Measuring the wrong KPIs in supply chain management is a surefire way to lose your way. You’re basically flying blind, wasting everyone’s time with numbers that don’t mean nothing. Let’s break it down.
Why Meaningless KPIs Are a Problem
Imagine a warehouse guy bragging about processing 500 goods receipts in a day. Sounds good, right? But if they were supposed to handle 1,000, or if those 500 were low-value items while critical stock is stuck somewhere, that number’s useless. It’s like counting how many times you blink; doesn’t tell you anything about where you’re going. Inexperienced teams fall into this trap, tracking stuff like goods receipts or issues per day because it’s easy, not because it matters. It’s a waste of brainpower and distracts from real issues.
What Happens When You Lack Visibility
If you’re not measuring what actually drives value, you’re in the dark. Say you’re only tracking how many lines your team received. What about the stuff that didn’t get received but was supposed to? That’s where the real problems hide – missed deliveries, delayed orders, or stock shortages that could tank your operations. Without visibility into those gaps, you’re not managing a supply chain; you’re just hoping it works out. And hope isn’t a strategy.
For example, instead of patting yourself on the back for 500 receipts, measure the percentage of expected receipts completed accurately and on time. That tells you if your process is actually working or if you’re dropping the ball. Or measure the cost of service level failures – how much revenue or production is lost when critical stock isn’t issued to end-users, stalling machines and mining operations. These are the numbers that tie directly to commercial outcomes, not some feel-good tally.
Picking KPIs That Matter
Good KPIs drive the right behaviour. If you measure what’s late or missing, your team focuses on fixing those gaps, not just racking up receipts to hit a meaningless target. Here’s a quick guide to avoid messing this up:
- Measure outcomes, not activity. Don’t count receipts; track the percentage of on-time, accurate receipts against what was expected.
- Focus on bottlenecks. Identify where delays or errors cost you money – like unprocessed inbound stock or late goods-issues.
- Tie it to cash. KPIs should link to commercial impact, like the cost of stockouts or excess inventory sitting around.
The Bottom Line
Tracking pointless KPIs is like navigating with a broken GPS – it feels like you’re doing something, but you’re lost. Inexperienced teams waste time on metrics that don’t tell you what’s wrong or how to fix it. Get smart, measure what matters, and you’ll actually know where your supply chain stands. Otherwise, you’re just counting blinks while the plane’s off course.
