Abstract
Overview
Supply Chain Metrics that Matter delivers as advertised by focusing on useful ways to measure supply chain performance and then how to use the metrics effectively for managing a successful supply chain. This review provides a critical evaluation of the book assessing its merit according to the ability to accurately portray how to apply supply chain metrics. The interests of practitioners and educators of supply chain management (SCM) are both considered.
In the beginning of the book, the author introduces a framework termed the effective frontier, which postulates that supply chain managers must manage four pillars concurrently to achieve success. Those pillars are growth, profitability, cycles, and complexity. She refers back to the effective frontier frequently in the text, which serves as a mental framework for the reader to apply concepts from the book and begin to understand the interdependent relationships within complex supply chains.
This book encouraged me to reflect on advanced analytics which include the following: modeling, executive information systems, robust reporting, what-if analysis, and simulation. There are still no secret metrics, formulas, or methodologies. Effective and efficient SCM is ultimately the product of skillful and persistent improvements. Also, the metrics that matter are not always transferable. There are differences among industries which influence the prioritization of metrics. The book has examples from multiple industries and companies to help the reader recognize the differences between them and the metrics they depend upon for successful SCM.
The subject matter in this book is part of a standard education in logistics and SCM that is provided by business schools. There is nothing new here. For example, these principles include the following: manage the logistics functions as a complex system and never independently, seek to manage (reduce if possible) supply chain complexity, don’t monitor financial ratios in isolation, and use compound metrics. The book also provides a reminder of some tried and true general management principles, such as determine the metrics you will use only after you determine your strategic goals (i.e. growth, low cost leader, and product differentiation) and measure what you want to encourage.
This book could be useful for executives who find themselves managing supply chain operations despite a college education in poetry or history—degrees which aren’t practically helpful. For those executives, this book can be their source for the important principles and by-laws of SCM. Also, even supply chain executives well versed in the principles of managing supply chains can always benefit from a refresher. Because of the great complexity of SCM, there are principles and ideas that any particular executive may not review regularly, but which can grow in importance as the business changes. These should be reconsidered periodically. Even highly educated SCM executives can benefit from “going back to the basics” every year or two, and this book can serve that purpose.
The book was repetitive. However, that may be beneficial for readers who are new to SCM. Sometimes, supply chain concepts can be difficult to absorb, and therefore, repetition, hearing alternate explanations, or new contexts can help difficult concepts to be absorbed and learned. Also, hearing and understanding may seem to come easily, but using the principles in an actual situation when they arise requires a higher degree of absorption of the material.
Narration
The narration style of this book is unusual for a “how-to” book on SCM because it uses a fictional story to communicate the primary content. Reading it brings to mind The Goal: A Process of Ongoing Improvement, by Eliyahu Goldratt and Jeff Cox (1984), which similarly delivered its content via a fictional story. The Goal has been used extensively by operations and supply chain educators to communicate how operations functions must systematically work together for optimum throughput and performance. Supply Chain Metrics that Matter may also be particularly useful for educating college students.
I personally lost interest and patience in the fictional stories while the author was trying to communicate her main points. I found myself reading the fictional aspects quickly, trying to skim the content while she told me that the protagonist, Joe Samparini, had a “lean frame, and stood a bit more than six feet tall,” and that “he was a man of few words and got along well with everyone.” Since I wasn’t interested in hearing a story, this made it more difficult to extract the useful information from this book. I suspect there will be other busy supply chain managers who would rather have the condensed version.
However, the narrative style of this book could be preferred by some business managers and students of SCM, because supply chain managers have a variety of personalities and come with different skill sets. In particular, people who either find understanding financial metrics difficult or people who find performance information boring and hard to focus on may perhaps get their valuable supply chain metric education painlessly by reading the story in this book. However, for my taste, I would rather the author give me the information succinctly with a higher value-to-length ratio.
Significant contributions
A valuable contribution of this book is the interview answers provided by existing supply chain executives. Through regular chapter supplements, actual interviews with practitioners from different industries discuss the important metrics which they use to manage their supply chains. Most executives recognize the potential of getting lost in too many metrics, with 3–5 primary metrics being the most common portfolio size. For example, SCM executives at Blue Bunny stress three key metrics for managing their business including the perfect order, the cash-to-cash cycle, and an inbound sourcing scorecard. Xilinx stresses metrics including the number of orders with lead time less than 6 weeks because these are difficult to meet successfully at low cost. Executives at BASF mention five metrics which are proprietary and their “secret sauce.” I could be wrong, but I would be surprised if these metrics are anything new and unusual. Good SCM requires proven principles followed by motivated people. The principles can be trained (this book is a good place to start learning them), but motivation often cannot.
To close, I want to mention one particularly useful table in the book (p. 20) that provides some general metrics—ones that coincide with the pillars of the effective frontier. For example, one of the effective frontier pillars is growth which can often be measured by the ratio of research and development expenditures to total cost of goods sold. This table can serve as a useful reference for supply chain managers.