E2E Supply Chain Key Performance Indicators DESIGN KPIs are interesting tools. However, they can easily be listed, merged, and more but not saying much if not well-thought in advance in their DESIGN. What are the best practices, sources, and thought leaders in terms of E2E Supply Chain KPI DESIGN?
Let's focus on KPI Design and consider the discussion about OKR and KPI mentioned above. Designing KPI is a matter of 'form,' 'fit,' and 'function.' When I talk about 'form,' I mean the visual aspect, whereas 'fit' and 'function' refers to the usefulness and practicality of the KPI. KPI design and representation must be more intuitive; bar, pie, or line charts alone cannot represent all KPIs appropriately. Therefore, we must put in the effort to make the KPI look more intuitive and easier to explain and understand. The KPI's 'fit' is correlated to the 'function,' which means that a KPI of Warehouse & DC Costs (% of Sales) relates to the OKRs that would optimize Order Picking Cost, Storage Cost, Shipping Cost, Receiving Cost, Other Cost, to meet or exceed the KPI industry standards or organizational target. KPI is an industry standard, but to achieve or exceed that industry standard, the organization must build OKRs that align with its supply chain and value chain capabilities to roll up and meet the KPI goals. The objectives and goals must be set at a function level and fit the KRs of other functions to deliver on the organization's KPI effectively.
Dear ,
Thank you for your input, lighting my questions with your thoughtful experience.
Your definition of OKRs is very interesting, and I join you in it: "OKRs are unique and specific to each organizational function, while KPIs are generally applicable across the entire organization." This is why the question can be broadened to OKRs DESIGN, within the Supply Chain function.
Keeping in mind KPIs DESIGN, your approach with 'form', 'fit', and 'function' as you mentioned is very insightful. It brings me back to the source of my question: there are many Forms (visual aspects: bars, charts, percentages,...). One can be easily flooded with many of those, or worse, misled. Fit and Function come exactly to the point to monitor efficient operations and get visibility/transparency for easier decision-making. Hence, it comes to the question of How to DESIGN perfectly this Function>Fit>Form triplet.
Looking forward to learning more in this Design, do you or anyone have resources to materials or thought leaders (entitities, universities, consulting firms, persons) in this field. You seem to be one of them , happy to discuss it with you.
Dear - I am happy to discuss this topic more. But I believe you understand what I am trying to explain. We can discuss resources too, but at this moment, I am stating from my experience observing how and why KPIs fail to deliver, and the root cause is expectations being set wrong and KPIs competing with other stakeholder KPIs.
Let's focus on KPI Design and consider the discussion about OKR and KPI mentioned above. Designing KPI is a matter of 'form,' 'fit,' and 'function.' When I talk about 'form,' I mean the visual aspect, whereas 'fit' and 'function' refers to the usefulness and practicality of the KPI. KPI design and representation must be more intuitive; bar, pie, or line charts alone cannot represent all KPIs appropriately. Therefore, we must put in the effort to make the KPI look more intuitive and easier to explain and understand. The KPI's 'fit' is correlated to the 'function,' which means that a KPI of Warehouse & DC Costs (% of Sales) relates to the OKRs that would optimize Order Picking Cost, Storage Cost, Shipping Cost, Receiving Cost, Other Cost, to meet or exceed the KPI industry standards or organizational target. KPI is an industry standard, but to achieve or exceed that industry standard, the organization must build OKRs that align with its supply chain and value chain capabilities to roll up and meet the KPI goals. The objectives and goals must be set at a function level and fit the KRs of other functions to deliver on the organization's KPI effectively.