By defining key performance indicators, reviewing how they evolve over time and looking at why deviations take place companies can optimize their ecosystems and understand how their partners are performing. This provides companies with better decision-making tools and allows them to substantiate appropriate decisions.

Companies can even use predictive algorithms to spot trends early and take corrective action prior to the moment something is going wrong. For example, if the defect rate of a product increases regularly, a company can realize there is a quality problem, even if acceptable defect rates have not yet been passed.

What can we use such analysis for?

• Review the evolution of key performance indicators (KPIs) over time by reporting on KPI trends.
• Analysis of the supply chain cost by applying activity-based costing techniques to the flow of products through the ecosystem, hence finding pockets of costs and inefficiencies.
• Identification of inventory-driven costs by understanding the evolution of stock levels at different nodes in the supply chain.
• Manage warranty by spotting issues early and understanding where quality problems occur
• Risks can also be identified through the spotting of variations in the performance of partners
• Ensure partners are delivering on their service level agreements, and if not enforce appropriate contractual clauses

As the relentless cost cutting continues in enterprises, understanding ecosystem performance and spotting waste early provides companies with a competitive advantage, allowing them to improve their market position both from a financial and a share perspective. Such companies are capable of applying Lean concepts to their ecosystems.

About the Author: Christian Verstraete is the senior director, Solutions & Technology Integration, Worldwide Manufacturing & Distribution Industries, Technology Solutions Group, HP. For more information, please visit www.hp.com/go/manufacturing or http://h71028.www7.hp.com/enterprise/cache/4520-0-0-0-121.html for more information about HP Supply Chain solutions.