In Lean Six Sigma, flow is the term used to refer to a production or service environment that continuously moves value through the value stream without interruptions. An environment that has flow would have very low levels of muda, muri and mura.
Cash to cash cycle time looks at the amount of time, usually days, of working capital a business has tied up in managing its inventory or supply chain. Like many metrics, the more efficient the cash-to-cash cycle time is, the fewer days an organization's cash is unavailable for use.
Days sales outstanding or DSO as it is often called, is a ratio that measures the average number of days a company takes to collect its accounts receivable. When a company's DSO is short, it tells us that the company is faster at collecting payments from customers. This also means you are able to use the cash from sales sooner.
Inventory is listed as an asset on a firm's balance sheet and consists of the stocks or items needed to maintain production, support activities such as maintenance and repair, and provide customer service. Inventory typically is categorized based on its flow through the production cycle, using such designations as raw materials, work in process, and finished goods. Maintenance, repair, and operating supplies also are stocked to support the functionality of the firm.
Days payable outstanding ratio is used in accounting and finance departments that measures how many days, usually on average, it takes a company to provide payment to its suppliers. The higher a company’s DPO, the longer it takes to pay its bills.
Days inventory outstanding, or, DIO, as it is often referred to, is a ratio that measures the average number of days that a company holds inventory before they transform that inventory into sales. The lower the figure, the better.
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