Kpi handbook implementation on bizforce one

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Kpi handbook implementation on bizforce one

  1. 1. Key Performance Indicator Implementation on Bizforceone Written By Fujitsu BizforceOne implemented by BMI Company Version 1.0 Page 1
  2. 2. 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 Page 2
  3. 3. 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 Page 3
  4. 4. 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. Page 4
  5. 5. 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. Page 5
  6. 6. 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). Page 6
  7. 7. 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. Page 7
  8. 8. 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 report Tolerance 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. Page 8
  9. 9. 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 Page 9
  10. 10. Simulated Template Page 10
  11. 11. 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. Page 11
  12. 12. 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) Page 12
  13. 13. ----------------------------------------------------------------------------------------------------------- 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. Page 13
  14. 14. 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: Page 14
  15. 15. Actual Order can be collected through Standard Template Page 15
  16. 16. Field Description Year Format: YYYY Enter the year covered by this report 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. 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 1. ITEM a. Add a SCORE column after each month. 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. Page 16
  17. 17. 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 Following are the KPI’s, which may be derived from this template: 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) Page 17
  18. 18. 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 Page 18
  19. 19. Standard Template Field Description Year Format: YYYY Enter the year covered by this report 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. 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. Select KPI_003 as follow: Page 19
  20. 20. Simulation 1. ITEM a. Add a SCORE column after each month. 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 Following are the KPI’s, which may be derived from this template: 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 a specific period. NOTE: If score exceeds 100%, this is subject for investigation due to overproduction. Page 20
  21. 21. Page 21
  22. 22. 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. For production good result, in BFO, we see “Inventory Ledger” as: Select “Analyze” on Menu and select “Analysis By Document” Filter Document Type as Shipment Page 22
  23. 23. Standard Template Field Description Year Format: YYYY Enter the year covered by this report Month Enter the month range covered by this report Tolerance 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. 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. 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 Page 23
  24. 24. 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 Shipment DO# 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 Select KPI_004 as follow: 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. Page 24
  25. 25. 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 Following are the KPI’s, which may be derived from this template: 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. Page 25
  26. 26. 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. Page 26
  27. 27. 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. Page 27
  28. 28. 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. Page 28
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  30. 30. 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 report Page 30
  31. 31. 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. 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. Shipment DO # 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 Billing Invoice # 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. Select KPI_005 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 1. Billing Days This computation is used to compare Invoice Date and Shipment Date Page 31
  32. 32. 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. Page 32
  33. 33. 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 Page 33
  34. 34. Field Description Year Text Enter the prior and the current year, as 2 consecutive years will be covered by this report 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. Previous Year Sales 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 Year Sales 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. Page 34
  35. 35. 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. Select KPI_006 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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. Page 35
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  37. 37. 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 goods Transfer 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 Page 37
  38. 38. Field Description Year Format: YYYY Enter the year covered by this report Inventory 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. Page 38
  39. 39. 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. Select KPI_007 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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 Page 39
  40. 40. 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 Page 40
  41. 41. 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. No. Integer Short term for number; this is a sequence number assigned for each line starting from 1 up to the last entry line. Item Type Text Classification of materials, supplies or goods other than Finished Goods Item Text Name or term used to identify the stock Sub Group Text Further classification, if any, for easier identification of inventory items Qty 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. Page 41
  42. 42. 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. Select KPI_0071 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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) Page 42
  43. 43. 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 Vendor Shipment to Customer Positive/negative adjustment Transfer in/out MFG issue MFG consumption Item Kit Returned Shipment to Vendor Receipt from Customer Shipment for outsourcing Receipt from Outsourcing Internal Shipment/internal Receipt to subsidiaries Uitility Standard Template Field Description Year/Month Text The year and month covered by this report. Select a Page 43
  44. 44. recent month that has normal conditions only. 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. 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. Beg Bal Quantity Short term for Beginning Balance, this is the on-hand quantity of each product at the beginning of the month. Production Result Good Quantity The number of finished goods produced without defects within the month Reject Quantity The number of products with defects Rework In Quantity The number of defective items brought in for repair or re-work processes Out 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 Return In 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 Others In 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. Page 44
  45. 45. 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. Select KPI_008 as follow: 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. Page 45
  46. 46. 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. Page 46
  47. 47. 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 Page 47
  48. 48. Field Description Year/Month Text The year and month covered by this report. Select a recent month that has normal conditions only. 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. Stock on Hand (N) Quantity The number of finished goods in stock. N represents the selected month Forecast N + 1 Quantity Projected stock of finished goods available for the following month, N + 1 N + 2 Quantity Projected stock of finished goods available two months after, N + 2 N + 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. Page 48
  49. 49. 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. Select KPI_009 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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 Nov N N+1 N+2 N+3 On 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 Nov N N+1 N+2 N+3 On 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) Page 49
  50. 50. 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. Page 50
  51. 51. 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. Page 51
  52. 52. Standard Template Page 52
  53. 53. Field Description As of date Date The cut-off date, preferably of the most recent month- end data available No. Integer Short term for number; this is a sequence number assigned for each line starting from 1 up to the last entry line. 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 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 specified 3. ITEM c. Get the total value of Outstanding Receivable as of the date specified. Select KPI_010 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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 Page 53
  54. 54. 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. Page 54
  55. 55. Standard Template Page 55
  56. 56. Field Description As of date Date The cut-off date, preferably of the most recent month- end data available No. Integer Short term for number; this is a sequence number assigned for each line starting from 1 up to the last entry line. 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 suppliers Credit 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 list 2. ITEM b. Get the total value of YTD Purchase Amount as of the date specified 3. ITEM c. Get the total value of Outstanding Payable as of the date specified. Select KPI_011 as follow: Page 56
  57. 57. KPI Computation Following are the KPI’s, which may be derived from this template: 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. Page 57
  58. 58. 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 Page 58
  59. 59. 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 done Shift 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. Page 59
  60. 60. 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. Select KPI_012 as follow: KPI Computation Following are the KPI’s, which may be derived from this template: 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 Page 60
  61. 61. 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 Page 61
  62. 62. 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. Defect Process 1 Quantity The number of products that were defective or damaged during the first process Process 2 Quantity The number of products that were defective or damaged during the second process Process 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 Following are the KPI’s, which may be derived from this template: 1. Process Defect Ratio Page 62
  63. 63. 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. Page 63
  64. 64. For production good result, in BFO, we see “Inventory Ledger” as: Select “Analyze” on Menu and select “Analysis By Document” Page 64
  65. 65. Filter Document Type as MFG Issue Page 65
  66. 66. Standard Template Field Description Year/Month Text The year and month covered by this report. Select a recent month that has normal conditions only. 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. 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. Plan Qty 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. Page 66
  67. 67. 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. Actual Qty 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. Select KPI_014 as follow: 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. Page 67
  68. 68. Appendix: Key Performance Indicators No. KPI Name Formular Code 1 Billing Days Invoice Date – Shipment Date KPI-0 2 Cash-to-Cash Cycle Time Days Inventory + Days Receivable – Days Payable KPI-0 3 CODI (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 365 Year-to-date Sales Amount KPI-010 7 Delivery Performance No. of items shipped on time -------------------------------------- x 100% No. of items due KPI-0 8 Demand Forecast Accuracy No. of Correct Forecast items (within tolerance) --------------------------------------- x 100% No. of Forecast items KPI-0 9 Demand Forecast Realization Total Actual Order Quantity -------------------------------------- x 100% Total Forecast Quantity KPI-001 10 D: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 Page 68
  69. 69. 12 Inventory Accuracy No. 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 14 ITR (Inventory Turnover Rate) Annual Cost of Goods Sold ------------------------------------- x 12 months Outstanding Inventory KPI-0 15 MFC (Monthly Forward Consumption) FG Stock On Hand as of month N ---------------------------------------------- x month Forecast Quantity for month N+1 KPI-0 16 Monthly Stock Ratio Stock OH - Demand + Production Result ------------------------------------------------------- x Stock Ratio Stock OH - Demand + Production Plan KPI-0 17 Order Fulfillment LT Shipment Date – Sales Order Date KPI-0 18 PFO (Profit from Operation) Sales Price – Cost of Goods Sold KPI-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 21 Production Performance (Realization) Production Result ------------------------ x 100% Production Plan KPI-0 22 Productivity /Yield Rate Good Inventory ------------------------ x 100% Good + Reject KPI-0 23 Return Ratio No. of Customer Returns --------------------------------- x 100% No. of SO lines KPI-0 24 Working Capital Inventory + Receivable – Payable KPI-0 Page 69

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