Metrics have an odd way of defining the supply chain and the organizations that comprise it. Select the wrong metrics and you might find organizational goals slipping out of alignment with the business and the supply chain. Chris Jones writes in a blog post about the curse of selecting wrong metrics and what can be done to select the right ones.
His first tip is to act like the business owner. Increasing sales and customer satisfaction are chief concerns, but supply chain operations are often measured according to operational costs and service level agreement. The lack of alignment can cause problems on whichever end is being ignored, and in either case, it works to the detriment of the business. Another tip is to build a supply chain metrics tree to find how the metrics of one organization jive with and affect the metrics of other organizations. A metric whose usefulness is isolated to a single organization is worthless to the overall supply chain.
Jones further recommends slaughtering “sacred cows” like asset truck fill and days of inventory, where specific unyielding standards are set in place. You must always be flexible about what overall benefits can be gained from playing with the numbers. Jones afterward talks about why saying “We only have metrics for what we can measure” is a bad idea:
How lame does that sound? I understand the challenge of getting the data to make more holistic metrics feasible. However, if you really want to change the overall performance of your supply chain, the effort has to be there to collect and validate the data. Yes, this might cost more money to do it, but my bet is it is nothing compared to the overall performance improvement you can achieve.
He concludes by saying that once numbers are decided, everyone needs to “live” by them. Why the metrics exist and must be adhered should be understood throughout the business. These tips together will help you break the curse and make metrics into the force of good that they should be in the supply chain.