A Comprehensive Overview of Supply Chain KPI Pitfalls

Who would have thought that measuring the performance of supply chain processes like warehousing, procurement, or logistics could be so troublesome? While technically KPI selection and use are relatively straightforward, the mistakes we’ll discuss here can lead to many problems and difficulties.

If you’ve experienced any of them, you may wonder, with good reason, if there is any real value in monitoring supply chain KPIs.

1. Failing to Utilize KPIs

It might seem logical to assume that if KPI monitoring is so unforgiving of mistakes, it’s better to dispense with them altogether, but that would be an unwise and incorrect conclusion.

2. Implementing KPIs That Do Not Align With the Supply Chain Plan

The whole point of KPIs is to show you how effectively your strategy is working by indicating progress toward your strategic goals. Conversely, there is no point at all in gathering data that will not help you see that progress.

3. Using Over-complicated KPIs 

As a rule, complexity is a risk in a KPI, increasing the chances of it being too sensitive or not sensitive enough and delivering misleading performance indications. Therefore, the most effective KPIs are usually the simplest.

4. Goal-setting Errors 

Therefore, the key for your business when implementing or reviewing its KPIs is to begin by checking the quality of any formally designated objectives.

Are your objectives SMART (specific, measurable, achievable, relevant, and time-bound)? If they’re not, you might find it challenging to identify any KPI that will enable you to track progress toward them. Like your KPIs, the objectives that inform their purpose should be as simple and easy to understand as possible.

5. Keeping Track of Too Many Key Performance Indicators

Many companies seem to fall into the trap of publishing too many KPIs—more than they can ever monitor effectively. Unfortunately, we see it all the time in our work with clients.

Do you feel your supply chain management team is tracking too much metrics? If so, it’s probably true, and what’s more, most of them are probably not KPIs at all (that’s why we said “metrics”).

6. Not Acknowledging the Difference Between Things That Can be Measured and Things That Should be Measured

In many cases, the things that are difficult to measure are also those for which a measure is most desirable. So, avoid falling into this trap of taking the path of least resistance, measuring all the easy things while neglecting those performance elements that need more effort, skill, resources, or technology to measure.

7. Priorities by Need, not Convenience 

It’s imperative to prioritise your supply chain processes in terms of their need for performance measurement and, in doing so, to postpone consideration of the mechanics until you have a concrete list. Don’t measure something just because it’s easy, and don’t neglect to measure a process just because it’s not easy.