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SCM Performance Evaluation
Module 01
Basic Intro of Subject &
Key Performance Indicators
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Supply Chain Performance
Strength of individual links
Strength of chain overall (also known as the
overall value of supply chain)
A chain is only as strong as its weakest link
A chain is only as strong as its weakest link
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Supply Chain Objectives
Reduce the total cost PROFIT
R
E
Increase the realized V
E
revenue C
N
O
U
S
E
T
Increase Value
Alignment of Interest
SC Level
SCM
Value
Policy
SC
Objectives
Organizational
Objectives
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Alignment of Interest
Organizational Level
Stakeholder
Organization Performance
Considerations
Measures &
Values
Targets
Policies &
Political Mission Governance
Priorities
Vision
Performance
Customer Strategic Information
Values Themes/Priorities
Programs
& Needs Products
Strategy Projects
Services
Strategic
Results
Strategic Strategic
Objectives Initiatives
Strategy
Map
Projects
Success Personal Activities
Factors Objectives Tasks
Rewards, Recognition &
Incentives
Supply Chain Performance
within Organization
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Do The Right Things Right
People and their managers are working so hard to
be sure things are done right, that they hardly have
time to decide if they are doing the right things.
Stephen R. Covey
In God we trust,
All others must bring data
William Edwards Deming
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TERMS & TOOLS LINKED TO
PERFORMANCE
Budgets KPIs Reports
Communications Meetings Rewards
Dashboards Objectives Scorecards
Discussions Performance reviews Targets
Forums Plans Technology
Goals Projects Training
Plenty of tools already in use in most organizations
we need to use them in alignment through a Performance Management
System.
Better structure, alignment, integration and use of what is already in
place is the answer to improve performance management practices.
The World of KPIs The Pillars of KPI KPI Selection KPI Data Data Gathering Generating Value
Architecture Documentation Visualization and Reporting From Using KPIs
Performance Measurement Answers
Key Questions
Objective Performance Measures are
associated with Objectives
Measure Behavior, Quality, Timeliness, Economics (Price or Cost), Competence,
What? Effectiveness, Completeness, Efficiency, Satisfaction, Production, Governance,
Compliance
Directed Questions To Help Measure The Right Things:
1) How much work do we do (Production)?
2) How well did we do the work (Quality, Timeliness, Economics, Efficiency)?
3) How satisfied were our customers with our products and services (Satisfaction)?
4) How well are we managing our resources (Effectiveness) ?
5) Are we following the rules and regulations (Governance, Compliance)?
6) How well did we work with others (Behavior)?
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Performance Measurement Has
Multiple Dimensions
Measure Behavior, Quality, Timeliness, Economics (Price or Cost), Competence,
What? Effectiveness, Completeness, Efficiency, Satisfaction, Production, Governance,
Compliance
Measure
How? Directly, Indirectly
Measure End Outcome, Intermediate Outcome, Output, Process, Project, Input
Type
Measure
Timing Leading, Lagging
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The Logic Model Helps Users Focus on
Output and Outcome Measurements
Input Process Output Outcome
Examples Examples Examples Examples
Capital Efficiency Employees Customer
Investment (output / Trained Retention
Dollars input) Production Employee
Operating Throughput Counts Satisfaction
Dollars Bottlenecks Transactions Compliance
FTEs Quality Processed Effectiveness
Cycle Time Profitability
Strategic Business Intelligence Increases
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TERMINOLOGY STANDARDS
Objectives start with verbs Increase customer satisfaction
KPIs start with symbols
$ = Value of $ Revenues per client
# = Number of # Complaints
% = Percentage of % Customer satisfaction
Initiatives start with nouns or Customer Relationship
adjectives Management Software
Implementation
The World
World of
of KPIs
KPIs The Pillars of KPI KPI Selection KPI Data Data Gathering Generating Value 15
Architecture Documentation Visualization and Reporting From Using KPIs
KPI Development
Describe the Describe the Describe the Desired Performance Level
Results Measure(s) and Interpretation
Choose & define
the appropriate
Yes direct measure(s)
Describe the Can the Should
Intended Intended Result measures be Develop targets
No
Result of the be measured combined & thresholds for
Objective directly? into a single each measure
index?
No
Yes
Choose & Develop a
Define measureable
define the composite
components that
appropriate index
thoroughly describe
indirect
the Intended Result
measures
Documentation: Intended Result, Measurement Definition & Desired Performance Levels Act
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Composite Index
Employee Satisfaction
Employee satisfaction may be too broad a measure to use to improve processes or behaviors, but
understanding the components of overall satisfaction may help us develop improved policies,
processes, and procedures. Thus, we could compose a composite indicator based on the following
correlations and contributors.
Weighted
Indicator Method Weight Score Value
Morale Survey .20 8 1.60
Problem Resolution Focus Group .05 9 0.45
Absenteeism Ratio .40 5 2.00
Appropriate workload Count .05 10 0.50
Turnover Ratio .05 7 0.35
Grievances Ratio .05 8 0.40
Transfer Requests Ratio .20 10 2.00
100% 7.30
(Scale: 0 10, With 10 Highest ) Composite
Indicator
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