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Posts Tagged ‘eis’

Executive Dashboard – Final Summary

April 3rd, 2009 Comments off

One of the key projects I wanted to complete during Q1, which is now finalized, is the introduction of an Executive Dashboard. For my current company, there has never been any form of EIS (Executive Information System) reporting in place so this involved the intro of a brand new reporting tool. For this type of situation there are countless pros and cons. On the one hand, there’s the open arms welcome of something that will help with key decision-making and provide new perspectives on the business. On the other hand, when everyone starts getting involved in “what they need” you run the risk of having what should be an overview turning into a data dump of so much info that it becomes more of a burden than useful tool.

As with every company, there are a multitude of approaches as it relates to measuring the business, and defining the necessary approach regarding the reporting of financials. More specifically, there will be a completely difference approach for the reporting of a Retailer versus the reporting for a company that might have an intensive R&D effort. Both will have a completely separate, and unique, set of needs for their reporting.  For the sake of this summary, I will keep those needs aligned with that of an Apparel or Footwear manufacturer.

                With respect to the creation of an Executive Dashboard, there are numerous off-the-shelf capabilities that can be integrated with your current reporting platform. For this company, which is using an older & customized form of MAS, I’ve chosen to take the more simplistic approach and build an Excel-based template that can be easily updated and will provide the snapshot that the greater management team will find of value. Especially since this type of tool has never been implemented.  Further considerations include the different segments or metrics that you believe need to be reported on.  In most cases, you’ll find a summarized reporting of Orders, Revenues, Balance Sheet, and Customer-centric items.

                But even then, with respect to each segment, do you really need to report on every item within each segment? For Revenue, I chose to report only to the level of Domestic and International for the segments of Footwear and Other, respectively. While we have additional segments such as Clothing, Accessories, etc., Footwear is still the core category that we need to watch the closest. I also chose to break this out at both a dollar and pair level. If any one of the team needs data on other softgoods then we can certainly pull that data but I don’t want to see a summary view turn into a data dump that can’t be synthesized in a matter of minutes. That’s really what the goal of the dashboard should be….a snapshot of the company that can be digested in a matter of minutes and provide a brief insight into the key areas that are critical to the success of the business. If any of these areas fall outside of the Company’s “comfort zone”, then it certainly warrants additional review and the pulling of details that are easily available.

                With respect to our Company, there were 5 key areas that I chose to focus on. However, it should be noted that your approach to any level of EIS reporting should not be static and should be open to change to accommodate the reporting needs of the company. But in planning such a tool, the areas chosen should be at a high enough level that there will be only subtle changes for long-term reporting purposes. For our first generation of reporting, I chose the following areas:

  • Orders / Revenues
  • Operating Expenses
  • Balance Sheet
  • Finance / Working Capital metrics
  • Dealer / E-Commerce metrics

                With respect to each of the sub-areas listed above, it’s important to note the need for brevity in each of these areas. As an example, in Section A above, the intent is not to do a data dump of every area that the company records revenue under.  In our situation, we record revenues at both the International, Domestic, and E-Commerce levels, along with further delineation by Footwear, Apparel, Clothing, Accessories, and Other. For the sake of an EIS platform, the best approach is to take the 80/20 approach where you can get a consistent snapshot of what is happening, if you will, the “temperature” of the Company. Should something be sub-par, it would be apparent within the EIS and there can then be a follow-up with more detailed reporting.  For myself, out of the 30 potential combinations above (Orders + Revenue), I chose to follow only 10. However, the 30 above would represent just the financial portion. The 10 I have included also include metrics on Pair performance. While only a fraction of the total permutations, it will give me an immediate indication if there are potentially greater issues to deal with respective to our corporate performance.

                What’s important to note is that this is not just a “Finance” document; it’s a document that needs to be shared among the Management team and used to prompt discussion or decision making. The data needs to be unquestioned and easily updated. It needs to be a document that other team members are eager to receive and provides them with the necessary “temperature”. Are you achieving that with your current dashboard reporting?

                With respect to Operating Expenses, I chose to include this area since there’s always a need to keep tabs on major expense areas. I’m not interested in just a blended topline number, I’m interested in knowing what is happening in key expense areas. Out of the dozens of expenses, I chose to include only 12 that I would want to track on a constant basis. These ranged from 3rd Party Logistics, Advertising, and Bad Debt, to Professional Services and Travel. However, while the remainders of our reporting metrics will be reported on a weekly basis, these are only being updated on a monthly basis. Then why don’t we just hold this for review in our standard financial reporting? I chose to include because I want our OpEx to be a constant data source that our entire team will be conditioned into being sensitive to and not paying attention to on strictly a monthly basis.  The reporting of the 12 areas I chose, we’ll be able to have constant oversight on almost 85% of our Operating Expenses.

                Next up, I wanted to focus on Balance Sheet accounts.  Again, I wanted to focus on those areas that should be tracked on a constant basis and not lost sight of.  We’re obviously following Cash/Cash Equivalents and Inventory, but I’ve taken a slightly different approach for A/P and A/R. For our Receivables, I chose to focus only on the 90+ column. We’re routinely seeing accounts in the Current to 60-day column, but my blood pressure starts going up when they hit the 90+ column.  I want to know if this column is growing.  Similar approach on the Payables side. I want to know if our A/P group is behind in paying vendors or if we are staying current. I chose to follow the Past-Due column. Similarly, I will also be following the amount of early pay discounts that we are taking with vendors.  I want this number increasing every week. Since we have the ability to easily meet payables, I want to push the calendar a little more and start taking discounts.

                Last, but not least, were the E-Commerce/Dealer metrics and the basic financial ratios. I chose to include newly opened dealers, closed dealers, inactive dealers, as well as 5-key metrics for our E-Commerce efforts. Considering the current environment, I kept the financial ratios to the top level considerations of working capital rations, DSO, inventory turns, etc..  As mentioned in my first post, the intent of an EIS platform is not to be a data dump.

                -It’s intended to give a very top level view of what is happening with the Company.

                -It’s not intended to replace any of your financial reporting.

                -It’s intended to be an indicator of what further reporting needs to be addressed if there is a problem.

                -It’s not a static tool, but one that is dynamic to the needs of the Company.

 

Thanks for reading . . . .

Jeffrey Ishmael

My final views on Executive Dashboards….

March 17th, 2009 Comments off

            My last two postings spent a little more time summarizing the different approaches that can be taken in developing an EIS platform. In this last installment I want to discuss the remaining elements that I chose to include in our first generation rollout. In the last posting we discussed the approach to Order / Revenue reporting.  Now it’s worth summarizing my approach to Operating Expenses, Balance Sheet, and Ratios. Again, it’s worth noting that this level of reporting is intended to only provide a quick “temperature” on what is happening with the Company.

 

            With respect to Operating Expenses, I chose to include this area since there’s always a need to keep tabs on major expense areas. I’m not interested in just a blended topline number, I’m interested in knowing what is happening in key expense areas. Out of the dozens of expenses, I chose to include only 12 that I would want to track on a constant basis. These ranged from 3rd Party Logistics, Advertising, and Bad Debt, to Professional Services and Travel. However, while the remainders of our reporting metrics will be reported on a weekly basis, these are only being updated on a monthly basis. Then why don’t we just hold this for review in our standard financial reporting? I chose to include because I want our OpEx to be a constant data source that our entire team will be conditioned into being sensitive to and not paying attention to on strictly a monthly basis.  With the reporting of the 12 areas I chose, we’ll be able to have constant oversight on almost 85% of our Operating Expenses.

 

            Next up, I wanted to focus on Balance Sheet accounts.  Again, I wanted to focus on those areas that should be tracked on a constant basis and not lost sight of.  We’re obviously following Cash/Cash Equivalents and Inventory, but I’ve taken a slightly different approach for A/P and A/R. For our Receivables, I chose to focus only on the 90+ column. We’re routinely seeing accounts in the Current to 60-day column, but my blood pressure starts going up when they hit the 90+ column.  I want to know if this column is growing.  Similar approach on the Payables side. I want to know if our A/P group is behind in paying vendors or if we are staying current, which is why I chose to follow the Past-Due column. Similarly, I will also be following the amount of early pay discounts that we are taking with vendors.  I want this number increasing every week. Since we have the ability to easily meet payables, I want to push the calendar a little more and start taking discounts.

 

            Last, but not least, were the E-Commerce/Dealer metrics and the basic financial ratios. I chose to include newly opened dealers, closed dealers, inactive dealers, as well as 5-key metrics for our E-Commerce efforts. Considering the current environment, I kept the financial ratios to the top level considerations of working capital rations, DSO, inventory turns, etc..  As mentioned in my first post, the intent of an EIS platform is not to be a data dump.

            -It’s intended to give a very top level view of what is happening with the Company.

            -It’s not intended to replace any of your financial reporting.

            -It’s intended to be an indicator of what further reporting needs to be addressed if there is a problem.

            -It’s not a static tool, but one that is dynamic to the needs of the Company.

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Executive Dashboards – Part 2

March 16th, 2009 Comments off

                In my last post I wrote a very brief summary on the development of Executive Dashboards and some of the basic elements that can be tabled for consideration within such a tool. As with everything company, there are a multitude of approaches as it relates to measuring the business, and defining the necessary approach regarding the reporting of financials. More specifically, there will be a completely difference approach for the reporting of a Retailer versus the reporting for a company that might have an intensive R&D effort. Both will have a completely separate, and unique, set of needs for their reporting.  For the sake of this summary, I will keep those needs aligned with that of an Apparel or Footwear manufacturer.

 

            With respect to our Company, there were 5 key areas that I chose to focus on. However, it should be noted that your approach to any level of EIS reporting should not be static and should be open to change to accommodate the reporting needs of the company. But in planning such a tool, the areas chosen should be at a high enough level that there will be only subtle changes for long-term reporting purposes. For our first generation of reporting, I chose the following areas:

a.      Orders / Revenues

b.      Operating Expenses

c.       Balance Sheet

d.      Finance / Working Capital metrics

e.      Dealer / E-Commerce metrics

 

            With respect to each of the sub-areas listed above, it’s important to note the need for brevity in each of these areas. As an example, in Section A above, the intent is not to do a data dump of every area that the company records revenue under.  In our situation, we record revenues at both the International, Domestic, and E-Commerce levels, along with further delineation by Footwear, Apparel, Clothing, Accessories, and Other. For the sake of an EIS platform, the best approach is to take the 80/20 approach where you can get a consistent snapshot of what is happening, if you will, the “temperature” of the Company. Should something be sub-par, it would be apparent within the EIS and there can then be a follow-up with more detailed reporting.  For myself, out of the 30 potential combinations above (Orders + Revenue), I chose to follow only 10. However, the 30 above would represent just the financial portion. The 10 I have included also include metrics on Pair performance. While only a fraction of the total permutations, it will give me an immediate indication if there are potentially greater issues to deal with respective to our corporate performance.

 

            What’s important to note is that this is not just a “Finance” document; it’s a document that needs to be shared among the Management team and used to prompt discussion or decision making. The data needs to be unquestioned and easily updated. It needs to be a document that other team members are eager to receive and provides them with the necessary “temperature”. Are you achieving that with your current dashboard reporting?

 

Thanks for reading . . . .

 

Jeffrey Ishmael

Executive Dashboard…or Exec Data Dump?

March 12th, 2009 Comments off

One of the key projects I wanted to complete during Q1, which is almost finalized, is the introduction of an Executive Dashboard. For my current company, there has never been any form of EIS (Executive Information System) reporting in place so this involved the intro of a brand new reporting tool. For this type of situation there are countless pros and cons. On the one hand, there’s the open arms welcome of something that will help with key decision-making and provide new perspectives on the business. On the other hand, when everyone starts getting involved in “what they need” you run the risk of having what should be an overview turning into a data dump of so much info that it becomes more of a burden than useful tool.

                With respect to the creation of an Executive Dashboard, there are numerous off-the-shelf capabilities that can be integrated with your current reporting platform. For this company, which is using an older & customized form of MAS, I’ve chosen to take the more simplistic approach and build an Excel-based template that can be easily updated and will provide the snapshot that the greater management team will find of value. Especially since this type of tool has never been implemented.  Further considerations include the different segments or metrics that you believe need to be reported on.  In most cases, you’ll find a summarized reporting of Orders, Revenues, Balance Sheet, and Customer-centric items.

                But even then, with respect to each segment, do you really need to report on every item within each segment? For Revenue, I chose to report only to the level of Domestic and International for the segments of Footwear and Other, respectively. While we have additional segments such as Clothing, Accessories, etc., Footwear is still the core category that we need to watch the closest. I also chose to break this out at both a dollar and pair level. If any one of the team needs data on other softgoods then we can certainly pull that data but I don’t want to see a summary view turn into a data dump that can’t be synthesized in a matter of minutes. That’s really what the goal of the dashboard should be….a snapshot of the company that can be digested in a matter of minutes and provide a brief insight into the key areas that are critical to the success of the business. If any of these areas fall outside of the Company’s “comfort zone”, then it certainly warrants additional review and the pulling of details that are easily available.

                This is a much larger topic that I will be discussing in further detail and providing examples of what we implement for our own use.

Thanks for reading. . . .

Jeffrey Ishmael