Supply Chain Key Performance Indicators: Tops Down or Bottoms Up?

22 Aug Supply Chain Key Performance Indicators: Tops Down or Bottoms Up?

Share this pageShare on LinkedIn
Linkedin
Tweet about this on Twitter
Twitter
Email this to someone
email

Supply Chain KPIs

 

The answer is both – supply chain Key Performance Indicators (KPIs) need to span all levels or an organization and thus should be tops-down for executives and management while knowledge workers need to review day-to-day KPIs to execute their activities.  One concern with many organizations that are metrics-driven is information overkill – not everyone needs to know every piece of information about a business.  In fact, LNS Research points out that misuse of metrics can hurt more than help.  When thinking or re-thinking an organization-wide KPI initiative, here are three things to keep in mind:

Why? Just because a KPI program has been successful for one group, one division or even one product line, does rolling out the exact same program everywhere make sense?  Revisit the real purpose of a KPI program – don’t do it for KPIs’ sake.  Is one division suffering?  Perhaps those KPIs need to be different than a division that is rolling in cash.  Very new and innovative products may require different KPIs vs. products later the their lifecycle.  A uni-lateral program may be the easy thing to implement, but could hurt the business by not providing an apples-to-apples comparison.

How? While spreadsheets are the old-standby, organizations need to think higher level than just spreadsheets.  Using KPIs involves analytics in the form of operational intelligence systems or supply chain management systems.  According LNS Research, The average annual improvement in Total Cost per Unit Excluding Materials was 24.1% for users of such systems versus 13.1% for all respondents.  Lots of numbers – what does that mean?

Companies who use a true intelligence platform improved their Total Cost Per Unit Excluding Materials at a rate 84% better than those who did not use such a platform.
 

Which KPIs? We get asked this question all the time and the answer can be as few as 10 or as many as 50.  The number can vary by industry, company and role.  The number also varies as you move from static to real-time metrics.

To avoid drowning in data and reducing the value a KPI initiative can deliver an organization, we are going to put a stake in the ground and propose some KPIs by level within the organization.

KPIs used by executives
 Days of Sales Outstanding
Revenue / Profitability by Product
Profitability by Customer 
 
KPIs used by middle management
Adherence to Plan
Cost per Case
On Time in Full Performance
 
KPIs used by knowledge workers
 Quantity Shipped
 Defects Per Day
 Daily Production
 

There are many more questions to address when rolling out an organization-wide KPI initiative, but three key questions are Why, How and Which ones.  A key take away is that the system to enable such an initiative need to be much more robust than a spreadsheet.

Share this pageShare on LinkedIn
Linkedin
Tweet about this on Twitter
Twitter
Email this to someone
email
No Comments

Post A Comment

[gravityform id="7" title="false" description="false" ajax="true"]
<div class='gf_browser_unknown gform_wrapper' id='gform_wrapper_7' ><div id='gf_7' class='gform_anchor' tabindex='-1'></div><form method='post' enctype='multipart/form-data' target='gform_ajax_frame_7' id='gform_7' action='/supply-chain-key-performance-indicators-tops-bottoms/#gf_7'> <div class='gform_body'><ul id='gform_fields_7' class='gform_fields top_label form_sublabel_below description_below'><li id='field_7_1' class='gfield form-field-name gfield_contains_required field_sublabel_hidden_label field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label gfield_label_before_complex' >Name<span class='gfield_required'>*</span></label><div class='ginput_complex ginput_container no_prefix has_first_name no_middle_name has_last_name no_suffix gf_name_has_2 ginput_container_name' id='input_7_1'> <span id='input_7_1_3_container' class='name_first' > <input type='text' name='input_1.3' id='input_7_1_3' value='' aria-label='First name' aria-required="true" aria-invalid="false" placeholder='First Name'/> <label for='input_7_1_3' class='hidden_sub_label screen-reader-text'>First</label> </span> <span id='input_7_1_6_container' class='name_last' > <input type='text' name='input_1.6' id='input_7_1_6' value='' aria-label='Last name' aria-required="true" aria-invalid="false" placeholder='Last Name'/> <label for='input_7_1_6' class='hidden_sub_label screen-reader-text'>Last</label> </span> </div></li><li id='field_7_3' class='gfield gfield_contains_required field_sublabel_below field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label' for='input_7_3' >Enter your email<span class='gfield_required'>*</span></label><div class='ginput_container ginput_container_email'> <input name='input_3' id='input_7_3' type='text' value='' class='medium' placeholder='Enter your email' aria-required="true" aria-invalid="false" /> </div></li><li id='field_7_8' class='gfield field_sublabel_below field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label' for='input_7_8' >Phone</label><div class='ginput_container ginput_container_phone'><input name='input_8' id='input_7_8' type='text' value='' class='medium' placeholder='Phone' aria-invalid="false" /></div></li><li id='field_7_7' class='gfield gfield_contains_required field_sublabel_below field_description_below hidden_label gfield_visibility_visible' ><label class='gfield_label' for='input_7_7' >Company<span class='gfield_required'>*</span></label><div class='ginput_container ginput_container_text'><input name='input_7' id='input_7_7' type='text' value='' class='medium' placeholder='Enter your company' aria-required="true" aria-invalid="false" /></div></li><li id='field_7_9' class='gfield gform_hidden field_sublabel_below field_description_below gfield_visibility_visible' ><input name='input_9' id='input_7_9' type='hidden' class='gform_hidden' aria-invalid="false" value='' /></li><li id='field_7_10' class='gfield gform_hidden field_sublabel_below field_description_below gfield_visibility_visible' ><input name='input_10' id='input_7_10' type='hidden' class='gform_hidden' aria-invalid="false" value='' /></li><li id='field_7_11' class='gfield gform_hidden field_sublabel_below field_description_below gfield_visibility_visible' ><input name='input_11' id='input_7_11' type='hidden' class='gform_hidden' aria-invalid="false" value='' /></li><li id='field_7_12' class='gfield gform_validation_container field_sublabel_below field_description_below gfield_visibility_visible' ><label class='gfield_label' for='input_7_12' >Email</label><div class='ginput_container'><input name='input_12' id='input_7_12' type='text' value='' /></div><div class='gfield_description' id='gfield_description__12'>This field is for validation purposes and should be left unchanged.</div></li> </ul></div> <div class='gform_footer top_label'> <input type='submit' id='gform_submit_button_7' class='gform_button button' value='WATCH THE VIDEO' onclick='if(window["gf_submitting_7"]){return false;} window["gf_submitting_7"]=true; ' onkeypress='if( event.keyCode == 13 ){ if(window["gf_submitting_7"]){return false;} window["gf_submitting_7"]=true; jQuery("#gform_7").trigger("submit",[true]); }' /><!-- Begin Daddy Analytics fields --><input type="hidden" name="" value="" /><input type="hidden" name="" value="" /><!-- End Daddy Analytics fields --> <input type='hidden' name='gform_ajax' value='form_id=7&amp;title=&amp;description=&amp;tabindex=0' /> <input type='hidden' class='gform_hidden' name='is_submit_7' value='1' /> <input type='hidden' class='gform_hidden' name='gform_submit' value='7' /> <input type='hidden' class='gform_hidden' name='gform_unique_id' value='' /> <input type='hidden' class='gform_hidden' name='state_7' value='WyJbXSIsIjkxNDIyMmFlMTAxZmQ0Y2JiZGRlMTcwMzZjMjBlNDQxIl0=' /> <input type='hidden' class='gform_hidden' name='gform_target_page_number_7' id='gform_target_page_number_7' value='0' /> <input type='hidden' class='gform_hidden' name='gform_source_page_number_7' id='gform_source_page_number_7' value='1' /> <input type='hidden' name='gform_field_values' value='' /> </div> </form> </div> <iframe style='display:none;width:0px;height:0px;' src='about:blank' name='gform_ajax_frame_7' id='gform_ajax_frame_7'>This iframe contains the logic required to handle Ajax powered Gravity Forms.</iframe> <script type='text/javascript'>jQuery(document).ready(function($){gformInitSpinner( 7, 'http://d361pqspa6t978.cloudfront.net/production/wp-content/plugins/gravityforms/images/spinner.gif' );jQuery('#gform_ajax_frame_7').on('load',function(){var contents = jQuery(this).contents().find('*').html();var is_postback = contents.indexOf('GF_AJAX_POSTBACK') >= 0;if(!is_postback){return;}var form_content = jQuery(this).contents().find('#gform_wrapper_7');var is_confirmation = jQuery(this).contents().find('#gform_confirmation_wrapper_7').length > 0;var is_redirect = contents.indexOf('gformRedirect(){') >= 0;var is_form = form_content.length > 0 && ! is_redirect && ! is_confirmation;var mt = parseInt(jQuery('html').css('margin-top'), 10) + parseInt(jQuery('body').css('margin-top'), 10) + 100;if(is_form){jQuery('#gform_wrapper_7').html(form_content.html());if(form_content.hasClass('gform_validation_error')){jQuery('#gform_wrapper_7').addClass('gform_validation_error');} else {jQuery('#gform_wrapper_7').removeClass('gform_validation_error');}setTimeout( function() { /* delay the scroll by 50 milliseconds to fix a bug in chrome */ jQuery(document).scrollTop(jQuery('#gform_wrapper_7').offset().top - mt); }, 50 );if(window['gformInitDatepicker']) {gformInitDatepicker();}if(window['gformInitPriceFields']) {gformInitPriceFields();}var current_page = jQuery('#gform_source_page_number_7').val();gformInitSpinner( 7, 'http://d361pqspa6t978.cloudfront.net/production/wp-content/plugins/gravityforms/images/spinner.gif' );jQuery(document).trigger('gform_page_loaded', [7, current_page]);window['gf_submitting_7'] = false;}else if(!is_redirect){var confirmation_content = jQuery(this).contents().find('.GF_AJAX_POSTBACK').html();if(!confirmation_content){confirmation_content = contents;}setTimeout(function(){jQuery('#gform_wrapper_7').replaceWith(confirmation_content);jQuery(document).scrollTop(jQuery('#gf_7').offset().top - mt);jQuery(document).trigger('gform_confirmation_loaded', [7]);window['gf_submitting_7'] = false;}, 50);}else{jQuery('#gform_7').append(contents);if(window['gformRedirect']) {gformRedirect();}}jQuery(document).trigger('gform_post_render', [7, current_page]);} );} );</script><script type='text/javascript'> jQuery(document).bind('gform_post_render', function(event, formId, currentPage){if(formId == 7) {if(typeof Placeholders != 'undefined'){ Placeholders.enable(); }jQuery('#input_7_8').mask('(999) 999-9999').bind('keypress', function(e){if(e.which == 13){jQuery(this).blur();} } );} } );jQuery(document).bind('gform_post_conditional_logic', function(event, formId, fields, isInit){} );</script><script type='text/javascript'> jQuery(document).ready(function(){jQuery(document).trigger('gform_post_render', [7, 1]) } ); </script>