Wednesday, December 10, 2008

Supply Chain / Value Chain Research - An Update

I wanted to send a word of thanks to those of you who have participated in the Supply Chain/Value Chain survey so far. With well over 100 respondents in the first few days we are in the process of making the first analytical pass of the data. The speed with which you have responded has been gratifying, particularly given the business demands associated with the holiday season and the end of the year.

A special thanks to the Value Chain Group for helping get the word out on the survey.

For those of you who started but then had to interrupt your survey, we will be looking at completed surveys again on December 12 so if you can complete your entry by then, your response will be included in the initial analysis. (As you know, with surveymethods.com you can begin the survey, leave the site, and then return to complete it without starting all over again). For those of you who have not yet started your response, the good news is that our initial estimate of approximately 20-25 minutes to complete the survey has been confirmed by a number of respondents.

If you are just now discovering the survey you can read the announcement of its launch here. And if the links don't work you can paste the link to your web browser. (http://www.surveymethods.com/EndUser.aspx?87A3CFD080C0D5D2)

Thanks again to everyone who is collaborating in this research.

Tuesday, December 2, 2008

Supply Chain Research - An Addendum

Yesterday I asked for your participation in some value chain / supply chain research that I am conducting with Dr. Sanjay Menon of Louisiana State University - Shreveport. I failed to let you know that unlike some research cycles that take weeks and months, this research is designed to move at the speed of business. Fast.

The first review cycle of data will take place within a matter of days. While the current plan is to let the survey evolve in scope and breadth, the significance and direction of the continuing research will be shaped by the early respondents.

So, in the next 20 minutes, you may help guide research that will be important to businesses in multiple industries, executives in multiple disciplines, and organizations in multiple geographies.

If you are a supply chain or value chain practitioner, a consultant, a technology provider, or an academician your participation in the research is welcome here. (http://www.surveymethods.com/EndUser.aspx?87A3CFD080C0D5D2)

Friday, November 28, 2008

Supply Chain Survey Research

A short while ago, I was flattered to be approacahed by Sanjay Menon, PhD, Lousisiana State University - Shreveport who was interested in continuing the supply chain research he began a few years ago. His original research used an expert panel (Delphi) to frame some basic questions regarding supply chain management - including developing a snapshot of best practices and basic management trends.


Dr. Menon is revisiting his research questions (with limited assistance from me) and expanding them to include: 1) how different people perceive supply chains and value chains, 2) how supply chain considerations drive human resource practices, 3) how organizations address performance measurement (KPIs) and who is responsible for those measurements, and 4) what the perceived state of the art in supply chain management today.


Unlike many surveys I have seen and participated in, this survey was designed to answer some very basic questions and can be completed by almost anyone in about 20 minutes. (I don't know is a valid answer for most questions). The results of the survey are intended to be published in academic, peer-reviewed publications. There are no sales or marketing efforts associated with the survey and you are invited to participate.

For the friends and colleagues I made during my tenure as the Chief Technology Officer of the Supply Chain Council, I encourage you to participate in the survey to help to frame answers for questions we have been asking since the 1990s. For those of you who are seasoned in value chain and supply chain practice, I would ask you to contribute your knowledge to help understand how to link management practice and measurement to the managers and exectuves who are responsible for their planning and execution.

What is your reward for participating in the survey? Your anonymity will be protected. You will not be put on a never-ending mailing list. You will receive a summary of the findings and there may be an opportunity for you to participate in additional research.

Thanks and the link to the survey is here.

Monday, November 10, 2008

In Search of the Perfect Order Webinar



As I mentioned in a previous post, the Value Chain Group was kind enough to host one of my webinars - this time, an overview of Perfect Order Fulfillment. In the one hour that we devoted to the topic, we were able to discuss how perfect orders are calculated and some of the issues associated with capturing and using the measurements.

As a special note, in the webinar I mentioned a survey that Louisiana State University at Shreveport's Sanjay Menon, PhD, and I are conducting on metrics, supply chain management, and human resources. If you are interested in this research please feel free to send him (or me) a note.

The webinar introduces the use of a powerful metric that has been termed a Key Performance Indicator (KPI) by practitioners, research organizations, academics, and consultants. While the measurement of Perfect Order Fulfillment may be the state of the art in fulfillment measures, it can be difficult to implement. Failing to reach consensus on the definition of the order, the required delivery times (what constitutes early/late), or quantities (e.g.,blanket order agreements, call-offs) can make any measurement impossible. Imperfect execution (inconsistent purchase order agreements, failure to collect delivery information, or an inability to link invoice accuracy with the on time in full delivery of a customer's order) can make it impossible to measure perfect order fulfillment but other measures (On Time In Full, Fill Rate, etc.) may provide acceptable alternatives.

The VCG recorded the webinar and has passed along a link to for those who may have missed the original broadcast. The recording includes the PowerPoint presentation and an audio recording of the event. The link to In Search of the Perfect Order uses GoToMeeting and will ask for an email address prior to launching a Windows Media file that will play the audio recording and show the accompanying PowerPoint presentation.

Thursday, October 16, 2008

In Search of the Perfect Order - Webinar Invitation



A month ago I presented a webinar on Measuring, Managing, and Improving the Extended Value Chain for the Value Chain Group. About 40% of the attendees who responded to survey questions indicated they were interested in additional information on metrics, KPIs, and benchmarking. Statistics indicate that readers of my blog are frequently attracted by the entries on those same activities and the list of benchmarking resources that I maintain.

On November 6, I will present another webinar, this one focused specifically on a KPI / measurement that has attracted significant attention in the last few years - Perfect Order Fulfillment. In the hour long webinar, I hope to address the challenges in defining and measuring the Perfect Order and how "metrics maturity" might progress from fill rate to delivery performance to on time in full delivery to perfect order fulfillment. While we will talk about how to calculate the metrics, the webinar is intended to discuss the issues in applying these service level metrics across the value chain (suppliers - customers). We will also touch on how superior or substandard performance may effect the financial performance of members of the value chain.

I was very pleased with the number of participants we had in the last webinar and if this one is received as well as the last, I hope to follow it with several metric-specific sessions. The VCG Invitation follows including the link if you choose to participate:

You are invited to join our VCG Webinar:
In Search of the Perfect Order

Join us on 6 November from 11:00 AM to 12:00 PM ET US (16:00-17:00 GMT)

Space is limited.Reserve your Webinar seat now at:https://www1.gotomeeting.com/register/695292800

In Search of the Perfect Order is a webinar introducing a key performance indicator (KPI) that has soared in popularity in recent years. Perfect Order Fulfillment has been touted as the customer service delivery metric by state of the art companies.
For many companies, the costs associated with an accurate measurement of Perfect Order Fulfillment may be prohibitive. If you are building a business dashboard, leading a value chain team, trying to understand how business measurements can drive business design and performance, or considering participating in a benchmarking program - this webinar may provide some important insights.
Large and small businesses recognize that achieving consistent, superior results requires managers and executives to monitor business performance and take decisive steps to maintain or improve outcomes. Strategic partnerships, go-to-market-strategy, and business plans are built on service level agreements that use business performance metrics to specify the commitments of the business partners. "Standard" contracting terms employ measurements terms that are often not well-defined nor standard. World-class companies are investing in business intelligence/analytic applications, employing "dashboards," and investing in benchmarking programs. At the heart of these efforts is consistent and meaningful definition of what and how to measure.
This webinar focuses on the implementation questions of employing a perfect order metric. How is a perfect order calculated? What is the financial impact of less than perfect orders? Should you use On Time in Full Delivery or Perfect Order Fulfillment as your primary service level metric? How does a fill rate metric compare to Perfect Order Fulfillment? Where are the common failures in measuring Perfect Order Fulfillment across an extended value chain?
Scott Stephens will be leading the webinar based on his experience in defining and employing the metric in multiple industries, multiple geographies, and across the extended value chain. More about our Speaker.

Sponsor: Value Chain Group, Inc. See http://www.value-chain.org/
Title: VCG Webinar: In Search of the Perfect Order
Date: Thursday, 6 November 2008
Time: 11:00 AM-12:00 PM ET USA (16:00-17:00 GMT) Time Zone Converter


System RequirementsPC-based attendeesRequired: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendeesRequired: Mac OS® X 10.3.9 (Panther®) or newer

Thursday, October 2, 2008

Webinar Link - Measuring, Managing, and Improving the Extended Value Chain





Recently I was privileged to present a basic introduction to using metrics and process mapping as tools and techniques to measure, manage, and improve the extended supply chain. The Value Chain Group was kind enough to invite me to present my thoughts on how to use a business-centered, metrics driven approach for value chain / supply chain improvement.

Besides hosting the webinar, the VCG recorded it and have posted it with a link on their website. They were also kind enough to conduct a brief survey regarding how the participants received the presentation and provided me with some feedback. Intriguingly, much of the feedback mirrored the comments I heard a decade ago when a few practitioner companies were forming the Supply Chain Council. When participants were asked in what area they would like to receive additional information, about 40% indicated they were interested in additional information about metrics and KPIs, 40% indicated they were interested in additional information about processes and value chain mapping and modeling, and the rest were interested in specific implementation techniques and tips.

I hope to continue to assemble information and resources that might help new value chain practitioners as well as those who are more experienced. I also hope that in the future I can work collaboratively with others in the field to share implementation experience, best practices, and case studies. Based on the feedback that I mentioned, I am working on a couple of presentations that focus on the challenges of effectively employing specific measurements across an extended value chain. I have started to put a presentation together that has a working title of: In Search of the Perfect Order (which will is focused on fulfillment metrics).

For those of you who had registered for the webinar but were unable to attend, the hour long presentation and the accompanying PowerPoint presentation can be accessed via the VCG link. There is a brief and painless registration process to access the archived presentation.

Thanks again to the VCG and thanks again for those of you who provided feedback. I would be pleased to receive additional feedback from the participants or from those who will be reviewing it for the first time.

Monday, August 11, 2008

Measuring, Managing, and Improving the Extended Value Chain Webinar

The Value Chain Group was kind enough to invite me to present my thoughts on how to use a business centered, metrics driven approach for value chain / supply chain improvement. It is a back to basics approach that focuses on the business drivers rather than the technology.

I am impressed that the Value Chain Group has opened the invitation (below) to anyone that might benefit from the webinar - not just their members. They have recognized that my presentation is model "neutral" and hopefully will provide some insights to the attendees who have little experience with value chain concepts as well as those that have considerable experience with process models like VRM, APQP, DFSS or SCOR.

VCG Invitation

You are invited to join our VCG Webinar: Measuring, Managing, and Improving the Extended Value Chain Join us for a Webinar on September 11 from 11:00 AM to 12:00 PM ET US Space is limited.Reserve your Webinar seat now t:https://www1.gotomeeting.com/register/640642420

Discussion: If you lead a business or team that has been tasked to improve the performance of your business unit, you have probably elected to use an approach that is driven by numbers. If you are a departmental leader or manager that is developing a business solution that requires collaboration with suppliers, customers, and other internal business units, you have probably been researching standards and practices that you can use. If you are a technology vendor or a consultant trying to build a business case for an IT solution or application, you have probably realized the imperative to successfully identify business drivers and processes that span sales, marketing, engineering, finance, IT, logistics, production, and customer service.

Large and small businesses recognize that achieving consistent, superior results requires managers and executives to monitor business performance and take decisive steps to maintain or improve outcomes. Strategic partnerships, go-to-market-strategy, and business plans are built on service level agreements that use business performance metrics to specify the commitments of the business partners. "Standard" contracting terms employ measurements terms that are often not well-defined nor standard.

World-class companies are investing in business intelligence/analytic applications, employing "dashboards," Measuring, Managing, and Improving Business Operations is a webinar introducing the use of business process models and metrics as frameworks for rapidly assessing and improving the extended value chain. It has been designed for those of us who are not experts in business and finance and statistics and information technology and logistics and process modeling and consulting and supply chain management.

If you are starting (or starting again) to explore a cross-functional, cross-enterprise KPI-driven approach to improving your business, this is designed to help orient you.

About our Speaker: Scott Stephens works as a consultant, trainer, and mentor with commercial and government executives, managers, and cross-functional project teams in value/supply chain management, performance measurement, and process improvement in both discrete and process industries. He has worked collaboratively with the Value-Chain Group in the past but may be best known for his contributions to the Supply Chain Council. This webinar is adapted from a workshop developed for the GPI - Global Performance Initiative (GPI), an organization dedicated to identifying and sharing measurable best practices for achieving operational excellence, particularly in the area of value/supply chain management.

From 1996 to 2006, Mr Stephens was a key contributor to the Supply Chain Council (SCC). As one of the founding members and the first chair of the Council's Board of Directors (representing Lockheed Martin), he was instrumental in establishing the Supply-Chain Council and transitioning the Council from a loose consortium of practitioners to an independent, not-for-profit trade association. For almost ten years, Mr. Stephens served as the Chief Technology Officer of the Council, working with practitioners, academicians, software providers, government organizations, and consulting companies in developing and advancing the Supply Chain Operations Reference (SCOR) Model. SCOR is a cross-industry supply-chain management reference model designed to describe, measure and analyze the performance of supply chain configurations. SCOR contains standard supply-chain process definitions, metrics, best practices, and references to enabling technology, which can contribute to SCM efficiency.

Mr. Stephens works with the world's leading organizations in industry, government, and academia in supply chain initiatives in Europe, Asia, Australia / New Zealand and the Americas. Mr. Stephens publishes and speaks frequently in international supply chain management and business forums. He is a guest lecturer at universities world-wide. He has delivered supply chain management workshops to over 2000 executives, globally and was responsible for training and certifying all SCOR instructors during his tenure as the SCC's Chief Technology Officer. He has assisted a number of Fortune 100 companies with business transformation and supply chain improvement.

Prior to establishing his business, and serving as the full time Supply Chain Council Chief Technology Officer, Mr. Stephens worked at Lockheed Martin with responsibilities in: all phases of the value chain (pre-sales, sales, design, production, and delivery through support and warranty management), development and implementation of supply chain strategy and technology to improve corporate competitiveness, the identification of commercial supply chain management best practice and off-the-shelf technology in support of DOD programs through the design and delivery of supply chain management "command and control systems," and supply chain management support for Lockheed Martin's commercial customers.

Sponsor: Value Chain Group, Inc. See http://www.value-chain.org/
Title: VCG Webinar: Measuring, Managing, and Improving the Extended Value Chain
Date: Thursday, 11 September 2008
Time: 11:00 AM - 12:00 PM ET USA


System Requirements
PC-based attendees Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista
Macintosh®-based attendees Required: Mac OS® X 10.3.9 (Panther®) or newer

Thursday, August 7, 2008

Value Chain Benchmarking Reports and Surveys



As the list of benchmarking reports and surveys has grown, it has been a bit more difficult to scroll through links and reports on the Google Doc spreadsheet that I have been embedding in the blog. This posting marks the transition of the embedded spreadsheet to a web-based table hosted on the Global Performance website. Since it is one of the more frequently bits of information accessed on this blog, I have made the link a permanent feature (top right) of the blog.

On this first version of the posted table, I have kept the links and added a description of the site on which the surveys can be found. The organizations are grouped as academic organizations, commercial organizations (including trade associations and consultants), and government organizations. While some of these services require fees and/or participation in the benchmarking to access the data, I don't identify the fee structure or the agreement you might have to enter into to participate in the survey or extract data.

I will continue to provide updates to the list and intend to provide a brief description of any changes on this blog but will provide the updated list for maintenance on the GP site.

Additions or corrections to the list are welcome. Additionally, anyone that is willing to share their experience using the benchmarking services is encouraged to do so.

Wednesday, July 9, 2008

Value Chain / Supply Chain Benchmarking and Studies Report Update

As I was researching online survey tools (in preparation for a metrics survey) I discovered MarketingProfs. For many of you who are in the supply chain space, it may seem irrelevant to consider marketing sites and research. For those of you who are in the value chain space (or read my entry Logistics – Supply Chain – Value Chain: Evolution of an Idea or Different Approaches?) you recognize that marketing (a demand creation process) may be a key to driving business improvement.

On their research page, Marketing Profs lists a number of studies including an annual survey investigating the use of Return on Investment (ROI) measurements to evaluate marketing effectiveness. From their home page, I linked to the MarketingProfs Daily Fix, a blog associated with the site. The blog has multiple contributors (including Tom Peters - a noted author in the field of business management). Because of the number of contributors, there may be multiple entries for a single day and there is a significant archive.

For example, a recent contribution by Ted Mininni, a contributor to the blog, commented and summarized a Marketing Daily interview with The CMO Council regarding a survey conducted by The CMO Council and the Boston Consulting Group of 1000 senior marketing execs. If you are not a marketing professional or familiar with the news, research, and tools of the field, the blog provides a useful (non-academic) starting point.

As a result of my quick investigation, I have added the Boston Consulting Group, the CMO Council, and Marketing Profs to my Update on Value Chain Benchmark and Surveys.

The following Update includes surveys with links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Tuesday, July 8, 2008

Value Chain/Supply Chain Benchmarking and Studies Report Update

In this, the latest revision of the supply chain and value chain benchmark report and studies list (the spreadsheet of links is embedded below), I have added PRTM. Many of you already know of the relationship between the Performance Measurement Group (PMG) and PRTM. While there are links and references between the PMG and PRTM websites, studies and reports are highlighted differently on each.

Those of you who pay attention to trade journals and press announcements for supply chain management have probably seen that PRTM has released its sixth annual survey of global supply chain trends. PRTM indicates they have 300 international respondents which, based on numbers alone, makes it a respectable survey.

According to PRTM's site, the survey was designed to investigate how industry leaders are globalizing their supply chain operations and considered: the future configuration of supply chain networks, managing product quality and safety while managing numerous internal and external international channel partners, and supply chain flexibility.


The following Update includes surveys with links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Sunday, July 6, 2008

The Continuing Search for Standard KPIs and Metrics

Last month I started identifying sources for KPIs and Metrics. In my initial entry I included a short description and links to:

The KPI Library
The Palladium Group
APICS
APQC

I have also had previous entries on BPIR.COM (affiliated with Massey) which provides members access to a library of metrics.

Cranfield University's School of Management offers a catalogue of performance measurements organized around a framework called the Performance Prism. The Performance Prism is a measurement and management framework that attempts to address all of an organisation’s stakeholders - investors, customers & intermediaries, employees, suppliers, regulators and communities. While the Catalogue costs £95.00, Cranfield lets you sample it (including a glossary list of the metrics).

The advertisement for the publication indicates that it includes:

  • The title of the measure.
  • Why it should be measured.
  • The role of the measure in different contexts.
  • How to measure it. Definition / formula of the measure – providing possible options
    What do we need to consider when defining the measure ? Definitions of key terms, possible sources of data, ways in which the data should be analysed, questions to be asked when using the measure

Another resource that I would recommend is Better Management.com. A website run and maintained by SAS, it is not a typical commercial website. SAS does a respectable job in keeping advertising to a minimum and providing readers with access to a wide-range of articles, white papers, and research (much of it that does not originate with SAS). I have not found a KPI library on the site but exploring the resources should provide ideas and references for trying to identify the right metrics or KPIs to use.

Saturday, July 5, 2008

Reengineering Performance Measurement: How to Align Systems to Improve Processes, Products, and Profits

One of the first books I added to my personal library that specifically addressed using a systemic approach to using KPIs and metrics to improve business performance was Reengineering Performance Measurement by Lockamy and Cox.

Part of the Irwin/APICS Series in Production Management, it was written in 1994 and I must confess it has been a while since I picked it up. I spent a few days re-reading it and, even though it is a bit dated, there are a number of reasons why it is still a valuable resource.

The first part of this book is a review of practice and theory in quality management and manufacturing management systems. The second half of the book is a series of six case studies including: Reliance Electric, Yamaha Motor Manufacturing, Northern Telecom, Clark Equipment Company, Trane, and Colgate-Palmolive (Hill's Pet Products Division).

One might think that any book that is over a decade old in the "rapidly" evolving field of value chain practice will have little relevance to the practitioner. Since Lockamy and Cox had to take the time to explain "new" concepts and methodologies to the business community, they provided concise explanations that are still perfectly suited for introducing some basic complex and powerful ideas.

First, the authors put their work in the context of a "resource management" - the planning, scheduling and control of an organization's resources to produce a product or service to satisfy a customer. They relied on the a framework that was advanced by APICS (then. an organization for enterprise resource management) that included: product design, purchasing, manufacturing, distribution, and customer service.

(I was very aware of the contribution that APICS its members made to the evolution of supply chain management and the Supply-Chain Council. When I led the technical development of the SCOR Model as the SCC's Chief Technology Officer , I engineered a partnership with the APICS E&R Foundation in which we co-sponsored supply chain research. Many of the Council's technical committees relied heavily on the APICS Dictionary, which is still one of my valued resources. I have always thought that if APICS had quickly embraced "supply chain" - instead of resource management - they could have dominated the supply chain space. While they appear to have retrenched into professional certifications and training, if they staked out the intellectual high ground in value chain - they could probably lead professionals for the foreseeable future.

Second, the authors provide an introduction to Just in Time Manufacturing (Toyota Production Systems and Lean), Total Quality Management (Juran, Deming, Crosby) and Theory of Constraints - Goldratt. For each of these major schools of thought, they provide a short summary of the key elements and usually an understandable explanation of what the element means.

For example, after providing a brief introduction to the Theory of Constraints, the authors provide an illustrative business example that shows how to construct a business plan/strategy using cost as a basis versus using constraints as the business driver. For those of you who are looking for a short, painless way to grasp the overarching concepts in each of these disciplines - Lockamy and Cox are a great starting point.

While Chapters 1-6 will provide a good grounding in philosophy and an explanation of how all of the methodology works, Chapters 8-13 are the fore mentioned case studies. They are short. They frequently don't provide all of the information that you might want. They do provide evidence for the linkage between the organization and the performance management system.

Chapter 7 compares and contrasts the companies in the case studies and their use of integrative performance management systems. Most of the comparisons are interesting. Most of the performance measurement system models still provide some insights to managers. I would expect this book, if it was revised or re-released today, to provide much more in the way of specific advice regarding which metrics to employ and which to avoid.

For the manager or analyst that is looking for a list of KPIs and metrics that they can lift for their own use, prepare to be disappointed. You will have to do dig within the chapters to find the relevant metrics and you will probably have to supplement the book with additional research to determine how best to calculate the metric and apply it. For the manager or analyst who is looking for a starting place to find metrics and kpis that may be important - you have found an important resource.

My recommendation - whether you are a veteran or just learning TOC, TQM, JIT, and measurement systems; spend some time with this book. It won't become your primary resource but it may help to provide context and history that you will find invaluable.

Monday, June 30, 2008

Invitation from the Global Benchmarking Network and Massey University

Dr. Robin Mann of COER and BPIR.com was kind enough to comment on my previous entry and extend an invitation to the readers of this blog. I would like to relay this to you, thank him, and encourage you to participate.

From Dr. Mann:

"The Centre for Organisational Excellence Research (COER), Massey
University, on behalf of the Global Benchmarking Network (www.globalbenchmarking.org) is conducting research to identify the current status of business improvement tool use worldwide. To assist with this important research we encourage you or a representative from your organisation to complete the electronic survey at http://gbn.bpir.sgizmo.com/.

It will take between 5 to 45 minutes of your time dependent on your use of
benchmarking. Those that do not use benchmarking only complete Sections 1 and 2 of the survey – this will only take 5-10 minutes of your time.

The person completing the survey should have a good understanding of the business improvement tools being used within your organisation. The survey is relevant to small organisations from one or two people to large multinational organisations.

The findings from the research will help to provide an understanding of the use of business improvement tools worldwide and how use varies from country to country. Already there has been over 400 responses.

In return for completing the survey you will be sent a copy of the findings and given one month’s FREE access to www.bpir.com (a benchmarking and best practice website resource).

In addition, one lucky winner that completes all sections of the survey will be invited to the GBN’s 3rd International Benchmarking Conference, Budapest, Hungary – 9/10 October 2008, www.bestpracticeconference.com. Conference fee and accommodation for three nights will be paid by the GBN.

Thank you for your participation."

Supply Chain/Value Chain Models - Quality Frameworks and Web Resources

If you are interested in value chain business and process improvement you have undoubtedly run across a number of the national quality award programs and frameworks. These frameworks frequently explore the "soft" discipline of business operations (critical organizational capabilities with impact that may be difficult to quantify - e.g., leadership, learning, societal impact) while they may not be as specific as the operational process frameworks.


BPIR.com provides a brief overview of some of the most recognizable of these frameworks including:

Baldrige Criteria for Performance Excellence
EFQM Excellence Model
Singapore Quality Award Framework
Canadian Framework for Business Excellence
Australian Business Awards

The website claims to provide a repository of over 1000 business metrics (available to BPIR members), benchmark and best practice, and access to business periodicals and journals. A review of the membership fee structure indicates that only a modest fee is required for individuals or companies. If the membership fees are as advertised the website might be an undervalued resource for value chain improvement.

The BPIR.com website was developed by the Centre for Organisational Excellence Research (COER), Massey University. The BPIR started out as a project within COER where a team carried out research on what support is provided to organisations, via the internet, to help improve business performance. The foundation and interest behind the research was linked to the experience of the team as business excellence evaluators using the EFQM and Baldrige models.

Friday, June 20, 2008

Supply Chain/Value Chain Models - Business Process Model Wars Update


Price Waterhouse Coopers, one of the largest consulting groups, has a process framework that is strikingly similar to the hierarchical models maintained by many of the trade associations that I have identified previously (and you can find in my list). They describe the framework as:

The universal Process classification framework contains 13 business processes that apply to almost any business, regardless of industry, size, or location. The first seven are operating processes that companies follow to develop and move products to the market. The last six are management and support processes that enable companies to operate effectively.


Probably all of the major consultants have process views of the enterprise. The majority of them have process organizations that vary by industry (and can be tailored to a company).

There are competitive advantages to using an industry-specific process framework. First, everyone believes that their industry and company are unique. In fact, they probably are, at some level. Second, if you are a consultant or a software provider that already has a presence in an industry, an industry-specific view (hopefully supported by reference accounts) can create barriers to your competition.

When you are working on business problems that span your business, your suppliers, and your customers, there are advantages to using an-industry neutral process framework and classification. Similarly, if you are a large consultant with projects supporting multiple industries and multiple businesses, there are advantages in using a framework that can be applied from the top down. Process models are the "standards" or banners in the escalating battle for the hearts, minds, and dollars of analysts, technologists, consultants, business process engineers, program managers, and business leaders.

APQP - Advanced Product Quality Planning - Automotive Industry Action Group

CCOR - Customer Chain Operations Reference Model - Supply-Chain Council, Inc.

CPFR -Collaborative Planning, Forecasting, and Replenishment Model-Voluntary InterIndustry Commerce Standards Association

DCOR - Design Chain Operations Reference Model - Supply-Chain Council, Inc.

DFSS - Design for Six Sigma - (Multiple Models)

eTOM - Enhanced Telcom Operations Map - TM Forum

MSDF - Manufacturing System Design Framework - Lean Advancement Initiative

PCF - Process Classification Framework - APQC

PWC Universal Process Classification Framework - Price Waterhouse Coopers

SAP- SAP Enterprise Services Workplace

SCOR - Supply Chain Operations Reference Model - Supply-Chain Council, Inc.

SCMF - Supply Chain Management Framework - SCM-Institute

VRM - Value Reference Model - Value-Chain Group

Technical but related frameworks

FERA - Federated Enterprise Reference Architecture - CPDA

ITIL - Information Technology Infrastructure Library

Corrections, additions, and amplifications are welcome.

Thursday, June 19, 2008

Key Perfrormance Indicators: Developing, Implementing, and Using Winning KPIs

David Gerbino had been kind enough to provide feedback to the blog entry I made on business measurement standards and KPIs. He recommended two books, one of them, Key Performance Indicators by David Parmenter, is already in my personal library.

Parmenter, a consultant who assists organizations in applying KPIs, lays out basic strategy for selecting and applying KPIs in an organization. The book is a reasonably good resource for someone starting to consider systematically applying a measurement strategy across an organization. It is also a valuable resource for someone who has a grasp of measurement systems but is interested in seeing some specific examples.

I was pleased to see that he spends some time trying to explain the difference between key performance indicators (KPIs), performance indicators (PIs) and key results indicators (KRIs). While I use different definitions than Parmenter, I must confess that I had been working with measurements for a few years before I recognized the importance of explicitly differentiating a metric, a measurement, and a key performance indicator.

Parmenter points out:

Performance measures are meaningless unless they are linked to the organization's current CSFs [critical success factors], the balanced scorecard (BSC) perspectives, and the organization's strategic objectives.
I found Parmenter's recommendations for choosing KPIs, gaining consensus, and implementing to be less helpful but, they will certainly provide ideas and cautions. In the years I have worked with large multi-national corporations, I never encountered a KPI team. The business measurement or benchmarking "teams" that I worked with or met were project teams supporting specific business objectives.

One of the most important resources in the book for me is the Performance Measures Database contained in the Appendix. The table provide a fairly extensive list of metrics to consider and suggests a possible relationship between a Balanced Scorecard perspective and strategic objectives. It is helpful (but not necessary) if you are familiar with Kaplan and Norton's Balanced Scorecard. The database is a subset of the Waymark Database of Performance Measures (proprietary to Parmenter's firm) which apparently can be purchased for a fee from their website.
In summary, Key Performance Indicators is a good reference for anyone who needs to use KPIs. If you were going to assemble a measurement team, assign a KPI executive or manager, or hire a consultant to design, implement and use KPIs, you might want to read this book first.

Wednesday, June 18, 2008

Value Chain/Supply Chain Benchmarking and Studies Report Update


This is the latest revision of the supply chain and value chain benchmark report and studies list.

Recently, as I was searching for KPIs and metrics, I stumbled across the American Customer Satisfaction Index (ACSI).

One of the few benchmarking services that I have found that specifically attempts to measure customer satisfaction, the ACSI is administered by the National Quality Research Center at the University of Michigan's Ross Business School. Research support is provided by the Business School, the American Society for Quality (AQS), and the CFI Group.

According to their information page:

ACSI reports scores on a 0-100 scale at the national level and produces indexes for 10 economic sectors, 43 industries (including e-commerce and e-business) and more than 200 companies and federal or local government agencies. In addition to the company-level satisfaction scores, ACSI produces scores for the causes and consequences of customer satisfaction and their relationships. The measured companies, industries, and sectors are broadly representative of the U.S. economy serving American households.


The ASCI website also lists corporate sponsorships from some of the premier firms in the United States. It is possible, according to the website, to obtain additional services that allow benchmarking with your peers, with companies outside your industry, and to use predictive capabilities to estimate how your performance in satisfying your customers will effect your future business performance.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Thursday, June 12, 2008

Marketing Metrics: 50+ Metrics Every Executive Should Master

If you rely on books, white papers, and journals to stay current in the theory and practice of value chain improvement you probably see a lot of the material that is disappointing. I thought I would pass along some of the resources that I have found helpful and tell you why. I have begun inviting others to provide a review of materials they find helpful.

Recently, I stumbled across Marketing Metrics: 50+ Metrics Every Executive Should Master by Farris, Bendle, Pfeifer, and Reibstein and published by Wharton School Publishing. Published in 2006, I found it only recently. It is one of those books that you know will prove to be a reference that you return to over and over again.

While the book was written for marketers, it is equally valuable for strategists and planners, operations and finance executives, and IT departments. Consultants and value chain executives should be expected to have more than a passing familiarity with the contents. I would use the list of metrics as part of a checklist for anyone who was trying to sell me an executive dashboard or business analytic solution.

This isn't an introduction to marketing and is not the starting point for someone who is trying to figure out how marketing fits into a value chain approach. On the other hand, you do not have to be a career marketer to understand how the metrics will provide insight into how your business is operating. Manufacturers may better understand what drives their customers by looking at retail measurements. An inventory planner may not know what "lift" is from a marketing perspective but they certainly understand the increased demand that is driven by promotion.

To help readers that are being introduced to the concepts or the measurements for the first time, the authors provide examples. The examples are mini-business cases that attempt to illustrate how and why the measurements are used in practical applications. Don't be surprised that this book reads like a reference / text book. It is readable and understandable.

Within the first chapter, the authors provide a Major Metrics List which details the measurements that they discuss and the section of the book that will discuss that metric. The book includes Chapters for:

  • Shares of Hears, Minds, and Markets
  • Margins and Profits
  • Product and Portfolio Management
  • Customer Profitability
  • Sales Force and Channel Management
  • Pricing Strategy
  • Promotion
  • Advertising, Media and Web Metrics
  • Marketing and Finance

In each Chapter, there are sections that detail the definition of the metric, the purpose of the metric, how the metric is constructed, what the sources are for the data to compile the metric, and what other metrics or concepts might be related.

I have spent a considerable number of years looking at supply chain and financial metrics, I have spent less time looking at those performance measures that provide insight into how effectively a company market or spends its marketing dollars. I have seen many of these metrics before. I haven't seen all of these metrics in one place with the concise treatment they are provided here. (By the way, I count a lot more than 50 metrics that are described in the book).

So, if your business view of the value chain requires your understanding and measurement of demand generation activities this book probably belongs on your shelf.

Thursday, June 5, 2008

In Search of Business Performance Measurement Standards

A sizable percentage of the people who find my blog for the first time are searching for specific answers. A number of you are trying to find a list of key performance metrics (KPIs) or how to calculate OTIF (on time in full), or how stock-outs effect revenue.


While a number of my posts deal with concepts, theory, and framework, the practical questions of how and what to measure have been one of the principle elements that have kept me interested in this area.


In the past few months I have been trying to use LinkedIn as a collaborative resource to find technical answers. I first tried to use the network tool to find benchmark programs and surveys but I had very little luck. Of course it is hard to determine whether I phrased the question poorly, few were interested in the subject, or the question didn't reach the right people.


Recently I asked people to identify their sources for KPI and metrics. I have been pleasantly surprised by the willingness of very knowledgeable professionals to share their experience. A number of them have volunteered to collaborate in the future.


As a result of the email exchanges with these professionals I am starting to assemble at least one other resource list that I will post and try to maintain as a living document - Metrics Resources.


The goal of my search has been a neutral respository of business metrics, preferably a handbook of definitions, formula, and discussions of how and why to collect them. While I haven't found that source, people have been identifying resources which have proven interesting and useful.


While the initial list is taking shape, here are a few of the initial resources:


The KPI Library - A web site of Key Performance Indicator (KPI) libraries for finance, IT, supply chain, project and other business processes.

The Palladium Group - A web site (formerly the Balanced Scorecard Collaborative) relies on Kaplan and Norton's books on the Balanced Score Card to support a consulting practice. The body of knowledge in the books provides the basic concepts required for using the Balanced Scorecard approach and their are a number of consultants who are apparently qualified to teach / assist in the area. (Books will be listed separately).

APICS - A web site for the Association for Operations Management is a source of information in operations management, including production, inventory, supply chain, materials management, purchasing, and logistics. The APICS Dictionary (will be listed separately) was a primary resource of Supply Chain Council members as they were developing versions of the SCOR Model.

APQC - A web site for the metrics, benchmarking, and a process framework. Most content is premium (available to members - membership requires a subscription fee).

Besides assembling this list for publication, I will be providing short monograms on metrics. I expect the first metric to be treated this way will be On Time In Full.

Finally, I will be asking for your input. What resources do you use to identify and deploy metrics? How do you compare the calculations and the source of the business metrics between two dashboard systems? What books, websites, blogs are important if you are a professional in the value chain area? I will include my library (even standard reference books like the MBA Desk Reference and a Pocket Guide to Financial Ratios) as well as sources of information that others find important. (I have begun asking people if they would be willing to help assemble an annotated bibliography - books, white papers, web sites, and blogs and a metrics dictionary. Unfortunately, I didn't ask them if I could mention them in my blog or point to their sites. Part of the learning curve).

If you know a source of standard business metrics please let me know.

Wednesday, May 21, 2008

Supply Chain / Value Chain Benchmark Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.



In this revision I have added The Hackett Group to the list. The Hackett Group maintains a proprietary benchmark database to support a benchmark service and their consulting group.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Tuesday, May 20, 2008

Supply and Value Chain Benchmark Programs and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added Ventana Research to the list.


The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Wednesday, March 26, 2008

Supply and Value Chain Benchmark Programs and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added Forrester Research to the list. Although their website highlights marketing, strategy, and information technology, a search in their research will reveal surveys and benchmark studies that are specific to value chain and supply chain operations. It does appear true that their recent studies in this area concentrate on CRM.


The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Thursday, March 6, 2008

Supply Chain / Value Chain Models - Business Process Model Wars Update

In 1998, only two years after the publication of the first Supply Chain Operations Reference (SCOR) Model, the Voluntary InterIndustry Commerce Standards (VICS)Association released the Collaborative Planning, Forecasting, and Replenishment (CPFAR)Model.

While many business process models provide frameworks for describing supply chain (good or bad) the CPFR reference model provides a general "best practice" framework for the collaborative aspects of planning, forecasting and replenishment processes.


Process models are the "standards" or banners in the escalating battle for the hearts, minds, and dollars of analysts, technologists, consultants, business process engineers, program managers, and business leaders.

APQP - Advanced Product Quality Planning - Automotive Industry Action Group
CCOR - Customer Chain Operations Reference Model - Supply-Chain Council, Inc.
CPFR -Collaborative Planning, Forecasting, and Replenishment Model-Voluntary InterIndustry Commerce Standards Association
DCOR - Design Chain Operations Reference Model - Supply-Chain Council, Inc.
DFSS - Design for Six Sigma - (Multiple Models)
eTOM - Ehanced Telcom Operations Map - TM Forum
MSDF - Manufacturing System Design Framework - Lean Advancement Initiative
PCF - Process Classification Framework - APQC
SAP ES - SAP Enterprise Services Workplace
SCOR - Supply Chain Operations Reference Model - Supply-Chain Council, Inc.
SCMF - Supply Chain Management Framework - SCM-Institute
VRM - Value Reference Model - Value-Chain Group

Technical but related frameworks

FERA - Federated Enterprise Reference Architecture - CPDA
ITIL - Information Technology Infrastructure Library

Corrections, additions, and amplifications are welcome.

Thursday, February 28, 2008

Supply Chain / Value Chain Metrics - Getting Started (4) The Multiple Dimensions of Value Chain Measurement

There is, probably, no single measurement that effectively captures the health of a value chain, even though it may be easier to evaluate a value chain than an organization.

When you are performing a financial analysis of a company you expect to use multiple measures like: sales, costs, profit, and inventory. Managers and analysts understand that profit and loss statements and balance sheets provide multiple measurements in an attempt to capture a total picture of the organization. On the other hand, I have seen countless project teams use a single-point of measurement - cost, as their only measure of success in their value chain improvement project.


If you want to significantly reduce your costs - eliminate your product line. You should be able to drive your costs (and inventory) to zero. Sound crazy? If your only criteria is cost savings or cost avoidance, the elimation of a product makes perfect sense. While it may be a sound strategy if you are trying to close a business or business line focusing on cost reduction may be less important than improving your service level to your customers if you are trying to increase sales.


Just like you use multiple financial metrics to evaluate the business health of your organization, multiple operational metrics are necessary to properly evaluate the operational health of your organization. In a perfect world, your operational metrics will link to your financial metrics.


For a value chain / supply chain analysis, what business dimensions should you attempt to measure? As opposed to identifying metrics and trying to figure out how to use them, it may be useful to determine high level business performance and then derive the metrics that would help to drive changes in performance.


Revenue Value chain operations directly impact sales. Not only are sales and marketing activities directly linked to the generation of demand for products, product development, product quality, product delivery, and customer service / support. Because of the complex interrelationship of these activities it is useful to look at:


  • Demand Generation (How effectively you establish a need for your products and services).
  • Product Development / Introduction (How quickly and effectively you develop and introduce new, or modified, products and services).
  • Service Level (How successfully you serve your customers through meeting their expectations/ your commitments to them).

Cost The cost of your operations will clearly determine how much profit you can make or, in the case of not-for-profit organizations (like government agencies) how much service you can provide. Cost generally falls into two categories:

  • Direct Cost (The costs associated with producing the specific product or service).
  • Indirect Cost (The costs associated with the business that are not specifically attributable to a specific product or service).

Asset Management (How effectively you use your assets changes your financial performance. More effective use of resources translates into a competitive advantage.

  • Inventory Carrying raw, WIP, and finished goods inventory incurs a real cost as well as an opportunity cost.
  • Payables When suppliers extend credit (e.g., 30 days net) to their customers, they are essentially making loaning assets.
  • Receivables On the other hand, when you allow your customers to pay after delivery (e.g., 30 days net) you are making a loan of your assets. While it is may be beneficial, even necessary, for a sale, it means it may take longer for you to see a return from your assets.

Time Time is a critical factor in the success of any business. When evaluating value chains we frequently think in terms of time to market (the time between when a product is conceived to the time when it is first available for sale in the market). Sophisticated businesses understand that equally important may be time to volume. Nimble competitors can overtake a more innovative company if their manufacturing or distribution excellence allows them to imitate a product and make it available while the innovator is still trying to ramp up. Time metrics are interesting because shorter cycles times are usually less expensive and provide higher levels of customer satisfaction. It should be easy to understand that if you replace ground or sea transporation with air, you might get a shorter cycle time at a higher cost.

Agility The ability of the organization or value chain to adapt to unexpected changes in the market place.

These dimensions provide different, equally valid perspectives of the same value chain. While a Vice-President of Sales may focus on revenue, a Chief Operating Officer or a Transporation Manager may focus on cost. In a given quarter, a finance director may be focused on receivables. The challenge in a value chain analysis is to prioritize and balance these dimensions.

It is equally important to understand that priorities are going to shift between business and product lines. Many analysts and businesses struggle when they try to apply a one size fits all strategy to their businesses or products. (IT organizations frequently fall into that trap as they try to develop "common" processes or establish governance). The challenge is identifying common dimensions, metrics, and processes and varying their performance to effectively manage multiple and disparate product lines.

Wednesday, February 27, 2008

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added the SAP and the America's SAP User Group benchmark series. There is a series of benchmarking reports which extends across most supply chain processes, product development processes, and finance / human resource activities. They provide a sample of the benchmark reports on the SAP site.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Friday, February 22, 2008

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added the National Association of Manufacturers (NAM) which provides education and research (via the Manufacturing Institute) for its members in support of the US manufacturing base. Of particular interest, to me, is the "outlook" report it publishes in cooperation with Fortune magazine. While at first glance, the report is "US-centric," international suppliers, investors, and customers will understand the importance of a yardstick which measures manufacturers confidence in the market place. Technology providers might pay attention to the survey summary on the site which projects future investment.

On another note, I was reminded of the NAM report via a Supply Chain Brain article entitled "Value Chains Replacing Supply Chains." The article referenced the CRM Buyer and the NAM.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Thursday, February 14, 2008

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added the National Retail Foundation which provides benchmark information for that industry. The benchmark reports be interesting to manufacturers and distributors who provide products and / or services to retailers. The monthly Port Report may also be of interest to companies outside the retail industry.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Friday, February 8, 2008

Supply Chain / Value Chain Metrics - Getting Started (3) Government and Non-Profit Organizations

I have been fortunate to have worked with organizations in a wide variety of industries. As I was preparing the next entry in this Getting Started series, it occurred to me that I was writing it using language that would be most suited for those in, and working with, private for-profit companies.


One of the challenges that intrigues me in writing these blog entries is trying to describe my understanding of concepts and practices that I have used or seen used successfully in a style that effectively communicates to senior business executives, financial managers, functional or department managers, IT professionals, process modelers, small businesses, academicians, and anyone else who elects to read them.


During the course of these entries I hope I remember or am reminded to talk about how measuring business performance in process industries is similar to measuring performance in discrete industries. (That doesn't mean that there are not measurements and practices that are more suited to one industry than the other. It does mean that on time in full delivery, an example I used in my previous entry, can be used for either industry with equal success.)


More challenging might be trying to convey the similiarities between non-profit organizations and for-profit organizations. A government agency can provide a good or service to its "customers" just like a for-profit company. While it may not seem to make any sense to talk about revenue or profit margin as drivers for government or a not-for profit organization, there are more similarities then not. In the late 1990s, the US government commissioned a study that to determine whether or not commercial metrics could be applied to government performance. Ultimately, the government determined that metrics used by private industry translated very well for government use.


There are some adjustments that a government organization or not-for-profit organization will have to make. In some cases, revenue or sales measures don't seem to make sense. This top line of a profit and loss statement is fairly essential when doing some calculations. Substituting a budget allotment for sales fills the shortfall. (For-profit organizations may use the same technique for cost centers.) Similarly, the concept of profit may seem critical for private industry but irrelevant for government. There are any number of illustrations in which private industry sets profit goals to zero or negative (loss leaders or key value items) while government organizations employ revenue and profit goals.


As I describe how to get started using metrics, I recognize that I am not providing exhaustive descriptions that will necessarily align with every sector, industry, company or organization. I ask readers to view these entries in the broadest sense and if you have an unresolved question about applying to your situation feel free to make comments.

Thursday, February 7, 2008

Supply Chain / Value Chain Metrics - Getting Started (2) Benchmark Programs

The holy grail of business information for the executive, analyst, or consultant is benchmarking. When I was with the Supply-Chain Council, I estimated that about half of the organizations that joined were looking for benchmarking information. For over ten years, I probably spent some time at each face-to-face meeting or workshop answering questions about benchmarking. Things haven't changed much since 1996 and the dangers and pitfalls of working with benchmarking programs are much the same.

For some time I have been building and maintaining a list of benchmarking programs, on this blog, that are related to value chain operations. While this may provide a half way decent starting point to find resources, it is not intended as a blanket endorsement for the surveys on the list. It would also be very unusual for a company or organization to participate in all of the surveys.

So, how do you sort through list and find a program that might help you get the information you need? If you are working with a consultant who has a private benchmarking program, how do you qualify their list? What questions should you be asking?

About Benchmarking

While everyone wants benchmarking information, it is difficult and expensive to run a decent program. You might remember a college statistics course that spent an agonizing amount of time trying to teach you how to craft good survey questions, how to determine whether or not you are getting valid data, and how to determine what the data means. In the world of business, those questions can be pretty important but some companies are so eager for competitive information they don't invest the effort to qualify the source of their data. (For anyone who hasn't read it I highly recommend How to Lie with Statistics - a good, light read which helps remind people that seeing survey results, pie or bar charts on a website or in presentation is no guarantee that it is based on sound data).

Many "free" benchmarks reports are available to companies who are willing to respond to a survey. For example, you may be asked to complete a survey on the use of supply chain technology (RFID) for example. You will be referred to a website or online survey that collects your responses (usually takes 15 or 20 minutes). Your results are then used with other anonymous respondents to produce reports (which are sold and used as marketing collateral). A statistically significant number of the other respondents in the survey may have no investment or authority over supply chain technology but will enter data to receive the report - they make their best guess.

While it may take little time to enter data into an online survey, it may take a significant investment in time to collect and measure data. (The average time it takes for multi-national companies I work with to collect and report performance measurements for the first time is 3 months. I have seen companies spend months just deciding what KPIs or metrics are important. Most data is ready available somewhere in the company. Tracking information down, reformatting, and making sense of it takes time. After the first effort, most companies can measure and report their peformance in relatively short time periods. Of course, if you only collect information every 30 days, there is not much merit in demanding reporting faster than that.) Many companies are investing in business dashboards now which can collect and report performance information in "real time." More on business dashboards in another entry.

A careful purchaser of benchmark services understands that the benchmark service provider is spending resources to run the benchmark program and it will require an investment on the part of the purchaser to collect and report information.

Benchmark Scope

What are you trying to measure?

Probably the first question to address if you are considering a benchmarking program is: what are you trying to compare and to whom do you want to compare yourself? If time to market is an important operational measurement to you, it is important that the benchmarking program reports the metric or provides enough information to help you. If you intend that time to market includes product design, manufacturing, and distribution, a supply chain benchmarking program might not include enough information. A product design / development program probably won't have enough. A marketing and sales set of data might not either. You may have to use multiple programs or look for research programs that are specific to "time to market."

Identify the key metrics or KPIs you want to examine. You know you will probably be able to get general P&L and balance sheet numbers from public records or your marketing department. Pick high level operational questions you need to compare. While supply chain velocity may be too ambiguous for meaningful measurement, order fulfillment time or order fulfillment cycle time may be right on target.

I would also recommend that you pick multiple aspects or dimensions of the business problem to examine. There may be little merit in finding that a competitor has higher transportation costs without also realizing they have shorter delivery times and carry less inventory.

To whom are you trying to compare the company?

Most companies want to participate in benchmarking programs that will identify their weaknesses and strengths so they can become stronger in their market space. If you have worked with any competitive analysis you will be familiar with grouping companies by industry. There can be issues with relying on too easy a classification. If you visit the public sources of information that I identified in Part 1 of this series you will find that in many cases they don't group companies the same way or even use the same industry classifications.

Equally challenging, a large company may have multiple product lines that compete in what are intuitively different industries. For example, the largest provider of IT to the federal government is in what industry? Technology or information technology? No. Business services and solutions? No. The answer is Aerospace and Defense and the company is Lockheed Martin.

Even the best benchmarking programs (and consultants) may not group companies to allow you to compare apples and apples. There are two reasons.

First, if you are are comparing organizations instead of value chains (logistics vs. supply chains) you don't differentiate by products or product family. From a financial investment perspective it makes sense to compare how an organization manages their combined investments and businesses. If you are trying to improve your competitiveness in the marketplace, you are probably looking for information about well you generate demand, identify and satisfy demand and how efficiently you conduct the operations. It requires significantly more initial research and analysis to group by product and product lines.

The second reason benchmarking programs tend to group by industry and, indeed, very general industry categories is a very simple numbers game. If you are investing the time and money to participate in a benchmarking program you want to be able to compare yourself against as many of your competitors as possible. So, it is in the best interest of the benchmark program to have as few buckets as possible. How many Aerospace and Defense companies are there? How many aircraft manufacturers? How many manufacturers of large commercial aircraft? For many benchmark programs those questions are unimportant. For the business executive who understands that defense aircraft production is a cost-based market space (where the customer knows the cost of the product and negotiates the margin) and that commercial aircraft is a price-based market space (where the customer negotiates the price and may not know the cost) the difference is enormous. If you are a Boeing executive trying to benchmark your company it may be far less important to have a dozen companies to compare yourself to than one company, if that one company is Airbus. Of course, if you are selling or providing benchmarking services and you are trying to sell to Aerospace companies, you may be willing to group a manufacturer of aircraft landing gear gaskets and seals with the manufacturer of a helicoptor.

Besides determining who is in your industry (or product grouping) you may want to determine whether or not you want to limit yourself to your competitors. There is ample evidence that world-class organizations try to determine what the best-in-class organizations in other industries are doing. Why? Because breathroughs in competitive advantage may be developed by someone who is performing the same process for different customers and in support of different products. For example, most companies have to purchase goods and services. Best practices in purchasing like vendor managed inventory may be equally effective in different industries - but someone will do it first. Benchmarking may point to best practices or operational effiiciencies that have been captured in another industry and may be realized in yours. Of course, if you participate in a benchmarking program that is restricted to your industry you may not see the opportunities.

My recommendation is to participate in the broadest (cross-industry) program you can find that also gives you the detail that you need. If you are working with a consultant or benchmarking provider that support multiple industries, it may be possible to participate in a detailed study but have access to the summary information for other industries.


Qualifying the Benchmark Provider


After you have developed a short list of benchmark providers, there are probably a number of areas you should explore with the providers. I would qualify them just like you would any other major buy.


Price and Obligations


There is typically a set of conditions, including price, for participating in benchmark programs. These include:
  • Price. Frequently benchmarking is a subscription service. You put your data into the pot and can extract data that is comparable within the same time horizon. Issue: What is the length of time data is "comparable?" To make sure that some surveys have enough participants sometimes the time period can be 18 months or two years. Economically, that can be the difference between boom and recession. Within a market, major competitors may have come and gone. Products that dominated the market may be obsolescent.

  • Data Contribution. You must contribute data to receive data. If everyone could buy the data without contributing, programs would rapidly run out of results to share / sell. Theoretically this also means that consultants and vendors - who don't have data to contribute - don't have access to the benchmark results. Right.

  • Confidentiality. You may be asked to sign a non-disclosure agreement which could limit your ability to share the information with your partners. This can be particularly problematic if you work with consultants, technology providers, or may need to work with them in the future.

  • Anonymity. The contributor of individual data remains anonymous. There is some variation in programs but basically this means that if you report how long it takes for you to design a product, no one will be able to determine that the specific time belongs to you. (When I was a practitioner, I was invited to participate in a benchmarking program that promised anonymity. In my industry, there would have been two participants - my company and a major competitor. I might not be a mathematician but if there are two participants in a survey and I am one of them, I can figure out what data the other guy contributed.

Benchmark Population

While we have already talked about the issues with industry grouping, be very sensitive to benchmark programs that talk about 10 or 20 years of data and hundreds of participants.

  • Current Population. Determine the current (active) number of subscribers for the service you wish to obtain results from. If you are going to participate in an industry survey get the number of current subscribers, verify that they participate in the same survey, and try to determine you are comparing the same products / product families / businesses. Ideally, get a list of the active subscribers. Verify that benchmark reports don't blend former participants with current participants. If there are a hundred companies in the study you may want to verify that these are companies that contributed data to participate in the current study as opposed to being "grandfathered" in from previous "similar" studies.

  • Benchmark Study History. A number of long-term studies and reports change their survey questions from study to study. An annual benchmark report may not change its title but change its content on an annual basis. It is useful to compare questionairres for multi-year studies (and executive summary data).

Metrics, KPIs, and Test Question Validity

  • KPIs and Metrics. I will talk about selecting and defining metrics in other blog entries. For now, let's say there is little agreement within a company, between companies, between analysts, well between anyone about what or how to measure just about anything. That's a problem if you are doing benchmarking. Issue: Are you measuring the same thing? For example, if you are interested in customer service levels one measure you might be interested in is On Time In Full Delivery (OTIF). OTIF is understood by some pracitioners as the percentage of orders that are delivered when specified (neither early or late) and are complete based on the customers order. Some practitioners don't capture receipt information and so they calculate OTIF as a percentage of orders that are shipped on time and complete. Others calculate OTIF as the percentage of orders that are shipped on time and have an estimated shipping time that would have the product arrive at the customer's site on time. Those are three very different calculations that could potentiatlly lead to very different results. On many occassions I have seen companies puzzled by customers who complain about on time delivery. The company looks at their measurements and see OTIF number of 95-98%. The customer is complaining that OTIF is less than 80%. Frequently what is happening is the customer is measuring when they are supposed to receive the order and the company is ordering when it was shipped. The mismatch in measurement leads to misunderstanding and a loss of business.

  • Metric Standards

    Some of the benchmark programs will advertise that they use a "standard" set of metrics. Having spent over a decade working the members of the Supply-Chain Council in trying to get consistent, well-understood metric definitions I can tell you that these standards are elusive. I would certainly agree that a reference library is a useful "truth" source for measurement data. There may also be great value in having a company-neutral source of metric definitions.

  • Data Collection and Measurement - Validity of the Results If you do a bit of research on how the benchmark providers "assist" companies in assembling and contributing data (try to find presentations or webinars that provide guidance to propsective participants in collecting and post data) you may get a sense for how long it takes and what assistance the benchmark providers offer. I have seen in multiple presentations benchmark providers relate how they will help a company "guess" on performance results if the measurement data is not available. This should raise a red flag for anyone planning on seriously using the benchmarking data for business planning. Issue: If a provider enables the entry of questionable data they are committing two sins. First, they are skewing the results of the benchmarking - you may not know what a "real" answer is. Second, they are effectively hiding what participants know and don't know about their operations. It may be as valuable for a company to know that no one in their industry knows how to predict the time it takes for a concept to transition to the manufacturing floor as it would be to guess the time plus or minus 100%.

Benchmarking programs and surveys can be an invaluable source of information when you are first starting to systematically use KPIs and Metrics for your value chain. Working with a reputable benchmarking provider will not only provide you competitive information but the provider can help educate you in how to collect and measure your value chain - what is meaningful and why it is meaningful. If you don't exercise due diligence, you may find that you are investing time and resources in an exercise that provides little value and can lead you to investments that provide little return.

While this entry dealt primarily with formal benchmark programs, many of the large consultants and integrators offer versions of benchmarking where information is shared among their active clients. The business information as advantageous (or meaningless) as well run (or poorly run) commercial and academic programs.

Many large practitioners operate large performance measurement databases in their purchasing departments (to review their suppliers) and in their marketing and sales departments (to review performance to their customers). These internal sources of information may be used by an enlightened company to provide an "internal" benchmarking program that may be better and more extensive that one that could be purchased.