While people power the supply chain, your processes dictate what your people do as well as how and when they do it. That's why, to sustain profitability and growth, it's imperative that you implement processes specifically designed to meet the needs of your customers. In addition, to keep pace with industry changes and evolving customer requirements you need a systematic way to measure performance, identify areas for improvement, and make sure your processes remain properly aligned. Only then can you make informed decisions to optimize processes across your operations.
Not sure where to start? Here are three essential tips to supercharge your processes.
1. Let business strategy be the guide
Whether you're implementing a performance improvement program for the first time or re-evaluating your existing measures, let the overall business strategy guide you. In the logistics and distribution center space today, customer service continues to be a top strategic business focus.
In a 2015 DC Measures survey conducted by the Warehouse Education and Research Council (WERC), over 40% of respondents reported customer service as the overall business strategy for their unit or division — beating cost leadership and product/market Innovation. This represents a 6% increase from the previous year, indicating a growing emphasis on customer service by companies across the industry.
Once you understand how your business chooses to compete, you can align your organization's goals, set metrics to measure performance against those goals, and use that data to drive process improvements.
This cascading approach extends all the way to your workforce management processes. Human resources (HR), managers, and employees can work together to set performance goals for departments and individuals that align with the overall business strategy. That way, all members of the workforce understand what they're supposed to do, how they'll be evaluated, and how their work contributes to the success of the business.
2. Measure & benchmark performance regularly
You can't improve what you don't track and measure. Then again, it's simply not practical to measure every single aspect of your operations. That's why it's so important to figure out which metrics matter the most and focus on measuring performance metrics that align with strategic priorities.
Setting the right metrics helps keep your organization focused on delivering sustainable value and quality for the customer, as well as optimizing efficiency and reducing costs.
Benchmarking is also a helpful tool for maximizing performance. By comparing the cost, cycle time, productivity, and quality of a specific process or method to market-level or best-in-class standards, you can get confirmation that your processes are working well or identify critical gaps that may be hurting your competitive edge.
3. Resist complacency
Even if your organization is seeing steady improvement gains, it's important to stay the course and avoid settling for “good enough.” Although operational performance tracking, measurement, and analysis add to your management workload, it's well worth the effort.
As such, ongoing evaluation of your metrics will help ensure their continued alignment with your business strategy, particularly if customer service is a top focus. As your customers' requirements and expectations evolve, it's crucial that your processes — and performance — keep pace. You may be measuring some key performance indicators (KPIs) that simply don't matter anymore and failing to measure others that have become key drivers of customer satisfaction. By continuing to compare the metrics in place to what's happening in the market, you'll be in a better position to drive continuous improvement and stay one step ahead of the competition.
Process is an important component of any company strategy, but it plays an especially critical role in the logistics industry. However, with so many ways to measure effectiveness and productivity, disconnects can emerge between the metrics you're tracking and the goals your organization is trying to achieve. By establishing metrics that align with the business strategy, benchmarking against best-in-class players, and staying the course, you can identify performance gaps and take steps to drive continuous improvements for competitive advantage and bottom-line results.