Practical notes for finance and operations leaders
Short, evidence-first guidance on the measures CostCubes uses. Written for decision-makers; no client data is used here.
Direction matters: reading KPI trends correctly
Rising revenue is good; rising scrap is not. CostCubes classifies every trend as Uptrend, Downtrend, Stable, Volatile or Insufficient Data and then judges it against the KPI's good direction — so a "green" arrow always means better.
Why we never add savings across functions
A resin price variance, a scrap problem and a falling gross margin are often the same money seen three ways. CostCubes groups estimates into families and counts the larger estimate once, showing the overlap separately.
Achievement on a Balanced Scorecard
Higher-is-better KPIs use actual ÷ target; lower-is-better KPIs use target ÷ actual. Missing data is excluded rather than scored as zero, and scores are capped so one outlier cannot hide weak areas.
Working capital: days, not just balances
Receivable, inventory and payable days convert balances into a cash conversion cycle that can be compared year to year and against your own targets.
When is a Six Sigma project justified?
When the problem is recurring, measurable from data you already have, and its cause is unknown. Otherwise a corrective action or a Kaizen is faster. CostCubes recommends DMAIC only when data supports it.
Estimates versus verified benefits
An estimate is an assumption-based range. A verified benefit is confirmed by finance against a baseline over time. CostCubes keeps the two apart in every register and report.
Balanced Scorecard measures used by CostCubes
Targets shown are configurable starting points, not industry benchmarks.
| Perspective | KPI | Definition | Formula | Good direction |
|---|---|---|---|---|
| Financial | Revenue growth | Year-on-year growth in revenue from operations | Revenue FYn ÷ revenue FYn-1 − 1 | Higher |
| Financial | Contribution margin (gross margin proxy) | Revenue less material and variable conversion costs; gross margin is used when variable costs are not split | (Revenue − material cost) ÷ revenue | Higher |
| Financial | Profitability (EBITDA margin) | EBITDA as a share of revenue | EBITDA ÷ revenue | Higher |
| Financial | Cash flow (CFO ÷ EBITDA) | Operating cash generated per rupee of EBITDA | Cash from operations ÷ EBITDA | Higher |
| Financial | Working capital (cash conversion cycle) | Days of cash tied up in inventory and receivables net of payables | Inventory days + receivable days − payable days | Lower |
| Financial | Cost reduction — benefit realisation | Realised project benefits against benefit targets | Σ benefit realised ÷ Σ benefit target | Higher |
| Customer | Customer complaints | Complaints per 10,000 units sold | Σ complaints ÷ Σ units × 10,000 | Lower |
| Customer | OTIF delivery | Orders delivered on time and in full | OTIF lines ÷ lines due | Higher |
| Customer | Customer retention | Customers retained between consecutive six-month periods | Retained customers ÷ customers in prior period | Higher |
| Customer | Order fulfilment (fill rate) | Quantity dispatched against quantity ordered | Σ dispatched ÷ Σ ordered | Higher |
| Customer | Product quality (first-pass yield) | Share of inspected quantity accepted first time | 1 − Σ rejected ÷ Σ checked | Higher |
| Internal Process | Scrap rate | Scrap quantity as share of total output | Σ scrap ÷ Σ actual quantity | Lower |
| Internal Process | OEE | Availability × performance × quality | See KPI dictionary | Higher |
| Internal Process | Cycle-time efficiency | Standard cycle time against actual cycle time | Σ standard × qty ÷ Σ actual × qty | Higher |
| Internal Process | Inventory record accuracy | Counted lines without variance | Accurate lines ÷ counted lines | Higher |
| Internal Process | Production plan attainment | Good output against plan | Σ good ÷ Σ planned | Higher |
| Internal Process | Procurement performance (supplier OTIF) | Supplier receipts on or before the promised date | On-time receipts ÷ receipts | Higher |
| Learning & Growth | Employee skill coverage | Employees multi-skilled or certified | Multi-skilled or certified ÷ employees assessed | Higher |
| Learning & Growth | Training hours per employee | Average training hours year-to-date | Σ training hours ÷ employees | Higher |
| Learning & Growth | Attrition | Exits in the last 12 months against average headcount | Exits ÷ average headcount | Lower |
| Learning & Growth | Continuous-improvement participation | Employees owning at least one improvement action | Distinct action owners ÷ headcount | Higher |
| Learning & Growth | On-time action closure | Improvement actions closed by their target date | On-time closures ÷ (closures + overdue) | Higher |