04. Supply Chain Business Objectives & Metrics

Level 1 Level 2 Level 3 Level 4
Implicit or Reactive Documented / Explicit Internally Aligned Partner Aligned
  • Characteristics of business objectives may be: essential;-short term targets-defined by executive mandate-customer specific-implicit; untested.
  • Supply chain specific objectives are typically not seen as essential to core business activity.
  • Departments do supply chain things in siloed isolation at customer behest and or based on departmental budget/objectives to support product and sales goals.
  • Supply chain practices support business objectives but may not be mutually developed.
  • The organization has explicitly defined and documented objectives, practices and metrics.
  • Cross functional activities begin. Executive sponsors emerge.
  • Department budgets and objectives label supply chain activity.
  • Business and Supply Chain objectives, practices and metrics are integrated and internally aligned.
  • The business takes into account the impact of supply chain decisions on financial results (e.g. inventory impacts on cash-to-cash cycle and ROI).
  • Supply chain concepts such as a differentiation, postponement, cost of supply chain, cost of ownership, creep into staff level discussions.
  • Align objectives with strategic trading partners.
  • Agreed objectives and potential tensions are determined as a precursor to writing a contract in order to best align the partners to behave in mutual self-interest.
  • Explicit understanding flows though to risk management, metric design, contract preparation, process integration, team selection, IT integration and continuous improvement.
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    Incidental Metrics:
  • Metrics may be dictated by customer and/or limited to basic financial controls.
  • In general the supply chain and supply chain relationships are not measured as such.
    		• Defined Metrics:
  • Metrics have been explicitly defined, but may not be integrated to business objectives.
  • Most often determined by customer by default, i.e.,QBR. Each independently monitored.
  • Often moving toward externally agreed metrics before internally integrated and agreed metrics
    		• Comprehensive:
  • Use of comprehensive metrics dashboard or balanced scorecard approach.
  • Ability to use an appropriate small number of metrics depending on the business cycle.
  • Closed loops and timely data to turn metrics into action in a timely manner.
    		• Mutual:
  • Metrics are jointly developed as part of the agreement and reflect both mutual objectives and opposing tensions, e.g. customer forecast accuracy balanced against supplier inventory and on-time delivery.
  • Partners share a common interpretation, agreed accountability, and agreed single source of data.
  • Certain metrics may be shared across multiple tiers.
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