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What should I include on my dashboard – Supply Chain metrics
As I mentioned in my previous post here some ideas on supply chain metrics you may want to consider. This list is in no way exhaustive but it’s a good starting point as you think thru how to better digitally manage your supply chain.
These metrics and kpi’s are sometimes a bit tougher to compile, measuring your SC performance is critical.
As with any analytics project start small and work your way towards your goal. Remember that the kpi you want to measure today, may not be the one you want to measure tomorrow. Times they are a changin’! So gather information, leave room for flexibility and don’t worry if the measurement is not perfect. You can refine as you go.
So some supply chain metrics that we’ve seen both at customers and/or in sc dashboards:
Inventory turns and sales to inventory ratio
Both of these can help understand a number of different facets of your business – a key one being your planning and fulfillment processes and strategies. We see this one by year and by rolling x periods – both pretty easy in Stratum if you keep inventory snap shots. (if you don’t, but are seeing a single snapshot of inventory it’s pretty easy to start keeping historical snap shots).
DSO – days sales outstanding
Need to have your AR information – which is generally pretty easy to collect. Beyond the obvious how long to collect aspect of this metric you can use DSO as a part of an internal customer scorecard when evaluating customers. DSO also is part of the Cash to Cash Cycle Time KPI which is a more complex KPI but one that many SC dashboards contain – or at least they are working towards including it.
Sales to Forecast along with Outlook
This is an easy one that allows for basic comparison of sales (and orders) to the forecast and/or plan. From this simple metric you can determine where you are at vs. where you expected to be – you can look at it YTD, over time, current period etc. The Outlook lets you take expected sales (existing booked orders and the forecast, and anything else you might want to throw in – such as open CRM opportunities that are x% along…) to determine how the remainder of the year might play out. Be careful with the Outlook if you are off your forecast and have not made adjustments to your future forecasts.
Past Due Orders
Another simple one. All you need is open orders in Stratum and your definition of what is ‘past due’ With this you can begin to find problem products, vendors and processes.
Return amount and quantities – with reason codes if possible.
This allows you to see return rates – as a ratio of sales is one way to look at this – and identify why returns are happening. Some of this information will be used if you pursue the Perfect Order Rate which I’ll mention later. We’ve seen metrics around this take on more importance as major retailers are penalizing suppliers more and more for products that require returns.
Now on to two valuable but more complex KPI’s for the supply chain:
Cash to Cash Cycle Time
The shorter the better is the general look at this measure. You’ll need Inventory, Payables and Receivables to calculate this one. 3 ratios – Days of inventory, payables and receivables ae used to figure the CCCT. Working to decrease this metric can help improve all parts of the supply chain – procurement to sales.
Perfect Order Rate
This is one we’ve seen Gartner and others talk about quite a bit. In practice it can be a little elusive to quantify but it’s a great KPI to work towards as it requires an number of metrics to create and each of those if valuable in and of itself. I may post some more detail on this in a later post. The metric is the measurement of your supply chains ability to deliver the right stuff at the right time with no issues and the right documentation. Monitoring metric along with its components can be a way to reduce penalties from your customers (most often we see this in automotive from retailers).
So few metrics you can work on using information you may already have in your Stratum hub or maybe some of these will help you to determine what information is next for inclusion in Stratum.
Any questions or comments post them. Thanks for listening.