Common Metrics Used To Measure The Supply Chain
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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.
The fundamental or common metrics that are ubiquitous in most organizations are typically included to ensure that the performance of the supply chain meets the general requirements of the business. Less common metrics tend to be used to measure individual aspects of the supply chain that are relevant to that particular company or industrial sector.
Key common supply chain metrics
Delivery:
Delivery is critical to the supply chain, so on time delivery (or on time in full (OTIF)) can be a very useful metric to measure whether or not the supply chain is performing as well as it should be. Schedule Adherence can be measured for both supplier and a customer deliveries.
Cost:
Costs should be a common metric because cost is imperative to the efficacy of the supply chain. The costs need to be looked at in terms of the purchase costs, travel and transportation costs, the costs of storing items when they are delivered, the cost of administering supplies and revenue/capital costs as well.
Many organizations will utilize a material variance analysis which will look at actual vs predicted costs.
Forecast Accuracy:
Forecasting the needs for items to be supplied in the supply chain is critical if the supply chain is to operate effectively. Inaccurate forecasting will lead to a number of problems later down the line, so there is a real need for accurate forecasting and for the accuracy to be measured to ensure that it is as accurate as possible.
Quality/Defects:
Right first time is a critical feature within the supply chain. Deliveries, not just on time but also in terms of quality are vital;. Were rejects kept to an acceptable level? A standard measure is PPM or Defects in Parts Per Million.
Stock outs:
Stock outs are expensive because they cause delays in the supply chain and affect its overall performance to the customer. The number of stock outs will impact greatly in terms of costs, transportation issues etc, so it deserves to be listed as a specific metric to be used within any analysis of the supply chain.
Productivity:
Measuring the output of your organization in relation to its staff has become a key indicator that many companies measure. This might be in turns of products manufactured or even purchase order raised. Productivity indicators can be key to understanding the efficiency of your organization and help you to better understand where improvements are required.
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One Response to “Common Metrics Used To Measure The Supply Chain”
Thanks for your work on SCMP on different companies. If possible plc explain about performance measurement on Pharmaceuticals delivered to the customer without fee. That shows performance measured interns of Effectiveness or Efficiency so how can measure the over all system measurement of the supply chain of the the program like HIV/AIDS Commodities supply chain performance. How can measure the performance.