Making the most of your Supply Chain Metrics to leverage Competitive Advantage
In this brief article we are going to touch upon how you can maximize your SCM metrics in order to deliver the competitive advantage that you really are looking for.
The majority of KPI dashboards are in fact overloaded with metrics and the key to getting the most out of your SCM intelligence is in choosing the most appropriate metrics that are key to providing decision makers with the necessary information to deliver informed decisions when they need it. Using dashboards that are carrying large numbers of KPI's does not deliver information to SCM managers so they can make optimal decisions. Focusing on the key metrics that identify the main source of SCM business performance is vital and reducing the number of metrics used allows managers to understand better and far more intuitively what a metric is actually trying to tell them.
"Less is more" or TMI (Too Much Information) are two of the comments that you will hear from SCM experts who truly understand the components of the business supply chain from procurement, processing and through to customer delivery. In the very recent few years, with the introduction of RFID technology that allows tagging of containers, pallets and individual shipment items replete with a mass of raw data on content, models, color, specification, origination and so on , it is extremely tempting to dive in and start thinking that all this data that we are now routinely able to collect and collate can somehow be manipulated to provide SCM managers with even more information that will help them make better and more profitable decisions.
This is a short sighted approach and the reality does not match the theory that all of this information being put in front of an SCM management team is actually going to help them.
Following Pareto's Principle and focusing on the 20% of metrics that are actually telling you how 80% of SCM business performance is actually being generated does deliver better results.
The issue will become what are you going to use?
Concentrating on the basics will provide a far better SCM dashboard to equip managers to focus on the real drivers of the supply chain process. Remember we are looking to focus on cost reduction, better supplier management, shorter delivery times or better on-time delivery to customers, improving the efficiency of the manufacturing chain and being able to distil this in a format that presents information against pre-set indicators and historical trend data.
That all sounds great but let's have some specifics!
Aim to present the following and little else on your SCM dashboard:
- Production on Time and Complete- Supplier Fulfillment on Time and Complete- Perfect Order Fulfillment- Perfect Order Lead Time- Expedited Order Fulfillment- Customer Return Rate- Cash to Cash Cycle Time
These are seven KPI's that will provide your supply chain management team with the information that will provide them with over 80% of the indicators of SC performance. Look to provide more than this and you are heading into information replication and data overload resulting in management delays in exercising decision making power and confusion over what the metrics are actually trying to tell you.
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