The Magnitude of Measurement

Performance metrics monitoring targets optimal DC capital investments.

RALEIGH, NC, July 26, 2007 -- You have probably heard the old adage, “Measure twice; cut once.” Everyone can learn from this carpenter’s motto. Whether you are an Olympic athlete, a seamstress, or an industry executive, measurement plays a significant role in taking you to the level needed to continually achieve your goals.

In the supply chain, lean concepts and best practices are employed as measurement tools to ensure that business is operating at an optimal level. And a key factor in minimizing the cost of distribution is the ability to effectively capture and monitor distribution center (DC) costs and operational performance.

With performance metrics monitoring, you can:

• Identify improvement opportunities.
• Quantify and prioritize improvement opportunities.
• Track changes and results.
• Quickly flag changes in business to remain flexible.

The chart below, taken from the Supply Chain Consortium’s DC Costs and Performance Metric Monitoring Focus Report, represents the portion of the original and ongoing investment that survey respondents report spending on facilities, material handling equipment, and information technology. As you can see, supply chain executives rate information technology and mobile material handling systems as top investment priorities in the upcoming year.

But just how did these supply chain executives determine which areas should receive greater capital investment? They used the old carpenter’s motto. As part of the first step in creating an effective performance metrics program, it is important to document capital investments because they can help organizations set a baseline and interpret performance metrics.

“It takes careful planning and proper analysis of business requirements to balance the amount of investment between the size of the facility, automation, and system technology so that organizations get the best return on investment,” notes Thompson Brockmann, Principal at Tompkins Associates and author of the consortium report.

After tracking and capturing your capital investment and operating costs, you will need to determine and track the best ongoing performance metrics, identify improvement opportunities, implement changes and track results. If the metrics do not improve, then you will know that additional actions are necessary.

“With the proper performance metric tools and processes, you can continually improve operations while still meeting business requirements,” Brockmann adds. “Whether you are starting a new operation or attempting to implement continuous improvement strategies, performance metric management and benchmarking and best practices are extremely useful tools in today’s competitive business arena.”

Effective performance metrics programs--updated and reviewed on a regular basis--are critical to maximizing operational performance. When these processes are established and implemented, a proactive organization can make intelligent decisions on all levels when changes become necessary and more easily achieve their goals.

Media Contact
E-mail Keri McManus or call 919-855-5516.

About the Organization
The Supply Chain Consortium is the premier source for supply chain benchmarking and best practices knowledge. With more than 100 participating retail and retail supplier companies, the Supply Chain Consortium sponsors a comprehensive repository of 12,000-plus benchmarks complemented by search capabilities, online analysis tools, topic forums and peer networking for supply chain executives and practitioners. The consortium is led by the needs of its membership and an Advisory Board that includes supply chain executives from Campbell Soup, Hallmark, Ingram Micro, J.C. Penney, Molson Coors, Polo Ralph Lauren, Rite Aid, Target, The Coca-Cola Co., and Whirlpool. To learn more about how your company can become a member of the Supply Chain Consortium, contact John Foley, 919-855-5461 or visit www.supplychainconsortium.com.