Problem:
The CEO heard about your lunchtime discussion with the supervisors and managers when metrics were discussed. He would like you to help him prepare a PowerPoint presentation that he could use at the next board of directors meeting to link the day-to-day new metrics you suggested using to the bigger picture metrics that CEO's, CFO's and Board members would better relate to.
Describe the linkage between the following pairs of metrics (Note: In each pair, the first metric is the kind of measurement the supervisors and managers would monitor and be evaluated on, and the second is the bigger picture metric the CEO, CFO, and board of directors may monitor.):
Dollar amount of WIP inventory: Return On Assets (ROA)
Order lead time to customers: Cash flow requirements or cash conversion cycle
Cycle time: Return On Assets (ROA)
Changeover time: Inventory turn
Inventory turn: Profit
For each pair, describe how a meaningful change in the first metric will impact the second metric.