Many companies experience the roadblock of data scatter when trying to develop their performance management program. But corralling your systems and people to come up with systematic process and approach for extracting the right metrics is often a challenge.
Companies depend on their ability to understand and utilize critical data. While effective data warehousing can help a company better manage its data, most have not learned to unlock the hidden potential of information technology (IT) systems to collect, organize and extract key data. As a result, most companies experience "data scatter" when it comes to critical performance metrics, because data is scattered throughout the various functional silos and systems across the enterprise.
Various studies confirm that many companies often fly blind when it comes to supply chain performance information. Research shows that only 20 to 25 percent of managers have what they would describe as the full measure of supply chain information needed to aid in decision making. And a study by Bain & Co. revealed that 44 percent of respondents admit to having little or only basic data.
Key Challenges to Overcome
At the heart of most companies' data scatter troubles is the inability of the company to combine disparate data into a "single version of the truth" on which all people agree and trust. This can lead to a company's inability to effectively manage performance. For example, a large distributor of high-tech equipment has a traffic manager that may believe they are shipping 87 percent on time, while the distribution manager believes that on time performance is more likely around 96 percent.
A second key challenge many companies face is measuring too many things without having a good summary-level view in essence, not being able to see the forest for the trees. All too often companies end up measuring everything that moves without learning anything about how the business is really doing. While detailed-level metrics and data captured from transaction systems enable root-cause analysis to solve problems, companies need to balance this with aggregate "roll up" views and the critical few metrics for the CEO and management.
Technology a "Nice to Have" Building Block
Unfortunately, many companies dive straight into a technology solution to solve their problem of data scatter, often thinking they can "extract" data into flashy scorecards that will help improve performance visibility. However, relying solely on technology as the panacea for a company's performance measurement solution is naïve. According to a Michigan State University study, three of the top four drivers of supply chain excellence are related not to technology but to alignment of organization and to performance measurement. While addressing the business alignment issues in the development of a performance measurement program, therefore, organizations can also define the requirements for a performance management IT solution.
Most business people lack the needed skills to understand and utilize the data generated by their business systems. IT resources can help extract, organize and analyze critical data so that employees improve the business, but the blind spot for most businesses results from the assumption that IT resources can act as key business partners for taking the performance measurement program to the next level. In fact, the program should include metrics for IT performance.
The bottom line is that any performance measurement initiative should be managed as a business project that may include an IT solution. Successful performance management initiatives should, first and foremost, be driven by the company's overall goals and objectives, and they should foster a culture where employees at all levels actively use performance data and metrics to drive improvements in the business. A key starting point for any organization is to ensure objectives are consistently defined and universally shared. These objectives should be supported by performance measures that are universally defined. From the start, business requirements for an IT solution should also define how the detailed transactions will be used and aggregated for each level of the company.