Create Metrics to
Drive Your Business Smoothly
There are many Companies and Enterprises that have isolated metrics providing a narrow view of what is happening on the ground and some
have complex hierarchical ones that are mapped to provide lineage to the root cause
analysis and far few have capabilities to slice and dice the metrics across
different constructs or dimensions.
Imagine if I ask, how many of them have built-in metrics
that provides an E2E perspective that are inter-related across different functional
domain areas and if I harp further, what about metrics that are intertwined
across their LOB (Line of Businesses).
The C level and Senior level management would love to see
such metrics presented as flattened views with Dashboards, so they could check
each of them periodically to crisscross and validate the overall health of
their Organization’s operations and build appropriate programs, initiatives to
drive their business objectives and goals and monitor.
Yes, we all want such reporting environment to have been
built as of YESTERDAY. To create such a
reporting environment there is no easy tool or software from vendors or even
have panacea pill that can be consumed to cure this illness.
Rather what is required is an engagement to build a user friendly Reporting Platform that can provide meaningful and
insightful Reports and Analytics to support Operating Strategies of the Company with entrenched Business Processes
to create consistent value of drivers on continuous basis with portfolio of
metrics that drives and sustains Business Strategies and Initiatives.
I know these are lot of mouthful of words and phrases, but I will try and
attempt to write in this blog some concrete understanding of basic blocks required for Metrics, KPI's and Scorecards that could be leveraged to build and efficient and effective reporting and analytical platform.
Create Building
blocks of metrics using validated measures
Metrics are derived out of measures such as # of Customers,
Total Sales, and Total Revenue etc. These can be simple ones or combined with
other metrics to create complex metrics and also as hierarchical in nature.
These are usually build around constructs or dimensions to enable Users to
slice or dice them from higher to lower grain data or pivot them across
different facets for insights.
Define, Create a Template
Framework for Metrics
Metrics can be grouped and classified according to its
domain areas such as Inventory, Supply Chain, Order Management, Sales, Health, and
Progress or by context on Organization performance on Costs, Returns, Growth,
Profitability, and Cycle. With litany of hundreds and thousands of measures and metrics,
many Companies create Custom template frameworks for metrics or rely on some
Industry Standards like SCOR™ Supply Chain Framework to group and classify and
build metrics. Some major software vendors are offering OOTB (Out Of The Box) metrics
as part of their Software Analytics Platform across different domains.
Organizations have many disconnected projects with metrics
to validate its effectiveness and often they are singular in nature and don’t
line up with specific business objectives and goals and thus cannot be related
or mapped for an overall business value.
Frameworks can provide a 3D dimensional map of a complex
view of metrics in a flattened structure like a blue print, so it’s easier to view
and understand its inner workings and relationships.
Define KPI’s and
Balanced Scorecards across Organization Functional Domain activities
Key Performance Indicators (KPI’s) are measurement
indicators that supports Organizations Objectives and goals and provide key
indicative performance aspects. KPI’s are generally calculated as ratios to help
the business in their decision making process.
Several key metrics are grouped into different groups as
Sales KPI’s, Marketing KPI’s, Retail KPI’s, Supply Chain KPI’s, and Financial
KPI’s at broader level. KPI’s are also Categorize into Strategic, Tactical and
Operational as part of measurements identified by business units to align with
its strategies.
Most KPI’s are siloed in nature within each functional domain
areas with conflicting objectives from an E2E perspectives. Manufacturing floor
would like to have Stable volumes with higher lead time while logistics would
prefer low and mean volumes with less lead time while Sales and Customer domain
areas would like have high availability with higher responsive cycle times.
When you bring the financial domain they would like to have lower cost, higher
turnover, lower inventory and higher cash to cash cycle times.
Balanced Scorecards are traditionally used to track and keep
this conflicting and competing objectives in synch from different perspectives
to harness the KPI’s effectively. There are no hard and fast rules however one
could utilize certain thumb rules for an effective Balanced Scorecard.
- Build a proactive cause and effective map like the Ishikawa
- Align your strategies and processes to this map
- Identify KPI’s that are Strategic, Tactical and Operational and monitor them along the map
- Build continuous improvement processes for an effective decision making along the map
