per-Stock-Segment [BPX:UoM/day] x Price [BPX:$/UoM] NOTE1: The assignment of material classes to certain stock elements maybe customer s\pecific and needs to be configurable. Details can be derived from Figure 2 and Figure 3. NOTE2: It is assumed that the product master contains:
a flag that indicates, what kind of material class a product belongs to (e.g. raw material, semifinished product, finished good etc.) a suitable price that contains actual data per period, since the stock consumption always requires a period to be specified, the lowest level of granularity will typically be a day (the calculation will always relate to the past, so the fixed data may be assumed, no more shifts will happen.)
Unit of Measure
days
Direction of Improvement
Industry Relevance
Country Relevance
GLOBAL
bpx_business_kpis
bpx_process_kpis
Tools
Number of Contracts
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Number of Contracts
Name Number of Contracts
Description
This KPI is defined as the number of maintained purchasing contracts in the system. Only valid and released contracts are counted.
Interpretation
Often the purchasing department wants to control the maximum of purchasing spend. Negotiating prices and conditions with the supplier and maintaining them in purchasing contracts is the best way to reach this objective, because then these prices and conditions are available as sources of supply and can be used for operational purchasing.
Calculation Formula
Number of Contracts = Number of Valid and Released Contracts Maintained in the System
Unit of Measure
number
Direction of Improvement
maximize
Industry Relevance
generic
Country Relevance
generic
1. Business KPIs
Description
This KPI is defined as the ratio between the number of purchase order items with reference to a product ID to the total number of purchase order items. Only sent purchase orders are taken into account.
Interpretation
With this number the buyers get to know if there are many purchase order items with no reference to a product ID. Very often these purchase orders will have then a free text entry. If the ratio is low, it is a hint to maintain product master in purchasing, if the purchasing activities shall be controllable and effective.
Calculation Formula
Ratio of Purchase Order Items with Product IDs = ((Number of sent purchase order items with a reference to a product ID) / (Total number of sent purchase order items)) * 100%
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
generic
Country Relevance
generic
Price Trend
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Price Trend
Name Price Trend
Description
The Price Trend compares the price of two different time intervals. The time interval can be year or month. The Price Trend is calculated per product, but can be aggregated on product category, supplier, country of supplier or on any organizational level.
Interpretation
This KPI displays price changes on different levels and can be used to counter steer certain price development in the market.
Calculation Formula
Price Trend = (((Average Purchase Order Price of Current Period) - (Average Purchase Order Price of a Previous Period)) / (Average Purchase Order Price of Previous Period)) * 100%
Unit of Measure
Direction of Improvement
minimize
Industry Relevance
Generic
Country Relevance
Generic
Description
The Supplier Evaluation Score is the aggregated result of the manual and automatic evaluation for a supplier. It is an outcome of the supplier evaluation.
Interpretation
Calculation Formula
The calculation of the score is maintained by the user by defining relevant main criteria, criteria and weighting factors between them.
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Tools
Description
The KPI Supplier-On Time Delivery Performance is the comparison of the required delivery date in the purchase order to the actual goods receipt entry date per supplier. For the calculation of the Supplier-On Time Delivery Performance the delivery tolerances are respected.
Interpretation
This KPI gives an overview how many deliveries were in time and how many arrived not in time. This KPI is an important KPI to derive the supplier's performance. 1. Is the actual delivery date in the goods receipt equal to the required delivery date in the purchase order/purchase order acknowledgement or in the defined tolerance for the delivery, the document gets evaluated with a one. 2. Is the actual delivery date in the goods receipt not equal to the required delivery date in the purchase order/purchase order acknowledgement and not in the defined tolerance for the delivery, the document gets evaluated with a zero. Supplier-On Time Delivery Performance = ((Number of purchase order items evaluated with one) / (Total number of purchase order items per supplier)) * 100%
Calculation Formula
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
generic
Country Relevance
generic
Tools
Description
Shows the percentage of Service Order Items with only one related Service Confirmation Item.
Interpretation
It is essential to track the effectiveness of the Field Organization. If it is taking more than one call to complete a customer issue, it means that a process is broken somewhere (either in the logistics process, or in the training/knowledge of the Field force).
Calculation Formula
First Call Resolution Rate = (Number of Service Order Items with only one Related Service Confirmation Item) / (Total Number of Service Order Items)
Unit of Measure
Direction of Improvement
Usually Maximize
Industry Relevance
Country Relevance
start of metadata
Description
Sales Quantity - Earned is quantity of goods sold in a specified period. Earned means that the sales quantity is matched with realized revenue in same period.
Interpretation
By showing overall changes in sales quantity, sales, product, marketing and finance managers can see at-a glance which region sales organization, product and customer group, etc. require attention. The analyses of sales quantity answer common business questions as below, - Which products have the greatest sales quantity and the least sales quantity? - What other products are selling at the same time to the top sales customer? - Which products have declining sales momentum? - How have sales quantities of product X changed period over period? - What is the annual sales trend of each product? - How do promotion activities effort in sales quantities? In general speaking, increase in sales quantity results in sales revenue if sales price and market requirement remain fairly constant over a period. In reality, however, actual results may be constrained by various factors, such as promotion campaign, competitors' sales strategy, change of economics environment etc.
Calculation Formula
Quantity
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Tools
Description
Sales Quantity - Invoiced is quantity of goods sold in a specified period. Invoiced means that the sales quantity is matched with invoiced revenue in same period.
Interpretation
By showing overall changes in sales quantity, sales, product, marketing and finance managers can see at-a glance which region sales organization, product and customer group, etc. require attention. The analyses of sales quantity answer common business questions as below, - Which products have the greatest sales quantity and the least sales quantity? - What other products are selling at the same time to the top sales customer? - Which products have declining sales momentum? - How have sales quantities of product X changed period over period? - What is the annual sales trend of each product? - How do promotion activities effort in sales quantities? In general speaking, increase in sales quantity results in sales revenue if sales price and market requirement remain fairly constant over a period. In reality, however, actual results may be constrained by various factors, such as promotion campaign, competitors' sales strategy, change of economics environment etc.
Calculation Formula
Quantity
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Country Relevance
Tools
Description
Sales Quantity - Ordered is the sales quantity reflected in the incoming orders.
Interpretation
By showing overall changes in sales quantity, sales, product, marketing and finance managers can see at-a glance which region sales organization, product and customer group, etc. require attention. The analyses of sales quantity answer common business questions as below, - Which products have the greatest sales quantity and the least sales quantity? - What other products are selling at the same time to the top sales customer? - Which products have declining sales momentum? - How have sales quantities of product X changed period over period? - What is the annual sales trend of each product? - How do promotion activities effort in sales quantities? In general speaking, increase in sales quantity results in sales revenue if sales price and market requirement remain fairly constant over a period. In reality, however, actual results may be constrained by various factors, such as promotion campaign, competitors' sales strategy, change of economics environment etc.
Calculation Formula
Quantity
Unit of Measure
Direction of Improvement
maximize
Industry Relevance
Generic
Country Relevance
Generic
Tools
Description
This indicator shows the ratio of total discounts to total Gross Revenue-Earned for a given period.
Interpretation
Generally, the offering of discounts to customers is a form of price competition. Higher discounts may result in increase in demand, especially for those customers who are price sensitive. Discounts, on the other hand, sometimes are very damaging to profits because discounts affect net income directly. It is possible to have good sales volume and productivity and still lose money. By analyzing discounts as % of gross revenue, sales, product, marketing managers can promote more effectively and discount more judiciously. Discounts as % of Gross Revenue reveals the extent of discounting based on gross revenue and displays trends and responses to special promotions. Increase in Discounts as % of Gross Revenue results in net revenue decreases, provided list prices remain and discounts can not be offset by additional sales.
Calculation Formula
Unit of Measure
Direction of Improvement
range
Industry Relevance
Generic
Country Relevance
Generic
Tools
Description
Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories of direct and indirect materials, where direct material includes: - raw materials - WIP - plant FG, field FG, field samples and indirect material consists of: * tangible fixed assets * low value assets * consumable goods NOTE: For indirect materials IDS-TOTAL only applies as long as they are in stock only, once they are in use they are not "inventory" anymore. They turn into either "consumption" (from a cost perspective this is likely to be assigned to SGA) or into "tangible fixed assets" (from a cost perspective this is likely to cause the need for depreciation with the enterprise asset management function typically within financials dept.) This definition is in close alignment with SCOR 7.0 (see URL of the SupplyChain Council www.supply-chain.org).
Interpretation
The Inventory-Days-of-Supply allows to estimate for how long a stock level of a certain material will be sufficient to match upcoming requirements - basic assumption is a steady demand function.
Calculation Formula
Inventory Days of Supply-Total = (Inventory Days of Supply - Raw Material) + (Inventory Days of Supply - Work in Process) + (Inventory Days of Supply - Finished Goods) where the individual terms represent: IDS-raw equals the valued sum of all goods assigned to "Raw Material". IDS-wip equals the valued sum of all goods assigned to "Work-in-Process". IDS-fgd equals the valued sum of all goods assigned to "Finished Goods".
Unit of Measure
days
Direction
Minimize
Industry relevance
*Country *
GLOBAL
[# ftnref1|BPX:1] Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories (raw materials and WIP, plant FG, field FG, field samples, other) (COGS 365).
Tools
Name
Description
Interpretation
Providing information about won and lost opportunities the KPI helps the user to assess the sales performance. This is much more valuable if you are able to compare it over a period whereby you can find the trends in your sales performance. If calculated with respect to sales people, you can set a benchmark for the entire team and any deviance needs to be studied.
Calculation Formula
Opportunity Success Rate = (((Number of Opportunities-Status Won) / ((Number of OpportunitiesStatus Won) + (Lost))) * 100%
Unit of Measure
Direction of Improvement
Usually: Maximize
Industry Relevance
Country Relevance
Tools
Description
The value of obsolete stock is evaluated in a specific period of time, as the difference between the
value of valuated stock at the end of the chosen period, and the issue value of valuated stock during that period. If the issue value of valuated stock is greater than the value of valuated stock, the value of obsolete stock is zero.
Interpretation
The value of obsolete stock measures the excess of inventory. It can be evaluated for a specific material, for a warehouse or for a plant. On the one hand, obsolete materials take up valuable warehouse space, therefore should be scrapped or moved. On the other, cash sitting in inventory can be freed up. The evaluation period for the value of obsolete stock should be comparable with the frequency of supply. Example. A material is supplied weekly. The value of obsolete stock is calculated as the difference between the stock value and the issue value in a week. If we assume the issue value, supply frequency and supply amount are to remain constant, we can predict that a fraction of the available stock will never be used. The value of this fraction is the value of obsolete stock.
Calculation Formula
If Value of Valuated Stock(T2) > Issue Value of Valuated Stock(T1, T2), Value of Obsolete Stock(T1, T2) = Value of Valuated Stock(T2) - Issue Value of Valuated Stock(T1, T2); otherwise, Value of Obsolete Stock(T1, T2) = 0. T1 and T2 are two points in time, where T2 > T1.
Unit of Measure
company currency
Direction of Improvement
minimize
Industry Relevance
generic
Country Relevance
generic
Tools
Name
Description
In Retail Industry, vendor evaluation will not play major role. Therefore, we have to create Fill rate based on ordered verses received Quantity.
Interpretation
This KPI gives a hint how often the merchandising / purchasing department can fulfill users requirements. The value of this KPI is dependent on the purchasing DC's performance and/or from the quantity of reliability of `company's suppliers.
Calculation Formula Vendor Fill Rate = (Supplied Quantity / Ordered Quantity) x 100% This development can be handled through ABAP / BW with following Logic:* Article Number is available at the Table EKPO as a field MATNR
Ordered = How much Purchase qty ordered for that Vendor, available at the EKPO table as field MENGE, Current Month (Current month is Purchasing Document Date as a field in the EKKO BEDAT)
Supplied = Against that Ordered qty how much Purchase qty been supplied by Vendor, available at the MSEG table as field MENGE Current Month Formula = Supplied/ Ordered*100
Unit of Measure
Direction of Improvement
maximize
Country Relevance
Tools
Description
Lead time is calculated as the time between creation of a Service Request and the setting of the request status to Closed. It is displayed in hours. Division by Number of Service Requests gives the Average Lead Time of Service Requests.
Interpretation
Shows the average time required to complete Service Requests within the user's service organization. It gives an indication of the efficiency of the internal processes, and is an important factor that can influence customer satisfaction.
Calculation Formula
Average Lead Time of Service Requests = (Lead Time of Service Requests) / (Number of Service Requests) Lead Time of Service Requests = Time between Creation of a Service Request and the Setting of the Request Status to Closed-in Hours
Unit of Measure
Hours
Direction of Improvement
Usually Minimize
Industry Relevance
Country Relevance
Tools
Description
Order value of the quote items that have actually been converted to sales order items compared to their original quote value.
Interpretation
The Quote Success Rate can be used to analyze the quote value that is actually sold to the customer. This in turn helps the user to monitor which products or services are popular and to spot areas where action is required.
Calculation Formula
Quote Success Rate = (Referred Value) / (Net Value of Accepted Quote Items)
Unit of Measure
Direction of Improvement
Usually: Maximize
Industry Relevance
Country Rekevance
Tools
Name
Description
Call Closure Time time is calculated as the time between creation of a Service Order and the setting of the order status to Completed. It is displayed in hours. Division by the Number of Service Orders gives the Average Call Closure Time.
Interpretation
The Average Call Closure Time gives an indication of the efficiency of the internal processes, and is an important factor that can influence customer satisfaction.
Calculation Formula
Average Call Closure Time = (Call Closure Time) / (Number of Service Orders) Call Closure Time = Time between Creation of a Service Order and the Setting of the Order Status to Completed-in Hours
Unit of Measure
Hours
Direction of Improvement
Usually Minimize
Industry Relevance
Country Relevance
Description
Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories of direct and indirect materials, where direct material includes:
raw materials WIP plant FG, field FG, field samples and indirect material consists of: tangible fixed assets low value assets consumable goods NOTE: For indirect materials IDS-TOTAL only applies as long as they are in stock only, once they are in use they are not "inventory" anymore. They turn into either "consumption" (? from a cost perspective this is likely to be assigned to SGA) or into "tangible fixed assets" (? from a cost perspective this is likely to cause the need for depreciation with the enterprise asset management function typically within financials dept.) This definition is in close alignment with SCOR 7.0. Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included. Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365).
Interpretation
The Inventory-Days-of-Supply allows to estimate for how long a stock level of a certain material will be sufficient to match upcoming requirements - basic assumption is a steady demand function.
Calculation Formula
IDS-fgd [BPX:days] = SUMn (IDS_goodn-classified-as-FGD) / n [BPX:days] where n is the no. of materials summed up and the term of the SUM is derived from: IDS_ goodn-classified-as-FGD [BPX:days] = Stock-Value_ goodn [BPX:$] / Stock-Consumption_goodn [BPX:$/day] and with the sub-terms defined as: Stock-Value_ goodn [BPX:$] = Qty-per-Stock-Segment [BPX:UoM] x Price [BPX:$/UoM] Stock-Consumption_goodn [BPX:$/day] = Qty-per-Stock-Segment [BPX:UoM/day] x Price [BPX:$/UoM] NOTE1: The assignment of material classes to certain stock elements maybe customer specific and needs to be configurable. Details can be derived from Figure 2 and Figure 3. NOTE2:
a flag that indicates, what kind of material class a product belongs to (e.g. raw material, semifinished product, finished good etc.) a suitable price that contains actual data per period, since the stock consumption always requires a period to be specified, the lowest level of granularity will typically be a day (the calculation will always relate to the past, so the fixed data may be assumed, no more shifts will happen.)
Unit of Measure
days
Direction of Improvement
Industry Relevance
Country Relevance
GLOBAL