All 17 key metrics for supply chain management that you ever. Understand the structure of scor there are over 250 scor metrics that are organized in a hierarchical and codified structure from organization level 1 to process level 2 to diagnostic level 3. The gartner hierarchy of supply chain metrics has long been regarded as the industry standard for end to end supply chain performance measurement. The use of bad metrics can be a major impediment to the implementation of effective integrated supply chain management in todays highly competitive business environment. This paper develops a balanced scorecard for supply chain management scm that measures and evaluates daytoday business operations from following four perspectives. Now the question is whether traditional performance measures can be used and out of them which ones should be given priority for measuring. The first sets of keywords were green supply chain management and sustainable supply chain management. Apr 20, 2015 there are hundreds of metrics that can be used to measure supply chain performance. The study provides a snapshot of metrics currently being used by supply chain and procurement departments to gauge their performance and success. 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. 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. Is your supply chainprocurement department tracking and reporting the correct measures. Implementing supply chain performance indicators or metrics is.
This project offers a set of metrics that provide supply chain managers with a forwardlooking approach to predict supply chain future performance and align their strategy with performance. The iadc supply chain committee recognizes there are many other valuable metrics available to measure suppliers performance the committee considers the. The former measure the effectiveness of the supply. An analysis of metrics used to measure performance in green. What defines a supply chain dashboard and the performance measurement system. Now gartner has translated this framework into a dynamic benchmark database that enables you to compare key supply chain performance metrics with your peers. The guide also includes functional level metrics that measure performance specific to the functions of inventory management and distribution management. Quantitative measures is the assessments used to measure the performance, and compare or track the performance or products. Public health programs need supply chains they can rely on for ensuring product availability where and when needed. This paper develops a balanced scorecard for supply chain management scm that measures and evaluates day to day business operations from following four perspectives. Theres a wide variety of metrics available when assessing supply chain performance metrics and each will provide a slightly different perspective of the piece of the supply chain it.
Supply chain kpis metrics and measures of supply chain. This licentiate thesis focuses on the analysis of the supply chain performance in manufacturing organisations, i. Measuring strategic sourcing and procurement maturity within. Supply chain managers often find it difficult to select appropriate measures for their particular business or product. Figure 9 framework for prioritizing supply chain performance measures. The study provides a snapshot of metrics currently being used by supply chain and procurement departments to. Common metrics used to measure the supply chain supplychain.
Supply chain metrics that measure up supply and demand. Transportation is measured just as a cost rather than what it does for the rest of the organization. All agree, however, that approaches such as the balanced scorecard, the scor model, the logistics. Traditional or reactive performance metrics measure past performance and can be used, at best, for damage. Thus, scpm provides the means by which a company can assess whether its supply chain has improved or degraded.
Performance measuring process should show measured entity as a whole and highlight the most critical bottlenecks. The model has developed a set of metrics for supply chain performance, and supply chain council members have formed industry groups to collect best practices information that companies can use. Explain the characteristics of good performance measures. The important decision for any company is to prioritize which supply chain metrics are important and how they will be used. All 17 key metrics for supply chain management that you ever need updated view larger image to make rapid decisions in todays fastacting environment, we need smart, timesaving, easy to interpret and most importantly decisionsupporting key performance indicators or even better actionable insights.
The most important points are to link supply chain performance to the wider world, identify hotspots, and take action. How to measure supply chain performance material handling. As an indispensable management tool and the vehicle to achieving success, performance measurement enables supply chain to strategically manage and continuously control achieving of objectives. The following four key metrics tell the performance story when it comes to supply chain effectiveness. 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. Supply chain kpis key performance indicators are the metrics and measures that help supply chain professionals monitor the efficacy and efficiency of various supply chain processes. Figure 10 product life cycle phases and different product characteristics, their supply chains, measures and metrics in addition to the measurement situation.
We can further divide the quantitative measures of supply chain performance into two types. This project offers a set of metrics that provide supply chain managers with a forwardlooking approach to predict supply chain future performance and align their strategy with performance outcomes. However, to track and measure their performance, companies traditionally relied solely on financial accounting metrics. Performance measurement of supply chain management. Supply chain management chapter 5 flashcards quizlet. All 17 key metrics for supply chain management that you ever need updated view larger image to make rapid decisions in todays fastacting environment, we need smart, timesaving, easy to interpret.
Implementing supply chain performance indicators or metrics is one of the simplest, least expensive t in operations. Each supply chain performance metric gives a slightly different view of a piece of the supply chain. As logistic managers need sufficient information and visibility not only. R ecently, institute for supply man age ment ism surveyed supply chain leaders about departmental performance metrics. While espousing the importance of measuring supply chain performance, leading consultants have no definitive set of metrics to recommend. Supply chain performance measures, also called supply chain metrics, can be classified as functional indicators and endtoend supply chain indicators.
Metrics should measure the supply chain, not its logistics components. The dod supply chain metrics guide is the result of collaboration with the military departments. Both quantitative and qualitative performance indicators were put forward. This process is used to link supply chain metrics to financial key performance indicators kpis.
Measuring supply chain performance measures prioritizing. In addi tion to documenting which metrics are being used, this study examines which metrics are being reported on departmental scorecards and organizational scorecards. That said, measuring and reporting supply chain sustainability is rarely about adding decimal places to. 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. The guide also includes functional level metrics that measure performance specific to the functions of. Balanced scorecard is a tool used for managing and tracking performance of corporate functions. Pdf performance measurement of supply chain management. Nonfinancial metrics should be established as well 1. There are hundreds of metrics that can be used to measure supply chain performance. The model has developed a set of metrics for supply chain performance, and supply chain council members have formed industry groups to collect best practices information that companies can use to evaluate their supply chain performance.
In our plotting of industry results for the supply chain metrics that matter report s, we could see that certain. Each supply chain performance metric gives a slightly different view of a piece of the. Logistics performance gap analysis see figures 1 and 2 can be used to compare key. For greater impact, it is important for the metrics to be aligned and not work at counter. Supply chain managers often find it difficult to select appropriate measures for their particular. May 14, 2007 this process is used to link supply chain metrics to financial key performance indicators kpis. Being able to measure supply chain performance is important since it leads to a greater understanding of the supply chain and provides important feedback on the improvement progress. Supply chain performance refers to the extended supply chain s activities in meeting endcustomer requirements, including product availability, ontime delivery. Performance metrics gauge growth, peaks, dips and unusual activity. Most organizations track various performance criteria, and although there are a myriad. The framework is intended to summarize the essentials. For any company, an accurate overview of performance is essential. Supply chain management performance measures matrix by function.
A threepoint approach to measuring supply chain sustainability. Measuring strategic sourcing and procurement maturity. Both quantitative and qualitative performance indicators were. That said, measuring and reporting supply chain sustainability is rarely about adding decimal places to impact calculations. Again, not saying cost reduction is an indicator of poorly measuring supply chain performance, but its not the only thing to measure when considering transportation. Measuring supply chain performance usaid global health. To identify articles within that sample that focused on performance measurement, the second set of keywords focused on a search for the terms of metrics, indicators, and performance measures.
Each company must assess what measurements and metrics are important evaluation tools for them. Objective, holistic key performance indicator kpi measurement and. Supply chain management is a process that is often measured on its logistics costs. When a company wants to look at the performance of its supply chain, there are a great many metrics that can be used. Measuring supply chain performance through kpi identification. To identify articles within that sample that focused on performance measurement, the. The metrics are categorized in five performance attributes. Performance metrics in supply chain management article pdf available in journal of the operational research society 005. Figure 8 four different types of supply chain performance measurement situations adopted from paper ii. What are the strategies for measuring supply chain performance. The former measure the effectiveness of the supply chain function, while the latter refers to how well these functions are coordinated and what is needed for this coordination, that is, costs.
Understand the basics of an income statement and a balance sheet. Measuring supply chain performance measures diva portal. Developing a supply chain performance measurement dashboard. In todays economy the battlefield is shifting from individual company performance to what we call supply chain performance.
However, some measures are still in need of manual handling, which. For example, a cashtocash cycle time metrics framework should be linked to return on assets. The external metrics measure outputs andor services that flow across the supply chain and evaluate some aspect of serving the customer. The gartner supply chain hierarchy of metrics benchmarking. Apr 14, 2000 approach or set of measures to be used to measure ones supply chain performance. However, further clients of the supply chain application will often interact with the application via a browser. It provides the necessary assistance for performance. Supply chain performance measures, also called supply chain metrics, can be classified as functional indicators and end to end supply chain indicators. For this purpose it is necessary to specify proper and well.
It is important for managers to have meaningful performance information to avoid becoming lost in a sea of data. A literature study was done in order to investigate what metrics can be used in supply chain measurement systems. Jan 03, 2020 supply chain kpis are essential the right ones. Such computations do not measure the supply chain or its performance and can include factors outside of the supply chain. Many people get confused about kpis or key performance indicators in logistics and supply chain operations. Measuring supply chain performance through kpi identification and. Set of metrics used in companies for monitoring supply chain management is not wellbalanced in a meaning of multidimensional perceiving of organization.
Raw tonnage is an inappropriate measure of supply chain performance for a diverse product line where gross margin per ton varies considerably. Dec 12, 2017 theres a wide variety of metrics available when assessing supply chain performance metrics and each will provide a slightly different perspective of the piece of the supply chain it measures. The information on this page will help you get it right. Performance measures and metrics in logistics and supply chain. Supply chain performance measures stanford graduate.
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