KPIs

Question 1

Explain what KPIs are and how are they calculated

Answer 1

KPIs are metrics used to measure the performance of a business.

KPIs should be SMART

Specific, Measurable, Achievable, Relevant, Time Bound

Question 2

What is the structure for answering a KPIs question

Answer 2

State the KPI

State the headline KPI

**Explain it **

How can it be measured, ensuring it is ‘SMART’

Apply it to Kannon

Justify why this KPI is relevant to Kannon

Question 3

What are examples of KPIs for operations

Answer 3

• Supply chain costs per unit sold
• Time taken to deliver a customer order
• Percentage on-time delivery to a customer
• Percentage of customer orders fulfilled
• Percentage defect rate (supplier and customer orders)
• Percentage waste rate
• Quality costs (individual KPIs for prevention, detection, internal failure and external failure costs)
• Labour utilisation rate
• Asset utilisation rate
• Warehousing costs
• Queues and waiting times
• Working capital ratios such as inventory days, payable days and receivable days and the length of the cash operating cycle
• Inventory days = inventory / cost of sales * 365
• Receivable days = Receivables / Sales * 365
• Payables days = Payables / Purchases * 365
• Cash operating cycle = inventory days / receivable days – payable days

Question 4

What are examples of KPIs for Marketing

Answer 4

Overall sales and marketing activity

Growth in sales volume/revenue
Market share
Gross margins
Customer retention rate
Cost of customer acquisition
Marketing spend per customer
Customer lifetime value

Promotion

Promotion cost
Awareness levels
Website traffic to conversion %
Social media reach ( for example Instagram followers)
Email marketing performance (for example, unsubscribe rate)
Sales team response times

Product or Service

Product development time/cost
Product life-cycle costs
Repurchase rate
Brand value
Warranty claims

Pricing

Price relative to industry average
Price elasticity of demand

Place

Transport costs
Storage costs

Question 5

What are examples of KPIs for HR

Answer 5

Recruitment and selection

Cost per employee hired
Selection method conversion rate
Time to fill a position
Female to male ratio

Training and development

Training and development costs
Impact of training on existing KPIs
Training feedback

Performance management

Appraisals completed on time
Appraisal action plan agree and followed up

Motivation

Turnover rate
Employee absenteeism
Employee productivity
Employee satisfaction scores
Flexible working arrangements offered

Reward system

Cost of rewards
Competitiveness of reward system
Adherence to laws and regulations

Question 6

What are examples of KPIs for IT

Answer 6

Operational

Ticket response rates for IT issues sent to IT support
Resolution rates
System / Technology downtime
Customer experience / feedback

Transformational

Cost of new technology
Time saved using new technology
IT spend per employee
IT utilisation
Security adherence/breaches

Strategic

New/improved business opportunities using technology
Revenue generated using new technology
Technology leading to competitive advantage
IT function as a leader in the market place

Question 7

What are KPIs specific to Kannan

Answer 7

What are KPIs specific to Kannon

Sales and marketing

Sales growth by market share > market share increase (or decrease) per quarter
Promotion > Number of likes on social media posts per week
Product (& innovation) > number of new saddles launched in the rage per year
Price > Average retail price for each saddle type verses the main competitor’s equivalent per month
Place > number of Keeland and international retailers who stock Kannan saddles per period
People > Percentage of website customer enquires not responded to within a 24 hours per week

Product and Distribution

Wastage levels
- Percentage of raw materials not useable for production per week
- This KPI monitors production efficiency but also considers cost reduction and sustainability too

Inventory to sales ratio
- Measures stock levels against sales
- This KPI helps ensure that inventory levels are managed efficiently in response to changes in sales volume

Packing time
- The average time taken to pack an order compared to standard
- This measures the efficiency of the order packing department

Machine downtime
- Number of hours of downtime due to machine failure per month
- This KPI will highlight where our machinery is not operating efficiently

Outbound order delivery time
- Average number of days taken for orders placed with Kannan to reach retailers
- This measure is vital in identifying inefficiencies in dispatch and courier speed

Capacity utilisation
- Percentage of output capacity not fulfilled each week
- This compares actual output to determine how much of our current available capacity we are using