Trent Morris is back! This time discussing Performance Management.
Is supplier performance management all about KPI?
Let’s find out!
Related articles on this topic have appeared throughout our website, check them out:
Supplier Performance Management with Trent
Apr 5, 2023 | Videos | 2 comments
Rob/Trent,
The best KPI is the one that the people buy into and continue to improve upon. Many places I worked did not have any KPI’s in place. So, I had the people perform their job as normal and I was able to get a baseline for cases per hour. This was the productivty metric. The quality metric I tied into the inventory accuracy. And the safety metric was TCR (total case rate).
After these were established, I asked for a 3%-5% improvement each year and I tied their quarterly bonus into the results. All understood the KPI and all had a part in improving upon the KPI.
Hi Rob,
That’s a great story! Thanks for sharing.
I totally agree with the comment that the best KPI is the one that the people buy into and continue to improve upon. I also loved the fact that you tied their bonus reward to their achievement.
May I add that the KPI also needs to serve the business’s needs. In your case you were probably able to do that because of your experience.
In most cases however the KPIs of the supply chain need to be aligned to the business strategy. Typically they are focussed on one of 4 areas: Safety, Quality, Cost, and Service. Then at each level of the team they need to be broken down further – eg cost of transport, cost of warehousing, cost of inventory etc.
When you can align business strategy with the team’s buy-in, then you have a winning combination.