Effective supply chain Metrics
Business world is dependent on four empirical organizational elements namely; transportation, warehousing, logistics and supply chain. It does not matter whether a firm is a small one, a medium sized or a large corporation. The dependence on these elements is inevitable at some point or another.
Of these four elements, supply chain scores to be the most complex. Not only do the tasks involved have avarice for resources, but are extremely sensitive to time as well, for example; transmission, freight costs etc. the metrics provided by the Balanced Scorecards help in measuring how the cost involved in the supply chain processes can affect the profitability of the business. Understanding the relevance of supply chain units is the key to the answers of crucial profitability questions that need to be determined to improvised, for perfection as much as possible. With the apt utilization of scorecards and other indicators an organization can keep a close check on their service, delivery and related aspects. It also helps the management and the decision makers to evaluate the performance of warehouse, delivery points, manufacturing and customer satisfaction from marketing and financial point of view and help elucidate the loopholes existing along the activities involved.
Some of the supply chain metrics that should be studied often include; transit time, claims percentage, monthly inventory, defects per unit, promised cycle time, on time line count etc. It is important to have an explicit view of the overall processes that involve more than one departments like; distribution, procurements and so on, because information of one or two departments counts to be insufficient, irrespective of how detailed it is. It is only when the productivities of all departments are combined that organizations achieve triumph.
However, simply implementing all that one can understand for the purpose of structuring policies is not enough. For a Balanced Scorecard it is important that appropriate metrics are identified and utilized. Such a process involves brain storming sessions, careful considerations and goal setting activities. As a guide, one should keep in mind a few things before selecting the metrics. Selection should be made effective by choosing only those metrics which influence the optimization of the supply chain activities. They may also include the areas prone to hurdles and inefficiencies and might also incorporate relationship comparison for industry benchmarking. Balanced scorecards also provide the user with the option to customize the metrics, according to the need of the organization or departments.
The metrics related to the supply chain operations can be classified into four distinct groups. They are; inventory months of supply, inventory rationalization, material value, and upside flexibility. Keeping in mind the goals, mission and vision of the organization management and staff should gauge the activities incorporated in these four groups to become more responsive in terms of time and quality of services and methodologies.
