Weekend Listens: What the Scorecard Misses

Weekend Listens: What the Scorecard Misses

Most of us run our business by a scorecard. Those numbers mean everything, and we don't always check what's behind them. Three leaders on scorecard successes and failures.

1. On time, against the wrong date

Art of Procurement, 884: Beyond On-Time Delivery: Measuring Supplier Stability, with Shayan Farshid, a procurement and operations professional in semiconductor manufacturing.

Why listen: a supplier can look healthy on the scorecard while the production floor lives in constant uncertainty. Farshid found out why, and built a free tool around it.

• What he saw at the purchase order line: "the supplier was delivering on time against latest commitment, but the commitment had gradually drifted away from the original need date."
• Why drift never shows up in one place. It arrives as expediting, escalations, buffer inventory and schedule changes.
• His Supplier Stability Index, open source and built for midsize manufacturers without a risk platform budget. It weighs commitment drift, open exposure, quality events and how critical the part is, then grades suppliers A through F.
• A starting exercise that needs only a spreadsheet and three dates per order.

2. Paying for the brand name

Private Equity Funcast, Diminishing Returns to Scale in Private Equity, with Andrew Akers, Associate Director of Quantitative Research at PitchBook.

Why listen: a former allocator walks through PitchBook research on whether the biggest buyout funds earn their share of the money.

• Per the data on the show, the top 5% of funds now raise close to 60% of US buyout capital. Before 2000 it was about a third.
• Relative performance of the household-name managers has trended down, with recent vintages near or below the median. Akers flags why young funds' numbers deserve little weight.
• The real pitch for the brands: they rarely blow up. Their winners are smaller, too.
• Bigger funds pay higher multiples for the same size deal and add more leverage. The host cites data showing margins fell in the largest deals in 9 of 21 vintages.
• Why he thinks "indexing" private equity is a misnomer. He closes with a call on which funds win this decade.

His objection to passive products: "There's nothing passive about the buyout universe."

3. The listing everyone skipped

The Commercial Real Estate Investor Podcast, 406. This Building Hasn't Sold in 400 Days. Why?, with host Tyler Cauble.

Why listen: a 7,400 square foot flex building in Birmingham sat for 499 days against a market median of 209. Cauble explains how to tell a dead deal from a negotiable one.

• The four reasons a building sits: priced wrong, won't finance at today's rates, a problem with the property, or marketed badly.
• Which of those a buyer can fix, and when to walk. Title is on his walk list; one Nashville property needs eight heirs to sign.
• The carrying cost math. On a $775,000 building with debt, he estimates the seller could be spending close to $100,000 a year to wait. That is the buyer's leverage.
• A live tour of long-listed properties with dark phone photos and no interiors.

His opening premise: "A stale listing has already been told no by the market."

Sources: Interviews from Art of Procurement (Sep 21), Shayan Farshid; Private Equity Funcast (Sep 23), Andrew Akers of PitchBook; and The Commercial Real Estate Investor Podcast (Sep 17), Tyler Cauble.