Scorecard Statistics — do you get what you measure?

As the saying goes, statistics can be made to prove anything – even the truth.

Or, everything is vague to a degree you do not realize till you have tried to make it precise (Bertrand Russell).

The customer sends the supplier its monthly scorecard. Wait, the calculations seem completely wrong. We did better than that. So the supplier team spends several days preparing its own calculations to disprove the scores on the report card. Then several individuals from management spend a day or two at the customer disputing the numbers and generally taking a beating. The customer makes threats and the supplier makes excuses and promises. Nothing changes. Repeat this cycle next month. 

Does any of this sound familiar? What’s wrong with this picture? Could be a number of things.

  • The customer scorecard lacks credibility and is open to dispute

 

  • The supplier doesn’t understand how the scorecard is derived

 

  • The supplier has not agreed to the basis for the scorecard calculation

 

What is the result? The result is certainly not improved supplier performance. The result is waste: wasted time on both sides talking about scorecard mechanics and not about how to improve performance. In fact, the supplier knows that its performance is lacking. And the customer is tearing out its hair because this key supplier appears incorrigible. But the way the scorecard and the supplier evaluation process are set up, the focus is on the scorecard itself rather than on performance.

Or, as a supplier, did you ever look at your scorecard and wonder if your customer was just making up the numbers on it, as there was no way to tell how they were derived? Hopefully a simple explanation would suffice, but maybe there was some art rather than just science involved. 

Bullet-proof scorecard data can be difficult to develop. Nothing is perfect. However, the data should be clean and valid and the calculations transparent to the supplier. If the scorecard calculations are more smoke and mirrors than defensible, then perhaps the KPIs should be changed, rethought, or eliminated. Otherwise, the effect will be wasted time and resources and ultimately no results.

 

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