Why you need to look after the data in your micro business supply chain
If your data is accurate, relevant, current, useful and proportionate then it’s likely that your supply chain will be too.
A supply chain is just numbers. Probabilities, quantities, cubic dimensions, lead times, miles, delivery times… the list is endless. So if your data is not up to scratch then your supply chain probably isn’t either. But what does a good supply chain look like?
I once managed a one million case per week distribution centre for a grocery retailer. One day all the picked orders were overspilling from the roll cages we picked into. This was quickly spiralling out of control as our load planning function used the data from the warehouse management system to schedule journeys to stores. The resulting overspill would lead to products being having to follow on a later vehicle unless we rectified the issue.
We soon discovered that a single promotional stock keeping unit (SKU) had been set up with the incorrect cubic data by the buyer. On further investigation we discovered that when this SKU was set up on the system the junior buyer had been told just to put “one” in each of the dimension fields, as the system wouldn’t let you leave it blank. The cost of this error was around £60,000 on that one day as all the other distribution centres had the same problem.
If your people don’t understand why data is important they won’t be diligent in creating and maintaining it. Make sure you communicate the importance of good data and don’t leave it to chance.
How often are your databases cleansed and purged of data that is no longer relevant? How many redundant SKUs are taking up space on your servers or costing you money on cloud based servers? Similarly, when you are doing some analysis of your range and throughput how often do you have to filter out these SKUs, to make the data meaningful? Keep your data files current and your analysis and data efficiency will be improved.
Useful and proportionate
There is a tendency amongst management to want to develop a new key performance indicator (KPI) for every issue that occurs. Many businesses I’ve worked with have comprehensive KPI packs that allow the end to end supply chain to be broken down into its lowest common denominator. This is often the result of the packs being developed over a long period of time and more and more measures being added as the weeks go by so that “…the problem we had last Tuesday won’t happen again, and if it does we’ll see the impact in this KPI”.
The challenge with this microscopic focus is that it’s easy to lose sight of the big picture and stop looking at the 6 or 7 things that really matter. At the other end of the spectrum we see businesses that have next to no KPIs or measures for people or departmental performance. Balanced scorecards were all the rage several years ago and as with all fads they fade with time and other things take over. I think they were a good thing and it’s great to see the performance of an end to end supply chain on a single page. Any more detail than that can be followed up afterwards or left in an appendix.
Clients often ask for our opinion of “What should we measure?” Our view is that only measure what matters. Typically, the most sensible first thing to do is “Follow the money…”. This refers to both revenue and cost. How does your supply chain contribute to increasing revenue and what does it cost?
The second thing to focus on should often be achievement of a plan. Business owners and shareholders like predictability, so if we can predict what our supply chain is likely to need to fulfil, then we can predict how it will behave and perform. Once we have these predictions (or budgets/forecasts if you prefer) we can measure the adherence to the plan. We can then identify variances and investigate why they occurred and how we prevent recurrence, or in the case of positive variances, how we recreate those circumstances.
Confident you’ve got the right data but concerned about keeping it safe? Check out this guide to data security for small businesses.