Finance related metrics

– Return on equity (ROE) = net income/shareholder equity

– Return on assets (ROA) = net income/assets = (net income/sales)*(sales/assets)

– Accounts payable turnover (APT) = cost of goods sold/accounts payable (how

many times a company pays for its purchases/expenses in a year)

– Accounts receivable turnover (ART) = sales/accounts receivables (how many

times a company collects its money due to business in a year)

– Inventory turnover ratio (INVT) = cost of goods sold (or sales)/inventory

– Cash to cash cycle time (C2C) = (weeks receivable/ART) + (weeks in

inventory/INVT) – (weeks payable/APT)

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 Facility related metrics
– Capacity and capacity utilization

– Processing/set up/down/idle time

– Production cost per unit

– Quality losses due to defects, wastes or rework

– Cycle/flow time (theoretical vs. actual)

– Product variety (total no of products produced/processed)

– Volume contribution of top 20 percent SKUs

– Average production batch size

– Production service level (production order completion)

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 Inventory related metrics
– Cash-to-cash cycle time =

inventory days of supply + days sales outstanding – days payable outstanding

– Average inventory (in terms of units, demand and financial value)

– Product with more than a specified number of days of inventory

– Average replenishment batch size

– Average safety inventory (both in terms of units and days of demand)

– Seasonal inventory (product inflow vs. sales)

– Fill rate (fraction of orders upon demand that are met on time)

– Fraction of time out of stock (good indicator of lost sales)

– Obsolete inventory (inventory remaining outside a specific date)

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 Transportation related metrics
– Average in bound transportation cost (as a percentage of sales or cost
of goods sold)

– Average incoming shipment size

– Average inbound transportation cost per shipment

– Average outbound transportation cost (as a percentage of sales often)

– Average outbound shipment size

– Average outbound transportation cost per shipment

– Fraction transported by mode (e.g. road, rail, air, sea)

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 Information related metrics
– Forecasting horizon (>= lead time)

– Frequency of update

– Forecasting error

– Seasonal factors

– Variance from plan (planned vs actual)

– Ratio of demand variability (std deviation) to order variability

(std deviation); ratio less than one indicates existence of
bullwhip effect

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 Sourcing related metrics
– Days payable outstanding (days gap between receipt of supply and
payment made)

– Average purchase price

– Range of purchase price (quantity and price correlations)

– Average purchase quantity per order

– Supply quality

– Supply lead time

– Fraction of on-time deliveries

– Supplier reliability (lead time and ordered quantity variations)

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 Pricing related metrics
– Profit margin

– Days sales outstanding (days gap between sales made and payment
collected)

– Incremental fixed cost per order

– Incremental variable cost per unit

– Average sales price

– Average order size

– Range of sales price over a time period

– Range of periodic sales over a time period

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 Supply chain types and performance

Source: Christopher and Towill (2000)

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 References/suggested readings
1. Chopra, S., & Meindl, P. (2012). Supply chain management:
strategy, planning and operation. New Delhi: Prentice Hall.

2. Christopher, M., & Towill, D. (2000). Supply chain migration from

lean and functional to agile and customised. Supply Chain
Management: An International Journal, 5(4), 206-213.

3. Lambert, D. M., & Pohlen, T. L. (2001). Supply chain metrics. The

International Journal of Logistics Management, 12(1), 1-19.

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 Disclaimer!
The content of this presentation is solely intended to be used by MBA-IV semester
“Supply Chain Analytics” students of School of Management Studies, University
of Hyderabad. Distribution of the same without the permission of the instructor is
strictly prohibited. The instructor, Dr. Pramod K. Mishra, declares that the sources
of various concepts/theories cited in the presentation are duly acknowledged.
Nobody should edit/post/upload any supply chain analytics (SCA) class materials
(cases, texts, ppts, video recordings or any other related contents) in/on to any
social networking sites, print media, YouTube etc. without the prior permission of
the concerned teacher “Dr. Pramod K. Mishra.” Disciplinary action, as per rule,
will be taken against the concerned student/s for such misconducts.

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