An oft-invoked quotation from the legendary quality expert Dr. W. Edwards Deming states that "You can't manage what you don't measure."
Those words have prompted thousands of companies to implement detailed metrics programs to track their performance. Yet these efforts often fall short despite the best of intentions. The problem may have nothing to do with misaligned metrics, lack of strategic vision, or even poor management. Rather, it could lie in the enabling technologies that companies use to improve (and yes, measure) their performance.
To understand why this would be, you need to know a little about the forces that have reshaped supply chain management in recent years. One, of course, has been the evolution of metrics. Another has been the push to break down functional silos and unify the entire enterprise around such common goals as sustained profitability, stellar customer service performance, and driving growth.
But simply dismantling silos isn't always enough. A number of companies have been disappointed in the results. Instead of getting better, in some cases, things have gotten worse.
One reason may be that while these companies have broken down the functional silos, they're still mired in technological silos. Over the years, they've invested in sophisticated technologies to manage such aspects of their operations as transportation, procurement, warehousing, production, and even point-of-purchase activity. These systems can be remarkably effective in generating large volumes of useful data. But there hasn't been a way to meld it all into a single, unified database that provides a big-picture view of the operation.
As Richard Sharpe, chief executive officer (CEO) of the supply chain software and services firm Competitive Insights, said in a recent interview, "The functional silos are gone, but what about the performance data silos?"
The takeaway here is that if you want to be rid of silos, you need to be sure that your technological infrastructure will support, rather than detract from, that mission. It appears that companies are beginning to realize that. A recent study conducted by Sharpe's firm over an audience of chief financial officers indicates that businesses are placing a high priority on finding better ways to analyze and understand their performance, especially as it relates to profitability.
Sharpe's company and a few others are trying to do that by bringing the data generated by disparate systems—transportation management software, warehouse management software, enterprise resource planning systems, and the like—into a unified database. By doing so, they make it possible to analyze information that can answer very specific and important questions about profitability.
Initiatives like this could be an important step toward getting all of the players in a supply chain on the same page. Perhaps more important, from that page they will be able to answer the question their boardroom-level managers want answered: "Where are we making money, and where are we not?"
