#23 -CAPA Corrective Action Preventive Action Metrics

Welcome to our series, OMG :  One Metric for Growth where we dive deep into real-life examples of how one metric helped an organization to grow their business. Today's Metric for Growth is :“Corrective Action, Preventive Action Metrics” 📈

What are CAPA Metrics?

‍Whether you are running a small business or a large multinational, CAPA approach helps you make systematic changes to address the communication, service or quality issues. CAPA stands for Corrective Action and Preventive Action.It consists of 2 key components:

1. Corrective Action - Reactive actions taken to fix the issues.

2. Preventive Action - Proactive actions taken so that issues don’t repeat in the future.

Together, CAPA is not only about fixing the problems, but also creating a process to handle General & Exception cases to ensure that they don't recur in the future.

Real-Life 5 Applications Overview

1. Variation in Physical stock and Book stock

Corrective - Adjust that particular stock immediately in books.

Preventive - Timely audits of stock to ensure that differences, if any, are taken into account and make someone responsible.

‍

2. Bad Debts

Corrective - Write off the amount and take legal action, if feasible.

Preventive - Review the credit policy for existing customers and bring strict norms when giving credit to a new account. Timely reminders to all concerned beyond certain days.

‍

3. Loss in GP due to wrong billing price.

Corrective - Issue a debit note for the price difference, if it is not too late.

Preventive - Bring minimum price restriction in your ERP and also implement a double check system.

‍

4. HR Related.

Corrective - There can be behavior issues that need to be corrected immediately by intervention of a senior person.

Preventive - Regular communication in person and in general meetings about the expectation and norms regarding behavior.

‍

5. Customers complain regarding quality or service.

Corrective - Address each complaint separately and check for a pattern in complaints.

Preventive - Strengthen the system by introducing a maker-checker system.

One Application explained in Depth for CAPA?

Customer retention can be bifurcated into 3 parts.

1. The customers who continue to buy from us each month / year depending on frequency of our product / service.

2. The customers who continue to buy each month but don’t buy many products consistently.

3. The customers continue to buy each month, but have stopped buying a certain product group.

A standard customer retention rate differs from industry to industry. You must bring context into the matter and evaluate how you are doing and what your goals are. Regardless of your retention rate, there is always room for improvement. An increase in customer retention rate will automatically lead to enhancement of business.

Your Growth Action Plan

Step 1 - Identify the issues
Step 2 - Apply the CAPA Framework
Step 3 - Use tools to track and measure the effectiveness
Step 4 - Review and iterate, if required.

Remember, CAPA isn't just a framework; it’s a growth-enabler. It is the foundation for sustainable success. We will cover more applications in the coming week.

Whenever You are Ready! 🔑  

Your metrics don't just reflect the past; they lead the future.

At Magenta, we specialize in turning these metrics into actionable steps.

Our Business Intelligence software seamlessly integrates with ERPs like Tally, Busy, Align Books, SAP etc and can help you with sales team performance in a click. If you haven't already signed up for Magenta Insights, now is the time!

‍