The goal of this website is to give a basic overview of Supply Chain metrics that cover Inventory, Sourcing, Manufacturing, Transportation and Distribution.
How can you use Supply Chain Metrics to improve your operation?
Try following these basic steps....
1.The first step is to identify the performance metrics that you want to use. Do not use every metric available. Rather, focus on the vital measurements that mean the most to your business.These can be considered your KPI's (key performance indicators). You should have 3-5 KPI's per functional area. If you decide to include numerous measurements, you may encounter "analysis paralysis".
2. Next, you need to understand the meaning of these metrics. It is not enough for management to simply view these measurements, they must also understand the meaning behind them.
3.The next step is to learn the mechanics behind the measurements. What drives them...positive & negative. Try to understand the various factors that influence your results.
4. Using this information, identify any weak areas or areas of improvement in your current processes.
5. Set goals based on these improvement areas. The goals should be aggressive, but yet obtainable. Goals can be based on benchmarking against "like" companies or goals can be set to reflect a specific percentage improvement over past performance. As an example, improving your results by X% every year.
6. Put corrective action in place to improve your processes. Make sure that these corrective actions do not negatively effect other areas. Also, check that all effected areas have a clear understanding of the changes.
7. Monitor your results. Did your corrective actions yield your desired results? If so, what is your next area for improvement? If you did not get the desired results, what went wrong? Try to identify the root cause of your undesired results, then brainstorm new corrective actions.
Are you still not sure which supply chain performance measures to use? Take this approach, ask yourself how your senior management will rate your departments performance. Is it based on the inventory level verses sales, if so consider using Inventory Turns. Is it based on the speed at which you fill orders...if so consider Turn Around Time or Fill Rate. Is it based on over cost?...if so, then consider a metric that tracks over all cost verses your goal.
Once you have this metric(s) in place, then consider how your end customer views your success. You should then establish a metric to rate how your customer views your performance (fill rate, on time shipments etc).
For over 14 years (since February 2001), SupplyChainMetric.com has been the leading Supply Chain performance measurement site on the web. If you would like to contribute a metric to our site, please email us.
Our goal is to guide companies that are looking to optimize their Supply Chain by using performance measures. Originally, we intended on answering questions about Inventory Control, Sourcing, Manufacturing, Distribution and Supply Chain Metrics. However, we currently do not have the resources to answer individual questions.
For information on Inventory Turns, Fill Rate Measurement, Backorder Reporting or any other Logistics Supply Chain Management Measurements (metric), click on the links to the left. The text that appears on this website is the opinion of the webmaster. Metrics may or may not be uniform across all industries. We recommend contacting a qualified Supply Chain consultant before implementing a measurement program.