Supply Chain Performance Measurement
Supply Chain Performance Measurement
With the emergence of supply chain management (SCM) in the world of business, most companies have been adopting this methodology due to its effective and positive impact in improving companies’ performance. It includes collaboration, integration and coordination of business processes across organizations as a network through supply chain. Despite of how effective and beneficial supply chain management is, measuring it has been recognized as critical.
Performance measurement is very essential to manage, improve and develop the supply chain. performance can be measured using several kinds of approaches; they are more than 10 different approaches. Measuring the performance is needed in every management level
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The SCOR model contains 5 major supply chain performance attributes: o Reliability: focuses on performing the tasks in the right form as expected, metrics of reliability include: on time, right quantity and right quality. SCOR key performance indicator (KPI) is perfect order fulfillment. o Agility: focuses on external influences such as environment and the ability to respond to change. External influences such natural disasters, sudden increase or decrease in demand. SCOR KPI is Flexibility and Adaptability. o Responsiveness: focuses on how fast and how much it takes for tasks to be done. Responsiveness metrics include cycle-time. SCOR KPI is Order Fulfillment Cycle Time. o Cost: focuses process operations costs such as: labor costs, material and transportations costs. SCOR KPI is Costs of Goods Sold (COGS) and SCM Costs. o Assets or Assets Management Efficiency: focuses on how efficient the company is to utilize its assets. Inventory reduction is an example of Asset management in supply chain. SCOR KPI is Return On Fixed Assets and Cash To Cash Cycle …show more content…
Companies use these standard percentages and compare them to its performance and they include: o On-time delivery 90% o Quality of goods and services 83% o Price competitiveness 55% o Response 50% o Innovation 29% o Lead-time 44% o Technical capability 34%
For example, a company’s On-time delivery may be 87% because it often delivers 10 minutes late, then it’s not performing well, unlike a company whose On-time delivery percentage is 93%.
In conclusion, it is important to consider that a good supply chain performance measure has to be quantitative, clear and visible in order to be understood by all members, and for right actions to take
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