Kpi handbook implementation on bizforce one

Key Performance
Indicator
Implementation on
Bizforceone
Written By Fujitsu
BizforceOne implemented by BMI Company
Version 1.0
Page 1

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

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

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

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

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

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

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

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

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

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)
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----------------------------------------------------------------------------------------------------------- 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

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

Actual Order can be collected through
Standard Template
Page 15

Field Description
entry line.
together.
SO Quantity Short term for Sales Order, which refers to a
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
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

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
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

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

Standard Template
Field Description
entry line.
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.
Page 19

Simulation
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
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

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.
Filter Document Type as Shipment
Page 22

Standard Template
Field Description
Month Enter the month range covered by this report
Tolerance
Qty (%) Percentage An allowance for acceptable variations from specified
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.
entry line.
company sells.
Product Text Goods produced and sold by the company.
Sales Order
Page 23

SO# Alphanumeric A unique number that identifies each SO form. SO is
the short term for Sales Order, which refers to a
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
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

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
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

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.
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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

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

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
Month Text Enter the month range covered by this report
Page 30

entry line.
company sells.
Product Text Goods produced and sold by the company.
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.
KPI Computation
1. Billing Days
This computation is used to compare Invoice Date and Shipment Date
Page 31

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

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

Field Description
Year Text Enter the prior and the current year, as 2 consecutive
years will be covered by this report
entry line.
together.
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

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.
KPI Computation
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

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

Field Description
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.
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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.
KPI Computation
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
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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
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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
must be shown in percentage form or fixed value.
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.
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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.
KPI Computation
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

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

recent month that has normal conditions only.
Tolerance Percentage or
Integer
An allowance for acceptable variations from specified
must be shown in percentage form or fixed value.
entry line.
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

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.
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

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

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

Field Description
entry line.
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

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.
KPI Computation
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

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

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

Field Description
As of date Date The cut-off date, preferably of the most recent month-
end data available
entry line.
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.
KPI Computation
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

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

Field Description
As of date Date The cut-off date, preferably of the most recent month-
end data available
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.
Page 56

KPI Computation
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

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

Field Description
Year/Month The year and month covered by this report. Select a
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

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.
KPI Computation
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

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
Page 61

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.
KPI Computation
1. Process Defect Ratio
Page 62

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

Page 64

Filter Document Type as MFG Issue
Page 65

Standard Template
Field Description
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

Actual
Qty Quantity Actual number of items produced within the month for
each Production Line.
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.
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

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

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

Kpi handbook implementation on bizforce one

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