Metrics, Scorecard, KPIs

The world of business can never function without a proper supply chain, which is also called a logistics network. A supply chain is the network system of different people, functions, companies, methodologies, information, resources, and technology that are interconnected. Thus, supply chain measures must be taken by the business proponent to ensure that the process always goes smoothly.

In every business transaction or activity, there is always the question of how the supply chain is holding up. From placing orders for raw materials to sending them to manufacturers for processing, to suppliers and dealers for distribution, and finally to retailers for dissemination to consumers, a supply chain functions as an interconnection of intimately related processes that depend on each other for efficient functioning.

The first thing to be done when dealing with a supply chain is to ensure its efficiency. To be able to effectively measure a supply chain, certain metrics must be identified, defined, and analyzed, leading to an enhancement in the overall efficiency of the business. These metrics must be related to the nature of the business or organization. The results of the measures are what matters most. Having high inventory turnovers may mean good business operations. However, it is useless if the consumers are not getting what they want and what they need. If such is the case, the business will eventually fail.

The measurements obtained will reflect the efficiency of the supply chain. It is best if the measurements show a consistent level of performance in the chain. High consistency is usually indicative of good performance while low consistency shows problems or lags somewhere within the network. However, as with the example of high inventory turnovers, measurements are useless if they cannot be translated into action.

When the supply chain fails, the business fails. It may even be close to impossible to restore the normal operations of the business. Measurement is a very important aspect of supply chain management. Although there may be several measures already taken, there always exists the possibility that there may be certain areas of aspects of the supply chain that are not dealt with or measured. Thus, it is always in the best interest of the business to make sure that all areas of the supply chain are monitored well.

To be able to effectively make measurements, the metrics that are reliable and recommended for the business must be taken and identified. When metrics have been properly identified, the goals and objectives must be set, including targets for a certain period, which will give you something to look forward to. Obtain performance and efficiency data from reliable information and data-gathering processes and systems. When the data has been gathered, analyze them and determine whether or not the information points to improvement in the business. If not, adjust the metrics or adopt new ones.

Implementing supply chain measures may be a tedious task for every business proponent. However, to ensure that the business runs smoothly, the supply chain must also run smoothly. This cannot be ensured without the use of such measures.

–

If you are interested in Supply Chain Measures, check this web-site to learn more about supply chain measure.

The world of business is a complex universe of service and product channels. These are interlinked with four of the most common organizational elements in distributing goods and services: transportation, warehousing and inventory, global logistics and supply chain. Of the four, supply chain scores to be the most multifaceted. This area involves a web of time-conscious and resource-hungry activities like pickups, transmission, freight costs, and inventory control. Supply chain metrics exist to help managers measure how supply chain costs affect business profitability.

Measuring relevance of the supply chain units to profitability is ultimately the main purpose why managers embrace the use of metrics for rating supply chain performance. But there is actually more to just knowing how profitable the supply chain activities are. Scorecards and other supply chain measuring applications are implemented to control company service delivery and related aspects.  By using such system, managers are able to know the performance of the warehouse and delivery points, manufacturing, customer satisfaction which should all be seen from both financial and marketing viewpoints.

Among the most commonly used supply chain measurements are customer order promised cycle time, on time line count, transit time, on time pick ups, freight cots, claims percentage, monthly inventory and supply, and defects per million opportunities. Knowing only about a single good performance of any of the supply chain departments such as customer service, transportation, inventory, warehousing, distribution, productions, and procurement is utterly insufficient. The manager must make sure that all of these supply chain unites are producing good results.

But opting to know how many of these supply chain units is doing good is only half of the real challenge. What managers basically should do is identify the most appropriate metrics to use. The managers may apply all the given metrics but not all of these may be helpful, in fact, not all my show the performance of all the units. The process actually starts by making careful considerations and setting goals

Before choosing any metrics for measuring the performance of all supply chain units, here are the most important things to bear in mind. Managers should only consider indicators that will keep them track of supply chain optimization, indicators that identify challenging areas and allows for relationship comparison through industry benchmarking. Managers should also consider the customizability of the metrics. Some metrics like inventory turns are more generic while others like backorders are customizable, allowing you to change the factors based on the logistics or industry business model,.

Managers should also remember that metrics are not the solutions to the problem but rather means to help them solve a crisis. It is how managers digest and translate the data that aid them in coming up with sane and effective decisions. And lastly, managers should delegate the metrics to all supply chain units. For example, the “customer order promised cycle time” metric should be owned by the customer service unit. In short, supply chain measurements should have their own owners.

Supply chain metrics are generally classified into four: inventory months of supply, inventory rationalization, material value, and upside flexibility. But these metrics would go to waste without the goal. Managers therefore, should see to it that the company goals are specific, measurable, achievable, practical, and time-bound.

–

If you are interested in supply chain metrics, check this web-site to learn more about supply chain kpi.