In this video tutorial, accounting professor Kay Stice focuses on developing the fourth key performance indicator (KPI) for a trucking company used in this case study. He explains the process of developing the KPI of increasing the fuel purchased from company docks. He also explains how a cash incentive can help reach this KPI.
- We are at the daily 8am meeting…looking at our four Key Performance Indicators, our KPIs.…The first measure, driver turnover,…the second measure, billable miles per tractor per day,…the third measure is days pickup to cash,…and the fourth and last measure…is the percent of fuel purchased from company docks.…Recall that XYZ's second largest operating cost…is the cost of fuel.…The fuel cost is the most volatile of XYZ's operating cost,…fluctuating up and down with the worldwide price of oil.…
XYZ attempts to reduce its fuel cost…by operating its own fuel depots.…XYZ can save 10% on its fuel cost…if its drivers refuel at a company owned fuel depot…rather than at a commercial truck stop.…The goal here is 90%.…We are currently at 70%.…Now you may ask, why our goal isn't 100%,…given that we get a cost savings of 10%…for all fuel obtained from our own fuel depots?…Well, we can't get 100%,…because we don't have full coverage.…There are some parts of our service area…where we don't yet have one of our own fuel depots.…
In this course, accounting professors Jim and Kay Stice explain what KPIs your business should consider in a balanced scorecard, from financial goals to employee and customer satisfaction. They describe how to craft a clear mission statement that complements your KPIs, and how to tie performance to incentives. Plus, get a look at KPIs in action, as Jim and Kay break down a case study examining a trucking company's balanced scorecard.
- The importance of KPIs and measuring performance
- Financial goals and measure
- Customer needs and satisfaction
- Employee growth
- Creating an effective mission statement
- Linking measurements and rewards
- Examining a KPI case study