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SCM-2017-Performance Measures-2018
SCM-2017-Performance Measures-2018
W S William
The saying goes,
“You get what you measure.”
• Dell
Faster this time, the less time their customers wait for that
engine.
• Service Metrics
how you meet customer needs
• Inventory Metrics
how much inventory you have
• Time/Speed/Flexibility Metrics
how quickly can you respond to new developments
• Financial Metrics
how supply chain management affects your bottom line
Service Metric under “Build-to-Stock”
Suppose you sell coloured pens, and you receive the following orders:
Item Quantity
Red Pen 10
Blue Pen 1
Green Pen 2
Suppose you were stocked out of red pens temporarily, but had
sufficient blue and green pens to meet the remainder of the order.
What is your line item fill rate ? [2/3 or 66.7%]
What is your order fill rate ? [ 0%]
What is your unit fill rate ? [3/13]
• As a customer, which metric would you prefer ?
Order Fill Rate vs Line Item Fill Rate
So an order fill rate metric may not reflect your business need.
Fill rate measure the ‘successes’
• % Completed on Time
Inventory Turns
• Cash-to-cash cycle
The Cash-to-Cash Cycle
Inventory
Accounts Accounts
Payable Receivable
Cash-to-cash cycle
Time
CCC = DIO + DSO – DPO
CCC (Cash Conversion Cycle)
DIO (Days of Inventory Outstanding)
DSO (Days of Sales Outstanding)
DPO (Days of Payable Outstanding)
Facility-related metrics
Capacity
Utilization
Processing/setup/down/idle time
Production cost per unit
Quality losses
Theoretical flow/cycle time of production
Actual average flow/cycle time
Components of Inventory Decisions
• Inventory-related metrics
Cash-to-cash cycle time
Average inventory
Inventory turns
Products with more than a specified number of days of inventory
Average replenishment batch size
Average safety inventory
Seasonal inventory
Fill rate
Obsolete inventory
Transportation
• Transportation-related metrics
Average inbound transportation cost
Average inbound shipment size
Average inbound transportation cost per shipment
Average outbound transportation cost
Average outbound shipment size
Average outbound transportation cost per shipment
Fraction transported by mode
Components of Information Decisions
• Information-related metrics
Forecast horizon
Frequency update
Forecast error
Seasonal factors
Components of Sourcing Decisions
• Sourcing-related metrics
Days payable outstanding
Average purchase price
Range of purchase price
Average purchase quantity
Supply quality
Supply lead time
Fraction of on-time deliveries
Supplier reliability
Components of Pricing Decisions
• Pricing-related metrics
Profit margin
Days sales outstanding
Incremental fixed cost per order
Incremental variable cost per unit
Average sale price
Average order size
Range of sale price
Range of periodic sales
Thank You