10/3/2017

SCM Performance Evaluation

Module 01
Basic Intro of Subject &
Key Performance Indicators

1
 10/3/2017

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

2
 10/3/2017

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

3
 10/3/2017

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

4
 10/3/2017

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

5
 10/3/2017

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)?

12

6
 10/3/2017

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

13

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

14

7
 10/3/2017

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

16

8
 10/3/2017

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
17