Developing Metrics to Drive Results

Transcription

1 Developing Metrics to Drive Results June 18 th, 2013

2 Agenda I. Introductions and Objectives II. Challenges of implementing a metrics strategy III. How do we define an effective metrics strategy a) Identifying the right metrics b) How do we balance the organization? IV. How can metrics drive business improvements? V. Demonstration: Industry tools VI. Q & A 2

3 Background - Joe Vocaire CEO and co-founder of Vizion Solutions, LLC Over 28 years of Information Technology and business solution experience Deep industry experience delivering analytics solutions for consumer packaged goods, distribution, manufacturing and services 12 years at a large international consulting company Consulted with 100+ companies ranging from small million dollar companies to multi-billion dollar international organizations IT strategy advisor Extensive ERP knowledge and experience Vendor selection consulting Implementation project management 3

4 Objectives Facilitate a discussion on : I. How do define a metrics strategy? II. Discuss how effective management metrics can drive growth and profitability III. Identify key considerations for a successful metrics driven management approach 4

5 Differentiation of products and services is increasingly difficult to achieve Companies will succeed based on ability to execute and adapt Defining the right metrics is critical Most important getting the organization aligned on the same goals Metrics managed properly can be a strategic tool to improve growth and profitability What Challenges are you facing today? Management Information Issues If you cant measure it, you can t manage it. Bill Hewllet 5

6 Approach to defining effective metrics 6

7 Approach to defining effective metrics Every metric, whether it is used explicitly to influence behavior, to evaluate strategies, or simply to take stock, will affect actions and decisions Metrics are effective if the actions and decisions which improve the metrics also improve your company s desired short and long term outcomes Which metrics will be most effective for your business? There is no magic bullet! 7

8 Challenges of implementing a metrics strategy What are some challenges companies have today with a metrics strategy? Starting at the bottom instead of the top Getting management consensus on goals, objectives and right things to measure Alignment between Sales, Finance and Operations Previous failed implementations Group Discussion What have been your experiences?

9 Identifying the right metrics Management Information Hierarchy Executives Sales Finance Operations 9

10 Identifying the right metrics Management Information Hierarchy Sales Sales Regions Customer Service Marketing / Product Lines Sales Reps 10

11 Identifying the right metrics Management Information Hierarchy Finance Financial Reporting Costs IT HR 11

12 Identifying the right metrics Management Information Hierarchy Operations Service Distribution Manufacturing Quality 12

13 Identifying the right metrics Create company wide Metrics and supporting analytical tools to support those metrics: Executive level: 3-5 enterprise-wide KPIs used to manage the overall business Director/management levels: Supporting drivers of top line metrics 1-2 drivers per top line Metric Key schedules per driver Supervisor/People/Process level: Detailed process/function related metrics Must relate to top line metrics Be careful not to have too many 13

14 Approach to defining effective metrics An MIT research paper describes a seven-step system to identify effective metrics. The system is based on a thorough understanding of customers, employees, work processes, and the underlying properties of metrics. Step 1. Start by Listening to the Customer what do they need? Step 2. Understand the Job what are the work processes? Step 3. Understand the Interrelationships consider all customers, suppliers, peers, and other actors. Step 4. Understand the Linkages - link efforts to metrics and efforts to outcomes. Step 5. Test Manager and Employee Reaction Step 6. Involve Managers and Employees Step 7. Seek New Paradigms 14

15 Identifying the right metrics Group exercise: Identifying the right corporate KPIs (ask the audience two questions and capture the responses in the form of two lists). Question 1 what are some common corporate level KPIs and why are they useful? Question 2 What are some more unique KPIs you feel are important to helping you manage your business and why do you find them useful? The goal of the exercise is to facilitate a discussion within the group that will help validate value of certain standard metrics and point out new metrics that group members can draw from to develop their own list of effective corporate metrics 15

16 Identifying the right metrics Some Sample Metrics: KPIs quickly communicate status and ID critical issues/opportunities o Sales o Margin o Profitability o On Time and Fill Rate o Revenue or Profit Per Employee o Utilization/Chargeability o DSO o Inventory Each industry has slightly different top line and supporting metrics Analytics enable data drill through to details in order to ID what is driving issues/opportunities so they may be addressed properly 16

17 Common Management Information Issues: Critical information getting answers you need Accurate information getting answers you trust Timely information getting answers fast at the press of a button vs. taking hours to assemble Flexible information being able to data mine Sort, filter and change views on the fly Answer follow on questions without running more reports Effective analytics address these issues and enables agile organizations that can react quickly to changing market conditions It all starts with capturing the right metrics How metrics can drive business improvements 17

18 Analytics: ROI Efficiency Gains What is a one percent improvement on your targeted KPI s worth? Imagine if you could do even better! 18

19 Metrics Management with BI A Metrics Strategy with a Business Intelligence (BI) toolset can be a strategic tool to gain competitive advantage BI tools help companies manage, monitor and analyze metrics Example: sales and profitability by customer and by product BI can be a key tool to monitor the business process execution which is key to success Order to Cash Supply Chain Management Financial Profitability 19

20 The analytics can deliver benefits such as: Analytics: Owner and Executive Benefits 1. Time management improvement effective analytics deliver facts that help executives rapidly identify where to focus their attention What is happening? Underperforming products and sales reps Lagging service levels 2. Decision support improvement effective analytics make more facts accessible to help diagnose issues so they can be treated Why are these things happening? What factors are driving the erosion of profit within a product line? What factors are driving unsatisfactory service levels? 20

21 Analytics: Effective Components Analytics applications can categorized into the following component layers: Dashboard Summary Level Trending - Slice/Dice - Drill to Detail Organized Business Level Detail Revenue - Plant - Customer Profitability - Product - Purchasing Transaction Detail Internal Data - External Data 21

22 Analytics: Effective Components Effective analytics applications address the top three component layers: Dashboard Summary Level Trending - Slice/Dice Drill to Detail Organized Business Level Detail Revenue - Plant - Customer Profitability - Product - Purchasing Transaction Detail Internal Data - External Data 22

23 Demonstration: Industry tools

24 Challenges of implementing a metrics strategy What should you take into consideration when thinking about improving your analytics capabilities? Start by understanding what is possible! How can analytics help my team? Prioritize your needs - analytics is a journey Understand cost drivers Software/Hardware Resource hours Identify who will do the work that is required make or buy? 24

25 What are keys to a successful analytics implementation? Focus on the whole solution not just the tool Understand your data - business systems and processes create the data you have to work with Define data model from top down Leverage experienced resources with appropriate skills Ensure user adoption Intuitive, easy to use functionality Challenges of implementing a metrics strategy

26 Q & A 26

27 Contact Info: Joseph Vocaire

28 Appendix 28

29 Notes from Meeting Challenges: ISO program - tying program together Difficult to measure to create numbers Time it takes to get the numbers assembled Customer Complaints Quality metrics Getting the employees/team member to understand why Employee and team to understand value How do we use to motivate not create fear? Tie to financials Scrap or yield shows good - but when inventory - changes How do need to know what we make on each customer? Recording all the costs How to measure outside partners - independent contractors or other channel partners Understanding inventory layers Keeping on volatility Managing pricing Managing hedging What is the intended purpose of each metric? Is just information for the leadership team Or is to take action 29

30 Notes from Meeting List of KPI's Sales Quality Cash Profit per employee Customer Satisfaction New Customers or New Products - New business development Orders/Bookings 30

31 Analytics: ROI Productivity Gains BI Solutions can automate significant amounts of busy work driven by the complexities involved with developing reports from transactional data What else could your employees be doing with every hour they no longer spend developing reports? 31

32 Analytics: Audience Experiences 1. How are you analyzing your business today? How do you assess what issues will be addressed? Do you rely heavily on facts to support decisions? How do you gather the facts you need to help you make decisions? 2. Would you like to be able to get more facts so you could analyze more of your business? If so, what is stopping you? 32

33 Reports are too slow Too many reports not enough info Information is not actionable Information is not accurate Takes too long to get answers Every report needs follow up Multiple versions of the truth IT resources are overburdened Industry tools Typical management frustrations with information systems

34 Common BI Applications Management Wants: Automated, On-Demand Reporting e.g. Sales Reporting: Revenue, Volume, Gross Margin - by Customer, by Product, by Business Unit, by Sales Region e.g. Inventory management calculations: Turns, Overstock, Slow moving, Obsolete by product line, by warehouse e.g. Remote Sales Rep Reporting: Self service reports to prep for account calls, new sales calls. Order and Pricing history, Current pricing, Product availability, Market trends Simplified, Sophisticated, On-Demand Analytic Frameworks e.g. Profitability Analysis: Calculate true profitability by Customer, by Product, by Channel to guide crucial pricing and product mix decisions Real-time Information e.g. Service Level performance tracking: On time, Complete, Backlog Visual information e.g. Executive KPI Dashboards Why BI?: Applications That Deliver ROI 34

35 Customer/ Product Profitability Sales Analytics Vizion360 Analytic Solutions Orders Analytics Accounts Receivable Analytics Service/ Fill Rate Analytics Finance Analytics Manufacturing Analytics Point of Sale Analytics Purchasing Analytics Inventory Analytics

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