Developing Your Corporate Dashboard of Key Performance Metrics
Consider the hundreds of reports and millions of data elements that are generated in your business by merchandising, marketing, fulfillment and financial systems. From all that data, what are you using to run your direct and retail business? What are the key performance metrics, indicators or dials that tell management about customer satisfaction and service levels, whether you’re on sales plan by channel, how is your inventory performing, what your cash flow needs will be, etc.?
Coming up with effective management reports, KPI’s and metrics has always been a challenge. This may sound like Business Management 101, but we are constantly surprised that this seemingly fundamental aspect of the business is being ignored by many direct businesses. As companies grow and continue to add new channels and titles, KPI’s and Business Intelligence (BI) are key to helping top management keep a finger on the pulse of the business without micro-managing.
One concept worth exploring is the “corporate dashboard” – a series of visual KPI’s (or dials) in the corporate cockpit-that reflects the key performance metrics from each department. How can your direct business benefit? By improving customer service, increasing top line sales and profitability. What are the essential elements to implementing this highly refined online reporting?
What is a Corporate Dashboard?
By dashboard we mean, key performance indicators (KPI) that reflect the overall performance of the business including customer service and satisfaction, sales analysis against plan and overall profitability. When highly summarized, they give management an accurate and timely picture of the business. In order to do this, the information systems also need to provide detail answers (drill down) as to why the various indicators or dials or metrics are reporting what they’re reporting. Also, as you think through these dials and metrics, you need to determine which need to be plans, projection and/or actual.
Here are some metrics and KPI’s we see in direct business dashboards or weekly analysis:
- From a marketing perspective for the current active promotions-the demand dollars to date; revenue dollars per catalog for house file and prospect lists separately and in total; average order in units and dollars; order forecast by week; total number of one time buyers versus multi buyers, what is the cost to acquire a new customer, how profitable are multi time buyers, etc.
- From ecommerce data, total sales generated; unique visitors; total new customers; shopping cart abandonment rate; inventory out of stock; sales per marketing effort (organic search, paid search, e-mail, shopping portals, banner ads, affiliate marketing, etc.).
- Merchandising metrics may include category projections; top 20 and bottom 20 selling products; net contribution to profit by category style and SKU; contribution analysis for new versus repeat items, import versus domestic, core products versus non-core products, etc.
- Inventory Management indicators might show initial customer order fill rates compared to item fill rates for the year; summaries of cost recovery and margin loss by liquidation media; summary of initial coverage of products/SKUs as new catalogs mail, etc.
- Customer Contact Center indicators may be limited to call and order activity by channel; call to order ratio; summary of inquiries/complaints and service indicators such as time to answer and call abandonment rate.
- In the Fulfillment Center in-bound receipts and receipts requiring buyer or vendor attention; aging of customer back orders; pick/pack error statistics; order and return turnaround times, packages shipped, etc.
- Finance may report sales actual to plan; summarized cash flow and days to refund/credit customers.
We have created a corporate dashboard pictorially representing many of these dials and metrics. One can obviously argue that a dashboard should include or exclude specific dials or metrics. There is no one way or standard to implement this as it will vary by management’s specific hot buttons, the importance of multi-channels and the ability to report in detail at all levels of management.
Additionally, weekly reporting/analysis will obviously differ from monthly analysis. On a monthly basis more formal analysis points are taken (e.g. profit & loss statement, inventory turnover calculated, etc.).
There is a wealth of information in our direct businesses. What specific metrics will give a complete picture of your business?
While many catalogs have not formalized their key performance metrics, leading direct companies have moved beyond reporting to online management systems that integrate the results of information systems across the enterprise into highly refined dials, graphs and bar charts that are easy to read and interpret.
To better understand what other direct leaders are doing with corporate performance reporting, here are three examples:
- Company A with sales over $1 billion annually-including retail stores, 10 specialty catalog titles and the Internet-has developed an online system that displays all the key business indicators daily. Some indicators are obviously kept as weekly, monthly, catalog-to-date and by season. Sales from the retail stores are downloaded automatically each hour. Every five (5) minutes, phone and Internet order management systems report the number of orders and dollars, average order of sales check by channel. The fulfillment system reports every five (5) minutes on in-bound receipt status and packages shipped. A 52-week history of initial customer order fill rates are reported vs. initial item fill rates as a measure of customer service.
- Company B has overlaid its fulfillment, marketing and financial reporting systems with a financial reporting package that uploads key metrics on a daily, weekly and monthly basis. Some of the data is displayed online as well as key metrics reporting.
- Company C has implemented departmental operational statistics reporting throughout the company. Marketing, merchandising, call center, fulfillment center and finance managers are responsible for maintaining departmental reports. Departments are also responsible for data integrity, timeliness and accuracy and then extracting and reporting the key daily, weekly and monthly metric. While Company A and B require a significant investment for purchasing a commercial system or developing in-house programming, Company C’s model is one that we recommend all catalogs implement.
Detailed Departmental Reporting Key
No matter what approach you take to develop your metrics, detailed departmental reporting and analysis is essential both to providing key performance metrics at an executive level and being able to break down more detailed statistics when necessary. Let’s take for example metrics that are provided to the weekly management team reporting (above) by the director of a Customer Contact Center. The detailed Customer Contact Manager’s departmental reporting typically covers 25 to 35 measures of inbound orders, call and non-order activity; outbound contacts and correspondence; performance service levels and cost per contact, call and order. Data integrity, timeliness and accuracy, which are at the heart of this effective reporting, should remain the responsibility of the director of the Customer Call Center.
What are the Benefits?
There is an old industrial engineering principle that says, “What hasn’t been measured can’t be improved.” Establishing this principle will push each of the departments to improve their analysis and internal reporting of efficiency, cost and customer service. One of the most beneficial results that will come from this is “benchmarking internally against yourself” season to season and year to year. Through continual process improvement, your organization will improve internally.
If you’re not reporting key performance benchmarks, start out on a small scale. Reduce it to the essentials and the build on it. Don’t get overwhelmed with how many things you could report. Be cognizant of data integrity, timeliness and consistency. If you don’t, the process will not be maintainable.
Set realistic benchmark goals (internal and external) by exchanging benchmarks and best practices with other. External benchmarking plays an important role in the development of these concepts. While businesses vary dramatically, there are certain foundational benchmarks and best practices that are always important. These external benchmarks are obtained through exchanging ideas with other catalogs and trade organizations.
In this period of uncertainty, there is no better way to improve your direct businesses’ performance, customer service, achieving sales and profitability-than implementing a corporate dashboard of key performance metrics.
Curt Barry is president of F. Curtis Barry & Company, a multichannel operations and fulfillment consulting firm with expertise in multichannel systems, warehouse, call center, inventory, business intelligence systems and benchmarking; Learn more online at: http://www.fcbco.com
About Manage Metrix
Manage Metrix is a business intelligence system with KPI alerts and dashboard capabilities that can be easily customized for each user. In addition, managers can use pre-built retail and direct analytical templates and KPIs or clients can customize their own unique analysis. Senior management has drill down capabilities into the same detail data as the department management assuring everyone is using “the same version of the truth”. Another unique approach offered is that F. Curtis Barry & Company works with the client management to set appropriate KPIs and action plans for improvement. Modules have functionality for inventory management, merchandising, marketing, call center, fulfillment, retail merchandising and finance which shares data across the enterprise. The product is co-developed by Taurus Software and F. Curtis Barry & Company. To learn more about Manage Metrix, visit www.managemetrix.com or call 650-482-2022 x1.
About Taurus Software
Taurus Software has been making data liquid since 1987. Taurus offers an entire range of solutions that incorporate products such as DataBridger—a robust open platform data foundation creation tool, and application specific data models such as Ecomedate for Ecometry customers and Analysis Suite—a powerful analytical and reporting toolset. Taurus is a member of the HPe3000 Transition Partners Program and has technology partnerships with DirectTech, Quest Software, Lund Performance Solutions, Managed Business Solutions, Escalate Retail, Orbit Software, Pathway Pacific, DST Health Solutions and Acumium. To learn more about Taurus Software, visit www.taurus.com or call 650-482-2022 x1.
About F. Curtis Barry & CompanyF. Curtis Barry & Company is a national consulting firm for catalog, e-commerce, and retail businesses offering clients expertise in order management systems, warehouse management systems; warehousing and distribution; inventory management and forecasting solutions; and operational benchmarking for all business channels.
F. Curtis Barry & Company is a consultancy specializing in multichannel operations and fulfillment for catalog, e-commerce, and retail businesses. F. Curtis Barry & Company offers clients expertise in business process and order management systems, inventory management systems, warehouse management systems; warehousing and distribution; contact center services; inventory management and forecasting solutions; and strategic, financial, and operational planning for all business channels. To learn more about F. Curtis Barry & Company, visit www.fcbco.com or call 804-740-8743.
Please contact Jeff Barry to discuss your upcoming projects at firstname.lastname@example.org or 804-457-4028.