15 Jun Hitting your numbers: Applying “What if?” Analysis to Metrics
The old business adage “you can’t manage what you don’t measure” has been echoed throughout the halls of organizations for years. Many business metrics programs use this adage as a rallying cry. Once an organization determines what to measure, the next step is how to manage. A key component of managing is to apply goals or targets to specific measures. Some goals are customer driven and some are driven by measures set forth my executive management. Here are three items to think about when applying goal attainment principles to metrics.
Stoplight Metrics and Indirect Key Performance Indicators (KPIs)
Stoplight metrics is the concept of representing where the status of a metric is with respect to a specific stated range. Stoplight metrics are one of the most reliable ways to review and quickly assess if certain metrics are within a specific rage. However, with an enormous amount of variability in supply chains today (variability can include items such as distance, demand and supply interruptions), just knowing that certain metrics are red is not enough. 3 seemingly unrelated metrics may be green, but, due to a combination of factors, may cause a metric to be red. This is an example of taking stoplight metrics to another level – using KPIs which depend on others, or Indirect KPIs as elements into a metrics program to achieve specific goals.
What parameters can we change and based on such changes, understand how these changes can affect our goals. We refer to this as performance goal scenarios. The example below shows a mobile application using slider bars where team members can adjust variables and determine how these adjustments impact a metric (The On Time In Full, or OTIF metric). Supporting this capability is a sophisticated analytics system, accessing information from numerous data sources (such as an ERP system, a manufacturing system and a forecasting system) and an intuitive interface, engaging users and encouraging the team to try new scenarios.
Unless a single individual carries an entire company’s performance objectives, teamwork and communication between silos is a crucial behavior for successful goal attainment. Collaboration is the manner in which we take such teamwork and communication to the next level.
According to Wikepedia.org, collaboration is working with others to do a task and to achieve shared goals. So, how do we collaborate? Pick up the phone? Send an email? Have a meeting? All the above have a place in collaboration. A next generation metrics system will enable organizations to share metrics which align to the goals. Sharing metrics is more than just a number or a graph. Next generation sharing includes the metrics, as well as the story behind the metrics. The ability to bring related metrics, drill into the causes, study scenarios which affect the metrics all become a key component of a goal attainment program.
While there are many other items to consider when thinking of goal attainment principles, the above three items are top-of-mind in the organizations we have had pleasure of working with. When considering stoplight management, scenario analysis and collaboration strategically and objectively, a metrics program can be developed while being fully aligned with executive management.