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Supply Chain Performance Metrics
Supply Chain Performance Metrics
Performance
metrics
To transform supply chain effectiveness,
performance measurement must be a
focus of continuous improvement.
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Performance
metrics
foundational elements with essential processes are in place, but they might operate
in functional silos with a minimal level
of integration across the organization.
Rationalization of business plans is tactical
rather than strategic in nature, and the
supply chain tends to work in a reactive or
firefighting mode. From the talent standpoint, there is often an overreliance on
tribal knowledge and poor planning, and
execution typically leads to waste.
Efficient. At the efficient stage, the
supply chain moves from stabilization to
optimization. This involves minimizing
operating costs and employed assets, supporting compliance and attempting to gain
competitive advantage through operational
productivity and profitability. However,
the supply chain is still hampered by
inconsistent and nonstandard processes for
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High
Effective
Transform
Value Creation
Efficient
Optimize
Elemental
Stabilize
Low
Industry leader
Focus on high-quality, cost-effective,
profitable supply chain performance
Exploits value through economies of scale
Integrated and novel operating model
Value accelerator
Low
High
This illustration details the three-stage continuum to achieving supply chain improvement and transformation.
Capacity ramp-up
Demand forecast accuracy.
Development and transition to an effective operating model requires building new
organizational capabilities to support the
strategic objectives. One of the key constituents of this model is having the right
talent pool with the right skill sets to handle
the challenges inherent in the transformation process. In addition, the communication of performance management systems
both internally and externally is also
vital and should be a key part of organizational culture. Performance management
should be geared toward talent retention
and development that includes technical and
business-level skills, especially when responsibilities break down to include business
decision-making.
Institute for Supply Management . All rights reserved. Reprinted with permission from the publisher, the Institute for Supply Management.
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