Today, I’m here with Trent Morris, and we’re diving deeper into performance management.
Trent believes performance management isn’t solely about KPIs, and in fact, many people misunderstand KPIs.
The Real Focus: 100% Quality Service
Trent highlights that when working with suppliers, we’re paying for 100% service quality, not just a target percentage like 98%. Yes, KPIs are useful, but we should aim for perfection — a perfect order, perfect service, and complete customer satisfaction. Accepting a KPI of 98% is acknowledging that things might go wrong. But if we focus too much on that 98%, we might miss out on the bigger goal: achieving 100%. It’s about fostering trust with suppliers and service providers, striving for 100%, and acknowledging that setbacks can happen. But if we settle for a target below 100%, like 95%, we’re accepting failure too easily.
The Pitfalls of Lowering Standards
Trent also discusses the issue of setting lower failure thresholds. If a contract defines a KPI of 98% but allows for failure as low as 95%, it effectively lowers the actual target to 95%. This relaxed approach can lead to complacency, which affects the overall quality. Trent’s message is clear: we should expect 100%, even if we recognize there will be occasional setbacks.
Internal Operations and External Suppliers
The same principle applies to internal operations. Whether you’re managing warehousing or transport, aiming for 100% performance is crucial. By targeting a perfect score, you’re pushing the boundaries of excellence. But if the target is set too low, such as 98%, then you’re settling for a failure rate. Whether it’s external suppliers or internal processes, maintaining a focus on continuous improvement is key to achieving higher performance.
Trent offers one simple piece of advice: ensure your KPIs are well-defined, measured regularly, and actively monitored. If you don’t measure, you can’t manage. Without proper KPIs, performance suffers. Start by identifying the most critical aspects of your business — like on-time delivery or invoicing accuracy — and measure them consistently. This way, you’ll have the insight needed to improve over time.
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?“.
