Performance Management: Getting Everybody On the Same Page

Actively managing the performance of your supply chain has never been more important. Increased globalization, volatility in demand and commodity costs, regulatory requirements and greater dependency on suppliers and other partners have significantly increased the risk of doing business. Knowing inventory positions, delivery dates and fill rates is not enough. You must also understand the impact of supply chain changes on total cost or cash flow and optimize supply chain effectiveness for better corporate results. This requires end-to-end visibility into factors that drive performance — such as cash-to-cash cycle times, overall supply chain cost and the quality of order fulfillment.

Modern business ecosystems are not what they were a decade ago. Traditional supply chains involved only factories, suppliers, distributors, carriers and customers. This relatively simple model no longer exists for most companies. Processes that were once linear are now dispersed. Multiple parties that purchase materials, manufacture and deliver products to market are no longer a part of a “chain” as much as they are networks. These networks are expensive to manage and difficult to oversee in terms of risk and compliance. Success requires actionable and timely insights into supply chain performance across business processes.

Business Intelligence

Business intelligence technology enables companies to collect, aggregate, transform and manage crucial insights culled from enterprise systems. However, much of this crucial information may be buried within those systems and dispersed across multiple documents and databases. You may not even know what data you need to make decisions. Your supply chain metrics may also lack formal definitions and standards common in finance and other areas of your business. In addition, it's likely that neither your business manager nor your IT department has the time to create the modern and flexible information architecture your enterprise requires to address evolving supply chain needs.

So, the challenges you face are daunting. To meet or exceed your current corporate goals, you and your team must respond to supply and demand with greater speed and efficiency. Your operations must be visible and, most importantly, flexible enough to respond to network needs while controlling cost and risk.

Technology Changes Supply Chains

One answer is a supply chain performance management application that provides visibility into supply chain processes, such as order-to-cash. You stay clearly informed about performance metrics, such as shipment reliability, perfect-order fulfillment or supply chain cost. You also understand underlying factors, such as production cycle times, order backlogs or warehouse cost, and even correlations and mutual impacts of one on the others.

These insights help you take immediate action for short-term benefits — adjusting batch sizes to compensate for fuel cost increases, for example — and improve supply chain performance in the long run. Enhanced supply chain performance will, in turn, improve financial performance by reducing costs, increasing working capital and strengthening customer loyalty.

Until recently, spreadsheets supported supply chain performance efforts (and let's face it, they are still widely used). The biggest problem with spreadsheets is they cannot provide a single version of the truth. You cannot integrate and reconcile spreadsheets with the processes that underlie supply chain management nor use them to gain real-time data.