1. Driving to the Effective Enterprise With KPI's
Explore 2012
Driving to the Effective Enterprise With KPI's
Michael Hennessey
Director, Solution Consulting, QAD

2. Driving to the Effective Enterprise with KPI's
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3. Overview Session overview Speaker Focus
Driving to the Effective Enterprise with KPI's
Overview
Session overview
Learn how QAD's KPI's, Metrics, best practices and analytical tools can help monitor and drive to the effective enterprise.
Speaker
Michael Hennessey
Focus
Concept and details around QAD’s KPI framework
Objectives
Alignment of customer business objectives with Key Performance Indicators
Provides KPI framework for identifying best practices
Establishes a closed-loop monitoring on performance improvement with a dashboard and metrics

4. The Effective Enterprise
Driving to the Effective Enterprise with KPI's
The Effective Enterprise
Where every business process is working at peak efficiency and perfectly aligned to the company’s strategic goals. 

5. ‘Five essential questions’ to ask about an organization:
Driving to the Effective Enterprise with KPI's
The First Questions:
‘Five essential questions’ to ask about an organization:
What is our mission?
Who is our customer?
What does the customer value?
What are our results?
What is our plan?
Peter Drucker

6. What is Our Mission? Examples
Driving to the Effective Enterprise with KPI's
What is Our Mission? Examples
Our mission is to "Be the best in the eyes of our customers, employees and shareholders.“ American Standard
Undisputed Marketplace Leadership. Hershey
We will be the easiest pharmacy retailer for customers to use. CVS
Workforce diversity gives us access to a world of different ideas and perspectives. XXX XXX is committed to maintaining a corporate culture where men and women of all ages, races, physical abilities, preferences and backgrounds are treated with dignity and respect. At XXX XXX we recognize that when diversity is valued and respected the results are improved service, customer satisfaction and a positive community image. We believe our employees make a world of difference and work to maintain an environment where diversity and inclusion is a critical component of our success. Our Diversity Vision To build a high performing environment where individual differences and contributions of employees, customers and business partners are respected and valued, the result of which is a business organization where fairness, trust and integrity govern relationships and the way we do business.

7. Delivering the Effective Enterprise
Driving to the Effective Enterprise with KPI's
Delivering the Effective Enterprise
The Deming Model
Plan
Design
Operational Model Do
Implement Operational Model
Check
Measure
Results, Monitor Performance
Act
Refine &
Strive for Improvement
“Certainly we want good results, but management by results is not the way to get good results…work on the causes of results”

8. Driving to the Effective Enterprise with KPI's
Why KPI’s?
KPI’s monitor the effectiveness of end-to-end business processes
Business processes can involve many departments and business units in an organization.
They help focus Business Operations to achieve the overall strategic goals of a company or corporation.
Complacency can be prevented and value optimized for the end customer

9. Align Metrics to the Value Chain
Driving to the Effective Enterprise with KPI's
Align Metrics to the Value Chain
Measures like service levels, inventory, utilization and cash-flow averaged across the business, don’t give a clear indication as to where the problems lie and what drives Value.
Applying a ‘cookie-cutter’ model to different processes results in averaging
The good processes compensate for the bad, and the bad bring down the good.

10. Align KPI’s Align KPIs with deliberately chosen performance results.
Driving to the Effective Enterprise with KPI's
Align KPI’s
Align KPIs with deliberately chosen performance results.
Spend time working out the performance results to align KPIs with, before you worry about what the KPIs themselves will be.
Establish KPIs that monitor:
The most important outputs that the organization exists to produce
The greatest influences in support of the results the organization exists to achieve.
The results of critically important steps in the business process, the in-process drivers of its outputs.

11. QAD KPI’s & Business Performance
Driving to the Effective Enterprise with KPI's
QAD KPI’s & Business Performance
Growth & Profitability
Revenue
Net Income
COGS
R&D
Costs
SG&A
Return on Net Assets
Distribution
Inventory
Capital Utilization
Working Capital
Receivables
Cash
Net Assets
Fixed Assets

12. QAD Key Performance Indicators (KPI’s)
Driving to the Effective Enterprise with KPI's
QAD Key Performance Indicators (KPI’s)
Growth & Profitability
Capital Utilization

13. Inventory Effectiveness - KPI
Driving to the Effective Enterprise with KPI's
Inventory Effectiveness - KPI
Description:
Inventory Effectiveness measures the process of having the right part at the right place at the right time, with minimal investment to ensure that deliveries meet the customer requirements.

14. Sub-Metrics: Inventory Effectiveness
Driving to the Effective Enterprise with KPI's
Sub-Metrics: Inventory Effectiveness
Certainly we want good results, but management by results is not the way to get good results…work on the causes of results
Obsolete Inventory
Excess Safety Stock
Schedule Achievement
Unplanned Downtime
Production Plan Accuracy
Supplier Delivery Performance
Requirements Plan Accuracy
Inventory Accuracy
Forecast Accuracy

15. Business Strategies to Improve Metrics
Driving to the Effective Enterprise with KPI's
Business Strategies to Improve Metrics
Leverage Sophisticated
Forecasting Systems
Solicit Varied Input
Forecast Accuracy
Forecast Accuracy
Deploy Forecast Review Process
Inventory Turns
Inventory Turns
Inventory Accuracy
Utilize Industry Forecast Data
Production Plan Accuracy
Safety Stock Level
Requirements Plan Accuracy
Safety Stock
Deploy S&OP Feedback Loop
Requirements Plan Accuracy
Production Plan Accuracy
Unplanned Maintenance
Historical Data
Obsolete Inventory Ratio

16. Strategy Enablers Within QAD Applications
Driving to the Effective Enterprise with KPI's
Strategy Enablers Within QAD Applications
QAD Forecasting Application
QAD Demand Management
Leverage Sophisticated
Forecasting Systems
QAD Customer Relationship Management
QAD Quote Management
QAD BI, Browse, Reports

17. QAD Tools - Analytics Operational metrics and browses
Driving to the Effective Enterprise with KPI's
QAD Tools - Analytics
Operational metrics and browses
at the operational level
Alerts and reports
at a tactical level
Business intelligence dashboards etc.
in aggregate
And good consulting services to help customers ensure alignment...

18. Op Metrics – Inventory Metrics
Driving to the Effective Enterprise with KPI's
Op Metrics – Inventory Metrics

19. Alerts & Reports – (Condition Out of Tolerance)
Driving to the Effective Enterprise with KPI's
Alerts & Reports – (Condition Out of Tolerance)

20. QAD BI 3.x – Dashboard Example
Driving to the Effective Enterprise with KPI's
QAD BI 3.x – Dashboard Example

21. QAD BI 3.x - Inventory Dashboard Example
Driving to the Effective Enterprise with KPI's
QAD BI 3.x - Inventory Dashboard Example

22. QAD BI Roadmap Driving to the Effective Enterprise with KPI's
BI 3.5 exists
BI 3.6 March
BI 3.7 Sept
Future – 2013+
to be determined

23. Customer Example Customer Strategy: KPI: “Technology Vitality Index”
Driving to the Effective Enterprise with KPI's
Customer Example
Customer Strategy:
Develop and maintain a competitive edge through constant technical product innovation – 30% + of revenue should be derived from ‘new’ products incorporating new technologies.
KPI: “Technology Vitality Index”
Measures the revenue generated from new product sales (‘new product = introduced in last 4 years
How measured: Using QAD BI 3

24. Driving to the Effective Enterprise with KPI's
Summary
The value of performance measurement is evident in how it has transformed performance
Choose a goal
Make your goal measurable by teasing out the performance result(s) it implies
Name and describe your selected measure
Define exactly how to calculate your measure’s values
Interpret what your measure is saying, and understand why it’s saying that

25. Driving to the Effective Enterprise with KPI's
Make a Start
Many people are on a quest to find the perfect performance measures or KPIs.
Buy-in matters more than the perfect KPI
Collaborate to choose a few reasonably good KPIs that they feel confident in
Start with QAD standard offerings & use the tools available to refine existing or create new
Engage QAD Services to help
“It is wrong to suppose that if you can’t measure it, you can’t manage it – a costly myth”
W. Edwards Deming

26. Questions & Answers Michael A. Hennessey
Driving to the Effective Enterprise with KPI's
Questions & Answers
Michael A. Hennessey
Director, Solution Consulting, QAD

27.
© QAD Inc 2012