Tuesday, October 27, 2009

Performance Management: Getting Everybody On the Same Page in the Supply Chain

The three co-authors of Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution wrote an article for Material Handling Management called Performance Management: Getting Everybody On the Same Page that specifically discusses how Driven to Perform can help you improve your performance in Supply Chain Management.

Some highlights are below, but be sure to read the whole article!

On the challenges of modern supply chain management and how performance management can help:

Actively managing the performance of your supply chain has never been more important. Increased globalization, volatility in demand and commodity costs, regulatory requirements and greater dependency on suppliers and other partners have significantly increased the risk of doing business. Knowing inventory positions, delivery dates and fill rates is not enough. You must also understand the impact of supply chain changes on total cost or cash flow and optimize supply chain effectiveness for better corporate results. This requires end-to-end visibility into factors that drive performance — such as cash-to-cash cycle times, overall supply chain cost and the quality of order fulfillment.

On metrics that matter to break open corporate siloes:

In today's IT-heavy supply chain networks, plenty of data points exist. In any given situation, however, only a few numbers are truly important. Unable to identify the right key performance indicators (KPIs), managers may focus only on improving the measures under their immediate control — an approach that fosters silo thinking and frequently sacrifices overall supply chain network effectiveness. For example, isolated focus on capacity utilization may result in excess inventories.

On embracing a holistic view of supply chain performance:

Quarterly snapshots of supply chain activities alone won't cut it anymore. With each passing day, the need for modern modeling and optimization processes becomes greater. If you don't have a detailed, real-time view of your supply chain, you will be unable to compete in today's marketplace. A limited view will also prevent you from aligning your supply chain strategy with your corporate goals. With the right supply chain performance management architecture, you will be able to manage an extended, globally dispersed, responsive supply network; use models to view the performance of your network; execute based on visibility gained by closing the loop; link strategy to execution; and systematically measure, monitor and optimize strategy and performance.
You can find much more detail about supply chain performance, risk, and compliance management in Driven to Perform.  Enjoy!


  1. Nenshad, graat post. Just read the article and loved this quote: "In the end, the right metrics drive individual behavior, and behavior drives enterprise performance." That's what we truly believe too, that individual's at the front-lines of decision-making have to have accss to the metrics that can help them improve their performance, but they also have to be tied to corporate goals.
    Also, your emphasis on real-time monitoring is key as well. Reports and performance monitoring is all good and well, but if it's not done within the time-frame where corrective action can make a difference to the business then it'll do us no good.
    I like the practical approach to your article Neshad!

    Fernando Labastida

  2. Hi Fernando,

    In Driven to Perform, we emphasize the point over and over again that corporate objectives will never be executed (except by chance) if they are not aligned directly to people's personal career goals and the incentives put in place to reach them. It makes no sense to even try managing performance without looking at the linkages between these different perspectives.

    To your second point, it also makes no sense to me why we keep creating technology siloes with data warehousing, EAI, BAM, CEP, reporting, etc. Performance information is always federated and available from a variety of sources whose latency, consistency, and availability is always variable. The next-generation of performance management systems needs to be designed for this from the outset.



    Best Regards,