Strategic Supply Chain Management - Supply Chain Online

CHAPTER 5 Core Discipline 5: Use Metrics to Drive Business Success 209
each of the level 1 metrics, strong performance in targeted areas is a
reflection of overall supply chain health and therefore a very good indicator
of return on supply chain spending.”
While level 1 metrics are appropriate for monitoring performance at
a high level, they are less useful for diagnosing the causes of performance
problems. More detailed performance measures that provide details on
tactical execution provide a better understanding of these problems. In
keeping with the SCOR model’s hierarchical structure, each level 1 metric
is associated with a group of level 2 and level 3 metrics. These lowerlevel
metrics can be used to diagnose the causes of any performance
problems that appear at level 1. Before you start, make sure that you create
an overall architecture for your performance-management program—
determine which level 1, level 2, and level 3 metrics you will monitor.
(See Appendix C for a comprehensive list of level 2 and level 3 metrics.)
Measure Yourself as Your
Customers Measure You
The metrics embedded in the SCOR model
are consistent with the premise of the supply
chain as an end-to-end process. As such,
each metric is considered from the perspective
of customers and suppliers—not just
from an internal perspective. The supply
chain scorecard is necessarily prescriptive.
It provides detailed definitions for each
metric and specific recommendations for
how to collect the needed data.
In many cases a company may stray
from the standard definitions. This may be
The metrics
embedded in the
SCOR model are
consistent with the
premise of the
supply chain as an
end-to-end process.
done to ease the burden of data collection, to influence the behavior of an
internal or an external constituent, or—consciously or unconsciously—to
make performance seem better than it really is. While it may be appropriate
to “tweak” the standard definitions, always make sure that your metrics
are consistent with what your customers and suppliers would use.
We worked with a global automotive parts company that spent more
than two years making sure that each of its business units adopted a consistent
measurement for delivery performance to its primary customers—
retail chains and stores. With daily deliveries and an official policy that
all products would be available to customers within one day of ordering,