Performance measures must change to reflect current business conditions

Economic conditions in the past year have led to many companies seeing their demand volume drop—and the mix change. Have companies re-weighted supply chain metrics to accommodate those shifts?

09/01/2009


Economic conditions in the past year have led to many companies seeing their demand volume drop—and the mix change. Have companies re-weighted supply chain metrics to accommodate those shifts? For example:

• As consumer-goods demand moved from high-price to value-oriented items and from non-essential to essential goods, are companies not only changing the forecast, but also the target service levels? They should go up for those essential, lower-priced items and may be able to drop for luxury items. This may also shift which items are considered A, B, and C for planning purposes.

• Have industrial equipment and machinery makers adequately accounted for a shift in demand from new products to spare parts or refurbished units, and possibly from products to services? Final assembly areas should be focused on speed of reaction, not utilization, and spare parts may take priority over new production on some lines. If the company offers service, product quality targets may need to be higher to reap strong profits on that business line.

• In the downturn, companies looked to work inventories down. Are companies prepared to increase those levels again when the economic pressure is lifting, and demand starts to rise? Some countries will recover faster than others—so it's not only a matter of having enough inventory, but having it in the right places.

When conditions change, metrics must as well. This may involve setting new targets and shifting which performance metrics are most important. Forecast and order accuracy, productivity, and shrinkage should continue to improve. Ensuring appropriate updates entails some dramatic changes to a performance dashboard. Think of a traditional gasoline-powered car's dashboard compared to that of a hybrid or electric car—the top speed may be different, and the fuel gauge may be less important than the battery-charge gauge, yet many items are the same.

For a supply chain manager, this is fundamentally a process challenge—ensuring a review and update of operational metrics, not just periodically, but as conditions change. Analytical applications can not only support dashboard views, but also make changes to them easier. While any business-intelligence (BI) system can produce those views, specialized supply-chain analytics applications can accelerate success.

Specialized providers of supply-chain-analytical applications include Llamasoft, Oco Inc., Pelyco Systems, PivotLink, QlikView, and Silvon Systems. A few of the BI vendors, notably IBM Cognos, MicroStrategy and SAS, have packaged up templates for supply-chain analytics. And a number of ERP and supply-chain suite players offer specialized supply-chain analytics, including CDC Software, i2, Infor, JDA, Lawson, Logility, Manhattan, Oracle, and Supply Chain Consultants.

Most companies have literally hundreds of supply-chain metrics in place. Which ones matter, and what appropriate targets are, will change over time. Are your metrics (still) driving the behavior —and the results —you want and need to succeed?

 


Author Information

Julie Fraser is Principal Industry Analyst for Cambashi Inc., and has been an industry analyst, consultant, and marketer for more than 20 years, specializing in manufacturing value network processes and systems. Julie can be reached through Manufacturing Business Technology, or email at Julie.fraser@cambashi.com .




No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.