Executive Briefings

Quality & Metrics: Perfect-Order Mentality More Important Than the Actual Measure

Analyst Insight: There has been significant debate spanning 20 years about the validity of the "perfect order" metric, which measures the quality of product delivery. The debate mostly focuses on how the metric is calculated and if it is a valid measurement of supply chain performance. But, a more relevant part of the discussion is the mentality that drives organizations toward perfect performance.

The perfect order, whether for a customer or supplier, is commonly considered to be a measure of the:

• Percentage of on-time delivery;
• Percentage of complete orders;
• Percentage of the right quality; and
• Percentage of correct documentation.

So to be perfect, an order must be delivered on time, complete, with the right product quality, and have all required documentation - a very difficult task given the internal and external processes that must function perfectly for this to occur.

While getting all of these events to occur simultaneously may be a difficult task, does that make it an impossible task?

Organizations that think that "perfect" is possible will push to continuously improve, while others will stop to look for innovations. Having a mindset that strives for perfect is a key differentiator between organizations that prosper and those that do not, especially in the long term.

Practically speaking, a requirement of perfection is folly. The laws of diminishing returns suggest that, at some point in the journey, being less than perfect makes sense. But experience has taught that striving for perfect orders will leave organizations better prepared to meet the expectations of customers and consumers. 

The Outlook

In 2010, expect to see the debate on perfect order continue. But also expect to hear about more and more companies actively pursuing perfect order as a performance metric and as a company culture. The visionary companies will look beyond the order-delivery process and look for perfection in other supply chain processes, as well.

The perfect order, whether for a customer or supplier, is commonly considered to be a measure of the:

• Percentage of on-time delivery;
• Percentage of complete orders;
• Percentage of the right quality; and
• Percentage of correct documentation.

So to be perfect, an order must be delivered on time, complete, with the right product quality, and have all required documentation - a very difficult task given the internal and external processes that must function perfectly for this to occur.

While getting all of these events to occur simultaneously may be a difficult task, does that make it an impossible task?

Organizations that think that "perfect" is possible will push to continuously improve, while others will stop to look for innovations. Having a mindset that strives for perfect is a key differentiator between organizations that prosper and those that do not, especially in the long term.

Practically speaking, a requirement of perfection is folly. The laws of diminishing returns suggest that, at some point in the journey, being less than perfect makes sense. But experience has taught that striving for perfect orders will leave organizations better prepared to meet the expectations of customers and consumers. 

The Outlook

In 2010, expect to see the debate on perfect order continue. But also expect to hear about more and more companies actively pursuing perfect order as a performance metric and as a company culture. The visionary companies will look beyond the order-delivery process and look for perfection in other supply chain processes, as well.