JUSTIFICATION OF METRICS
FINANCIAL PERSPECTIVE
The financial perspective will give us insight into the value the company is providing for the customer and how the purchases are covering the costs of manufacturing and the return of the investments.
Working capital: The working capital has to be positive in order to continue functioning and be able to cover the basic manufacturing process of DreamScent. To have negative working capitals is a good indicator that we need to search through costs to see why we can’t run the business.
Leverage ratio: The leverage ratio needs to never be less than 1. From this ratio we can be sure the assets we have can cover our debt in case the company needs to close. It is also important so investors can see we can meet our financial obligations, and they do not retire their investments.
ROE: An increasing return of equity shows that our investors are gaining money and shows the business is being successful. A good measure is for it to be at least 12%.
Gross margin: Our gross margin indicates how large our direct costs are, and if they are too high we can narrow down the activities that need to be improved. We thrive to have at least 60% of gross margin.
Operating margin: This indicates how large our variable costs are and if any of those activities need assessment so we can have the gains we need to keep manufacturing. Our target is at least 40% of operating margin.
Net margin: Our revenue, which needs to be at least 20%. This measurement puts in proportion how much we are actually receiving from the sales and can indicate that an activity is producing too much cost for the business to be profitable.
Debt service leverage ratio: This indicates how much we are producing with our credits. To have positive ratios indicates we are actually producing value and credits are helping. It needs to be of more than 1.3, so that if we see it going down we can assume we need to produce more value to be attractive to investors.
LEARNING AND INNOVATION PERSPECTIVE
Time to improve device system/version: This gives us an idea of how quickly our team is improving the technology to create better versions of the Dreamscent family products. Too much time of improvement can leave us obsolete to the clients eyes.
Number and entrance in POS and distribution channels: How we enter and adapt POS and distribution channels helps us learn where we sell the best and in which ones we should concentrate, to keep from wasting resources entering spaces in which we will not be purchased.
Percent of products that equal 80% sales (in addition to device system): It helps us see how our products are received and which ones should not be kept in order to bring the quality the customer needs and avoid extra expenses.
New product introduction vs other insomnia solutions: This helps us remain competitive and relevant within the market of universal insomnia solutions.
INTERNAL PROCESSES PERSPECTIVE
Automatization percentage of the manufacturing process of the device system: The process will need to be automated so that defects are minimal and we keep a standard product the customer knows will be of high quality. The goal is to automate the processes so we can provide more time to our workforce to innovate and do other activities.
Cycle Time: The time of production needs to be monitored so we can produce the units we need with the capacity we have and be able to meet our demand in time and form.
Unit costs: It is essential we know how much a unit of Dreamscent costs, both the device and the pods so we can place a competitive price.
Changeover time: It will help us make the most of our machinery and meet the demand we are given.
Diameter accuracy of tubes: To keep quality and the benefits of the device, we need to keep a close monitoring of the diameter of the tubes in which the essential oil mix travels. It needs to be according to specification and can’t vary outside of the limits permitted.
Defects per million: It will help us understand how much rework and waste we have and which factors contribute to it, so they can be avoided.
CUSTOMER PERSPECTIVE
Percentage of sales from new products: How much our new products are having acceptance is important since one of our goals is to innovate and give personalized products to the customer.
On-time deliveries: This has to be one of our priorities since it will define the overall shopping experience and may influence directly if the client shops again. Since we need loyal customers to sell the essential oil pods, which is our recurring business, it must be highlighted.
Percentage of returns per channel: Returns are meant to be zero, and we should control every return so the customer feels appreciated even if the product had a defect. This way we do not lose customers and we can identify and correct errors that cause returns quickly.
Reviews & rating scores: These are important because, since we are an startup, our main shopping and marketing will be done through the internet and customers will search for opinions on the product. It is also a good way to record customers' feedback and apply it to either the product or the process.
Personalization of scents: Since we intend to offer personalization, the percentage of usage and costs of the personalization needs to be in our balance scorecard, so it helps us understand if the innovations are being done as the customer wants.
