Strategic Supply Chain Management - Supply Chain Online

CHAPTER 5 Core Discipline 5: Use Metrics to Drive Business Success 205
The remainder of this chapter provides guidance on how to choose the
right metrics and build an infrastructure that supports ongoing measurement.
WHICH METRICS
When faced with a universe of metrics, companies tend to choose more
than they actually need. This is especially true when one or two key metrics
are first put in place—providing visibility into operational capabilities
and results for the first time. For companies used to backward-looking
metrics and rear-view-mirror steering, data that can offer insight into
cause and effect of key supply chain processes are extremely powerful.
The natural inclination is to want such data for all processes.
As an example, let’s look at order-fulfillment cycle time. The macrolevel
metric used by most companies measures the elapsed time between
when a customer order is entered and when the associated product is shipped.
Orders go through numerous “gates”—an order may be received, verified,
entered, priced, credit-checked, released, picked, packed, and shipped—and
it is possible to measure the elapsed time between each gate and the next.
From the customer’s perspective, though, the clock starts when he or she
issues the order and stops when the product is
received; customers are not particularly interested
in the interim stops the order may take
along the way. Because of this, it probably
doesn’t make sense to measure each gateto-gate
cycle. Instead, choose larger “process
sets,” such as the time between order receipt
and order release. And if the results indicate a
performance issue, consider adding additional
granularity at that point.
You also should avoid using a predefined
set of metrics designated as being
“right” for your business. No predetermined
set of metrics is appropriate for all businesses.
Earlier in this chapter we discussed
the need to align metrics with strategic objectives.
Since a supply chain strategy is based
on a company’s overall strategic direction
and core competencies, you’ll need to carefully
choose the metrics that make sense as
signals of performance to your objectives.
Since a supply chain
strategy is based on
a company’s overall
strategic direction
and core
competencies, you’ll
need to choose
carefully the metrics
that make sense as
signals of
performance to your
objectives.