For businesses, the key focus is to deliver high-quality products to a large number of consumers. Very high emphasis is put on designing the products according to customer needs and marketing activities to spread maximum awareness regarding the product. While businesses constantly monitor metrics like revenue, cash flow, ROI, etc. These metrics are useful for assessing business performance. However, the business needs to be backed by highly efficient operations.
But for a C-suite executive, how will he manage the operations and understand the impact of it on its business performance. This is where internal controls come into play. Defining the right internal controls would not only monitor the operations of the organization but also help in continuously improving the operations to attain a competitive benchmark KPI.
The following internal control metrics would bring alignment between the business objectives and the operational processes.
Whether the quality of the product is suitable for consumption by the consumer? The quality control KPIs ensure that the products are free of any error or defects when it reaches the customer. This not only involves production quality assurance but also ensuring quality maintenance during logistics. Few examples of the quality metrics can be error percentage, standard deviation, defects per shipment, etc.
Am I meeting the needs of all the customers? Is my company producing the right amount of product to meet all consumer needs along with keeping the inventory optimal? The quantity KPIs measures the capacity of the organization to meet the quantity requirements of the customers in a specified time. Percentage of deliveries on time in full is one of the KPI monitored to judge the capacity of the organization to meet consumer needs.
In how much time I am able to meet the customer’s demand? The velocity or speed KPI monitors the promptness of the customer service. This KPI tracking is important to identify any inefficiency in the operations leading to high customer service time. Lead time between the customer’s order and product delivery helps in analyzing the whole business operations from procurement to delivery of the product.
Is my product adaptable to the varying needs of the consumer? Is my business operations adaptable to the dynamic business environment? The ability of my operations to meet the dynamic customer needs also has an effect on the velocity of the product to reach the market. Making adaptable operations incur incremental costs but derive much higher benefits in the future.
Profit being the function of cost and revenue, revenue is dependent on external factors like customer’s buying power, competition, etc. However, what the business can control is the costs associated with making the product and delivering it to the customer. The objective of the business is to control costs and reduce wastage in order to drive higher margins.
These 5 Internal Controls are at the core of any business operations as they decide the level of customer service which is directly related to the price the customer is willing to pay. With VComply, manage all your operations KPIs on the single cloud integrated platform with real-time tracking and analysis to help improve the operational efficiency.Add to favorites