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Supply chain managers may find proprietary or purchased metrics-tracking software useful, but the most important factor in choosing an option is knowing what facts and trends are really worthwhile to monitor.

Fact-based management requires key performance indicators (KPIs) that give supply chain managers a true picture of what's going on. "Dashboards" extract the most pertinent and up-to-date metrics, allowing managers to grasp the current situation at a glance. Choosing the right metrics is critical, and it depends on your company's strategic goals. These quantitative performance metrics from the Supply-Chain Council serve as one example of a common and complete benchmarking set:

  1. Meeting customer request dates, fill rate by order line and percent of orders delivered on time and in full with no product defects.

  2. Lead time from order receipt to customer receipt of order.

  3. Material, parts and labor availability, and manufacturing capacity.

  4. Forecast cycle time, replanning cycle time, total sourcing lead time and release-to-ship time.

  5. Costs of order management, material acquisition, inventory carrying, finance and planning, and IT.

  6. Cash-to-cash cycle time: days sales outstanding, average payment period for materials, inventory days of supply, and inventory turns.

  7. Unit and dollar forecast accuracy.

  8. Cost of goods sold; earnings before interest and taxes; selling, general and administrative costs; sales growth; and net asset turns as a percent of revenue.

  9. Value-added productivity per employee and per payroll.

Dashboards allow managers to identify and focus on just a few of these metrics frequently enough to change course quickly and react when performance is not meeting desired levels. For that reason, they should present the performance indicators in real time and against goals.

Software that mines the wealth of data now recorded by supply chain systems is available from a number of vendors, including SAP, IBM Cognos and Microsoft. In addition, many companies still rely on spreadsheets or even whiteboards to give managers a snapshot of the current state of operations.

 


The article you read was prepared for general information purposes by McMurry. These articles are for general information purposes only and are not intended to provide legal, tax, accounting or financial advice. PNC urges its customers to do independent research and to consult with financial and legal professionals before making any financial decisions.These articles may provide reference to Internet sites as a convenience to our readers. While PNC endeavors to provide resources that are reputable and safe, we cannot be held responsible for the information, products, or services obtained on such sites and will not be liable for any damages arising from your access to such sites. The content, accuracy, opinions expressed, and links provided by these resources are not investigated, verified, monitored or endorsed by PNC.