Supply Chain Metrics that Matter. Cecere Lora M.

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      Lora M. Cecere

      Supply Chain Metrics that Matter

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      Supply Chain Metrics That Matter

      LORA M. CECERE

      Cover Design and Image: C-Leveld, Pittsburgh, PA

      Copyright © 2015 by Lora M. Cecere. All rights reserved.

      Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

      Published simultaneously in Canada.

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       Library of Congress Cataloging-in-Publication Data:

      ISBN 9781118858110 (Hardcover)

      ISBN 9781118938980 (ePDF)

      ISBN 9781118938973 (ePub)

      This book is dedicated to supply chain pioneers who forged the path for the supply chain management profession.

      Foreword

      My first exposure to the discipline of supply chain management was in the fall of 1969 when, as an undergraduate business major at the University of Notre Dame, I took an elective course in Physical Distribution Management. The text of the same name was by three pioneers: Donald J. Bowersox, Edward W. Smykay, and Bernard J. LaLonde. Less than a year later I would begin a PhD program in Business Logistics at The Ohio State University with the remarkable privilege of having Dr. Bud LaLonde as my program advisor and committee chair.

      During the 1960s the academic discipline and eventual career path that would come to be known as supply chain management was effectively in its infancy. Textbooks were only beginning to appear, major fields of study were offered by only a few universities (a scandalous omission that persists to the present day), and the principal international organization of professionals had only recently been founded: the National Council of Physical Distribution Management (NCPDM), later renamed the Council of Logistics Management (CLM) and its present incarnation, the Council of Supply Chain Management Professionals (CSCMP). It was certainly a more innocent time for logisticians, for the management objective in those days was consistent with the course and book titles: balancing a limited set of finished goods distribution costs against selected customer service goals, and almost always for domestic firms.

      It was not until 1982 that the term supply chain first appeared and it did not gain widespread use until the mid-1990s. But way back in 1963, something remarkable happened. Bud LaLonde did what he would continue to do for decades: he put forth a vision for the profession. In his view Physical Distribution Management should be married with Materials Management (procurement and manufacturing) and the whole thing should be called Business Logistics. Revolutionary? Absolutely. Accepted by the profession? Not a chance. Some 13 years later Michigan State researchers would introduce the term Integrated Logistics (procurement, manufacturing, and finished goods distribution under a single line-level executive) as one of the attributes for Leading Edge firms. In recent years, notably in the work by Professors Douglas Lambert, Martha Cooper, Keely Croxton, Thomas Goldsby et al. of The Ohio State University and the Global Supply Chain Forum, we have seen SCM developed using the very sophisticated perspective of cross-functional business process integration with relationship management as a key element.

      So, five decades later, where are we? Sadly, for many companies not much better off than in the 1970s. We are still crippled by anachronistic functional silos, presided over by vice presidents who fiercely defend their worn-out turf and who measure and reward performance with an endless stream of silo initiatives and ever-changing performance metrics. Supply chain management may be the fashionable verbal coin of the realm, but far too often in practice it is currency that purchases relatively little. Where have we gone astray and what can be done about it?

      Enter Lora M. Cecere. As a highly experienced software developer, consultant, and industry analyst she has a wealth of experience from which to draw. And draw she does, introducing the reader to a fictitious company populated with classic executives who are struggling to understand why overall corporate performance lags despite their relentless pursuit of typical performance metrics. In particular, there is a singular focus on growth objectives. Complicating matters further is an impending expansion into Brazil. The executives are all well-meaning, if functionally myopic at the outset. Here, Lora very effectively avoids the obvious trap of overplaying their characteristics to the point of caricature. Rather, at least in my experience, they are very accurately portrayed.

      Very early on, Lora introduces the reader to the overarching theme of the book, which is also the title: Metrics That Matter. We learn that her selected measures are familiar enough to almost anyone in business, while at the same time we are disabused of a host of other, equally traditional measures. So where is the fundamental contribution? It is with the cross-functional (read that as corporate performance) interplay of the measures, the interactions that are not – indeed cannot – be appreciated when one is focused on functional silo performance. It is in this context that we are introduced to the concept of the Effective Frontier, the goal of maximizing corporate performance by measuring and managing selected metrics simultaneously, not individually. We also learn the critical difference between efficient and effective, a distinction all but lost in many companies.

      If the text stopped here, it might be worthy of consignment to the shelf labeled Interesting Academic Ideas. Fortunately for the reader it is only the beginning. For it is in