Visibility – Metrics and Dashboards
Every initiative aimed at improving working capital requires information at various levels within the company. First, information is needed to look for optimization opportunities. With the right metrics, executives can benchmark divisions and groups against each other, and against other companies. From these insights, savings opportunities can be identified and appropriate policies and targets can be set. Once new policies are in place, the task is to monitor compliance to the policies and to ensure that the policies are having the desired effect – all of which requires access to data from multiple systems all compiled into a set of consistent and always available metrics.
Although the specific policies and how they are implemented will vary, the most common metrics of the cash conversion cycle (CCC) are well understood, days sales outstanding (DSO), days sales in inventory (DSI), and days payables outstanding (DPO) against annual operating plans and forecasts as well as trending information. This information along with supporting detail must be available at the company level and for all the divisions and groups that make it up.