Whether you are running a supply chain or selling lollipops at the elementary school fair, everybody can benefit from smart key performance indicators (KPIs). Mark Rhyman writes for Supply & Demand-Chain Executive with the KPIs that supply chain managers can use to take their processes to the next level.
The KPIs that Ship Success
- Inventory turnover
- Order tracking
- Inventory to sales ratio
- Backorder rate
- Time from order to ship
- Rate of return
Inventory turnover is usually measured annually and tracks how many times the business sells through its whole inventory. Unlike employee turnover, high inventory turnover is something to celebrate, and is used to help determine the most appropriate stock levels and pricing for items. Order tracking by comparison is an even simpler KPI, just seeking to monitor order status and accuracy so that problems can be reacted to and responses to customer inquiries can be answered sooner.
Inventory to sales ratio is exactly what it sounds like, no further explanation necessary. The backorder rate though has to do with how often you cannot immediately fulfill orders placed, which is a number you want to scrutinize closely in order to develop a better understanding of things like seasonal demand and manufacturing downtimes. About time from order to ship, Rhyman writes:
The efficiency of your shop floor is of the utmost concern for many SCM professionals. Knowing that your employees are as productive as possible means a more efficient business. The time it takes from an order to be processed to the moment it is on the truck is a go-to KPI for many managers. Breaking things down even further, for example by employee, helps identify problems that may need addressing or the opportunity to praise an employee for a job well done.
Finally, rate of return lets you see how often product is being returned and for what reasons it is occurring. Use this to identify negative trends and put a stop to them.
You can read the original article here: http://www.sdcexec.com/article/12066589/benchmarking-success-for-supply-chain-management-professionals