When it comes to measuring distribution center performance, it's not enough to just focus on operational factors—like throughout and order accuracy. According to Tracy Maylett, CEO of consulting firm DecisionWise, you also need to measure the "soft side" of the business—how human beings interact with one another in the workplace. That's because skills like the ability to communicate effectively and build and maintain relationships have a measurable impact on both operational performance and customer satisfaction.

A specialist in leadership development through education, performance feedback, and coaching, Maylett has spent more than 20 years in the field and worked with clients in 30 countries. Prior to joining DecisionWise, an international consulting firm that focuses on boosting individual and organizational performance through feedback and measurement, he was the vice president of organization effectiveness at Modus Media International in Boston.

Maylett has also taught strategy in the Marriott School of Management at Brigham Young University. He has a doctorate in organizational change from Pepperdine University and is the author of numerous publications relating to feedback, human process systems, and leadership. His article "A hard look at the soft side of performance," co-written with Kate Vitasek, appeared in the Quarter 4/2011 edition of DC Velocity's sister publication, CSCMP's Supply Chain Quarterly.

Maylett recently spoke with DC Velocity Group Editorial Director Mitch Mac Donald about the importance of interpersonal skills in the workplace and how those skills can have as much effect on supply chain performance as the operational aspects of a business.

Q: How have companies traditionally gone about measuring the performance of their supply chain operations?
A: Most of the emphasis has been on measuring the hard side. By "hard side," I mean very, very specific aspects of operational efficiency and performance—like ship rates, inventory turns, sales, and so forth. Over the past 15 years, most organizations have become pretty adept at measuring the hard side.

But in the last 10 years, I've come to realize that these organizations are missing a whole piece of the picture. What we are missing is how things happen. We tend to measure what we did, what we accomplished, and what has been done. What is not factored in is **ital{how} things are taken care of.

Q: Why is that important?
A: By failing to focus on how things get done, companies could jeopardize or even destroy relationships. We may have met one of our metrics so things look fine on paper, but some larger issue may have been missed. We may have just decimated a vendor. We may have destroyed a customer relationship in the process. We need to be measuring not just what got done, but how it got done.

For instance, a lot of the steps toward greater efficiency have included the use of technology. In taking this approach, we may have designed humans out of the system. There's been a lot of designing humans out of this to make the supply chain relationship a purely technology relationship or a goods exchange relationship. It is almost an obsession to design humans out of the system, when in reality it is the human piece that holds the supply chain together.

Q: So how do we change that? You talk about the soft skills—or if you will, the human or interpersonal skills—in a supply chain. What are some of the skills that can have a measurable impact on the supply chain or an organization's supply chain effectiveness?
A: The first one is communication, obviously. My co-author on the Supply Chain Quarterly article was Kate Vitasek, who a few years ago wrote an article on collaborative education. Collaborative education relies on a willingness to exchange information back and forth. So one of the soft skills is not just how we maximize the technology or the logistics pieces, but how we maximize our knowledge of each other and what works for us and what doesn't work for us. So that interpersonal communication piece is a key part of this.

Q: Are there other soft skills that should be taken into consideration?
A: Yes. Building and maintaining relationships is a big piece of this. One of the things we see quite often in supply chain management is the focus on hitting a metric, and we might be blind to the fact that we may destroy relationships in the process. My firm focuses a lot on measuring what we call engagement, employee engagement. That is the idea that employees are bringing their hearts, their hands, and their minds to what they are doing. So the next piece is motivation. The motivation piece is how intrinsically motivated I am to work with this person or to work with this company.

The last part of that is satisfaction. What will that relationship bring to me? Is it working both in your favor and in my favor? We use answers to questions like that to measure what we think of as supply chain engagement.

Q: Can you point to any companies that have adopted this approach?
A: Yes. There are several companies I work with that have done a couple of really effective things in this area. One of the things they've done is develop balanced scorecards that include not just hard metrics but also some soft metrics—metrics such as customer retention, employee retention, and employee engagement. The idea of employee surveys and employee engagement has really taken off over the last 10 years.

It's important to note that they're holding their managers accountable not just for hitting those hard metrics but those soft ones too.

Q: I expect this doesn't happen overnight—that it takes a bit of time and patience for this kind of thinking to become ingrained in the culture?
A: Definitely. You have to remember that for the last 15 years, we have been intensely focused on designing the human factor out of the supply chain. So to put that back in the supply chain takes a cultural shift.

Q: What advice would you offer a company that's interested in exploring the "soft skills" approach?
A: A good place to start might be with collaborative education. It's about teaching each other about our own companies. Bringing all the players in an entire supply chain together in a room. It's about helping everyone get a deeper understanding of how what they do in their piece of the supply chain impacts the entire group, both upstream and downstream.

It's important to understand what really impacts the long-term effectiveness of the supply chain and a hint here: It is not always just technology. It is not always just process. It is the people.