In our recent IBP & IBSing practitioners‘ call, Susanne Walker and a dynamic peer group of Supply Chain leaders and IBP experts offered insightful examples of the boon and bane of KPIs.
Below are the core principles that emerged out of the breakout sessions:
𝐁𝐄𝐒𝐓 𝐏𝐑𝐀𝐂𝐓𝐈𝐂𝐄𝐒:
1. 𝐁𝐚𝐥𝐚𝐧𝐜𝐞𝐝 𝐒𝐜𝐨𝐫𝐞𝐜𝐚𝐫𝐝 𝐀𝐩𝐩𝐫𝐨𝐚𝐜𝐡: Employ a suite of complementary KPIs for a rounded perspective.
2. 𝐃𝐞𝐭𝐚𝐢𝐥-𝐨𝐫𝐢𝐞𝐧𝐭𝐞𝐝 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬: Work at a level of granularity that pinpoints areas of progress and needed improvement.
3. 𝐈𝐧𝐭𝐞𝐠𝐫𝐚𝐭𝐢𝐨𝐧 𝐰𝐢𝐭𝐡 𝐅𝐢𝐧𝐚𝐧𝐜𝐞: Align IBP and financial KPIs, acknowledging potential target discrepancies between Supply Chain and Finance.
4. 𝐏𝐫𝐨𝐚𝐜𝐭𝐢𝐯𝐞 𝐯𝐬. 𝐑𝐞𝐚𝐜𝐭𝐢𝐯𝐞 𝐌𝐞𝐚𝐬𝐮𝐫𝐞𝐬: Understand the difference between lagging KPIs (outcome-focused) and leading KPIs (action-oriented) and balance business-centric lag KPIs with process quality and adherence lead KPIs.
5. 𝐑𝐨𝐨𝐭 𝐂𝐚𝐮𝐬𝐞 𝐀𝐧𝐚𝐥𝐲𝐬𝐢𝐬: Investigate the discrepancy between target and actual performance.
6. 𝐏𝐫𝐞𝐜𝐢𝐬𝐞 𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧𝐬: Standardize KPIs with clear formulas, impacting business results, and ensure comprehensive training and maintain user-friendly and clear KPI presentations.
7. 𝐅𝐮𝐭𝐮𝐫𝐞-𝐅𝐨𝐫𝐰𝐚𝐫𝐝 𝐅𝐨𝐜𝐮𝐬: Prioritize forward-looking KPIs over historical data.
8. 𝐂𝐨𝐧𝐭𝐞𝐱𝐭𝐮𝐚𝐥 𝐓𝐚𝐫𝐠𝐞𝐭 𝐒𝐞𝐭𝐭𝐢𝐧𝐠: Set targets reflective of the company’s situation and external trends.
9. 𝐃𝐚𝐭𝐚 𝐈𝐧𝐭𝐞𝐠𝐫𝐢𝐭𝐲: Base KPIs on reliable data.
10. 𝐅𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐚𝐥 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲: Assign responsibility to the roles that directly impact outcomes and empower decision-makers to act on KPI analysis.
𝐂𝐎𝐌𝐌𝐎𝐍 𝐏𝐈𝐓𝐅𝐀𝐋𝐋𝐒 𝐓𝐎 𝐀𝐕𝐎𝐈𝐃:
1. 𝐁𝐥𝐚𝐦𝐞 𝐆𝐚𝐦𝐞𝐬: Finger-pointing is counterproductive.
2. 𝐒𝐮𝐛𝐬𝐭𝐚𝐧𝐭𝐢𝐚𝐭𝐞𝐝 𝐓𝐚𝐫𝐠𝐞𝐭𝐬: Eschew setting targets without empirical backing.
3. 𝐒𝐭𝐚𝐛𝐢𝐥𝐢𝐭𝐲 𝐢𝐧 𝐌𝐞𝐚𝐬𝐮𝐫𝐞𝐦𝐞𝐧𝐭: Refrain from frequent KPI redefinitions.
4. 𝐒𝐢𝐦𝐩𝐥𝐢𝐜𝐢𝐭𝐲 𝐟𝐨𝐫 𝐋𝐞𝐚𝐝𝐞𝐫𝐬𝐡𝐢𝐩: Keep KPIs comprehensible for executive management.
5. 𝐏𝐨𝐥𝐢𝐭𝐢𝐜𝐚𝐥 𝐄𝐱𝐜𝐥𝐮𝐬𝐢𝐨𝐧𝐬: Stay objective; avoid politically motivated KPI exclusions.
6. 𝐃𝐚𝐭𝐚 𝐐𝐮𝐚𝐥𝐢𝐭𝐲: Do not compromise on the quality of data.
7. 𝐇𝐨𝐥𝐢𝐬𝐭𝐢𝐜 𝐕𝐢𝐞𝐰: Analyse current performance in the broader organizational context.
8. 𝐑𝐞𝐚𝐥𝐢𝐬𝐭𝐢𝐜 𝐆𝐨𝐚𝐥𝐬: Set achievable timelines and objectives.
9. 𝐃𝐞𝐜𝐢𝐬𝐢𝐯𝐞 𝐀𝐜𝐭𝐢𝐨𝐧: Eliminate dawdling in decision-making.
10. 𝐏𝐫𝐨𝐭𝐞𝐜𝐭 𝐭𝐡𝐞 𝐁𝐞𝐚𝐫𝐞𝐫𝐬 𝐨𝐟 𝐁𝐚𝐝 𝐍𝐞𝐰𝐬: Don’t penalize the messengers of inconvenient truths.
We welcome your insights and additions to the output of our call.
Thank you to all who participated. For more on the IBP/IBSing program and our regular, cost-free peer-calls for industry SC leads and IBP practitioners, see the comments.