Measurement is the closing link in portfolio management. An unmeasured portfolio is unmanageable; however, an improperly measured portfolio is more dangerous than an unmanaged one because it inspires false confidence.
Portfolio KPI set
Indicator
What does it measure?
Why is it important?
New product sales rate
Share of total turnover for products launched in the last 3 years
The most concise indicator showing the portfolio's renewal capability.
Time to market
Average time from idea to launch
A measure of competitive response speed.
Gate opening rate
The percentage of items that remain at each decision point
If the score is too high, no elimination takes place; if it's too low, the preliminary round is weak.
Work case deviation
Planned and actual revenue/cost difference
An indicator of predictive ability and optimism bias.
Revenue concentration
Distribution of turnover among products.
A long queue indicates the size of the tail and the risk involved.
Number of active SKUs and their changes.
The trend of portfolio breadth over time.
It shows whether complexity is growing in a controlled manner.
Product-based contribution margin
Product profitability calculated using actual cost allocation.
The basic input for rationalization decisions
Inventory turnover rate
Stock turnover count by product group.
Allocation of tied working capital in the portfolio
Capacity utilization rate
Distribution of R&D and production capacity across the portfolio.
It shows whether short-term pressure is eating away at the future.
Capacity per active pen
Effective capacity per ongoing project
Early warning of excessive simultaneous work.
End-of-life liability
Number of products with ongoing service and spare parts commitment
A tail that has been removed from the portfolio but continues to generate costs.
Why is real-time measurement important?
Consolidated reports at the end of the period tell the story of the past. However, most portfolio decisions should be made when they can be corrected : the pace of a launch in its first eight weeks, the rate of return on a variant in its first quarter, the initial erosion of a product's margin.
This speed is not possible in structures where data needs to be collected and synchronized from separate systems. However, in an integrated system operating on a single database, the indicator is updated as soon as the transaction occurs.
Benefit to the customer
Portfolio performance becomes a continuous view, not just a monthly presentation.
Problems are noticed when they are fixable.
Management meetings begin with decisions, not with data discussions.
Product owners monitor their own displays from their own screens.