#24 -CPart-2 of 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 :“Part-2 of Corrective Action, Preventive Action Metrics” 📈

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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.

5 More Applications to Apply CAPA

1. High percentage of Over Stock and Non-Moving Stock

Corrective - A target can be given to the team to liquidate the same with a price range. With the higher interest cost and chances of less realization of prices in future, the sooner we sell, the better for us.

Preventive - We cannot completely avoid the same but we can define the acceptable percentage and the moment it crosses that figure, immediately take action to avoid more losses.

2. Increase in APCD (Average Payment Collection Days)

Corrective - Involve sales team also to focus on collections.

Preventive - Not much can be done, if it has become the trend in industry. But, a few steps can be taken to increase gross profit to cover the cost of delayed payment.

3. Loss in GP due to high purchase price.

Corrective - The sales price can be increased, if it has been missed due to increase in purchase price.

Preventive - An alert system can be made to get notification if the purchase price is more than previous purchase price, so that timely action can be taken.

4. Delay in Delivery issues.

Corrective - Assign a person to compile and resolve all the pending delivery related issues within a timeframe.

Preventive - Review the existing courier / transport contracts and explore more to understand the options available.

5. Damage due to Water.

Corrective - Identifying the reasons and segregating the damaged stock so that it can be sold ASAP.

Preventive - Take insurance, if not taken for water, fire and theft related matters. Change the place of godown, if it is prone to water congestion.

These are not exhaustive lists. We have tried to cover 10 such cases to highlight the importance of taking not only corrective actions but also preventive actions.

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!

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