KPI Portal

What defines a good KPI?

Bas van Raaij — Mon, 06 Jul 2009 18:18:17 +0000

Defining a good KPI is one of the most important things in Performance Management. This presentation describes the characteristics of good KPIs. Originally posted at KPI Portal: Your first step to a fully steerable organization! What defines a good KPI?

BSC dimensions during the credit crunch

Bas van Raaij — Tue, 10 Feb 2009 15:58:16 +0000

One of today’s most discussed topics is the credit crunch. Politicians, managers, consumers, everybody is looking at the currents all over the world with Argus’ eyes. Managers wonder if they steer at the right management information. Have they assembled the right set op KPIs? That’s why KPI Portal published a series of articles on surviving the [...]

How to survive the credit crunch? (part 1)

Bas van Raaij — Fri, 30 Jan 2009 10:57:07 +0000

It’s without a doubt the most discussed topic at the moment: the credit crunch. Managers wonder how to achieve their targets, how to reduce the pain and, in worse situations, how to survive the credit crunch. In the current economic situation, managers have to make their decisions as quickly as possible and therefore also need their [...]

Product-level costs

Bas van Raaij — Sat, 24 Jan 2009 18:00:46 +0000

Product-level costs arise from activities to support the production of the product or model. For example, engineering support costs for process modifications and product design depend on the existence of the product line and do not vary with the number of units or number of batches produced. Variables: All costs for supporting production Calculation: Sum of these [...]

Batch-level costs

Bas van Raaij — Sat, 24 Jan 2009 17:58:07 +0000

Batch-lever costs arise from activities performed once for each batch or lot of products. For example, machine setups, cleanup, moving the batch to the next step in the production process depend on the number of batches rather than the number of units in each batch. Purchase orders and inspections are also examples of batch-level activities. [...]

Unit level costs

Bas van Raaij — Sat, 24 Jan 2009 17:54:23 +0000

Unit level costs arise from activities that are performed at least once for each unit of product. For example, machining a surface, drilling a hole, or attaching a subassembly must be done for eacht and every unit produced. These costs include direct labor and material, machine costs, and direct energy costs. Variables: direct labor costs, direct [...]

Return on Marketing Investment (ROMI)

Bas van Raaij — Sat, 24 Jan 2009 17:45:21 +0000

Return on Marketing Investment (ROMI) can help you in optimizing your earings from marketing activities. Improving ROMI says your marketing effectiveness has grown, resulting in higher revenues and market share. Variables: Investments in marketing, earnings from marketing activities Calculation: (Earnings / investment) * 100% Measured as: Percentage (%), Interpretation of results: Higher is better Originally posted at KPI Portal: [...]

Return on Investment

Bas van Raaij — Sat, 24 Jan 2009 17:31:21 +0000

The revenues (before interest, taxes and dividends) earned on invested capital. calculated by dividing the total capital into earnings before interest, taxes, or dividends are paid. Variables: Revenues, investment Calculation: (revenues / investment) * 100% Measured as: Percentage (%), Interpretation of results: Higher is better Originally posted at KPI Portal: Your first step to a fully steerable organization! Return on Investment

Opportunity costs

Bas van Raaij — Sat, 24 Jan 2009 17:21:24 +0000

Opportunity costs measure what the firm forgoes when it chooses a specific action. The notion of opportunity costs is crucial in decision making. Variables: cost of capital, avg net value Calculation: Cost of capital * average net value Measured as: Value ($/€), Interpretation of results: Lower is better Originally posted at KPI Portal: Your first step to a fully [...]

Residual Income

Bas van Raaij — Sat, 24 Jan 2009 17:17:41 +0000

Some firms use this KPI to overcome some of the incentive deficiencies of ROI, such as underinvesting. Residual income measures divisional performance by subtracting the opportunity cost of capital employed from division profits. Variables: Opportunity costs of capital employed, division profits Calculation: Division profits - Opportunity cost Measured as: Value ($/€), Interpretation of results: Lower is better Originally posted [...]