KPI’s in Supply Chain Management:

Whatever your industry, key performance indicators (KPIs) can help you make the best short-term and long-term decisions for your business. But that’s easier said than done. In fact, according to supply chain industry analytics, challenges with implementing metrics are often the result of not having a clear understanding of what to measure.

In addition to uncertainty around what to measure now, we find that many companies are very aware that certain metrics will likely change in the future. In other words, being prepared for what comes next is just as important as knowing what’s happening today – and will also help you maximize the cost and use of your analytics technology.

It’s beneficial to measure both short-term and long-term KPIs: Long-term helps you understand the trends so that you’re not making drastic changes to your operations on account of a few bad days; and knowing your short-term analytics via real-time data informs the smaller adjustments you should make on a case-by-case basis.

Other benefits of tracking and measuring your operations with supply chain analytics include:

  • Increase efficiency: Pinpoint stumbling blocks and how to remove them
  • Maximize labor resources:Track productivity and compare your teams
  • Quickly identify errors: Fix little problems before they become big ones
  • Meet customer demand: Know where you can make adjustments that keep costs in line while meeting customer expectations for speed and accuracy.

What to Measure:

The answer to the common question “What should we be measuring?” is twofold: At its core, a supply chain analytics solution should provide an enterprise-level view of warehouse operations, empowering your team with timely, meaningful information that drives process improvements. This should include a set of industry-standard, best-practice KPIs for your operations. But to maximize your investment, your supply chain intelligence software should include tools that allow you to create metrics based on your company and its own way of doing business.

Let’s first look at the foundation of metrics you may consider as a starting point. Metrics should generally fall under dashboards that address a specific area of your organization, such as inbound or outbound operations. In some instances, the dashboards have drill-down capabilities where a more granular layer of information is presented.

Any software provider should offer, at a minimum, the foundation for best practice analytics. Compare these to what you’re already tracking, and consider which ones to add or remove.

6 Key Supply Chain Analytics Measurements should include:

1. Inbound
2. Outbound
3. Order Accuracy
4. Customer
5. Quality
6. Capacity and Utilization

1. Inbound
a. Dock-to-Stock
b. Percentage of Supplier Orders Received Damage-Free
c. Orders (POs) and Lines Received per Hour
d. Suppliers On Time

2. Outbound
a. Line Fill Rate
b. Order Fill Rate
c. Fill Rate Percent
d. Lines Picked and Shipped per Hour
e. Orders Picked and Shipped per Hour
f. On Time and Ready to Ship

3. Order Accuracy
a. Order Pick Accuracy
b. Order Pick Accuracy by Type
c. Orders Shipped Complete
d. Cases Shipped vs. Cases Ordered

4. Customer
a. Percent of SKUs In Stock
b. Cycle Time Percent (Internal versus External)
c. Back Order Percent
d. On-Time Shipments

5. Quality
a. Percent Unsaleable
b. Inventory Count Accuracy
c. Inventory Shrinkage by Month
d. Inventory Shrinkage by Type

6. Capacity and Utilization
a. Honeycomb Percent
b. Days on Hand by Inventory Type
c. Days on Hand by Item
d. Percent Capacity Used by Storage Device
e. Shelf Capacity Used by Inventory Type

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Posted by iCepts Technology Group, Inc. A Supply Chain Management Technology Solution Partner