Implementing a supply chain strategy is one thing, but determining whether it actually achieves desired results is another matter entirely. Too many companies lack ways to quantitatively measure supply chain success, if you are the one, seek consultation about Operations and Supply Chain Management – Trace Consultants. By establishing KPIs, leveraging data analytics, and comparing results to goals, organizations can truly evaluate strategic performance.
Define Quantitative Metrics
First, identify which supply chain metrics align with strategic priorities like cost reduction, working capital improvements, risk reduction, or customer service levels. Common metrics to track include total supply chain costs, cash conversion cycle times, inventory turns, on-time delivery rates, and supplier lead times. Tie metrics directly to goals for the strategy.
Gather Data for Transparency
Supply chain metrics and KPIs are only as good as the data behind them. Integrate systems across the value chain to collect clean, consistent data on procurement, inventory, logistics, and point of sale or usage. Manual data entry leads to errors and opacity. Automated data flows are essential for factual insights.
Establish Performance Baselines
Before implementing major changes, establish current performance baselines for comparison. Factoring in historical norms and seasonal patterns provides context for measuring impact of strategic shifts. Baselines also highlight improvement areas to address. Just beware internal biases skewing perceived baseline performance.
Set Realistic Targets
When setting goals for supply chain strategy, resist the temptation to simply demand “improvements” or “savings”. Quantify expected benefits based on credible estimates, benchmarks, and past large initiatives. Set specific targets pegged to strategic priorities like “Reduce expedited shipping by 20%”. Realistic quantified targets guide resource allocation.
Regularly Review Metrics
Ongoing measurement provides crucial feedback on strategic progress. Establish cadences for analyzing supply chain metrics – daily, weekly, monthly – as appropriate for each. Dashboards with drill-down capabilities deliver visibility. asleep at the wheel destroys value. Course correct based on variances.
Compare Results to Goals
Here is where the rubber meets the road in determining strategy success. Compare supply chain metric results over relevant time horizons to the original targets set. Calculate variances and determine root causes driving under or overperformance. Celebrate wins and pivot where needed based on facts.
Re-Forecast and Adjust
Periodic re-forecasting allows adjusting targets and resource allocation based on measured results. If initial cost reduction targets proved unrealistic due to higher input prices, for example, re-baseline and set revised goals. Account for implementation barriers or changes in strategic priorities that occur over longer timeframes as well.
By quantifying supply chain success and tying it directly to strategic goals, companies gain crucial feedback for optimizing efforts and demonstrating impact. The visibility performance measurement provides is crucial for selling the supply chain strategy internally and gaining ongoing buy-in across the organization. Invest time upfront to design metrics that matter and reap the returns through data-driven supply chain success.