Are Scorecards Overrated?

by Gray Rinehart

How much do you rely on a “scorecard” to know how your supply chain is doing? Too much, maybe?

(“Scorecard,” by Jonathan McPherskesen, on Flickr under Creative Commons.)

I’ve seen various types of management scorecards throughout the years — simple and complex tables, “dashboard” graphics and “stop light” charts, etc. — but I’ve come to believe that they give the illusion of information more than they convey information itself. Relying on a scorecard is like reading a news headline and thinking you know everything that’s in the story.

For instance, How do you turn Supply Chain Data in to Actionable Information? says, “today’s business intelligence reports are far more detailed and dynamic than in the past,” and

… a [business intelligence] report of today displays all the data about transportation providers as usable information, in a scorecard format. Factors such as on-time delivery, freight cost per unit shipped, and transit time are assigned metrics and weighted averages to help users determine how well carriers are performing overall.
Operation managers and executives who want a quick, daily overview of what is happening in their transportation or supply chain network use dashboards to provide information in near real-time to help users understand what is happening within their network, and allows them to make proactive decisions to remedy problems as they occur.

It’s like magic! If only it were that simple and effective. And then there’s this:

Where reporting is really like looking in the rearview mirror, dashboards are used to see what’s going on now, and makes it easier for users to identify trends and exceptions, and to intervene before something goes wrong.

There is so much wrong with that sentence, I hardly know where to begin. The timelag may be smaller, but dashboards and scorecards still present data that are somewhat older than real time, and the only way to “identify trends and exceptions” is to interpret more recent data in light of previously-collected data. Presenting “what’s going on now” without presenting “what went on before” is the exact opposite of what is needed to identify a trend. And the only way to “intervene before something goes wrong” is to either be a true psychic or prophet — unlikely — or to understand the system’s capability well enough that one can recognize when its performance is about to go out of spec. (To the author’s credit, he does allude to the greater depth required later, when he writes, “As you become more mature in your supply chain analytics, you will be able to apply predictive and prescriptive analytics to find patterns in historical data that yield insights into future risks and opportunities in your supply chain and transportation networks.”) In reality, very little intervention happens before something goes wrong: the trick, more often, is to catch things that go wrong before they repeat too many times or cost too much money (or both).

In What Is the Value of a Scorecard? the author notes that “scorecards have become more of a stick than a carrot” in terms of their usefulness in managing supply chains, but that they have produced mixed results: improvements in some areas but not in others.

That’s because scorecards are overrated.

It doesn’t matter if your scorecard is “balanced” or not,* it’s not going to give you the same insight that you would get from visiting your suppliers, having your suppliers visit you, and working with them to improve their quality and productivity so your own quality and productivity improve. In the same way that a QC report that X% of a lot was defective doesn’t give you insight into what the defects were and how they might be reduced or eliminated in the future, the scorecard doesn’t give you insight into whether your supplier will still be in business next year, whether they’re prepared for a natural disaster or other interruption, whether their operations are morally questionable, etc. (If you’re not sure where to begin to get that insight, you can start with the Supply Chain Optimization Vitality Quiz to assess your organization’s supply chain strategy and potential.)

Many years ago, I heard Jim Belasco — author of Teaching the Elephant to Dance and other management books — say, “Coaching is not managing the scoreboard.” The scoreboard says how well the team did in one game, but says nothing about how it will do in the next game, and the next. If managing an enterprise, or the supply chain that keeps an enterprise going, is at all like coaching, it’s like coaching against an opponent that is constantly changing in a game in which time never runs out. The scoreboard may give you a picture of how you’re doing, but it’s a picture that fades very quickly.

The scorecard doesn’t make you a better golfer. The scoresheet doesn’t make you a better bowler. And it doesn’t make you a better supply chain manager: you still have to dig to find out what really matters.

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*Yeah, bad joke. Sue me.