3 steps to measuring supply chain performance


Sanjay Saini

Domain Principal

Banner: Supply Chain Paradox

It’s a typical Monday morning meeting in a company boardroom. A group of leaders from various departments gather, sipping coffee and bemoaning how fast the weekend went. They settle into the weekly cadence of departmental updates and soon it’s the supply chain leader’s turn. The supply chain is performing well. Service levels are being met, inventory is being used efficiently, demand is being met. Before the update is over, the CEO breaks in with a question: “How do you know?”

There’s a moment of silence. “I mean, how do you know it’s performing well? Weren’t we just talking about integration and visibility issues last week?”

If bells are ringing in your head, it’s not just you. We found the same situation among a group of global supply chain leaders that we recently surveyed in partnership with Supply Chain Management Review.

The supply chain performance paradox

When asked how effective their operational strategies were, 91 percent of respondents perceive their supply chain management strategies as either somewhat, very or extremely effective. When those same leaders were asked what problems they faced regarding supply chain visibility, 76 percent said that their systems aren’t integrated well and 46 percent said that they often lose visibility when items are handed over to partners. Even though most supply chain leaders perceived their performance as decent, what they complained about doesn’t seem to match up with that perception.

The paradox deepened when we asked what obstacles stood between supply chain leaders and accomplishing their goals. 51 percent said a lack of visibility was an issue, and 49 percent said a lack of access to accurate, time-sensitive information got in the way.

“What obstacles do you face to achieving your supply chain goals?”

Think about it. If supply chain leaders struggle with visibility and getting the right data, how are they forming an accurate view of supply chain performance?

Even if they answered “somewhat effective” about their supply chain management strategies, they must have some reason for their opinions. Using their own answers, it looks like their positive spin is based on a false perception. And we all want to think that what we’re responsible for is performing well, so perhaps that also contributes to this clouded view.

The last thing a supply chain leader wants is bad information, especially if it could have a ripple effect through the business. In his book “Shoe Dog,” Phil Knight said, “Supply and demand is always the root problem in business.” Whether you’re importing shoes from Japan or making sure a kindergartener in San Francisco gets his backpack on time for his first day of school, when the supply chain succeeds, the business succeeds. So how do you avoid falling prey to the paradox?

Think about supply chain collaboration and communication

Of the leaders we surveyed, 63 percent said that they communicated with customers and suppliers via methods like email, phone, and fax. About 54 percent said that spreadsheets were part of their communication, and we all know how much fun it is to email a spreadsheet back and forth. (“Is this Version 7 or 7A?”) If your communication methods are lagging, gaining an accurate view of supply chain performance will be a struggle. When supply chain leaders communicate and collaborate with modern, cloud-based technology, there’s less confusion over data accuracy and project prioritization, and supply chain teams can focus on the company’s larger goals rather than spending their energy working through frustrating system issues.

Think about supply chain system integration

Of the leaders we talked to, 64 percent described their systems as fragmented, with little or no integration, or a mix of connected and disconnected. It’s a challenge to make all your systems play along nicely, as they often grow in a disorganized way, layering over one another.

Perhaps new leaders brought in systems they knew, or mergers or acquisitions force leaders to integrate a less-than-ideal new system. When you have clarity around how each system works and communicates with each other and what their goals are, your organization can move closer to true visibility, and with it, an accurate view of supply chain performance.

Think about supply chain visibility

End-to-end visibility is a supply chain phrase that many like to throw around, but only 6% of companies believe they’ve actually achieved. Our survey found that supply chain leaders want to improve visibility across supply chain processes and put an end to unpleasant surprises and fire drills.

If you want to gain an accurate view of supply chain performance so you can make changes that’ll send positive ripple effects across the business, invest your resources into a cloud-based supply chain planning platform to move toward provides true end-to-end visibility. This type of collaborative platform, when used by the leaders involved in the supply chain from start to finish, provides a look into all relevant parts of the supply chain management process.

Finding true confidence in supply chain performance

Don’t lose sight of true supply chain performance because of this perception paradox. With the right cloud-based platform in place, leaders can focus on collaboration, integration, and visibility, and the next time the supply chain leader is asked “how do you know?” in that mahogany-paneled boardroom, they can answer with confidence.

For a deeper dive into the data, take a look at our research report with Supply Chain Management Review, “How connecting the supply chain improves business performance.”

How connecting the supply chain improves business performanceRead report

Topic: Supply Chain Management