Insights

Dashboards

Taking Dashboards out of Wonderland

“When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean – neither more nor less.”??”The question is,” said Alice, “whether you can make words mean so many different things.” ?”The question is,” said Humpty Dumpty, “which is to be master – that’s all.”  Through the Looking Glass, Lewis Carroll.

Dashboard metrics, like words, can mean many things to many people depending on who is the master.  We are all familiar with the purchasing agent who says there will be a report card that will be filled out by their plants’ management each quarter judging on-time delivery performance and the incoming quality of a suppliers’ parts, but how many have experienced the following conversation, from an executive in the personal care industry.

“We are having trouble with our plant in Pennsylvania and here in North Carolina.  The sales people bring us orders with a delivery date and we confirm the timing with our promise date, but when we ship the product to our promise date, the customer tells us we are late.  I can show you that we have daily charts that show we ship 99.999% to our promise dates. Now this has happened with our largest customers and they are threatening to pull the business and go to our competitor because we have missed so many deliveries.  The loss would cripple this plant.”

Upon investigation, the problem was occurring because the sales organization was communicating a customer “want” date and the plant was responding with a “promise” date commitment, but there was no mutually agreed upon resolution of the difference.  There were dashboards in place but their definitions and metrics being used by the companies involved were different and in conflict.

In a different business, we recently finished a project focused on developing strategic account management systems.  One of the new account managers, a bright, intelligent, high-potential employee, was surprised when in one of the first meetings with the account the senior purchasing executive of the newly targeted customer announced that our client had just been named a strategic supplier, one of a very small handful of suppliers being elevated to that level.  A flurry of meetings occurred that began to establish linkages at various levels and functions of the two organizations.  Along with steps to ensure that some old wounds were salved, there remained fundamental questions on how to proceed.  Long-standing metrics monitoring on-time performance, quality, and forecast accuracy were in place in the plants.  Plant managers knew how much profit was made on each order.

Performance dashboards had been long established and used to manage the daily transactional relationship between the two companies, at least on an episodic basis.  Depending on the ebb and flow of business, the dashboards had been topics for weekly meetings, monthly meetings, and quarterly meetings at various points in the past.  Now that the relationship had been elevated to a new level, would the old metrics for supplier performance and financial results be sufficient?

Many companies face this issue with their best customers, but fail to recognize that performance dashboards focusing only on transactions are not enough to insure that the goals of the two organizations are met.  Even more important in our experience is the prerequisite that the two organizations agree on a common set of dashboards and metrics.  Too often as in the personal care example, communications stop and, as a result, dashboards fail to reflect agreement as to what is important and how success is to be measured.  As Humpty Dumpty pointed out “The question is which is to be master.”  Dashboards are important but must be created in collaboration between supplier and buyer to be effective.

Traditional Approaches to Dashboards

What are the most common performance dashboards?  We frequently see dashboards focused on supplier performance.  Is the supplier delivering on-time, in-spec product, at a fair price, which allows their customers to compete effectively in the market?

One area where dashboards are frequently created is in the quality function, but all too often we have heard a variant of following dialog.

(Seller) “The product meets the specification that we have been producing for everyone else in your industry.”

(Buyer’s Operations Manager) “Yes, I understand it works in other people’s plants, but it jams coming down our line.  Our process is different.”

(Seller) “But your machines are different and the set-up has changed for the new tubes.”

(Buyer’s Operations Manager) “We haven’t had this issue with other supplier’s tubes.  Have the new caps and tubes changed?”

(Seller) “Well, yes, we were able to find a better material that ran faster in production with fewer rejects.”

(Buyer’s Operations Manager) “I can tell you the current production isn’t running very well in our machines.  What are you going to do about it?  Or do I have to call Acme?”

In this case, the differences started in a communication over “product conformance quality” (meets the product specification) by our client and an expectation of “quality in-use” (runs on our machines) from their customer.  The issue that triggered the discussion was certainly aided and abetted by a recent material change.  Collaboration over a metric and a supporting dashboard that measured line stoppages, which could be caused by either tubes supplied by our client or the buyer’s machinery set-up and maintenance, would provide a framework for problem resolution.  Better communication would have also helped.  We have seen that it is important to find the right metric and even more important to have it understood by the supplier and buyers.  Can dashboards help with the communication?  The answer is an emphatic “yes,” particularly when there is mutual agreement on their definition.

A second common set of dashboards revolve around the customer’s value to the supplier and/or to financial performance.  Is this account meeting the financial performance necessary to support the supplier’s investment in new products, rapid deliveries and promotions for the customer?

In many instances, such dashboards are created and used only within the supplier organization.  Once financial performance metrics are in place and operating, unless there is a specific problem, the business interactions become habitual and often even reactive.  When a problem occurs that disrupts the normal processes, then the supply team is charged with surfacing the issue with the purchasing teams.

In many of these cases, the problems are solved, but in extreme cases in which the supplier sees an unacceptable future, the customer is faced with turning to another supplier.  A narrow focus on financial performance metrics by the supplier can narrow the scope of the relationship and implicitly open the business to any competitor that can qualify their product and services to the level of performance sought by the customer.  In effect, this suggests an environment in which both supplier and purchaser are content with a relationship based on continued supply transactions and the contractual status quo.  In today’s rapidly changing business environment, this can be a shortsighted approach.

A Broader Perspective on Dashboards

While the traditional approach to dashboards, when implemented fully and in collaboration with the customer organization, can yield benefits, we believe that even greater value can emerge from a broader perspective on the elements that should be included in a dashboard.  In working with clients on business-to-business metrics and dashboards, Blue Canyon has identified two more critical areas for account management dashboards; relationships and strategy. The diagram below suggests such additional ingredients:

The first suggested addition to the dashboard focuses on Relationship Performance.  Smart companies realize that non-financial metrics that measure the progress of the relationship not only support day-to-day interactions, but also give strategic benefits to both supplier and customers.  Customer relationship metrics ask if touch points have been identified and if relationships have been developed that span geographies, functions, plants, operations, and the executive level.

The second suggested addition focuses on Strategic Performance.  Strategic performance metrics ask if the supplier and customer jointly plan for future successes within the markets that they serve and measure concrete results related to such plans.  Do they collaborate on research about markets or issues of shared interest?  For example, a client several years ago in the furniture industry teamed with one of their major channel partners to meet the requirements of a major retailer.  Both parties put together a joint team to first investigate and then pursue the business opportunity.  Due to the sales opportunity that was involved, senior management from both companies reviewed the team’s actions and progress on a quarterly basis.

There is a need for relationship and strategic performance dashboards since they focus on actions that will sustain and grow today’s business into the future.  One metric that Blue Canyon has found useful is collaboration on future focused plans.  Key to successful account management is elevation of the relationship to a focus on common achievements that can yield positive results.

One example of such future-focused efforts can be collaboration on entry into new markets or products.  In the furniture example, our clients now own a new revenue stream.  In today’s global world, often we have seen such efforts involving moving a business relationship into a new geography, which again underscores the importance of relationship touch points.

A not incidental impact of comprehensive dashboards of the form we are recommending is that it allows two management teams to work together toward a common goal and periodically ask and have a dialog on the continuing importance of the joint work.  Perhaps the most important benefit of this process is the open dialog that it fosters.  In the quality example, imagine how easy it would have been to avoid the current problems if communication about the material changes had occurred and a jointly owned metric focused on uptime performance was established.

Relationship and strategy dashboards support today’s transactions and financial results, and also lay the groundwork for long-term success.  One significant reason why companies find this difficult is that it expands the sales role beyond the traditional sales force.  Traditional relationship dashboards often funnel down into a “bow-tie” linkage between the two firms, often involving a single point of contact, usually a purchasing agent and an account manager.  Many organizations advocate that, using phrases like “one hand to shake and one throat to choke” in describing its benefits.

When implemented, the approach recommended here more often resembles a diamond.  There are interactions within multiple functions, regions, and levels, which may not all funnel through the account manager.  This can be unsettling for the account manager, who often feels some loss of control and the many points of contact can pose an additional communication challenge to the organization.

The role of the “point persons” as relationship dashboards are implemented changes.  The account manager and the purchasing manager, who were the star players that found answers to all questions, now must become the quarterbacks directing others or the orchestra conductors leading and monitoring the success of the relationship.  As in all instances of change, this can be unsettling to the account manager and purchasing agent who are accustomed to different roles.  But in their new roles, they have the opportunity to contribute to a higher-value relationship for their firms.

Successful transition to this new quarterback role is often accompanied by changes in reporting relationships and senior executive sponsorship of the process.  At Blue Canyon, we have often recommended separate organizations established to handle these strategically-important relationships.  When there is failure of strategic relationships, it can often be found in lack of senior executive commitment to the process and, as a result, lack of corresponding organizational support.  The positive results from broader touch points, however, can be dramatic because problems can be solved much more rapidly when they arise and in fact they are often preemptively avoided.

At the same time, interaction at senior levels allows dialog surrounding future direction and commitment.  Often the customer can leverage their scarce resources by looking to the supplier as a source of help in addressing their growth challenges.  We have found that frequently the supplier and customer can redefine the boundaries between their businesses in ways that reduce costs in their combined business systems.  Better communications between the partners can prevent both organizations from traveling down blind alleys and wasting resources.

Strategy dashboards often focus on the definition of projects requiring resources from both supplier and customer that can yield future growth for each.  This can go well beyond the more typical cost improvement program that we have all experienced to defining a joint direction for new products and services, new customers to sell, and new markets to enter.  The furniture example earlier illustrated a successful investigation and conquest of such an opportunity[1].

Dashboards work best if there is senior management support for a customer-supplier relationship process that uses relationship and strategic performance dashboards.  They create a call for executive action, not passivity.  Perhaps less than 30% of the typical business-to-business customers will be prepared to engage with key suppliers or customers at this level.  The 30% may be appropriate for most companies because of the time, resources and effort involved.  Our research has shown that those that do engage will be rewarded with superior profits, stronger relationships that are critical to market success, and a platform for growth.  Even the account manager’s problems that we related earlier was actually an opportunity for growth, once the partners recognized that financial and supplier metrics were not enough to guide the relationship into the future.  As they worked together to define performance metrics that included ongoing relationship and strategy, the focus shifted from minor performance issues to opportunities to reward their company’s shareholders.


[1] Another example of the use of supplier-customer dashboards to manage a key relationship is presented by George F. Brown, Jr. in Turn Your Customer into a Partner, Industrial Engineer, January 2012.

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