Supply Chain Performance Measures

Frequently expressed as a ratio or a percentage

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Unformatted text preview: s a ratio or a percentage. Characteristics of Good Measures Questions about a metric ―Is it quantitative?‖ ―Is it easy to understand?‖ Aligned with the reward system ―Is the metric visible?‖ On time delivery ―Does it encourage appropriate behavior?‖ If qualitative, it should be backed up with quantitative data •Specific •Measurable •Achievable •Consistent How do users get it? ―Does the metric encompass both outputs and inputs?‖ In process measures Questions about a metric (cont) ―Does it measure only what is important?‖ ―Is it multidimensional?‖ ―Does the process use economies of effort?‖ Balance scorecard approach KPI’s Is it worthwhile? ―Does it facilitate trust?‖ Is it valid? •Specific •Measurable •Achievable •Consistent Do Customers Use These Measures to Evaluate Your Performance? Figure 5-2 What Supplier Performance Metrics Do Companies Use? On-time delivery Quality of goods/services Service capability/performance Price competitiveness Compliance with contract terms Response Lead time Technical capability Environmental, health, and safety performance Innovation Source: Logistics Management (January 2006) 90% 83% 69% 55% 51% 50% 44% 34% 30% 29% Evolving Customer Service Requirements Evolving Customer Service Requirements Cost reduction ROI Shipped complete Delivery complete Distribution Center focus Store shelf In stock at DC In stock at retail Inventory replenishment Flow logistics Local management Reg...
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