Measuring supply chain performance through kpi identification. Supply chain business solutions apics for business. Drivers of supply chain performance enhancing organizational. Drivers of supply chain performance to understand how a company can improve supply chain performance in terms of responsiveness and efficiency, we must examine the logistical and crossfunctional drivers of supply chain performance. When your company implements a new supply chain execution system warehouse, labor, yard, or transportation, its an excellent time to evaluate your operations and metrics programs. The diagnostic or level2 metrics are useful to diagnose performance issues. Supply chain measurements can cover many areas including procurement. To forecast how the values of these metrics will change once a supply chain is redesigned simulation may be used.
Common metrics used to measure the supply chain filed under blog there are various metrics that can be used to measure the supply chain all of which can help to provide an overview of how the supply chain is performing, not just in terms of spend and cost, but also in terms of supplier information as well as operational aspects. Supply chain metrics that matter is a series of monthly reports published from august, 2012 through present time by supply chain insights llc. Supply chain metrics that matter supply chain insights. Timewhen companies look at selecting supply chain performance metrics, they usually will examine those metrics that relate to time, as they are easily calculated, easily understood, and clearly show operational effectiveness. When selecting a performance metric to use, a company should examine different. The iadc supply chain committee recognizes there are many other valuable metrics available to measure suppliers performance the committee considers the. This is the actual scorecard with supply chain measures and performance indicators. A performance attribute is a grouping or categorization of metrics used to express a specific. Supply chain management refers to what is at outside the firm to create high values for customers lalonde, 1996. In this report series we provide a deep focus on progress over the past. There are more than 1 million books that have been enjoyed by people from all over the world. Standardize scorecard metrics hidas channel partnership council provides scorecarding best practices guide. Understand how your supply chain organization, distribution center or manufacturing site measure against competitors to close performance gaps.
Do you know what it means to have a perfect order measure of 94%. Supply chain management is the integration of key business processes from end user through. The information on this page will help you get it right. Interview with lora cecere, founder and ceo of supply chain insights and author of supply chain metrics that matter published december 2014. From 2016 to 2017, labor costs as a percent of gross margin remained. We recommend the definition of supply chain management developed and used by the global supply chain forum. Lora cecere is the founder and ceo of the research firm supply chain insights. In a competitive market, supply chain flexibility improvements are key and needed to support the innovation cycle of the business. The complete guide to supply chain metrics supply chain brain.
Although this framework is generally viewed from the top down, in many instances, a study of the six drivers may indicate the need to change the supply. By using a fictionalized case that aggregates the authors three years of intensive research, supply chain metrics that matter provides an engaging and useful way to. Lora cecere is the founder and ceo of supply chain insights, the research firm thats paving new directions in building thoughtleading supply chain research. Global manufacturing sourcing contract manufacturing resource for castings, rubber molded parts, stampings, gears and tooling for the lighting, medical, automotive, agricultural and. The top five supply chain metrics reported organizationally are the same as those reported departmentally, namely ppv, inventory turnover ratio, %total spend managed, total spend revenue, and dio. By all means monitor other metrics in addition to the top six indeed, most supply chain components will need their own kpis, like a metric for picking accuracy in the warehouse for example. Implementing supply chain performance indicators or metrics is one of the. Try to maintain extra metrics as secondary diagnostics though and keep your highlevel, crossfunctional kpis at the forefront.
Get ebooks supply chain management on pdf, epub, tuebl, mobi and audiobook for free. Ultimately and ideally, supplier performance scorecards containing a rollup or summary view of all results. Metrics supporting supply chain leverage strive to reduce the cashtocash conversion cycle time including days of inventory while maintaining targeted customer service levels. Try to maintain extra metrics as secondary diagnostics though and keep your highlevel, crossfunctional kpis at. Logistics, metrics and software supply chain brief. Scor is the worlds leading supply chain framework, linking business processes, performance metrics, practices and people skills into a unified structure. Supply chain measurements or metrics such as inventory turns, cycle time, dpmo and fill rate are used to track supply chain performance. The guide also includes functional level metrics that measure performance specific to the functions of inventory management and distribution management. Just like your customers probably measure your performance, its important that you and your suppliers work together to determine the right metrics to measure their performance.
Your supply chain team will work with your suppliers customer service teams, engineering teams, quality teams and even supply chain teams. The blog focuses on the use of enterprise applications to drive supply chain excellence. This project offers a set of metrics that provide supply chain managers with a forwardlooking. When it comes to the deployment of blockchain in the supply chain, or anywhere else for that matter, these are still early days. The dod supply chain metrics guide is the result of collaboration with the military departments. Always update books hourly, if not looking, search in the book search column. Most organizations are short term in nature and plan along a timeline of one quarter to one year.
Supply chain analytics is the application of mathematics, statistics, predictive modeling and machinelearning techniques to find meaningful patterns and knowledge in order, shipment and transactional and sensor data. Performance measures and metrics in logistics and supply chain management. R ecently, institute for supply man age ment ism surveyed supply chain leaders about departmental performance metrics. Chain metrics working group, their work is set out in the report. Supplier performance metrics such as kpis derived from internal surveys or internal management systems. When selecting a performance metric to use, a company should examine different characteristics that align with their business. Fundamentally, the approach to measure and managing direct and indirect suppliers is the. Supply chain metrics that matter is a series of industryspecific reports published throughout the year by supply chain insights llc. By whatever name it is the sinuous, gritty, and cumbersome process by. Do you know how many fgs are leaving the ndc in ltl quantities. Dec 12, 2017 theres a variety of metrics available when assessing supply chain performance metrics and each provide a different perspective of the piece of the supply chain it measures. In the manual plotting of these results, we could see that some industries had a very tight pattern, but others did not. Supply chain management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers. Sep 04, 2017 lora cecere is the founder and ceo of supply chain insights, the research firm thats paving new directions in building thoughtleading supply chain research.
Supply chain management is full of metrics and acronyms that can be confusing to even the most seasoned professional. Stanford supply chain forum call it distribution or logistics or supply chain management. Track critical parts of supply chain with ready to use kpis. Practitioners and educators need a common definition of supply chain management, and a shared understanding of the processes. Performance measurement a report by the hospital supply chain metrics working group. The series starts in may when fullyear corporate reporting is complete for the prior year. Supply chain planning, at the tactical level, occurs regularly but is not a daily task. Fifty percent of acute and longterm care distributors, and 40% of physician office distributors report consolidation. Further reproduction prohibited without permission. However, some measures are still in need of manual handling, which takes time and. Every company knows customer service is important, but it is seldom welldefined, and even more rarely measured in logistics operations. Ask any supply chain leader which metrics are the most important to deliver, and the most common answers are operating margin, inventory turns, and revenue growth. Many people get confused about kpis or key performance indicators in logistics and supply chain operations.
Metrics that express the level of ontime deliveries, ontime receipts, time to process purchase orders, and time to. Supply chain metrics that matter was written to guide businesses through the change process with a measurementbased outlook that will help any organization stand the test of time. She is also the author of the enterprise software blog supply chain shaman. Pdf most discussions and articles about supply chain metrics are, in actuality, about internal logistics performance measures. The supply chain must then use the three logistical and three crossfunctional drivers to reach the performance level the supply chain strategy dictates and maximize the supply chain profits.
In our plotting of industry results for the supply chain metrics that matter report s, we could see that certain. Distributors report continued customer consolidation in 2018. Now gartner has translated this framework into a dynamic benchmark database that enables you to compare key supply chain performance metrics with your peers. Metrics, procurement and sourcing supply chain brief. Theres a variety of metrics available when assessing supply chain performance metrics and each provide a different perspective of the piece of the supply chain it measures. Performance metrics in supply chain management article pdf available in journal of the operational research society 005. All 17 key metrics for supply chain management that you ever. Inventory accountability and special management and handling. Supply chain management scm is a term that was first introduced by consultants in the early 1980s and has since then frequently gained increased attention by both. The performance of the supply chain function is measured by metrics grouped in 4 attributes.
Jan 03, 2020 supply chain kpis are essential the right ones. Now gartner has translated this framework into a dynamic benchmark database that enables you to compare key. Supply chain management includes the activities inside and outside the organization that are done by that particular organization in order to deliver the high values to customers. They allow organizations to analyze risks and provide supply chain managers.
The gartner hierarchy of supply chain metrics has long been regarded as the industry standard for endtoend supply chain performance measurement. The department of defense dod supply chain metrics guide is the main source. Performance measures and metrics in logistics and supply. What are supply chain metrics and how are they most useful.
This report proposed a series of metrics and standards that hospitals could use to evaluate their supply chain performance and target performance improvement. The gartner supply chain hierarchy of metrics benchmarking. Supply chain analytics helps to make sense of all this data uncovering patterns and generating insights. This will start to pinpoint the areas within your supply chain that could benefit from improvement. An important goal of supply chain analytics is to improve forecasting and efficiency and be more responsive to customer. Measuring supply chain performance through kpi identification and.
Performance measurement phase ii a framework for action. Supply chain metrics require the same observations, only instead of driving a car purchase, they speak to something far more important. Is your supply chainprocurement department tracking and reporting the correct measures. The strategic or level1 metrics measure the overall performance of the supply chain. The goal of these metrics is to provide a key set of indicators, aligned with the business strategy, that provide early warnings of problems or early signals of successful project completion. The study provides a snapshot of metrics currently being used by supply chain and procurement departments to. Editors pick kenco group logistics supply chain metrics. Performance measurement a report by the hospital supply. Dependability, responsiveness, cost, asset efficiency. What are integrated performance measures for supply chains. Commonly used by supply chain management, metrics can help you to understand how your company is operating over a given period of time. Supply chain metrics your small business should be tracking. Supply chains typically generate massive amounts of data. Metrics play a key role in the profitable management of a warehouse and in an organizations overall supply chain success.
Analytics represent the ability to make datadriven decisions, based on a summary of relevant, trusted data, often using visualization in the form of graphs, charts and other means. Measuring supply chain performance usaid global health. Measuring supply chain performance through kpi identification and evaluation. Supplier assessment reporting, which can be qualitative and quantitative. Many supply chain management decisions continue to be made as though driving with the rear view mirror. However, at the orga nizational level, inventory turnover ratio edges out ppv for the top spot. This paper distinguishes four simulation types for scm. The overall purpose is to develop plans that it here to supply chain strategy well achieving maximum benefit from supply chain resources.