KPI Dashboard
As a BI Data analyst, it’s common to create a KPI dashboard for business. But I didn’t really understand what ‘KPI’ means. So I was just calculating some indexs that seems like insightful. As a result, I couldn’t explain why I calculated certain index on my final dashboard in the first place.
I think there are several reasons that situation happened to me. Firstly, I never thought about what ‘KPI’ means. I thought it was just random index that each business considered to be crucial. Secondly, I passively accepted my client’s opinion about ‘KPI’ rather than thinking ‘Does this KPI really matters in their business?’
With that I decided to learn what ‘KPI’ means through Udemy, where you can take e-learning course. Also, at the end I created a KPI dashboard since taking an online course doesn’t gurantee that I’m fully understand the content.
- What KPI means
KPI stands for ‘Key Performance Index’ that measures quantifiable , comparing performance to track the business performance over a time frame. For example, it could be like number of new subscribers per blog post for marketing. In other hands you could calculate the reject rate percent for manufacturing.
2. Hierarchy of KPI
What about the hierarchy of KPI? In this course you can learn about hierarchy of KPI. While KPI does matter, not every KPI is equally important.
Look at the hierarchy above. Net profit is top hierarchy of the KPI. Other KPIs are following under below. In this case, net profit is the most important KPI more than any other KPI including Revenue, costs etc,.
3. Perspective of KPI : Business
Many business industries have their own KPI. However, in my case I focus business perspective KPI which is common factor that I encounter throughtout projects.
Referring the online course resource, there are three main business perspective factors for owners/investors.
- Net profit(Revenue — cost) : It’s better to maximize revenue and minimize the cost as best as you can.
- ROCE(Return on Capital Employed) or ROI(Return on Investment)% : The more higher ROCE and ROI you have, the more it’s beneficial to you business
- Cashflow : It’s a ideal to minimise time between spending cash and receving it.
4. Create a KPI Dashboard
In this section, I’m going to explain what KPI factor that I would choose if I’m a business analyst in H&M company. First of all, I used H&M transactions and articles dataset on Kaggle.
Transaction dataset incldues what product customers purchased and product price. Article dataset is about product information that I can join this dataset with Transaction.
In my dashboard, I calculated the three KPIs as business perspective to track the H&M business performance. Here are three KPI factors under below.
- Total Daily/Monthly Sales : Sum of product price by each month and day.
- Total Daily/Monthly Net Profit : Total revenue — Total cost. But this dataset doesn’t have a cost column so that I can’t calculated the KPI first. Therefore, I was serarching for article ‘How Fashion Brands Set prices’. As you refer to this picture under below, I assumed that the cost is half of price that origin data have.
- Total Daily/Monthly Quality : Revenue / cost
5. Final Dashboard & Thought
As you’ve noticed my final dashboard, there’s no even slightly difference between three KPIs. What’s more important thing, however, I learned what KPI means and which KPI matters in business or operation perspective.
Next time I will update for you guys how to improve my current KPI dashboard. Thank you for reading my article.
