Editor's Note: No two successful performance management programs are the same, but all successful performance management programs share common principles. To shed some light on what separates a good company from a great company with regard to performance management, DC VELOCITY will publish a column on one of the 12 Commandments of Successful Performance Management each month. This month we will drill into the eighth commandment: Listen.
The Eighth Commandment Listen: Find out what your customer wants (not what you think it wants)
The distribution director for an office products supplier had been eagerly awaiting the arrival of his suppliers' scorecards. He had worked long and hard to put what he thought were customer-focused metrics in place and couldn't wait to see how his customers—retailers like Staples, OfficeMax and Costco—rated his team's performance. He was confident he'd like what he saw.
But when the scorecards began to roll in, he was shocked. Not only were the customers' ratings wildly out of whack with his internal performance stats, but the scores themselves were downright terrible.
The
12 Commandments of
Performance Management
1Focus:
Know
your goals 2Balance:
Use a balanced approach 3Involve:
Get employees engaged 4Apply:
Be metrics ?users,? not just ?collectors? or ?posters? 5Beware:
Know the point of your metrics 6Anticipate: Use metrics as your headlights 7Integrate: Layer your
metrics like an onion 8Listen: Pay attention
to what your customer is saying 9 Benchmark! 10 Be flexible: There?s
no such thing as the holy grail of metrics 11 Lead: Practice what
you preach 12 Be Patient: Crawl
before you walk (or run!)
The distribution exec was totally bewildered. "We didn't understand why they said we were executing poorly," he remarked. "We knew we had product in stock and [that we] were shipping on time."
A team was formed to look into the situation. What it found was a classic failure to communicate: "Our customers were measuring on-time delivery," lamented the distribution exec, "and we were measuring on-time shipments."
Another sore point was the supplier's tendency to split orders. If it ran out of an item, the supplier simply shipped what it had on hand and expedited the rest of the order later, assuming that's what any customer would want. Trouble was, that wasn't what customers like Staples wanted at all. "We thought we were meeting [our customers'] needs, but, in reality, we weren't," the director said. "When we began looking at our processes from the customer's point of view, it opened our eyes." So how do you make sure that you're delivering what your customers want? The first step is to define our terms. Nine times out of 10 the problem can be traced to something as simple as the two parties' defining their terms differently. To minimize confusion, ask your customer exactly what it expects and how it will assess your performance. Then get it in writing.
An alternative approach is to use Service Level Agreements (SLAs) or Statements of Work (SOWs). While SLAs and SOWs have been a key component of third-party business arrangements for years, they have yet to gain widespread acceptance outside the 3PL industry. But even they don't guarantee satisfaction. More often than not, they simply state the metric and the target—but don't explain how they define their terms and how they assess performance against the target.
Happily, operational performance standards are starting to emerge. The Supply Chain Council has developed a comprehensive list of metrics definitions (www.supply-chain.org). And recently, APQC and the Council of Supply Chain Management Professionals issued a robust set of performance metrics standards (visit www.cscmp.org or www.apqc.org).
But whatever metrics you choose, bear in mind that you must measure not what you consider important, but what the customer considers important. In the end, there's only one voice that really matters: the customer's.
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.