Navigate By Numbers

After rolling out a new KPI management system, Strauss Israel has seen growth in almost every sector it operates in. Barak Messa, CFO of supply chain, tells Nigel Ash how to make sure you are properly tuned in to your data.

While key performance indicators (KPIs) need to be checked regularly, their availability at planning meetings can save a great deal of time in establishing in which direction the business is really heading.

Barak Messa, CFO of supply chain for Strauss Israel, explains: "Before we introduced KPIs we spent a large part of many meetings arguing about the numbers. It was only in the last ten minutes of such meetings that we got around to deciding what we were going to do and what the solutions were going to be."

While many companies use business information systems to watch money, the accounts receivable and payable and the cashflow, few drill down through that data. This means that they cannot accurately ascertain where performance has to be improved.

Without decent metrics, problems are always open to the arguments that Messa deplores, preventing businesses from taking action quickly.

CONSISTENT FIGURES

Although the Strauss Group uses SAP, Messa says it was not implemented to mine key supply chain data. "SAP is heavy – it takes a lot of time to implement major changes into it. So, in the last 18 months in Israel, we have changed our supply chain performance management system."

Messa basically needed to know more about what was really happening in the supply chain: "If you cannot measure, you can talk about it, but it’s not a fact. If you say to someone "order fulfilment is terrible – It’s only 75%," they will respond: "No it's not; it's two million shekels." At the end of the day, the factory will measure it in money because it only sees costs and payments, but when we look at the larger financial side – the performance – the perspective becomes very different."

Part of the challenge, says Messa, was that every part of the business was calculating its own numbers. "Before we moved to our new system, we had to work out the KPIs manually. It was a monthly process, rather than weekly or daily. If you see the numbers only once a month, you cannot make fast improvements. You do something, and then you have to wait a month to see what happened. We are unable to be as agile as the market demands."

He describes the business positioning system provided by Sterna Technologies as "amazing". With the introduction of the system, he explains: "When I see a problem, I can call the department concerned and the manager there will see the same number that I see. There is no more argument. We can start to look for solutions straight away."

IMPROVED PERFORMANCE

The Sterna Business Positioning System (BPS) has only been rolled out in Israel, where the company has enjoyed a dominant position since 2004 when Strauss, a predominantly dairy company, merged with Elite, which produces chocolate, coffee and dried food snacks.

As a result of the BPS software implementation, says Messa: "Our numbers have generally improved. Any areas that haven’t improved have been held back by the markets. Order fulfilment has certainly shown a marked improvement."

It has also lead to a much closer analysis of sales, which in turn has helped Strauss reduce its product lines. In Israel, the group has 11 factories producing over 1,000 lines. According to Messa: "Once we had the KPIs in place, we could see that some products were not selling. So we dropped those lines."

With a growing suite of KPIs, did Messa fear that there might be a point where there was simply too much information? He thinks not. "We take a different approach from many companies. We have a lot of KPIs, but each group of people only sees their own KPIs. Top managers typically have only between four and ten to look at.

The sales guys see only the sales KPIs and the planning department sees only theirs. I would say that 99% of managers cannot see all the KPIs. But along with the CFOs of all the different companies, I see it all because I am the owner of the system."

The wealth of information provided by software systems and management practices can help any company improve process and cut inefficiencies, yet the defining characteristic of successful implementation is the ability to know which information you need, and make that available to the relevant people in your organisation, at the right time.