Along the mantra service-cost-cash, operational metrics would focus on the former. They would be...
Customers would require that every product comes with the expected quality, in the quantity and at the timing required, wouldn’t they ?
Supply chain would thus anticipate on that by measuring its operational performance and its response to customers. While identifying discrepancies through early warning signals, it would apply immediate corrective actions, and on the mid to long term ensure preventive measures are implemented.
A simple set of sensible performance measures to pursue efficiency, the more so in a dynamic landscape, would monitor achievements accordingly. Underlying objectives would be improve productivity and drive profitability.
Complete delivery rate
The complete order delivery rate evaluates order completeness as well as accuracy of orders fulfilled through supply chain. The higher the rate the higher the process efficiency across the distribution network. It indirectly address product quality thus mitigating risk of errors and reducing possible rework.
On time delivery rate
The on-time delivery rate evaluates promised timeframe of order delivery. Though supporting supply chain responsiveness and inventory optimization, it is a key contributor to customer trust, loyalty and retention. At the same time strengthening competitive position and operational sustainability.
Fulfillment cycle time
The fulfillment cycle time tracks time from order receipt to product delivery further fostering customer loyalty. Streamlined process for order fulfillment reduces lead times along the supply chain, while mitigating stockouts risks and efficiently meeting demand fluctuations.
Inventory turnover rate
The inventory turnover rate measures the frequency at which stock on hand is sold or used during an given period of time. It is an overall measure of supply chain efficiency and effectiveness. Higher rate signals a healthy process, at the same time directly impacting cash flow.
Summing up, supply chain can anticipate on customer demand and enhance their satisfaction by measuring its operational performance and its responsiveness. A straightforward set of measures with complete and on-time delivery rates, and also fulfillment cycle time and inventory turnover rate, can provide early warning signals to apply corrective and preventive measures, as well as streamlining processes. Ultimately it lays the ground for sustainably outperforming competition.
