What are the best Supply Chain KPIs and decision drivers for S&OP ?

Carlos Garcia Torrado/Flickr
Carlos Garcia Torrado/Flickr

A common question we get is which measures are the best KPI’s/decision drivers to be used at different levels within the organization structure?

The  best executive level dashboards (leveraging an underlying cloud network) will typically focus on measures related to both customers as well as enterprise financial performance. In keeping with good measurement practice, it is good to limit the number of KPI drivers to 6.

A typical executive level measurement bundle related to customer performance that we have implemented in the past includes quality, service, pricing, lead time, brand, and NPS.

A typical executive level measurement bundle related to financial performance that we have implemented includes ROI, EVA, revenue, earnings, capital, and cash flow.

The added advantage of the new cloud architecture is not only providing drill down and issue resolution connected to these drivers, but also the elimination of any latency in the calculation of these measures related to real time supply network performance. Plus the financial measure can be calculated at the operating level and translated into any financial view, include the chart of account structure.

The Departmental Level Dashboard will be more tightly connected to actual process level performance. A typical departmental bundle related to process performance includes sales volume, material costs, labor costs, transportation costs, storage costs, and overhead costs.

Deploying this type of advanced IBP and Sales and Operations Planning (S&OP) has been difficult for most companies due to false starts given that many companies market this capability but lack the platform that can enable this level of consensus based collaborative forecasting and planning. Analysts give credit to technology providers who unfortunately can only really solve a small piece of the problem. This has shaken the confidence of many companies who now believe this all sounds “too good to be true”.

However as we have detailed in previous posts, these more advanced solutions have been successfully deployed  in the retail, consumer goods, and automotive sectors. Even pharmaceuticals which has been slow to adopt these types of advanced platforms due to its skepticism of cloud based solu­tions and the security related to shared data is beginning to move forward.

To read more about this subject, I suggest you read the new whitepaper, Supply Chain’s New World Order”, which discusses the cloud, S&OP, and why a holistic approach is needed for supply chain management.

Bruce Jacquemard

Executive Staff at One Network Enterprises
Bruce Jacquemard is a member of One Network Enterprises' Executive Staff and leads a variety of customer-facing and field operations related activities. Much of his career has focused on European and Asian markets.