Influence and Accountability

Only 30% to 40% of total supply chain costs are truly controllable. (click to enlarge image)

One of the most detrimental phenomena in management is holding people accountable for activities, individuals, and/or metrics that they cannot influence. Unfortunately, in supply chain logistics, many performance metrics are out of the control and influence of those being held accountable for them.

In the screenshot from our Supply Chain Scoreboard, total logistics cost is illustrated to be a result of many sometimes interdependent factors. Many of those factors are included as sliders on the left hand side of the screen. Note the different colors used for sliders. Some are blue. Some are green. Some are teal. Can you identify the difference for the colors?

The difference is in the level of control the head of supply chain management has on the factor. Those in blue are not influenceable. Those in green are influenceable. The ones in teal are somewhere in between. Note that the majority of levers of not influenceable. This is not uncommon. In fact, our experience and research have shown that most supply chain managers can really only truly influence between 30% and 40% of their cost structure.

One important takeaway from this phenomena is that the metrics that are selected for use in a performance measurement program should be those that are the most influencable by the individual(s) being held accountable to them.