ISCOM 370/Strategic Supply Chain Management
Key Supply Chain Performance Indicators
Performance indicators are used to measure the performance of an organization. These measurements are used to evaluate how successful an organization is progressing toward the long term goals set by management. Key supply chain performance indicators are different depending on the long-term goals or the vision of an organization. When evaluating the performance of each when dealing with consumer demand, one may discover how important the accuracy of each indicator is to a successful supply chain. Although several key supply chain indicators exist, this paper will only discuss the importance of forecast accuracy, fill rates and manufacturing cycle time. These three indicators are extremely significant in the supply chain performance.
Fill rate measures the ability of the inventory to meet the demand. A customer satisfaction increase is generally associated with a high fill rate but must also be weighed against the higher expense of maintaining a greater depth of inventory. Because of the different fill rates, the definition may vary. The different fill rates are as follows: 1) line count fill rate, 2) SKU (stock keeping units) fill rate, 3) case fill rate and 4) value fill rate. The line count fill rate is the amount of order lines shipped on the initial shipment versus the amount of lines ordered. As one may imagine, this could directly affect the estimated date of receipt of the item or items ordered. The SKU (stock keeping units) fill rate is the number of SKU’s ordered and shipped. If lines one and two of the same item were ordered at the beginning of the month and line one, 20 SKU’s, was received five days after the order and line two, 20 SKU’s, was received 10 days after the order then the SKU fill rate would be 50%. The case fill rate is the amount of cases shipped versus the amount ordered. The value fill rate is somewhat the...