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KPI decreasing is better with percentage Expand / Collapse
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Posted Tuesday, April 19, 2011 5:58 AM
Old Hand

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Dear,

I want to define a KPI that measures the relative amount of freight costs to the amount sold.
The target is to limit this percentage as much as possible, so "decreasing is better".

Let's say that in most cases the freight cost is below 10%.
The best case would be 0% (but unrealistic).
A "good" situation is where we have 5% freight costs.
Bad sales are sales with freight costs above 15%.

What this the best way to model this KPI ? Use a normalized methode, or absolute ? What is the "worst value" ? ..

Franky


Franky L.
Post #1095540
Posted Wednesday, April 20, 2011 3:04 AM


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It largely depends upon the factors that the business considers while designing the KPI's.

A business could very well measure KPI for freight as freight/tonnage(this is an arbitrary example)
This is a classic example of relative KPI measure.


Regards/Raunak
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Post #1096161
Posted Thursday, April 21, 2011 7:11 AM
Old Hand

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Solved:
When using ratio's (percentages), you should use the "Band by value" scoring pattern. In such case 'a worst value' is not needed in the KPI configuration wizard.


Franky L.
Post #1096960
Posted Friday, April 22, 2011 8:57 AM
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Hi,

Thanks very much for this comment. It help me to think about my ideals.

Tks again and pls keep posting.

If you want to get more materials that related to this topic, you can visit: KPI examples

Best regards.
Post #1097479
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