Supply Chain Blog

FMCG/Pharma KPI Scorecard: How accurate are your calculations?

Posted by Dave Jordan on Thu, Oct 31, 2013

Well I find it strange anyway.  Whenever I go to see my doctor she always greets me with a cheery “good morning, how are you?” I always feel like replying “well I‘m in your clinic so there is a fair chance I need some medical advice or assistance”. My dentist never asks me if my teeth are ok and my solicitor never thinks I have just popped into his office for a timed and expensive chat about football. If you go into a barbershop there is every chance you have a hair cut in mind and you are not there to buy cheese.

KPI Dashboard data verification resized 600On this occasion I was in the clinic to receive the results of my recent annual check-up from the neck-down. Blood and effluent had been collected and analysed for a whole raft of potential bodily malfunctions and anomalies. On this occasion despite a badly timed Indian take away the night before the blood letting, I was passed fit. In fact the doctor actually said I was in the best condition for a man of my age that she had ever seen.

With a spring in my step I walked by the unhealthy people in the waiting room and left the clinic beaming before I took a look at the detailed analytical results. Oh very good, a doctor with a sense of humour. In the box showing my age was the number 450! While I found this very funny I also wondered if the error was one of data input or data manipulation.

Was it simply someone with a fat finger typing my details into the form while dreamily thinking about the performance of Dave the Hairy Biker on Strictly Come Dancing? Or, did the error occur outside of obvious human control inside a slick piece of IT software? Even so, although we are making huge technological advances whatever happens inside a piece of software has ultimately been designed and built by a human who may or may not be a follower of pink lycra.

How confident are you that the KPI Dashboard numbers on which you and your senior FMCG/Pharma colleagues rely are 100% accurate? Has anyone double checked that the logic behind the KPI generation is actually right and still valid for the current situation? Are the KPIs actually incorrect and guiding your business down a route you really shouldn’t be taking? As ever in business, trust is good but check is much, much better!

As part of your standard operating procedures on at least an annual basis you should:

  1. Review the principles behind KPI selection and adjust as per current business needs, e.g. are the top 20 SKUs still the top 20?
  2. Review the calculation steps and logic behind each KPI.
  3. Test the IT software by calculating manually or in another IT package – painful but well worth it if this reveals any serious error or bias.
  4. Challenge the IT system by inserting dummy numbers to force out-of-specification limits notifications.

Simply, a little validation and verification is what you need.

Humans do indeed make mistakes but only humans will spot errors in data insertion or data manipulation. Just because an ERP or Finance IT package is expensive with a sexy name it does not mean it is always 100% correct or infallible.

Image courtesy of Grant Cochrane at freedigitalphotos.net

Tagss: FMCG, Dave Jordan, CEO, Performance Improvement, Pharma, KPI, Supply Chain