Frank Buytendijk of Oracle has unveiled the True Value Index (TVI) in the latest issue of the Journal of Management Excellence at:http://www.oracle.com/solutions/business_intelligence/docs/journal-of-management-excellence-2009-feb.pdfThe formula is straight forward:TVI = (Operating margin – X) / Operating marginX = Unfair procurement savings (X1) +…
TVI = (Operating margin – X) / Operating margin
X = Unfair procurement savings (X1) + intransparent margin (X2) + margin from
nonprimary sources (X3) – unnecessary cost (X4)
It's those "X Factors" that help bring us closer to true value.