Come Up With Effective Supply Chain Metrics

Supply Chain Metrics

The business world is a complex universe of service channels and products. It is interconnected with the four most common organizational elements in distributing goods and services: transportation, warehousing and inventory, global logistics and supply chains. Out of four, providing value networks to be the most multifaceted. This area involves web-aware time and resource-hungry activities such as pickup, transmission, freight costs and inventory controls. Existing supply chain metrics to help managers measure how supply chain costs affect business profitability.

Supply Chain Metrics

Measuring the relevance of supply chain units to profitability ultimately is the primary goal why managers embrace using metrics for supply chain performance ratings, but there is actually more to know just how profitable supply chain activities. Scorecards and other supply chain measuring applications are implemented to control delivery service companies and deal with various aspects. By using such systems, managers are able to know the performance of warehouse and point delivery, manufacturing, customer satisfaction that should all be viewed from a financial and marketing standpoint.

Among the most commonly used supply measurement networks are customer orders promised cycle times, timing count, time transit, upon pick up, Cots freight, percentage claims, monthly supplies and supplies, and Defects per million occasions. Knowing just about the single good performance of one of the supply chain departments such as customer service, transportation, inventory, warehousing, distribution, production and procurement is absolutely insufficient. Managers must ensure that all of these supply chains bring together produce good results.

But choosing to know how many units of this supply chain are doing well is only half of the real challenge. What the manager basically has to do is identify the most appropriate metric to use. The manager may apply all certain metrics but not all of these may be useful, in fact, not all of me show the performance of all units. The process really begins by making thorough consideration and setting goals

Before choosing each metric to measure the performance of the entire supply chain unit, here is the most important thing to remember. Managers should only consider indicators that will track their supply chain optimization, indicators that identify challenging areas and allow for comparison of relationships through the benchmarking industry. Managers should also consider customizability metrics. Some of these metrics as inventory turns are more generic while others such as backorders can be customized, allowing you to change factors based in the logistics or industry business model.

Managers should also remember that the metrics are not the solution to the problem but it does not mean to help them solve the crisis. That is how managers digest and translate data that helps them in coming up with safe and effective decisions. Finally, managers must delegate metrics to all supply chain units. For example, the order of customer pledged cycle time metrics must be owned by the customer service unit. In short, the measurement of the supply chain must be its own owner.

Supply chain metrics are generally classified into four: inventory supply months, inventory rationalization, material value, and reversed flexibility. But this metric will go to waste aimlessly. Managers must therefore look to specific, measurable, achievable, practical, and time bound objectives.

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