KPI decreasing is better with percentage

  • Franky Leeuwerck

    SSCrazy

    Points: 2036

    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.

  • Raunak Jhawar

    SSCoach

    Points: 15701

    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.

    Raunak J

  • Franky Leeuwerck

    SSCrazy

    Points: 2036

    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.

  • hamburg113

    Valued Member

    Points: 52

    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.

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