Selecting the Key Metrics
Selecting the key metrics to measure performance a long the supply chain can be crucial, as clear connections have to be made between the metrics and the business goals in order for the business to achieve the results they are looking for and also to achieve growth within the market place. Management should identify the key performance indicators they need to focus on, measuring these indicators can help them in reaching the company's goals.
We have identified Total Throughput Time, Right First Time and On-Time Shipment Delivery as key supply chain metrics to measure across the supply chain.
Total Throughput Time
The total throughput time of an organisation captures the time the customer sales order is received to the time the product is ready to ship. This time is an accumulative of all the time spent from procuring the raw material to manufacturing and releasing the finished product to ship. This KPI is key to analysing the direct impact each internal and external process has on the customer receiving the order on time. It provides management with an overall view of the critical steps and the relationship each step has on getting the finished product to the customer. This time is usually measured in minutes or in working days.
Management can work with the relevant department managers to set the target needed for each of the critical processes that have a direct impact on the customer order. Each department can then manage internally their individual KPI and work to the pre-determined target. Management can then monitor the KPI's weekly or monthly.
This will provide management with a clear view on how each process is performing and can highlight any issues that could have a direct impact on the customer not receiving the order on time. Monitoring the KPI's will quicken response times to resolving issues if and when they arise.
The customer will also be informed of this time so they...