Dr. Frazelle explains the principles of determining the optimal number of supply chain metrics.
During a recent visit to an automotive client I asked the vice president of supply chain how many metrics they used to monitor their supply chain performance. I don’t know why the number stuck with me, but it did. He proudly stated that they had 349 supply chain performance metrics and pointed to the six-inch thick notebook on the shelf behind him that had detail on each of those metrics going back for the prior five years. I wasn’t quite sure how to respond and so I said what I often say when I don’t know what to say and I don’t want to be derogatory. I simply said, “That’s amazing.” That is amazing.
There is no way anyone could keep track of 349 metrics. (I suspect that they, like many, use metrics as a substitute and/or pretense for management.) At some point, too many metrics dilutes the meaning of any single metric. The right number of metrics is the fewest needed to do the job. I typically recommend that no more than seven metrics be used for any activity. People can only remember up to seven things about anything. As long as they are the right ones, fewer is better than more!
According to Webster, “relevant” means having significant and demonstrable bearing on the matter at hand. A metric may be irrelevant because it is buried under so many other metrics that no one can find it, or because no one is accountable to it, or because when the performance for the metric changes and no behaviors or decisions change – then it should not be incorporated in a supply chain performance measurement program.