KPI Design and Implementation - Agenda

2. KPI Design and Implementation - Agenda • Introductions • KPI Example – Working Capital • KPI Design and Implementation • KPI Demonstration • Q & A

3. KPI Example – Working Capital KPI Example – Working Capital

4. KPI Example – Working Capital • Working Capital Performance KPI’s • Important in most businesses • Can get off most Income Statements • and Balance Sheets • Published standards for WC numbers • by industry • Dell Corporation knows WC

5. KPI’s in More Detail • Working Capital Performance KPI’s • CCC (Cash Conversion Cycle) • AR - Open Receivables • AR - Credit Sales • AR - DSO (Days Sales Outstanding) • AP - Open Payables • AP - Spend or COGS • AP - DPO (Days Purchasing Outstanding) • INV - Cost of Goods Sold • INV - Inventory Value • INV - Inventory Turns • INV - DIO (Days Inventory Outstanding)

6. KPI - Accounts Receivable Working Capital Math 101 - AR DSO = Accounts Receivables / (Credit Sales / 365) The lower the number the better. For example, If your DSO is 40, then the average number of days it takes to collect on receivables is 40 days. That means your financing your customer’s cash for 40 days.

7. KPI - Accounts Payable Working Capital Math 101 - AP DPO = Accounts Payables / (COGS / 365) The higher the number the better. For example, If your DPO is 40, then the average number of days it takes to pay a bill is 40 days. That means your vendor is financing your cash for 40 days.

8. KPI - Inventory Working Capital Math 101 - Inventory Inventory Turns = Yearly COGS / Period End Inventory Value The higher the number the better. Companies calculate COGS differently. Some annualize COGS or use rolling 12 months. DIO = 365 / Inventory Turns Tells how long items sit in inventory. Lower is better.

9. KPI – Cash Conversion Cycle Working Capital Math 101 CCC = DSO + DIO – DPO The smaller the number the better. Negative CCC means you sell something to a customer and get the cash for the sale before you have to pay your vendors. Each industry has published CCC numbers to be used as benchmarks CCC highlights how well a company manages its supply chain. Dell has always been very good at this.

10. KPI Example – WC - Cash Cycle Inventory Accounts Payable Accounts Receivable CCC Cash

11. KPI Design and Implementation KPI Design and Implementation

12. Reporting / Dashboards / KPI’s / Strategy FSG’s Transactions General Ledger Sub-Ledgers Drill Path Reporting / Dashboards KPI Data Model FSG Data Model General Ledger / Sub Ledger Data Model Transactional Data Model

13. FSG – What Management Knows as Truth • Row Sets (Rows) - Dimension • Set of Accounts (GL Balances) • Calculation • Period - Dimension • Budget or Actual - Dimension • Set of Books – Dimension • Column Sets – Metric Value

14. Breakdown of Inventory KPIs WC – Inventory Turns, DIO Cost of Goods Sold Inventory Value General Ledger Sub-Ledger Transactions General Ledger Sub-Ledger Transactions GL Balances GL Headers GL Lines On Hand Quantities Item Costs GL Balances GL Headers GL Lines MTL Material Transactions MTL Transaction Accounts

15. KPI Model – Single Table

16. KPI Model – Single Table

17. Inventory KPI Drill Path WC – Inventory Turns, DIO KPIs FSG / non-FSG Period, KPI Class, KPI Name General Ledger Fact Table Period, Account Structure, Set of Books Inventory COGS Details Inventory Value Details Inventory Turns Details Sub-Ledger and Transactional Details Period, Account Structure, Set of Books, Item, Inventory Org, Operation Unit, Transaction Type, ….

18. KPI Model – Benefits • Simple Approach • KPI’s in Multiple Dashboards • Single Version of the Truth • Have underlying Drill Details • Self Documenting

19. KPI Demonstration KPI Demonstration

20. Main Dashboard with KPIs Click here

21. Drill to AR Aging Summary Click Here

22. Drill to Open Receivables Summary Click Here

23. Drill To AR Invoice Details

24. KPI Design and Implementation – Q & A Q & A