This is part three of the mini-series on fulfillment KPIs. If you haven’t read parts one and two, you really should. It will make this part much easier to understand.
So, as a small recap, in total you look at 7 different KPIs / metrics for inbound ops and 8 for the outbound operations and inventory monitoring. Remember the saying about having to many KPIs and being lost because of it? All the dashboard models that are promoted? Well, I had the most visibility on operations of my whole career when these 15 KPIs (and then some) were presented in plain tables as a pdf, no diagrams, no graphs. It took some time to get used to it, but then it worked like a charm. I am still not sure, so, if having the possibility to access the data behind in real time would have provided added value or not.
So, why and how can make using 15 metrics on at least a weekly basis make sense? And why does it work? The answer lies in the way how these metrics are defined and connected with each other. As you saw in part one, OTD for a single warehouse was split in two to distinguish between warehouse and carrier delays. Looking at these two is as easy as looking at only OTIF, On-Time-In-Full, for that warehouse. And it makes root cause analysis so much easier. This can be applied to any of these KPIs we discussed so far, as long as the definition, calculation and interconnection with other metrics is clear and easy to understand, working with a lot of them is actually easier as it sounds.
It is even made easier by the fact not all KPIs are equally relevant at the same time and the same frequency. Customer complaints, for example, can easily be looked at in depth bi-weekly. If numbers are stable and under control, you could even get away with monthly intervals. Looking at this number daily, so, doesn’t make any sense at all. Late shipments, on the other hand, have to be looked at and followed up at least weekly. And daily during Q4. The same is true for cancelled orders and picks. Inventory related KPIS, inventory adjustments and results of stock taking, can be left to weekly schedule. Knowing which KPIs to look at makes already a huge difference when working with 15+ metrics.
The other solution is structure and training. Let’s start with the latter. Training, in the context of this blog, covers three aspects: operations, processes and metrics. The first one is straight forward, the better people understand operations in general and the particular operations they are responsible for, the easier their life is. The general part involves a decent degree of theory, and covers tools as well. The second part is mostly training on the job. It is about getting used to the people and sites involved. About understanding interfaces and recurring problems. All, ideally, flanked by feedback, mentoring and theory. Don’t underestimate the social aspect of this part. Operations are run by people.
Process training again should cover some general theory to provide the basis. On top of that, solid understanding of the particular processes has to be achieved. Everyone who worked with more than one SAP environment knows that even standard software can be very different in application. Training on the job should be tied in, but to be honest most practical experience is usually learned the hard way.
Metrics training, meaning the calculation and the overall connection between the KPIs and the underlying processes, is purely classroom so. This includes the formulas behind each KPI and the overall system.
Just a small reminder, so. Training looks easy in theory, but getting people trained is everything but easy. Usually there is no time nor resources to do that in any organized way. Which leaves more experienced team members to conduct a lot of that on the fly. Which is not the worst thing, if you ask me. I learned as much that way as I did in classrooms. One doesn’t work that well without the other so.
It is also important to remember, that suppliers, partners and 3PLs need similar training to make operations work. And that is usually achieved on the job, during hard business reviews and when problems are solved. And once partners understood the KPIs and processes, things tend to run rather smoothly. So if possible, invest a lot in partner training, education and onboarding. Structured and daily during operations.
Structure, the hardest part to keep up
Which leaves the key to unlock everything that was put in place. Without it, all the training and know-how and experience won’t help a single bit. And structure is also the hardest part to get right. It requires discipline to have daily calls during Q4, at 08:30 with warehouses, at 09:30 for a country or region and so on, for almost three months in a row. Including Saturdays. Just how to do it right depends on so much that it is impossible to provide one single answer. But generally speaking, everybody gets better with time. And having smaller deal events over the year is a great way to train that in real life.
The risk with having that structure and discipline is micro management. There is all the transparency you can dream of. And metrics are discussed at levels, in detail. For managers, discipline means to restrain themselves, to give people enough room to manage things.
I already hinted at the structure a little bit. Generally speaking, eCommerce operations should have a weekly routine already to cover all these metrics. For example Mondays with warehouses, Tuesdays on country level and so on. Which gives people time to get used to it. And to find solutions for problems identified on Monday for the big call on Tuesday. For Q4, you simply increase frequency and limit scope of the daily calls. Instead of covering late shipments weekly, you now do daily for example. At the beginning it can be overwhelming, but coming from a weekly routine makes the switch a lot easier. As long as everybody sticks to clearly defined agendas.
Working with 15 metrics on a weekly and daily basis requires structure, discipline, clear definitions of metrics and well worked out KPI system. People and partners, like 3PLs, have to be trained and educated on the specific metrics. And finally, not all metrics have to covered in depth daily, some can be covered bi-weekly even during Q4.