Cash Management Module in ERP
Cash management module provides information relating to cash flow of the organization, by processing and analyzing all cash and bank transactions, arising out of payment of supplier’s invoices, receipt from sales invoices, stand alone payment and unallocated payment/receipts. Cash management module also allows analyzing financial transactions for a given period of time and provides information […]
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Importance of Critical Thinking in the Age of (Mis)-Information
Information Overload can Drown Us We are literally and metaphorically drowning in information. From the time we wake up and check WhatsApp messages to the time we login to Facebook and Twitter or Google News, we are bombarded with an excess of information and data from multiple sources that can leave us drained and confused […]
The Economic Impact of Cape Town’s Water Crisis
Cape Town has been in drought for three years. The situation is the same across most of South Africa. Other cities like Pretoria, Durban, and Gauteng are also facing a severe shortage of water. At the present moment, water is being rationed by government agencies across most of South Africa. However, the problem with Cape […]
Why Donald Trump Will be able to Stop Outsourcing ?
Donald Trump has positioned himself to be a populist leader. Although in reality, he is an opportunist leader. He has promised his voters that he will stop outsourcing and protect their jobs from cheap foreign labor. Most political pundits did not believe Trump will be able to achieve anything of that sort. After all, even […]
A KPI is a great tool to measure and control the performance of any given process. In management jargon, there is a famous saying which says “That which cannot be measured cannot be managed”. The whole process of control, therefore relies on real time measurement and transfer of information from the site where the task is actually being performed to the control room i.e. the management.
Definition of KPI: The KPI can therefore be thought of as a measurement that tells that management the precise state of operations at any given point of time.
There are 4 components to any KPI.
It is important that these 4 parameters are carefully defined keeping in mind the operational and technical capabilities. Measuring the wrong KPI or measuring the right KPI in the wrong manner can cause more harm than good to the organization that is measuring it.
While a KPI is a measure of performance, the Service Level Agreement or SLA is the ideal state of those measurements. For instance our body temperature is a KPI for our health, while 98.3 degrees Fahrenheit is the SLA i.e. the ideal state of affairs.
Hence, if we were to control our health, we would create a mechanism in which our temperature is being automatically measured. When the KPI deviates from the desired SLA i.e. temperature deviates from 98.3 degrees Fahrenheit, it must send some sort of a message to the management that management interference is required.
The beauty of KPI’s and SLA’s is that it provides required solutions in required time. Hence management can take preventive action instead of having to cure the problems.
Algedonics: While BPM solutions have built in functionalities to report any and every deviation from the SLA, it would not be in the best interest of the management. It is impossible for any process to function at uniform speed, if it is being performed by humans. Even mechanised processes do not function at absolutely uniform speed. Some level of tolerance, therefore needs to be built in the control mechanism.
The KPI’s and SLA’s should therefore allow for +/- 10% changes. Anything which goes above this is serious enough to require management attention.
The 10% is a ballpark figure and may be different depending on the degree of automation and criticality of the process. But the idea is clear, some tolerance level needs to be built in this system or else the managements mailboxes will be flooded with deviation messages which do not even represent an operational problem.
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Continuous Improvement and Business Process Re-Engineering
February 12, 2025
