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Count Ratio: If a person tells you 13 out of 1,500 jobs in your company are running late, (past-due indicates late, past the promised shipping due date), you probably think that is not too bad given the ratio is 13/1500 = .86%
Dollar Ratio: If that same person then tells you that one of the 13 jobs is 41% of the company’s backlog, you quickly realize you cannot just track the number of late jobs to see the whole picture. You must ask what the dollar value of those jobs represents, compared to all jobs outstanding on your company’s sales order backlog.
Relevance Factor: The next mistake some make is not ranking the sales or jobs by customer importance. The customers paying for those late jobs need to be reviewed and considered for overall importance to your firm’s sales strategy. For example, if one of those jobs is the first you are doing for a customer who potentially could double your sales in five years, it becomes obvious the first two measurements discussed above are suddenly irrelevant and very misleading.
Track late jobs several ways for analysis: Track the number, dollar amount and importance of late jobs. Decide on your selection criteria when you categorize your customers by importance ranking (i.e. A customers (most important), B customers (medium), C customers (least important). Once you total the current sales and potential sales of each customer, you will clearly see that not all customers are equal.
