Executive Briefings

Quality & Metrics: A Metrics Culture Drives Better Performance

Analyst Insight: Leading companies have a portfolio of true end-to-end supply chain metrics, use those metrics in key processes such as S&OP, supplement the metrics with customer and supplier dashboards, and have an open attitude and metrics culture that drives them through an upward spiral of increasingly higher levels of performance. Most importantly: they understand they cannot be good at everything, and they consciously manage tradeoffs.

Companies are still trying to figure out which are the metrics that matter, how to get everyone to agree on standard definitions, and how to turn the numbers into something actionable.

This year, we saw more emphasis on financial supply chain metrics, such as working capital and cash-to-cash.  We also saw an increased focus on the demand forecast metric as companies look to better sense the anticipated upswing.  Only a handful of companies are successfully tracking the full perfect order and total end-to-end supply chain cost, and where they are, it tends to be in pockets of excellence rather than company-wide. Finally, there's been an uptick in interest from life sciences companies on the topic of metrics, as pressures on margin and cost in that value chain heat up.

AMR Research's annual Supply Chain Top 25 ranking highlights supply chain leadership. In the area of metrics, the best companies:

  • Have a portfolio of end-to-end supply chain metrics at the right level that cross procurement, manufacturing, distribution, transportation, and customer service; these are supplemented by supplier and customer scorecards;
  • Embed and use the metrics portfolio in a critical process such as S&OP, with different levels of detail provided for different key stakeholders;
  • Actively shape an attitude and metrics culture that is open to continually rooting out problem areas and improving them, avoiding the politics, agendas and personal blame;
  • And most importantly, understand they cannot be good at everything - they identify what they must be great at, and use the metrics to make conscious tradeoffs for everything else.

The Outlook

We expect this year to be one of continuing evolution. The majority of companies are still in the early stages of maturity when it comes to metrics, as they strive to get a better handle on their global supply chain performance.  The next stage is to elevate the metrics from supply chain to value chain, where companies will apply the metrics that matter to guide collaborative, win-win activities with their trading partners.

Companies are still trying to figure out which are the metrics that matter, how to get everyone to agree on standard definitions, and how to turn the numbers into something actionable.

This year, we saw more emphasis on financial supply chain metrics, such as working capital and cash-to-cash.  We also saw an increased focus on the demand forecast metric as companies look to better sense the anticipated upswing.  Only a handful of companies are successfully tracking the full perfect order and total end-to-end supply chain cost, and where they are, it tends to be in pockets of excellence rather than company-wide. Finally, there's been an uptick in interest from life sciences companies on the topic of metrics, as pressures on margin and cost in that value chain heat up.

AMR Research's annual Supply Chain Top 25 ranking highlights supply chain leadership. In the area of metrics, the best companies:

  • Have a portfolio of end-to-end supply chain metrics at the right level that cross procurement, manufacturing, distribution, transportation, and customer service; these are supplemented by supplier and customer scorecards;
  • Embed and use the metrics portfolio in a critical process such as S&OP, with different levels of detail provided for different key stakeholders;
  • Actively shape an attitude and metrics culture that is open to continually rooting out problem areas and improving them, avoiding the politics, agendas and personal blame;
  • And most importantly, understand they cannot be good at everything - they identify what they must be great at, and use the metrics to make conscious tradeoffs for everything else.

The Outlook

We expect this year to be one of continuing evolution. The majority of companies are still in the early stages of maturity when it comes to metrics, as they strive to get a better handle on their global supply chain performance.  The next stage is to elevate the metrics from supply chain to value chain, where companies will apply the metrics that matter to guide collaborative, win-win activities with their trading partners.