KPIs and dashboards help with value realisation

Monitoring

Once you have identified the bottlenecks in the organisational process, it's time to look ahead and improve processes and procedures. It is then necessary to monitor KPIs. As all departments and roles have different information needs, they should also have their own set of KPIs. That way you show the impact and each department and function gets recommendations for improvement for each KPI. Again, you can do that by pairing a standard within the organisation with a KPI or by following a benchmark.

"Dashboards make it much easier to turn data into information of interest to various departments within an organisation."

Maarten de Ru, Director Partners & Alliances | ISPnext

Expenditures as profit potential

How do you go about creating that value? Leppers provided an example to illustrate how you can use KPIs to extract profit from components within the organisation where you least expect it: spending as profit potential. Again, detail is an important driver. One of the KPIs concerns the flow of invoices within the organisation. "It appears that many companies are paying their invoices late," Leppers said. He wondered aloud if that was the right way to go about things. There are many advantages to paying an invoice on time. "In many cases, there are gains to be made if you do pay on time. Perhaps there are payment discounts or other forms of discounts. You can make good arrangements for that between Purchasing and Finance." It may be about one or two per cent; not exactly staggering amounts, according to Leppers, but if you make it a policy and arrange good deals with suppliers, it also works in your favour in a few other ways. First, of course, is the discount you receive. In addition, it boosts the relationship with the supplier, which can be useful, especially in light of the scarcity of products or production resources that exist today. Suppliers then prefer to deal with companies that pay on time. It also benefits your organisation's reputation; everyone wants to do business with companies who ensure prompt payment. The timely payment of invoices does not need to result in extra work. The invoice turnaround time within the organisation may even be much shorter than the final payment period.

There are many opportunities for Finance, in collaboration with Purchasing or other departments within your organisation, to create more value. The important thing is to gain insights. "You shouldn't focus on financial data as the end result," advises De Ru. "The data you end up with is the result of all the processes that took place before that. Departments within an organisation would benefit from more frequent interaction and collaboration. This is especially true for Purchasing and Finance, which is, in fact, a must. That can add value." His conclusion is that selling more is not always the answer for more profit at the end. It's all in the detail. "You won’t see it until you achieve it," De Ru quoted one of Johan Cruijff's many wise sayings.