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Week 10
Supply Chain Performance

Page  49
Contents

• Function of performance measure in SCM

• Framework of SC performance

• Metric/KPI in SC performance

• Model of continuous improvement

Why You Measure?

To control and monitor organization and

supply chain members (you can only
manage what you measure)
To benchmark your companies between
your competitors and found the best in class
companies
 to improve your performance (you cannot
improve if you do not measure)
Why You Measure? (2)
Why You Measure? (3)
KPI?

Key performance indicator is a key metric used

to quantify the efficiency and effectiveness on an action

Performance measurement is the process of

quantifying the efficiency and effectiveness of an action

Performance measurement system is a set of structured

metrics and procedures to quantify both effectiveness
and efficiency of activities
Questions

What performance model is used in your

companies?

Please write the KPI’s in your companies

What are your metrics/KPI’s that are related

with your department?
A Good Metrics/KPI
factors Description
The measure can be expressed as an
 Is quantitative
objective value
The measure conveys at a glance what
 Is easy to understand
it is measuring, and how it is derived
The effects of the measure are readily
 Is visible apparent to all involved in the process
of being measured
The measure has been defined by
 Is defined and
and/or agreed to by all key process
mutually understood
participants (internal and external)
 Encompasses both The measure integrates factors from all
inputs and outputs aspects of the process measured
 Measures only what is The measure focuses on a KPI that is
important of real value to managing the process
Types of basics metrics

Higher the better

Smaller the better

Quantifying of Metrics

Have a “scoreboard”
Use standardized metrics 5

Stick with the targets

Adopt a holistic approach to consolidate

performance
Alignments in SC Performance

SC strategy
Organization
strategy
Performance measurement systems/ Metric set

1 Functional strategy
Metric Metric
2
-----
Metric
n
Benchmarking

Metrik Penjelasan Best in Rata-

class rata
Delivery Persentase order terkirim sesuai 93% 69%
performance jadwal
Fill rate by line Persentase jumlah permintaan 97% 88%
item dipenuhi tanpa menunggu, diukur
tiap jenis produk (line items)
Perfect order Persentase order yang terkirim 92.4% 65.7%
fulfillment komplit dan tepat waktu
Order fulfilment Waktu antara pelanggan memesan 13,5 22,5 hari
lead time sampai pesanan tersebut mereka hari
diterima
Source: Pujawan
Benchmarking (2)

Leadership through customer 31

service 43

Leadership through 25
product/market innovation 22

23
Be the low-cost leader
13
2002
20 2001
Be all things to all people
23

0 10 20 30 40 50

Source: “Giants of Shipping, Logistics Management, Sept 2002

Framework for SC Performance

Balanced Scorecard (BsC)

Supply chain operations reference

(SCOR) model
Balanced Scorecard
Reason to use balanced scorecard

Lack of a balanced approach

Lack of understanding on deciding on the

number of metrics to be used

Lack of clear distinction between metrics at

strategic, tactical and operational levels
Performance metrics for the financial perspective

Rate of return on investment

Delivery cost performance

Cost per operation hour

Total costs of supply chain

Performance metrics for the customers perspective

Order lead time

Customer query time

Quality of delivered goods

Responsiveness of distribution planning

schedule
Performance metrics for internal BP perspective

Total supply chain cycle time

Accuracy of forecasting techniques

Capacity utilization

Total inventory costs

Performance metrics for L&G perspective

Supplier ability to respond to quality problems

Supplier assistance in solving technical

problems

Buyer-supplier partnerships level

Level of customer perceived value of product

SCOR Model (framework)
SCOR Model ( 3 major pillars)

Business Process Reengineering, untuk proses

kompleks yang terjadi saat ini (as is) dan
mendefinisikan proses yang diinginkan (to be)
Benchmarking, untuk mendapatkan data kinerja
operasional dari perusahaan sejenis. Target internal
kemudian ditentukan berdasarkan kinerja best in class
yang diperoleh
Performance Measurement, untuk mengukur,
mengendalikan, dan memperbaiki proses-proses
supply chain
SCOR Model ( 3 major pillars)

Business Process Reengineering, untuk proses

kompleks yang terjadi saat ini (as is) dan
mendefinisikan proses yang diinginkan (to be)
Benchmarking, untuk mendapatkan data kinerja
operasional dari perusahaan sejenis. Target internal
kemudian ditentukan berdasarkan kinerja best in class
yang diperoleh
Performance Measurement, untuk mengukur,
mengendalikan, dan memperbaiki proses-proses
supply chain
SCOR Model (five core supply chain performance attributes)

Reliability

Responsiveness

Agility

Costs

Assets
SCOR Model (core process)

Plan - Proses yang menyeimbangkan

permintaan dan pasokan untuk
menentukan tindakan terbaik dalam
memenuhi kebutuhan pengadaan,
produksi, dan pengiriman.

Source - Proses pengadaan barang

maupun jasa untuk memenuhi
permintaan.
SCOR Model ( core process)

Make - proses untuk mentransformasi bahan

baku / komponen menjadi produk yang diinginkan
pelanggan.

Deliver - proses untuk memenuhi permintaan

terhadap barang maupun jasa.

Return - proses pengembalian atau menerima

pengembalian produk karena berbagai alasan
SCOR Model (SCOR Level 1)
Performance Attribute Customer-Facing Internal-Facing
Reliability Responsiveness Flexibility Cost Assets
Delivery performance 
Fill rate 
Perfect order fulfillment 
Order fulfilment lead time 
Supply-chain response time 
Production flexibility 
Supply chain management costs 
Costs of goods sold 
Value-added productivity 
Warranty cost or return processing 
cost
Cash-to-cash cycle time 
Inventory days of supply 
Asset turns 
SCOR Model (example)
Metrik Penjelasan Best in Rata-rata
class
Delivery performance Persentase order terkirim sesuai jadwal 93% 69%
Fill rate by line item Persentase jumlah permintaan dipenuhi tanpa 97% 88%
menunggu, diukur tiap jenis produk (line items)

Perfect order fulfillment Persentase order yang terkirim komplit dan tepat 92.4% 65.7%
waktu
Order fulfilment lead time Waktu antara pelanggan memesan sampai pesanan 135 hari 225 hari
tersebut mereka diterima
Warranty cost as % of Persentase pengeluaran untuk warranty terhadap 1.2% 2.4%
revenue nilai penjualan
Inventory days of supply Lamanya persediaan cukup untuk memenuhi 55 hari 84 hari
kebutuhan kalau tidak ada pasokan lebih lanjut
Cash-to-cash cycle time Waktu antara perusahaan membayar material ke 35.6 hari 99.4 hari
supplier dan menerima pembayaran dari pelanggan
untuk produk yang dibuat dari material tersebut

Asset turns Berapa kali suatu asset bisa digunakan untuk 4.7 kali 1.7 kali
memperoleh revenue dan profit

Source: Pujawan
Example 1(inventory days of supply)

Perhitungan: Inventory days of Supply

= rata-rata inventory (hari) / rata-rata demand per hari

Perusahaan rata-rata menyimpan suatu

komponen sebanyak 150 unit per hari.
Kebutuhan rata-rata komponen tersebut per
tahun adalah 4000 unit. Jumlah hari kerja dalam
setahun adalah 250.
Dengan kata lain, rata-rata kebutuhan
komponen per hari adalah 4000 / 250 unit = 16
unit sehingga jumlah hari rata-rata yang bisa
ditutupi oleh persediaan yang dimiliki adalah
150 / 16 = 9.375 hari.
Source: Pujawan
Inventory turnover ratio

Tujuan : mengukur kecepatan perputaran

persediaan terhadap rata-rata persediaan
Type : …………………….
Keterangan: besarnya bisa berbeda antara satu
jenis barang. Sparepart biasanya memiliki
turnover ratio yang rendah

Rumus : nilai barang yang terpakai

setahun/nilai rata-rata di gudang x 100%
 Contoh

Diketahui: nilai barang yang terpakai

tahun 2015 adalah 100 milyar rupiah.
Nilai barang di gudang rata-rata tahun
tersebut adalah 150 milyar.

Berapa nilai inventory turnover rate-nya?

 = 100/150 x 100% = 67%.

@pujawan
Example 2 (cash to cash cycle time)

Formula cash-to-cash cycle time

• = inventory days of supply
+ average days of account receivable (piutang)
- average days of account payable (hutang)

Source: Pujawan
Example 2 (cash to cash cycle time 2)

Effect of Payment terms on Cash to Cash Cycle Time

Receipt RM into Finished Arrive @ Pay Receipt

of goods Prod goods Cust. supplier payment

Day 1 Day 2 Day 3 Day 8 Day 61 Day 68

Cash to cash = 68 – 61 hari = 7 hari.

Source: Pujawan
Cash to cash cycle time 3

Account payable

Purchasing Inventory
Cash-to-cash
Manufacturing Cost of sales cycle time
Sales & Sales
distribution
Account
receivable

Source: Pujawan
Cash to cash cycle
Contoh Perhitungan time 4 (Question)

Misalkan nilai penjualan selama 30

hari adalah Rp. 300 juta. Account
receivable pada akhir bulan sebesar
Rp. 60 juta. Nilai persediaan di akhir
bulan adalah Rp. 120 juta. Cost of
sales besarnya 60% dari nilai
penjualan dan account payable di
akhir bulan besarnya Rp. 45 juta.
Source: Pujawan
Cash to cash cycle
Contoh Perhitungan time 5 (Answer)
Nilai penjualan per hari adalah Rp. 10 juta (yaitu 300 juta
/ 30 hari).
Account receivable per hari adalah 6 hari (yaitu 60 juta /
10 juta per hari).
Cost of sales per hari adalah 60% x Rp. 10 juta = 6 juta.
Account payable per hari adalah 7.5 hari (yaitu Rp. 45
juta / 6 juta per hari)
Inventory days of supply adalah 20 hari (yaitu Rp. 120
juta / 6 juta per hari)

Dengan demikian maka cash-to-cash cycle time = 20 +

6 – 7.5 = 18.5 hari.
Source: Pujawan