From the course: Driving Measurable, Sustainable Change
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Evaluating legacy metrics
From the course: Driving Measurable, Sustainable Change
Evaluating legacy metrics
- Let's say your Procurement Department is measured and evaluated based on a key metric, cost per unit of what they purchase. Meaning, if the cost per unit of what they purchase is low, they are rated better. So when volume discounts are provided by suppliers, what happens? Large quantities are bought to get a lower per unit cost. Sounds good. Well, no, not if your company runs out of storage space then you might end up with excess purchase materials outside exposed to the snow, rain and humidity. Then before they can be used, you have to clean them, you have to remove the rust, clean the materials so it doesn't jam the machines. This means additional time, resources and costs. All of this happened because of a poor existing metric. Unfortunately, legacy metrics are often overlooked and it tend to linger around for a long time. As a result, all behaviors persist. To drive change, managers need to review and evaluate these…
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