Where to look to measure supply chain success

     

A common problem shared by most companies is an inability to benchmark the successes or failures of the supply chain. They lack an ability to point to specific areas that highlight what's working and what isn't across the partner community.

Rectifying this situation will empower an organization to know specifically what needs to be done in order to continue with high-performing initiatives or determine which ones should be scrapped and abandoned.

 

"Supply chain activities transform resources, raw materials and components into finished products and services that are delivered to the customers," a recent report from African news provider NewsDay stated. "A supply chain is as strong as its weakest link, bringing to the fore the need to identify the non-functionalities in the system."

According to the report, such performance measures can be either qualitative or quantitative. It highlighted several qualitative measures that also contain their own specific areas that can be benchmarked.

1. Cycle or lead time

This has to do with the overall delay experienced by a supply chain and can be broken down into three sub-categories: internal, external and total. The organization can allocate resources and attention to specific areas depending on the causes of delay, which, of course, are costly in terms of time and money.

NewsDay also noted that external lead time may be affected by a supplier's policy, specifically whether the supplier utilizes a produce-to-order or a produce-to-stock model. Each will account for different causes of lead time.

2. Customer service level

Order fill rate, stock-out rate and back-order levels all go into determining customer service levels, according to the report. Companies should track each one to ensure that customers are fully satisfied with the availability of products and the time it takes to deliver them to the market.

"To maximize customer satisfaction levels, one need to maximize order fill rate, minimize stockout rate and minimize back-order levels," the report stated.

3. Resource utilization

Finally, the report stated that companies should track the levels at which resources are utilized. This includes taking into account machinery, storage, transportation and distribution considerations, as well as human and financial resources, according to NewsDay. All such areas can be used to improve customer service and reduce lead times experienced by the supply chain, the report said.

Risk is another area that other reports and experts have agreed companies should look into. By identifying vulnerabilities along the supply chain, a company can better protect against specific issues that may arise.