Improving Supply Chain Performance by Focusing on Daily Improvement
OGSM (Objectives, Goals, Strategies and Measurements) provides clear goals and identifies the strategic choices to achieve them.
When first engaging in a partnership, shippers and their logistics providers have certain objectives in mind. Whether it's to reduce transportation costs or centralize logistics operations, both parties identify a desired outcome and work collaboratively to deliver on those promises. Unfortunately, over time, business "noise" pulls focus away from the original commitments and goals. In order to achieve the desired ROI and deliver on the promises made during the sales process, both parties need daily activities to align with that objective.
OGSM = A Disciplined Approach to Business Management
In order to establish (and maintain) a disciplined approach to business management, it's helpful to use a proven process such as OGSM (Objectives, Goals, Strategies and Measurements). This strategic planning process provides clear goals and identifies the strategic choices to achieve them—a model for delivering alignment, transparency and metrics that truly define success.1 OGSM has four components:
- Objective: Defines an over-arching breakthrough vision—while linking to company vision
- Goals: Stepping stones to achieving the higher level objective—S.M.A.R.T.
- Strategies: The choices we make to achieve our objective
- Measures: Numerical benchmarks to check progress and determine if strategies are working—must enable visual, exception-based management
By clearly defining these components from the beginning, all parties involved can be focused on achieving the commitment promised in the contract each and every day. Then, if there are shortfalls, they can be identified on a daily basis and accountability can be assigned to specific individuals for remedying. While this approach isn't going to magically fix anything, it does limit the period of time where issues can linger and lead to greater potential for risk and service disruptions. OGSM can help to:
- Ensure that all goals, strategies and measures directly connect to the overall objective
- Provide better standardization for processes and measurement—from the beginning
- Quickly identify shortfalls, leading to root cause analysis and the creation of a solution
- Empower employees to drive organizational change
Managing for Daily Improvement
Developing an OGSM is the first step, but in order to be successful long-term—and achieve the desired results—organizations need to establish daily tactical processes and consistently monitor goals versus actual results. One effective way to do this is through a methodology called Managing for Daily Improvement (MDI), in which leaders implement visual management strategies that are leveraged on a daily basis to drive continuous improvement at various levels of the organization. A key tenet of MDI is that it is led by individual contributors (at the ground level), with an emphasis on self-motivated, highly-engaged teams holding each other accountable to improve their daily processes and performance. The MDI process requires 4 key elements:
- Standard Work: A formally defined and documented process to deliver a quality product or service on time. This includes documenting current best practices, creating standardized work forms and defining benchmarks or baselines.
- Daily Accountability Process: Establishment of daily team meetings with peer-led facilitation where actual results are measured against a goal/baseline and actions are documented in order to drive improvements.
- Visual Controls: A formal mechanism for visually displaying information to quickly indicate wins/losses on defined KPIs on a daily basis.
- Leadership Discipline: Company leaders must create the framework within which MDI will operate, but will have to trust individuals to execute it.
Examining the metrics and goals each day drives incremental improvement on the important metrics within the overall strategy. Applying the OGSM process can help better standardize the approach to account management across all operations, and create a culture of accountability and visual management in order to drive improvement every day.