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How do you measure supply chain performance?

Alignment to business strategy and ability to act

Supply chain leaders have responsibility to the business in two areas.

The first is obvious. Supply chain teams have clear objectives in terms of cost and availability, and supply chain leaders have a duty to explain clearly and concisely the reasons behind operational performance to the rest of the business.

The second one is slightly more subtle. Supply chain performance plays a great part in meeting business strategy. If the business strategy is, for example, “to delight customers”, then how is the supply chain strategy aligned to that aim, and how does supply chain report back against that strategy? This measure is likely to be aligned to a transformational journey, with improvement measured over time, rather than be a daily standard measure.

Measuring supply chain activity is about both daily performance and trends over time.

Data, data and more data

Supply chains involve a multitude of different activities. Right the way from sourcing raw materials, through production into logistics, now itself focussed on the returns and disposal service, as much as on the initial customer or consumer delivery.

The diversity and size of the product range, the complexity of the manufacturing process and the number and geography of suppliers and customers are all factors that determine what you choose to measure and why.

Furthermore, change will also bring its own set of metrics. How well did project delivery meet expectation?

Consumers and some customers will also give you feedback data – some subjective and some objective. They will review their perception of the value proposition, often instantly.

There is data everywhere, and it can be confusing to sift through the detail.

Data must give you a picture

At Slater Austin, we believe in clarity.

It is important that all supply chain metrics can aggregate and decipher the data that matter into a visible picture that allows the supply chain leaders and managers to make decisions, and to communicate operational performance to the rest of the business.

When done well, this overall picture tells a story in a way that other stakeholders can easily follow. When done really well, the data structures used to tell the top-line story can be filtered to allow investigation of performance at more granular levels of detail.

Business strategy – not just sales, costs, profit and cash

One element that is changing is that supply chain metrics are no longer just be about the metrics of costs, availability and efficiency. Business imperatives are increasingly including targets on Environmental, Social and Governance (ESG) matters.

These imperatives are leading to new challenges for supply chain leaders in how to capture and report ESG data from their areas of control. How do you collect data on supplier climate data, and how do you select suppliers based on diversity?

Supply chain agenda evidence

Deloitte’s 2021 survey of Chief Procurement Officers highlights these points. Their report highlights supply chain professionals as ‘agility masters’, supply chain leaders with an equal focus on operational efficiency, cost reduction, digital transformation and innovation.

How well equipped is your organisation to measure supply chain performance?

Supply Chain strategy, management and analytics are wide-ranging topics. At Slater Austin, we run training courses on these three areas, that help you teams understand these subjects. Check out our training courses here.

As supply chain experts, we can also help your business to align your supply chain metrics to your business strategy. Contact us for a conversation today.


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