This form will give you some ideas of what to document around your KPIs to make sure that everyone is on the same page.

1. FIN-001 GROSS PROFIT MARGIN
KPI DEFINITION
KPI ID FIN-001
KPI Title Gross Profit Margin
Strategic Goal Improve Profitability Margin
Business Area Finance
KPI Champion Julie Holmes
Dates  January 21, 2014 – Created and Approved
 January 18, 2015 – Reviewed and Approved
Key Performance
Question
How much profit are we generating from each dollar in sales?
KPI Overview Gross profit margin is an indicator of how well our company is managing our production costs compared
to product revenue. If our gross profit margin is low, our costs are too high compared to our revenues. As
we have historically exceeded industry average for gross profit margin, we strive to improve upon our
own performance.
KPI Goal  Minimum Goal – Current Month Gross Profit Margin should be => Prior Month Gross Profit Margin
 Target Goal - Current Month Gross Profit Margin should be 1% above Prior Year Current Month Gross
Profit Margin
 Exceptional Goal - Current Month Gross Profit Margin should be 3% above Prior Year Current Month
Gross Profit Margin
Action Plan If this KPI is below the minimum goal the following action plan will be instituted:
1) KPI Champion will identify corrective team
2) Team will determine an action plan based on leading indicators
3) Results will be monitored weekly to ensure subsequent results are able to achieve goals
KPI Source ERP General Ledger
KPI Calculation Gross Profit Margin = (Revenues-Cost of Goods Sold)/Revenues x 100
Measurement
Frequency
Monthly
Leading Indicators The following are leading indicators for this KPI
REVENUE:
o Number of New Orders
o Sales Leads
COST OF GOODS SOLD:
o Inventory Cost
o Production Cost