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Measuring organization performance

While measuring organization performance I usually study 10 measures. These measures give me an idea about the overall health of organization. The measures are -


Cash flow return on gross capital as a % of the dollars invested in the operation. It is a measure of how efficiently a business utilizes and generates cash. The metric evaluates the amount of profit a business unit generates (Gross operating cash flow) in relation to the amount of cash invested in the business in the form of working capital, property, plant and equipment (Gross operating capital)

Performance to budget

Comparison of actual expense amount (net expense) to predetermined amounts (profit plan). Used to manage and hold expense levels as reported in SYSTEM.

DPO (#)

Days payable outstanding is average number of days needed for any location to pay creditors. This should aligned with SCM policy.

DSO (#)

Days Sales outstanding is average number of days firms customers are taking to pay their invoices. It is a measurement of many days (time) it takes to convert sales Rs to cash.

Support Expense (%)

An expense ratio metric that expresses total support expense (total distribution, administration, selling and R&D expenses) as a % of total sales. Used to measure and hold expense levels in line with sales levels. This calculation takes support expense (Rs) divided by net sales (Rs) times 100.

Employee Turnover (%)

The total number of firms employees who left in a measurement period. This includes all terminated employees with a classification of voluntary (resigned) and involuntary( released) status as in SYSTEM.

On time delivery (%)

The measurement of actual product delivery lines shipped to the date promised to the customer divided by total shipments due.

Monthly near misses or fatal injury/death (#)

As per reported from all locations in the firm


The elements of CONC ( cost of non conformance) are as follows-

  • Product warranty
  • Rework
  • Scrap
  • Excess & obsolete inventory
  • Maintenance
  • Premium inbound and outbound freight
  • Special activities that provide cost savings benefits of materials, services that directly impact the profit & loss statement

Supplier Quality - External DPPM (#)

This external DPPM calculation represents External suppliers shipping firms locations. Defects parts per million, is the total number of defects received divided by the total number of units received multiplied by 1 million. The rejection quantity within a DMR must be captured accurately to reflect the number of defective units known, whether it is based on percentage of defects from statistical sample or determined from 100% sort by firm or preferably by the supplier.