The Power of Metrics in Supply Chain Management
I like to start our seminars with a series of questions from the students. One morning the head of supply chain for a large telecommunications company asked me, “Dr. Frazelle. What’s the fastest, least expensive, simplest way to get our supply chain performing at world-class standards?”
The first thing I thought was, “Only in America would we ask something like that. For better or worse, we are always looking for the silver bullet.” The second thing I thought, being an American, was, “That’s a good question.”
I asked myself the same question. Here’s the answer I came up with. Get a world-class set of metrics in place. The reason is simple. My observation of our clients, and I guess human nature, is that people behave based on the way they are measured.
We all have an internal gyroscope, that contains within it our definition of success. That gyroscope dictates our decisions. If that gyroscope is right, we're going to make some very good decisions in life. And if that gyroscope is wrong, we're going to make some very bad decisions in life. It's that basic.
For a supply chain, if you get a set of metrics in place that are aligned vertically and horizontally and working with appropriate targets, there is no limit to what a supply chain can do to support a business. And, if you get a set of metrics in place that are mis-aligned vertically and horizontally with inappropriate targets, there’s no telling how much damage a supply chain can do to a business.