Successful businesses rely on performance metrics to ensure that they are performing at optimal levels. To achieve this optimum, business leaders must make informed, data-driven decisions. As companies adapt to a digital world and organizational transformation is increasingly top of mind, this is becoming even more important, as it is easy to lose sight of the core principles and measures of success. Before measuring success, it is important to consider the Why, What and How of your measurement process. What are the goals each area of the organization must achieve to be successful (“the Why”)? What are the best performance metrics to use to measure the achievement of these goals (“the What”)? What is the best way to collect this data (“the How”)? When these three basic pillars, Why, What and How, are aligned, decision-makers will be in the best position to make informed business decisions and avoid costly inefficiencies.
In many cases, organizations have the Why and the What figured out but not the How. They struggle to bring the available data together in a meaningful way that allows them to pinpoint inefficiencies and opportunities for improvement. The data, which may be housed in different systems and organizations throughout the company, must be brought together to produce impactful business insights leading to sound decision-making. When the data is brought together, the result is an Operations Decision Engine which can become the basis for a comprehensive and impactful scorecard, ensuring that the needed data is always at the decision-maker’s fingertips, generally leading to greater operational efficiencies.
Operations Decision Engine
Improving the visibility of performance metrics is key to realizing untapped opportunities for operational improvement. While an operations decision engine is crucial for accessing multiple data sets and bringing them together, a scorecard is helpful for collecting and reporting on the key metrics contained in that data. An effective scorecard can be easily viewed on a dashboard and used to align performance priorities across multiple processes and by business leaders at all levels within an organization. It is important that the key metrics across all areas of the business are aligned and that business leaders in all areas of the organization are using the same data in the same way. An effective scorecard uses data from multiple areas of an organization to create a single source of truth for all. It is the basis for reporting across all levels of the organization with varying amounts of detail from the line manager to the CEO.
A well-executed scorecard is not simply an alluring visual but an effective tool for making good decisions because it consolidates performance metrics and ensures that the collective data is always accessible to decision-makers. Creating the scorecard is just the beginning of how an effective operations decision engine can drive success at all levels of an organization. In addition to being used to measure performance, data provided by the decision engine can also be used to drive performance and make fact-based decisions for the day-to-day operations of the business.
Scorecard Construction
Effective scorecard construction requires careful planning. At the forefront of the construction is the Why. What is the goal of each area of the organization and how does that feed into larger corporate goals? As we turn to What, we need to determine which processes to include and which metrics should be measured for each process. This can be challenging but is essential to achieve accurate results. Finally, how do we bring available data together to triangulate in such a way that it is meaningful across the organization? When designed correctly, the scorecard will gather and summarize the relevant data and present it in a meaningful way based on the intended audience. Data visualization tools such as Python D3, Tableau Power BI or a host other leading BI tools are valuable for this exercise. When the data is viewed in this manner, inefficiencies in each process become obvious and avoidable.
Delivering Efficiency and Best-in-Class Pricing Performance
Scorecard creation is one important application of the Operations Decision Engine because scorecards provide continuous data-driven insights that can impact improvements in efficiency and performance. However, there are other practical applications of the Operations Decision Engine in the day-to-day running of a business as well. Consider the example of a switch access network business owner in the global telecom and technology space who is responsible for buying and selling relationships between carriers. To achieve “best-in-class” pricing performance, the business owner must know what carriers are available in the geographic markets she operates in, what rates they are offering, and what rates her business is currently paying. Data concerning the carrier markets and rates come from separate but sometimes publicly available sources. The rate her business is paying can be calculated through a complex analysis of the company’s payables system. In short, she has all the data she needs, but she can’t conveniently access it because it’s all housed separately and requires intricate calculations.
By effectively using the Operations Decision Engine, the business owner can ensure that all the data she needs to measure her pricing performance across markets are automatically gathered and delivered directly to her scorecard with visibility on her dashboard. At all times, she will have current updates on the key metrics she has defined. Armed with this knowledge, she can compare the rate her business is currently paying to the lowest rate in each market to ensure that her business always pays efficient market rates.
Identifying Opportunities to Achieve Operational Process Efficiencies
Ensuring efficiencies in operational performance in large organizations typically requires the analysis of millions of records each month across multiple disciplines so that data can be benchmarked against competition. Using a scorecard optimizes this process. Consider, for example, an organization that produces and delivers a product and wants to minimize the time between customer order placement and order delivery (interval length). They have the data they need but it’s not in one place. Using a scorecard to view interval data would allow them to identify any improvements they need to make. The ability to view all performance metrics in one place makes it possible to quickly pinpoint where the weak links are so they can be fixed. This forward-looking view can result in performance improvements such as reduced production and delivery times, faster revenues and opportunities to cut costs.
It is empowering to realize that your data can be transformed into actionable insights that can improve your operational processes, resulting in reduced cost and greater customer satisfaction. The Northridge Group can help you design an Operational Decision Engine and comprehensive scorecard that will improve your visibility into your data so you can minimize inefficiencies and more effectively manage your business. Contact us to learn more.
