Supply Chain Metrics that Matter

Chapter 1Starting the Journey

Energy filled the room, and excitement reigned. The global team was gathered for this February meeting. It was the beginning of a new year. Many of its members had worked together for years, but never met face to face. They were excited to connect. It was cold outside; but inside the room, the conversation was warm and quickly flowing, as people who previously only knew each other from e-mails shook hands and introduced themselves.

Centered in the front of the room was a flip chart. Placed on the board was a large white sheet of paper. In the center, carefully handwritten with a black marker, was a number. As people gathered over coffee they glanced at the board, and in casual conversation tried to guess what the number 77 might mean.

Joe, a leader in a major global multinational company, was hosting his annual kickoff meeting. It was the launch of his “big, hairy, and audacious goal (BHAG)” for the New Year. He rubbed his hands together as he began his talk. As he unveiled his vision, he was passionate in his argument. He believed in his mission. His speech started with great energy, but then stalled. The group was not buying his message.

The BHAG was an inventory goal. Joe wanted to finish the year with a 25 percent reduction in inventory. This translated to a target goal of 77 days of inventory. His desire was to reduce inventory and return cash to the corporation. The company was in a growth mode, and Joe wanted to deliver on the corporate strategy. ...