I was reading this article the other day 4 key performance indicators of a healthy supply chain and it got me thinking – what is the minimum number of metrics you can get away with to get a feel for the health of your supply chain, and also if you were taking that to the extreme is it possible to distil this to just 4 key metrics?
If you read this site regularly you’ll know that we’ve blogged on metrics before, but distilling your thoughts down to as few as possible is both a challenge plus it also focus’s the attention on what’s important.
Giving this some thought there are clearly various routes you can go down, and of course, a lot depends on what your business’s strategy is and what you’re trying to achieve but, we believe, there may be some key areas to target.
Let’s begin with four key fundamentals…
* Something focused on outputs i.e. – Customer Schedule Adherence
* Something focused on inputs into the business i.e. Supplier Schedule Adherence
* Something focused on cost – E.g. Inventory Values
* Something focused on our ability to predict – Forecast accuracy
That’s not a bad start, but will that tell us whether our Supply Chain is performing or not? The supply chain is a notoriously difficult beast to tame perhaps because there are many elements that intertwine.
Of course, a lot depends on what’s critical to you. You could have the bottom 3 metrics green and the top one red – does that mean you’re performing?
What happens if metric 1 is crucial and you put loads of buffer stock in place to ensure it and have Inventory values going through the roof? you’re all green in terms of metrics but is that healthy?
It’s a tough one right?
We love the idea of trying to distil your supply chain down into 4 metrics because it ensures you focus in on what’s really important but in terms of SC health? Well, beauty is in the eye of the beholder!
What do you think? How do you measure your supply chain health? We’d love to hear your feedback below.