In this video, Trent Morris and I talk about performance management, a topic we often discuss in the context of KPIs.
But is performance management really just about KPIs?
Let’s dive into that question by watching the video below.
Why 98% Isn’t Enough
Trent explains that many people set KPIs at targets like 98%, but the reality is that we’re paying for—and expecting—100%. For instance, in supply chain management, businesses strive for the perfect order every time. But when we set KPIs below 100%, we’re accepting that 98% or even 95% is good enough. Trent makes an important point: aiming for 100% service level is the right approach, even if we know that not everything will go perfectly. We can accept occasional setbacks, but we should always be pushing for 100% quality and service, not settling for lower targets.
Collaboration Drives Better Results
Trent’s perspective doesn’t just apply to managing suppliers; it also holds true for our internal operations, like warehousing and transportation. If we set our targets at 98%, we’re likely to fall short of that. But by aiming for 100%, we set a higher bar that pushes us to improve. Collaboration between service providers and clients is also crucial—both sides need to work together to continuously improve performance and close any gaps. If we settle for 95% as a failure threshold, we’re allowing problems to persist instead of addressing them head-on.
Start by Defining the Right KPIs
If you want to improve your performance management, Trent’s advice is simple: start by defining clear, well-structured KPIs that reflect the most critical aspects of your business. Measure those KPIs regularly and use them to track progress. It’s important to spend time understanding your KPIs and what they’re telling you so you can make data-driven decisions that lead to continuous improvement.
Related articles on this topic have appeared throughout our website, check them out:
- 4 Tips for Effective Supplier Performance Management
- Total Supplier Performance Evaluation: More than a Suite of KPIs
- How to Address Chronic Poor Supplier Performance
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated April 05, 2023, under the title “Supplier Performance Management with Trent?“.
