Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
What, metrics again? Aren't we getting tired of hearing about metrics? Maybe, but we hope not. A set of metrics is indispensable. It's how you keep score.
Without good, relevant measurements, you don't know whether you're winning or losing. You can't tell if you're gaining ground or falling behind. Actually, without metrics, you don't even know if you're in the game.
In both the United States and Europe, study after study has shown that companies that measure performance consistently outperform those that don't—and by an ever-growing margin. Simply put, the leaders measure, the laggards often don't, and the dominators definitely do.
But it's also true that some of the losers regularly measure performance. How can that be? Easy. They're measuring the wrong things. They haven't learned what to measure—what really moves the needle when it comes to supply chain, and corporate, performance. Interestingly, many of these outfits are downright aggressive and intense in their measurement and reporting. But all too often, their efforts yield little or nothing in the way of improvements because they have their eye on the wrong ball.
So knowing what to measure—and what not to bother with—is critical. Measure and report on everything, and performance will collapse under the weight. It's vital to focus on the few critical measures that profoundly affect the business (or the function) and put aside all the other possibilities. This holds true whether you're measuring corporate supply chain performance or pick/pack operations.
What to measure?
To a company contemplating which metrics to adopt, the vast array of options might seem an embarrassment of riches. But our view leans toward a few "musts" at the corporate level—the "cosmic" metrics, if you will: cash-to-cash cycle time, supply chain cost (as a percentage of sales), perfect orders, and economic value added (EVA).
If a couple of these don't strike you as natural supply chain measures, you're not alone. Most will agree that "supply chain cost" and "perfect orders" are relevant measures, but choke a little on the other two. We'll fight hard on this point.
Let's take cash-to-cash cycle time (the period from the time a company pays for raw materials, supplies or merchandise to the time it receives payment for products sold). That may not strike you as a supply chain matter until you consider that in the overall supply chain, we have enormous and diverse responsibilities, including sourcing and procurement, supply and supplier management, and physical distribution. We have—or ought to have—profound influence on trends in cash-to-cash. We're supposed to be about speed, about inventory management, about continuous improvement in all aspects of the supply chain. Cash-to-cash should be a major measure of our operational success.
The same reasoning applies when it comes to EVA. What we do in supply chain management is (or should be) focused on getting the most out of assets (or on maximizing the return on newly employed assets)—in other words, on adding value.
But the most important metric of all—the one you want to track religiously, relentlessly, rigorously—is customer satisfaction. If you measure nothing else, measure customer satisfaction. And do it right.
Measure it often, and measure it on both transaction and overall bases. Use a variety of techniques, including telephone surveys, return cards, focus groups and questionnaires. Wherever possible, use outside professionals to design and execute customer satisfaction measurement programs. Your organization may have the resources to conduct its own research, but the odds are that it doesn't have the objectivity. The independence of the evaluation is vital to its accuracy and usefulness.
Companies that let their focus stray from customer satisfaction are likely to pay dearly for the lapse. Even in the best of times, and with the best of performance, losing customers is inevitable. Losing sight of satisfaction levels only increases an organization's exposure to customer losses. Replacing those customers is incredibly expensive, and regaining the lost business is an iffy proposition at best.
We haven't even touched on the almost infinite world of granular operational measurements. The keys to success here are the usual—simplicity, focus and visibility.
These measures range from "transactional productivity in putaway" to "relationship structures in sourcing and procurement," and include almost everything in between. But all elements of the supply chain—including the planning functions (think forecast accuracy)—can and should have active and relevant metrics.
The caveat: As you delve deeper into individual granular metrics, keep in mind that they are all part of a balanced approach to achieving corporate supply chain objectives.
Making metrics real
Of course, metrics only add value when you do something with them—and the first thing to do is communicate what you've learned. While we advocate the sharing of overall supply chain performance measures, associates also need visibility of the metrics over which they have direct control. A forklift driver who's kept informed about trends in dock-to-stock time is far more likely to be engaged in efforts to improve performance than one who's left in the dark.
How should measurements and results be communicated? Clearly, early, and often, which is easier said than done. Whether the metric is "units per hour" or "on-time delivery" or "total supply chain cost vs. budget," performance stats need to be posted—or published—as soon as information becomes available and at intervals dictated by the natural business cycles. That is, measuring unit costs or total supply chain costs on a weekly basis might not provide much in the way of meaningful information, but weekly stats on group performance might prove invaluable. The trick is to find the time cycle that informs soon enough to permit corrective (or congratulatory) action, but which is also long enough to incorporate all the factors that affect performance over the long haul.
As for communicating the results, companies do this in a variety of ways, from corporate memoranda to hand-written production sheets pinned to a bulletin board. In any given workplace, the choice will be dictated by such factors as the source of the report, the audience, and the local culture.
Metrics, done right, spotlight an organization's current performance. In addition, they can help establish targets, the "could be" for groups and individuals. They let you know where you stand on the journey from "was" to "will be."
But, you may ask, do metrics stimulate improved performance? Yes, though the purpose is not to drive people to meet the target just because it's the target. The larger aim of measured and reported objectives is to provide a window into failure, to help identify not only when, but why, the goal is still out of reach. Then, it becomes management's responsibility to clear away the obstacles and do whatever it takes to allow people to meet and exceed published expectations. Making measured progress along the way, of course.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.