Tag Archives: supply chain practices

Soft Skill KPI’s

In an article in the current issue of CSCMP’s Supply Chain Quarterly the authors show that companies need to measure both business performance and employee interpersonal effectiveness when evaluating supply chain performance. And it makes sense that if we are going to measure one side of the business that we need to measure the other dimensions as well. While I agree with the idea that employee soft skills like leadership and communication can’t be measured in the same manner as fill rates and instocks, I believe there are significant issues when it comes to measuring these soft skills.

Evaluating interpersonal skills is difficult and frequently open to a wide range of interpretations. It’s hard to have an unbiased view of another’s behavior, especially if it deviates from what we might expect or how we might act in similar situations. A person who is demanding and harsh may actually need to act this way to get his/her job done to meet the business expectations. In this case saying that this behavior is not appropriate may be more a measure of the pressure to meet business goals than a valid interpretation of interpersonal skills. When push comes to shove, companies will care more about meeting their business goals and shareholder expectations than they will in developing nice people – even if nice people are more productive in the long run.

So what is the answer? In my view getting an accurate view of a person’s soft skills takes a lot of time. We need to observe the individual over an extended period of time and in a variety of situations. And we need to be experienced in objectively evaluating other’s behavior. In most cases the cost of doing proper evaluations is beyond the reach of most companies, and is usually reserved for the top levels of the company.

What about the rest of the employees? Here’s where I believe we have a structural problem: most managers are so busy trying to meet the expectations of their managers that they have little time to get to know their direct reports. And you can’t evaluate what you don’t know. To me this is a larger issue than how we evaluation soft skills, since these evaluations require a great deal of time and experience. If we make our managers’ jobs so demanding that they can’t take the time to develop the people under them, then I don’t see how we can expect these people to develop their soft skills. They will be too busy worrying about meeting the company’s financial and business goals.

Until this structural problem is resolved, I don’t see how we can expect much improvement in employees’ soft skills. Short-term business goals will always trump these, since business goals can be easily measured.

You can read the article here:

http://www.supplychainquarterly.com/topics/Strategy/201104people/

Trust your systems

Companies spend huge sums on installing and maintaining complex supply chain systems. Despite these expenditures and the training provided, it surprises me how frequently the people who work for these companies either don’t trust or don’t properly use these systems. And it isn’t just the people at the lowest levels of these companies that don’t trust these systems. I’ve seen people in leadership positions instruct their teams to override the systems under certain circumstances. In some cases this makes sense, since no system can anticipate every situation and some human judgment will always be required in unique situations. But when bypassing these systems becomes the norm or habitual, the value that these systems provide is quickly undermined.

So if you buy and install a system, it makes sense to require people to use the system as much as possible. Allow for exceptions and track these so that the system can be improved and standard operating procedures can be updated. But don’t allow the practice of bypassing the system become part of your company culture. Allowing this will undermine the system and deny your company the benefits it would otherwise provide.

Supply chain education

Supply chains and all the processes and systems that support them are very complex. People who don’t work directly with these processes and systems often have incorrect ideas about what can and cannot be accomplished by them. And it is the supply chain leaders’ responsibility to make sure that the people who depend on the supply chain understand its capabilities and limitations.

Here are some facts that I have found are often misunderstood:

  1. Supply chains don’t like variability. Sudden changes to demand or planning disrupt them, and these disruptions drive up costs. Planning and communication in advance is essential for making supply chain operations successful and profitable. There is a cost to serving every customer need exactly the way every customer expects.
  2. Strategic changes most often require supply chain changes. Buying product via importing it vs. buying it domestically requires very different strategies and practices, which need to be set up and tested before going live.
  3. Not all parts of your business benefit equally from supply chain practices. Highly seasonal businesses often require shipping outside the normal processes, so the cost saving for these products can be substantially lower than for commodity products that can be shipped in consistent quantities year-round.
  4. You will get better performance from your supply chain if you collaborate with your supply chain partners. Those who work in supply chain know that the purpose of the processes and systems is to support the business. Let them know how they can support you. If you demand that they accommodate to your business needs, you may find that they will support you – but only as far as they have to.
  5. Your suppliers have supply chains too. Before product ever arrives in your facilities, it has already gone through your supplier’s supply chain. If the supplier’s systems and processes are poor, you won’t be able to make up for this by building a better system for yourself. It may be to your advantage to share supply chain expertise and practices with them to improve both companies’ performance.
  6. Supply chains are strategic. Wal-Mart, Home Depot and Amazon have proven that improving supply chain processes and systems can dramatically improve corporate performance. Good business planning should include supply chain partners. Without them you may be building wish lists rather than plans.
  7. Supply chain reporting and tracking can help both you and your suppliers increase customer service and build business. Every supply chain has systems or processes that can be improved, or that need to be reviewed regularly as business grows and changes. Share as much as you can with your suppliers and help them see where they need to improve rather than using the data to beat them up when they don’t perform.
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