Best-in-Class Supply Chains utilise Policies and KPIs to provide focus, guide behaviour and ensure Supply Chain performance supports organisational goals.
Clear, relevant and integrated Supply Chain Policies and Key Performance Indicators (KPIs) are a hallmark of high performing supply chains. Where these do not exist, organisations may experience symptoms including:
- Misaligned or siloed behaviour
- Slow, reactive decision making, with a reliance on hindsight
- Lack of accountability and ownership, such as in the forecasting process
- Inconsistency and lack of transparency in decision making, for example surrounding customer prioritisation
- Many ad-hoc meetings to solve operational issues, often repeatedly solving the same problem
By adopting and implementing effective Policies and KPIs, organisations have an opportunity to cascade organisational priorities, drive accountability and enhance the decision making process.
Policies are enablers which succinctly state organisational priorities and guidelines. When effectively utilised, supply chain policies provide clarity and guidance to team members. Policies also drive ownership and accountabilities, essential characteristics of any mature Integrated Business Planning process.
Supply Chain and Logistics KPIs can provide clarity, focus and help drive insight and understanding of a business, and are central to any effective performance management system.
By communicating the information required to make appropriate and timely decisions, Policies and KPIs enable organisations to drive optimal outcomes consistent with current Supply Chain strategy.
The assessment, enhancement and development of best practice Supply Chain Policies and KPIs is one of GRA’s core offerings.
GRA advocates developing and enhancing the following characteristics in order to develop Policy and KPI maturity:
- Utilising a Governance Framework as a foundation to manage and support the use of Policies and KPIs
- Succinct policies which provide all necessary information – including owners and accountabilities – and cover all elements of an organisation's supply chain
- Action focused, exception driven KPIs to encourage value-adding behaviour
- Balanced KPI’s to provide a holistic, accurate view of the organisation and drive appropriate behaviour
- Links between Policies and KPIs to understand business behaviours and compliance
- The regular review and updating of all Policies and KPIs
As such, GRA regularly works with our clients to:
- Establish and review Policy and KPI governance
- Workshop, recommend and develop suites of appropriate and balanced KPIs
- Identify, understand and prioritise Policy gaps
- Construct and complete Policy and KPI documentation
- Build scorecards and dashboards for the reporting, visualisation and communicating of KPIs
The following are outcomes of this approach:
- Learn what Policies and KPIs should be in place
- Develop ownership and accountability for specific business processes, functions and categories
- Communicate appropriate behaviour and decisions given organisational direction
- Clarify what decisions or events to escalate, and to whom
- Define timeframes and circumstances for the review of Policies and KPIs
- Understand the impacts and consequences of decisions and changes in policy
The benefits of this approach include:
- Alignment of Supply Chain Goals to Organisational Strategy
- Clarity and Focus on Value-Adding Activity
- Effective and Efficient Decision Making
- Organisational Alignment and Consistency
- Enhanced Ownership and Accountabilities
- Proactive Behaviours Encouraged
– BACK TO CONSULTING
"GRA helped us reduce inventories and improve operating cash flow by $12 million within 12 months whilst improving stock availability in stores. All the more impressive considering we were growing rapidly, but experiencing tough retail trading conditions at the time."
– Peter Birtles, Managing Director, Super Cheap Auto Group
- 20-40% inventory investment reduction
- increased service levels ranging up to 99.9%
- 10%-15% reduction in supply chain operating costs
- 5%-20% spend management savings
- the ability to fund business initiatives from operating cash flow (OCF) improvements
- improved return on capital employed (ROCE)
- a minimum 3:1 ROI (10:1 to 30:1 typical)