The issues already identified need to be addressed by next-generation supply chain performance management systems. Such systems should include three capabilities: an analytics framework, a process orientation, and linkages.
Analytics framework. The ideal SCPM system should allow a user to define a complete framework for supply chain analytics. This framework should include: Overall supply chain objectives; the top-line metrics that affect the objective; the description, targets and acceptable range for each metric and; a list of reports where the metric can be found.
In addition, the framework should allow development of a hierarchy, such that for each Level-1 metric (such as service levels), which is associated with your supply chain objective, you should be able to define associated Level-2 metrics (such as forecast accuracy), and for each Level-2 metric, lower-level metrics and so on. Such a framework should also allow you to import popular hierarchies, such as the SCOR framework from Supply Chain Council.
Process orientation. The ideal SCPM system should support process orientation. The worlds of procurement, manufacturing, engineering, finance and other departments are connected but looking at today's analytics solutions, the relationships between these worlds are not well understood. This leads to local optimization at the expense of the performance of the overall process.
SCPM should address this by enabling a user to view all key metrics, current performance, and recent trends for a process, not just for a department.
By configuring the metrics in the SCPM framework, new metrics can be added to this orientation as the company becomes more skilled in measuring and improving the performance of their business processes.
Linkages. An ideal SCPM system should use the analytics framework to define linkages between two metrics that are related to the business process but associated with different departments.
We earlier mentioned the relationship between fulfillment levels (shipping department) and forecast accuracy (demand planning department). In addition, the system should be able to show linkages of any metric with lower-level metrics within the same department.
These inter- and intra-department linkages help users do a better job at root cause analysis and identify the key issues/metrics affecting objectives and targets. As a result, an organization's ability to perform operational analysis is significantly enhanced.
In addition, most SCPM systems offer a window into the past but they have no way of showing how a related metric would be affected if you moved a certain metric up or down by a certain percentage.
Without this capability, managers can't easily tell how much to change a certain process (and related metric) to bring the supply chain performance back into acceptable values, nor which tradeoffs they would have to make elsewhere.
Next-generation SCPM systems will use predictive modeling capabilities to address this issue.
Because current SCPM systems provide role-based dashboards and scorecards, they have primarily been developed in-house by the IT organization using business intelligence (BI) tools.
However, to address the requirements listed above, SCPM systems of tomorrow will have to come from vendors as configurable packaged applications.
With all these new SCPM capabilities, an organization in the electronics industry will be able to measure the effectiveness and efficiency of their supply chain and make better decisions to streamline the supply chain and align it with their overall objectives.
Such SCPM systems will enable supply chain executives to move from a mode where they are managing crisis to one where they are managing opportunities.
Jessie Chimni is vice president of services at Bristlecone (www.bcone.com), a global supply chain consulting firm. Bristlecone is working closely with SAP to bring the next generation of SAP's Supply Chain Performance Management solution to market. >