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What are we using Supply Chain KPIs for?
Supply Chain teams track a whole lot of KPIs on daily, weekly and monthly basis. Let’s pause for a moment and think about the purpose of tracking these KPIs.
Most teams use it to check the pulse of their supply chain… is it functioning smoothly? For all their improvement projects, they would be particularly interested in tracking the specific KPIs impacted by the project. KPIs are used as a feedback mechanism.
Some teams go a step further and analyze the impacted KPIs to find out the root causes of deviations. They build elaborate formulae to apportion the deviation to various root causes. It takes quite an effort and is typically done with a monthly cadence. I have seen some teams take as much as 3 weeks every month to apportion deviation to root causes.
The real purpose of tracking these KPIs should be beyond just a feedback. Ascertaining root causes is good, however, the entire calculation should not take more than a few hours. The teams will then have enough time to take corrective and preventive actions.