Supply chain management refers to the process of actively managing all activities on the supply chain in order to maximize value for the customer while at the same time ensuring that the organization is able to maintain and sustain a competitive advantage (Handfield, 2011). One of the many ways to aid in the tracking and monitoring necessary to accomplish this task is through the implementation of metrics or KPIs, key performance indicators (Peterson, 2015). These metrics will vary depending on the focus of the entity and its position on the supply chain.
A well-rounded dashboard will typically have 3-5 KPIs for each organization, making the metrics for warehouses, trucking companies, manufacturers, and distributors somewhat different, given their varied responsibilities. As a distributor is responsible for excellent service, their KPIs may include item fill rate, perfect orders, and first contact resolutions (Peterson, 2015). A manufacturer, on the other hand may look at total cost of goods sold, supply chain costs per number of units sold, and labor utilization metrics (Peterson, 2015). The trucking company, on the other hand, may look at the number of orders delivered in full, the number of orders delivered on time, and the number of perfect orders completed (Peterson, 2015). Finally, the warehouse may address warehousing costs, transportation costs, labor costs, the amount of stock, and the performance of the software that they utilize to track and monitor product (Peterson, 2015).
While there are certain similarities across the board, such as ensuring that each stage of the process is delivered on time, or making sure that costs are low, the type and variation in job duties and job descriptions will create variables in the KPIs selected. In order for the supply chain to be successful and sustainable, the KPIs must be met at each stage of the process, as failure to do so can create problems for those above and below on the supply chain. Supply chain sustainability is vital to the success of the organization as a whole.
- Handfield, R. (2011). What is Supply Chain Management?. North Carolina State University. Retrieved 15 September 2016, from https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management
- Peterson, K. (2015). 10 Supply Chain KPIs You’ll Want Every Morning. Halo Business Intelligence. Retrieved 15 September 2016, from https://halobi.com/2015/01/10-supply-chain-kpis-youll-want-every-morning/