{"id":6050,"date":"2023-09-06T20:12:49","date_gmt":"2023-09-06T20:12:49","guid":{"rendered":"https:\/\/www.peeriosity.com\/shared-services\/articles\/?p=6050"},"modified":"2023-09-06T20:12:49","modified_gmt":"2023-09-06T20:12:49","slug":"kpis-and-metric-driven-continuous-improvement-in-order-to-cash-o2c","status":"publish","type":"post","link":"https:\/\/www.peeriosity.com\/shared-services\/articles\/2023\/09\/kpis-and-metric-driven-continuous-improvement-in-order-to-cash-o2c\/","title":{"rendered":"KPI\u2019s and Metric-Driven Continuous Improvement in Order-to-Cash (O2C)"},"content":{"rendered":"

Introduction<\/strong><\/p>\n

Most Accounts Receivable organizations have historically been measured on overall Accounts Receivable levels, overdue accounts, and department cost. But, in today’s challenging business climate, with companies implementing more advanced technology and end-to-end process design, there is a much more compelling need to measure and evaluate the entire Order-to-Cash (O2C) process.\u00a0 How to best approach this daunting task can vary based upon such factors as company structure, the type and complexity of the customer base, and the governance model overseeing the Order-to-Cash organization.\u00a0 Most importantly, however, is securing a strong senior leadership commitment to focus the appropriate resources on getting this performance measurement structure in place and then adjusting and enhancing as needed on a going-forward basis.<\/p>\n

Company Experiences<\/strong><\/p>\n

A Peercast discussion in Peeriosity\u2019s Accounts Receivable (O2C) research area featured a global company with over $5B in annual revenue discussing their approach to developing KPIs and metric-driven improvement in O2C.\u00a0 The company\u2019s O2C Process Owner developed a framework for metrics that leverages Service Level Agreements (SLAs) that determine and regulate the end-to-end process key business deliverables, and Operating Level Agreements (OLAs) that determine and regulate the cross-functional key inputs to the process.\u00a0 Together, SLAs and OLAs are the key components of a metric-driven governance model with an end-to-end perspective.<\/p>\n

The company uses a continuous improvement cycle with oversight from a cross-functional steering committee and Global Process Owners.\u00a0 The key steps in the cycle include defining SLA and OLA content, defining and implementing shared KPIs, reviewing performance versus target, analyzing gaps, identifying improvement opportunities, implementing corrective action, assessing achieved benefits, sharing best practices and benchmarking, followed by repeating the cycle from the first step; defining SLA and OLA content.<\/p>\n

For more details about their experience in creating end-to-end KPIs and metrics to drive continuous improvement in the Order-to-Cash process, Peeriosity-100 members are encouraged to review the full presentation and listen to the Peercast recording in the Accounts Receivable (O2C) research area.\u00a0<\/strong><\/p>\n

Polling Results Review<\/strong><\/p>\n

To support the Peercast, a poll was created to understand how satisfied Peeriosity-100 member companies are with their KPI\u2019s and metrics to run day-to-day operations, and their KPI\u2019s and metrics used to drive continuous improvement efforts.<\/p>\n

The first poll question asked about satisfaction with KPI\u2019s and metrics to run day-to-day operations.\u00a0 \u00a0The results indicate that 40% are very satisfied, 20% are satisfied, 10% are neutral, and 30% are unsatisfied.<\/p>\n

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The second poll question asked about satisfaction with KPI\u2019s and metrics to drive continuous improvement efforts.\u00a0 This task appears to be more challenging, with only 11% indicating that they are very satisfied, 44% who are satisfied, 11% who are neutral, 22% who are dissatisfied, and 12% who indicate that they don\u2019t use KPI\u2019s or Metrics for this purpose.<\/p>\n

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Here are some of the comments from Peeriosity-100 members:<\/p>\n