Numerous articles and reports have been published around which metrics or KPIs are the right ones to use in an organization. And every time the conclusion is (not surprisingly) that a KPI has to reflect the overall company strategy in order to influence people in the organization in the right way and not be counter-productive. So Wal-Mart would focus on measuring cost reduction, Zara on speed and time-to-market. So does this mean we don’t need to measure anything else?

On a high level I certainly agree that our human behavior is to meet objectives that we are measured against, and focus less on other aspects. A picker being measured on picks per hour is more likely to make errors now and then unless he is also evaluated by a compound metric that includes also picking errors. There are several annual surveys on which KPIs are the most popular ones in supply chain, like the WERC survey on DC metrics. Looking at those they tell us we should measure a well balanced mix of cost, turnover, quality and productivity aspects.

Measuring on a high level gives you an indication on how things are performing. But how can you translate that into action? If you have a declining performance in e g a Perfect Order KPI (a compound metric reflecting how you meet customer demand with respect to availability and lead time promises) – are you able to break it down by product, market, pick zone and even picker? If you look at staff productivity, are you able to dig into the differences between sites, teams, fork lift drivers vs pickers etc? What I am saying is that if you want other usage of your measurements than to influence overall behavior, then you need details – a lot of details…

I am not proposing you should become a control maniac, but just to consider the good thing that if you can measure at the detailed level, you will also be able to monitor the operation – from task execution to daily, weekly and monthly aggregates and trends. When looking at the needs for measurements make sure you can:

• Automatically record start and end times for all tasks – this is crucial for productivity KPIs!
• Automatically record task details about products, orders, equipment used – key for analysis!
• Automatically tie all activities to individuals – key for linking to incentive programs!
• Automatically capture reasons for disruptions and exceptions – simplifies monitoring!
• Automatically record inventory balances at the lowest level, hour by hour – how can you otherwise measure how demand matches supply?
• Automatically link values and costs to performed activities – not only on products!

What if you can’t measure all of this? Then start looking at how you can get it updated in and extracted from your systems. If this proves difficult, expensive or not possible – then start looking for a better solution…

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