Many finance and IT executives acknowledge that large-scale data analysis is key to organization strategy for market differentiation. Still, a large portion of food and beverage consumer packaged goods companies the next steps are murky. Here are 5 KPIs to help you boost your BI programs. For more on making business intelligence work for your company, click here: http://gt-us.co/WHvOfw

1. August 20, 2014
Many finance and IT executives acknowledge that
large-scale data analysis is a key organizational
strategy for market differentiation. Still, for 44% of
the food and beverage consumer packaged goods
companies that we surveyed, less than one-third of
their data is turned into actionable insights. And only
40% of the respondents said they were very
confident they were using big data effectively.
So why are so many companies struggling to get the
most out of their business intelligence (BI) program?
John Miksich, senior manager in Grant Thornton’s
Technology Solutions practice, attributes the
challenge to the following factors: (1) immature data
governance processes, (2) disparate and siloed data
sources, (3) underutilization or overutilization of
purpose-built reporting technologies, and (4)
insufficient clarity of the “right tool for the right job”
for consumers of information.
“In a typical organization, information is collected by
individual business functions that are typically not
efficient at centralizing or combining information
across the functions,” Miksich explains. There also is
a tendency to overuse or underuse the existing
toolsets. But perhaps more importantly, there’s a lack
of strategy and planning. “It’s like trying to run a
marathon without a finish line. People in different
functions are asked to deliver a report in a vacuum.
By the time the report is ready, it’s already outdated
and irrelevant,” Miksich notes.
Clear KPIs helped manufacturing
company plan strategically
This leading manufacturer, with over 37
individual business units/companies, initiated a
major project to improve planning and strategic
management visibility. After conducting
interviews across each business unit and
company type, we defined 18 financial and
operational KPIs. Financial KPIs included
those critical to new planning improvements, as
well as those needed for any public entity on a
daily basis, such as earnings before interest and
taxes, return on capital equity, working capital
and trading margin. Operational KPIs were
defined as those that support key business
decisions across labor, sales, inventory, scrap
and safety.
Small steps can ignite your BI program
Making radical changes to the way your company
shares and analyzes data is daunting. But you can
start small with tools that you already have in place.
Begin by clearly documenting and sharing your
business or operational goals across the entire
company. Frameworks, such as Grant Thornton’s
Analytical Assessment Approach (also known as A3),
give organizations the structure they need to define
their measurement, reporting and data strategy, and
facilitate a successful outcome and linkage to the
corporate strategy.
Consider the following five key performance
indicators (KPIs) — essential to insightful data
analyses on profitability — to build a solid
foundation for your analytics reporting.

2. Gross margin target not only measures how
profitable your business aims to be, but it is also
one of the first things investors will look at. In
other words, as a KPI, the gross margin target
takes the pulse of your business.
1.
Working capital is another financial KPI that
measures your company’s health and is critical to
track. Expressed as a ratio of the difference
between current assets and liability and net sales,
the working capital KPI will tell you if the
business can cover its liabilities.
2.
Days sales outstanding is an operational
KPI that measures how efficient your company
is at collecting revenue after a sale and exposes
operational deficiencies that you can eliminate
with a predictive analytics tool.
3.
On-time delivery performance has a direct
impact on your revenue and profits and should
be one of your must-track KPIs. Make sure you
keep tabs not only on your performance, but on
your suppliers’ as well. We’ve found that
customer retention rates drop from 82% for
companies working with prompt suppliers to
70% for companies with poor supplier
performance.
4.
Inventory aging, a measure of how well your
business is able to move stock, can help you
identify bottlenecks when plugged into your BI
program. As your business grows and expands
its offerings, you will want to know how much
time it takes to move inventory in and out.
5.
Managing expectations is paramount
“Your leadership needs to understand that
introducing business intelligence concepts is an
evolution,” says Miksich. “Prioritizing the release of
information does not always align to executive
expectations, but it is critical to be measured in
deployments to build confidence in the business
intelligence strategy. And as the business changes, the
metrics and the associated KPIs will have to change
too.”
About the survey
We surveyed 241 business retailers, manufacturers/suppliers, and wholesalers/distributors/brokers in the
food and beverage industry in December 2013. The target respondents were directors, general managers,
category/merchandising/marketing managers, CEOs, CIOs and other senior executives.
See more at: http://www.grantthornton.com/issues/library/articles/food-and-beverage/2014/08-5-KPIs-that-can-boost-your-business
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