SUPPLY CHAIN FUNCTIONS AND METRICS

BY: ANKUR AGARWAL

PGPEX-VLM
IIM CALCUTTA

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 Understanding Supply Chain Processes using SCOR Model
PLAN
Align sourcing, production, and delivery with business goals by determining resources and requirements via
activities such as demand projection, capacity management, supply chain network, communication, and financial
projection.

• Identify, select, and
negotiate sources of goods
and services to meet
SUPPLIER planed & actual demand
by building suitable
supplier relationship
SOURCE
MAKE
• Determine means to
store, sort, and transport
• Create products and
goods to optimize cost,
services by adding value CUSTOMER
cash flow,
that meet customer
environmental impact, &
demands while
risk
optimizing cost and yield
DELIVER

SUPPLIER RETURN CUSTOMER RETURN

Facilitate reverse material flow Facilitate reverse product flow
for recycling, remanufacturing, for recycling, remanufacturing,
and return to address defects and return to address defects
in raw material in product & manufacturing
Supply Chain Performance Metrics

PLAN

FORECASTING PRODUCTION
QUALITY COST & CAPITAL
ACCURACY CAPACITY

MAPE, is a measure of PERFECT ORDER RATE: Capacity refers to an firm’s • Accounts Payable &
prediction accuracy of a capability to generate output receivables
forecasting method. Assesses the percentage of
customer orders that are Machine 1,Capacity= 40 • COGS as % of sales =
t=n delivered without errors, Machine 2,Capacity= 30 (COGS / Total sales) * 100
M = 1/n* ∑|At-Ft|/At including on-time delivery Machine 3,Capacity= 50
and correct products. • Inventory Turnover=
t=1
Capacity= Bottleneck= (Cost of Goods Sold/
Where, Average Inventory Value)
(Number of Perfect Orders / Min Capacity{1,2,3}
N = No of Time
Periods Total Orders) x 100
• Days of inventory
Production Capacity =
At = Actual Demand outstanding=
(Number of Machines
for Period t 365 days/inventory turnover​
or Workers)*
Ft = Forecasted
(Working Hours)*
Demand for Period t
(Efficiency Rate)
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Supply Chain Performance Metrics
SOURCE
SUPPLIER COST AND
LEAD TIME CAPITAL
The difference between • Raw Material Cost
the time when order is
placed and received. • Ordering Cost
Lead Time = Net Ordering Cost =
(Date of Receipt - (D/Q)*S
Date of Order
Where,
Placement) D= Annual Demand
Q= Economic Order Quantity
S= Ordering Cost
• Premium Freight
QUALITY AGILITY
Emergency Purchase Ratio
Measures the percentage of
supplier deliveries that The emergency purchase ratio
meet quality standards. is a purchasing KPI focused
on unplanned orders. These
Supplier Quality Index = orders are usually done when
there is an indication of
(Number of Good product shortages
Quality Deliveries /
Total Deliveries) x
Emergency Purchase Ratio
100 =
Emergency Purchases
Fulfilled/ Total
Purchases
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Supply Chain Performance Metrics

MAKE

SUSTAINABILITY QUALITY COST & CAPITAL AGILITY

• Health • Overall Equipment • Contribution margin Changeover time

Effectiveness
• Safety It helps to improve the It is the time
OEE = production process by between changing
• Environment Availability (%) * analyzing their variable from the existing
Performance (%) * Quality costs and finding ways to product to some
• Automation & (%) bring them down. other product.
Digitalisation
• OTIF Contribution Margin =

On-Time In-Full Rate = Revenue- Variable

(Total deliveries made on Cost
time and in full / Total
deliveries made)*100 • Productivity

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THANK YOU
Any Questions?