The success of any business is linked to the performance of its supply chain. It doesn’t matter if you are the CEO of a growing corporation or the owner of a developing enterprise, it’s the undeniable truth. At least 50% of businesses, regardless of size, close within 5 years of their launch. The statistics are real, regardless of the industry; 79% of companies with high-performing supply chains achieve higher revenue growth compared to the average within their industry. Contrarily, about 8% of companies with low-performing supply chains report above-average growth. This comparison alone highlights how critical the relationship is between companies and their supply chain. As mentioned before, 50% of businesses fail within 5 years of their launch, therefore, it can be concluded that poor supply chain performance can contribute to business failure.
Now why do businesses fail? In most cases, it’s due to unforeseeable financial problems, emphasis on unforeseeable. A successful business keeps its business successful not only with a high-performing supply chain, but with a high-performing supply chain that is monitored by Key Performance Indicators (KPI). Supply chain KPIs are essential – the right ones, that is. A KPI is a practical and objective measurement of progress. This can be toward an end goal or against a mandatory standard of performance. KPIs need to be SMART- Specific, Measurable, Achievable, Relevant, and Time-phased; these are building blocks to get the ideas going but as the ideas become more structured, KPIs should become more comprehensive. It’s important not to have too many – remember what the K stands for! Each KPI a business has should have an “owner” – either an individual or a group of people. Now, even if individuals within a company have identified their own KPIs, no KPI should contradict or undermine others. KPIs are meant to bring value to a business as a whole, not on only an individual level.
SCO’s mission is to create new value for our customers from their logistics activities, but how do we do that? By identifying KPIs. We monitor service level agreements through KPIs that are agreed upon between us and our customers. Within our solutions – supply chain advisory, sourcing and procurement, strategic outsourcing, same day delivery, and reverse logistics – are high-level KPIs aligned to the specific objectives of each solution. In turn, we can transform our clients supply chain from a cost center into a strategic asset.