Supply Chain Management (SCM) is the active management of supply chain activities to maximize customer value and achieve sustainable competitive advantage. It involves planning, implementing, and controlling the operations of the supply chain. SCM covers all stages in the production process, from procurement and supplier management to manufacturing and logistics. To optimize supply chain performance, you need to track the right metrics.
10 Metrics to Track Supply Chain Performance
The following are 10 key metrics you should track for optimal supply chain performance:
1. Order Cycle Time
This metric measures the time it takes from when an order is placed until it is delivered to the customer. A shorter order cycle time means that the supply chain can respond quickly to customer demand and avoid stock-outs.
2. Fill Rate
This metric measures the percentage of customer orders that are filled on time and in full. A high fill rate indicates that the supply chain is efficient and capable of meeting customer demand.
3. Supply Chain Costs
This metric measures the total costs associated with running the supply chain, including procurement, manufacturing, warehousing, transportation, and customer service. Supply chain costs should be monitored closely to ensure they remain within budget.
4. Inventory Turnover
This metric measures how often inventory is sold or used over some time. A high inventory turnover indicates that the supply chain is efficient and able to meet customer demand without excessive stockpiling.
5. Transportation Costs
This metric measures the costs associated with shipping goods from one location to another. Transportation costs can have a significant impact on the overall cost of the supply chain, so it is important to track this metric closely.
6. Supply Chain KPIs
Supply chain KPIs are a set of performance metrics that measure the health and efficiency of the supply chain. Common KPIs include on-time delivery, order accuracy, and fill rate.
7. Warehouse Utilization
This metric measures the percentage of warehouse space that most stores are using for inventory. A high warehouse utilization indicates that the supply chain is efficient and able to meet customer demand without excessive stockpiling.
8. Transportation Efficiency
This metric measures the percentage of shipments that offer on-time delivery. A high transportation efficiency indicates that the supply chain is efficient and capable of meeting customer demand.
9. Supply Chain Productivity
This metric measures the output of the supply chain relative to its inputs. You can measure supply chain productivity by tracking metrics such as inventory turnover, fill rate, and on-time delivery.
10. Supply Chain agility
This metric measures the ability of the supply chain to respond quickly to changes in customer demand. You can measure supply chain agility by tracking metrics such as order cycle time, fill rate, and transportation efficiency.
By tracking these metrics, you will be able to identify areas of the supply chain that need improvement and make changes to optimize performance. Supply chain management is a complex process, but by tracking the right metrics you can ensure that your supply chain is running smoothly and efficiently.