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We are building a DW for our distribution company.

By
  • Joe Oates, Chuck Kelley, Les Barbusinski
Published
  • February 03 2003, 1:00am EST
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Q:

We are building a DW for our distribution company. We are defining the metrics and key performance indicators (KPIs) to use. We are starting the implementation with the sales and marketing division. I was wondering if you know where to find samples of key metrics, KPIs or scorecards?

A:

Les Barbusinski’s Answer: Sales and marketing metrics and scorecards vary too widely by industry, and I know of no publications that list such metrics. However, most of the major business intelligence vendors offer "canned" reporting and analysis solutions for specific industries and business functions (e.g., sales, finance, marketing, customer support, operations, supply chain, clickstream analysis, etc.). This usually includes standard reports and metrics based on a standard set of data structures.

You may want to consider implementing the sales and marketing analytics solution for your industry from your chosen BI vendor as a version 1.0 release and elaborate from there. These solutions are usually reasonably priced because all of the BI vendors know that the real challenge lies in populating the data structures, not computing the metrics once the structures are populated. Even if you choose not to implement a vendor solution, you may want to ask your BI vendor for a "sneak peek" at their package to get an idea of some of the metrics you want to include in your DW implementation.

Chuck Kelley’s Answer: The best place to find them is in your user community heads. Hold a JAD session or do one-on-one interviews to find out what they think is important. Then start building the KPI dashboard (or whatever form they like) from there. I don’t know how IT can determine what is important for the user community without asking, and I have yet to understand the fear of IT to ask the user community.

Joe Oates’ Answer: There are many articles and white papers on metrics and KPIs on the Web. Go to any Web search engine and enter something like "metrics KPI sales distribution industry" and you will get a lot of hits. Of course, most of these give just a few examples, but by reading several, one can get a good idea of what are considered important metrics in most industries. Additionally, you can go to online bookstores such as Amazon, Barnes & Noble or Borders to find appropriate titles by entering "metric" in the keyword search.

A distribution company, like any other company, must lay out the key business processes that contribute to the growth and profitability of the company. These key processes include marketing, sales, customer relationship management (CRM), financial management, product management, inventory management, delivery management and supplier management.

Within each of these, your management must identify information items that they use to make business decisions, e.g., metrics or KPIs. The identification and collection of metrics or KPIs is only the first step. The management must look at these to determine if the metrics improve or deteriorate from one time period to another and to identify trends.

Examples of metrics for selected functions for a distribution company include (per period): 1) sales – gross revenue, net revenue, gross margin and, if you can calculate it, net margin; 2) CRM – complaints per customer, sales and margins by customer, customer profitability, customer payment scoring; 3) product management – sales and margins by product, number of turns per product, costs per product. Of course, there are many more, but this should give you a start.

Additionally, presentation tool vendors offer their views on how this information should be presented. Two that you might want to look at are:
MicroStrategy Sales Analytics, BusinessObjects Sales Analytics.

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