Oct 2006 Newsletter

Key Performance Indicators

What is a KPI?

Key Performance Indicators, also known as KPI’s, help an organization define and measure progress toward organizational goals. They are quantifiable measurements that reflect the critical success factors of an organization. Each organization has its own goals, so KPI’s will differ depending on the organization.

What are Benchmarks?

Benchmarks are the standards to which the stores, departments or employees performances are compared.

Why are Benchmarks important?

Benchmarks are important because they are a reference to which actual performance is compared. For example, it is important to know how much a store sells each month. It is better to know how the store is doing compared to what you expect the store to do. For example, a store has $25,000 per month in sales. How well you believe that store to be doing depends on what you expect. If you expect $15,000 per month, then the store is doing very well. However, if you expect $40,000 per month, then the store is doing poorly.

What makes a good KPI?

A good KPI should be something that can be measured and that will help your organization achieve its goals. A simple example of a good KPI is the variance of sales dollars for this year compared to last year. For example, if sales for this year are $120,000 and sales for the same period last year are $100,000, the variance is 20%.

KPI's in ReACT EKG

Before generating KPI reports or scorecards in ReACT EKG, benchmarks must be created.

Configuring Benchmarks

Begin by going to Performance – Benchmarks from the side menu.

To create a new Benchmark, click the New button on the top toolbar.

The next step is to configure the benchmark details. All the fields that are bold are required. As an example, benchmarks for stores can be configured generally for all stores or for a specific region or even for a specific store.

Group: Group is the functional area that the benchmark pertains to. For example, sales-to-square footage is a benchmark that pertains to stores, hence it belongs to the “store” group.

Measure: Measures are the item that is being measured. For example, this could be sales per square foot, sales dollars, closing ratio, etc.

Organization: If you have your stores divided into organizations, you can have a benchmark that applies only to a specific organization.

Region: If you have your stores divided into regions, you can have a benchmark that applies only to a region organization.

Store #: Depending on your stores, you may want to set specific benchmarks for each store.

Dep #: For benchmarks that apply to departments, you can configure benchmarks specific to each department.

Min Value: Is the low range of the expected or goal value for a benchmark.

Max Value: Is the high range of the expected or goal value for a benchmark.

Below is an example of a benchmark. This benchmark shows that the sales dollars for this year for stores in region P should be between $10,000 and $12,500.

KPI Report

Once the benchmarks have been configured, you can run the KPI report to see the performance of your stores. Begin by choosing KPI from the Performance menu.

Report filters allow you to narrow down the records that appear on a report. The filters for the KPI report look like this:

Data Grid

Once you’ve entered in your criteria, click the search button. A data grid will open as shown below.

Report Previews

If you right-click within the grid, you can select the report option.

The KPI Report looks like this:

Scorecards

Scorecards are a valuable tool to communicate performance to various levels in your organization. The focus is on how “my” performance was compared to benchmarks, as well as average values from comparable units. The individual unit doesn’t see the specific performance of other units.

If you right-click within the grid, you can select the Score Card option.

A Score Card will be displayed for each store. An icon indicates whether they were below the minimum value, between the minimum and maximum value or above the maximum value. The use of icons means that the reader of the report can see performance at a glance and the exceptions are easily identified.

Please contact Pulse Retail Systems' staff for additional information on ReACT EKG and Key Performance Indicators.