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Route to Market & Supply Chain Blog

FMCG KPIs: Performance improvement or blame-storming?

Posted by Dave Jordan on Tue, Mar 30, 2021

Once upon a time I worked in a well-known detergent powder factory in the north of England which has now sadly closed. The factory manager at the time must remain nameless but he had a habit of dragging people from the R&D Laboratory to show off his latest gadget or new technical innovation in his office. Bearing in mind this was a long time ago, these “modern” gadgets would include the unveiling of a plush push button telephone or a Dictaphone with a mini cassette tape or a computer that was small enough to actually fit under the desk.

One day he surpassed himself by inviting me along to his office to see the new security spy-hole that had been fitted to his wooden door. In isolation this sounds a boring distraction but his door already had a narrow rectangular window on one side of the door and the glass was standard, clear, 2-way stuff!  You would tap on this window and wait while he moved towards you to peer through the spy-hole. If he did not wish to meet you at that time, he would walk back to his desk in full window view of the person knocking. Trigger from Only Fools & Horses comes to mind.

While that really is just a little bit weird you could argue that it is actually fully transparent behaviour in that an audience was genuinely considered but rejected. There was no hiding behind a door without a window or behind a formidable secretary and this leads me on to the week’s topic in the wonderful world of Supply Chain and it concerns the choice, use and visibility of KPIs.

kpis-performance-storm-in-postYou need to measure performance and the KPIs should be selected to gauge unblinkered reality and promote continuous improvement. As improvement materialises or the market adjusts there is nothing wrong with changing KPIs to suit the new environment nor is it at all wrong to raise the bar – you should in order to avoid sandbagging. (Conversely, if your business is struggling then a set of “intensive care “ KPIs could be more appropriate).

What is certainly wrong is to measure negative and backward-looking KPIs where the only outcome is an energy sapping and time wasting blame-storming session. In many FMCG businesses there still exists a desire to allocate blame over KPI performance rather than collectively seek improvement and mutual success. This finger pointing or desire to “prove people wrong” over “proving people right” is extremely damaging and reflects a very immature business. Without doubt, a business far, far from tasting success.

Certainly, you need to measure performance in areas of weakness, e.g. forecast accuracy, case fill, but how you deal with the information is what defines the Board S&OP dynamics and ultimately company performance. If CEOs manage by fear, ridicule and blame allocation then you are likely to generate a rock solid, silo-based, bottom protection mentality which wastes time and effort constantly looking backwards or sideways at best.

If you are taking the trouble to measure performance it is important to publicise the KPIs around the workforce. Why are so many CEOs reluctant to let the rest of the business know how they are collectively performing? Certainly, you do not want KPI leaks to competition but what use would they be to nosey competitors anyway. If you do not trust your colleagues then it is already a sad state of affairs which pushes success even further back in the calendar.

If you and your key colleagues are continually looking forwards (with or without a dodgy spy-hole) then you are in with a chance of beating the competition rather than beating yourself.

 

Tags: Dave Jordan, CEO, Performance Improvement, KPI, S&OP