Supply Chain Performance Measurement

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Information about Supply Chain Performance Measurement
Business-Finance

Published on February 4, 2009

Author: MariaRey

Source: authorstream.com

Measuring Supply Chain Performance : Measuring Supply Chain Performance Before Designing the Strategy We Need to Decide the Goal of the Game! Skipping the Obvious : Skipping the Obvious Why measure? Strategic Value of Performance Management What/How to measure? Balanced Scorecard SCOR Six Sigma Activity-based Costing Total Quality Management Total Cost Management … [approach du jour] First Point : First Point Not everything that is quantitative is a performance measurement Statistics (Neutral) Profiles (Behavioral but not Judgmental) Performance Indicators (Judgmental) Architecture Design : Architecture Design Conceptualize > Top-Down Align to strategic objectives Do more, with less, better and faster Construct > Bottom-Up Adding is easier than subtracting The devil is in the details Understand the 3D Characteristics of a Performance Measuring Architecture Performance Management & Organization Design Architecture > Conceptual Design : Architecture > Conceptual Design Alignment is the key word Top-down view From the shareholder’s objectives… …to the forklift operator activities 3D View 1D Types of Measurements > Competitiveness 2D Perspectives > Different stakeholders 3D Hierarchies > Multiple levels of detail and complexity Our 3D Understanding of Performance Measurements : Our 3D Understanding of Performance Measurements Hierarchies Perspectives Types Perspectives of Interest : Perspectives of Interest How is Success Defined Among Different Stakeholders? The Universe of the Stakeholders : The Universe of the Stakeholders Regal Forest Holding... Customers Suppliers Consumers Employees Competitors Media Policy Makers Lost Customers Investors Hierarchies : Hierarchies Different Levels of Detail and Views of Performance (Scope) Organizational Design vs. Performance Hierarchies : Organizational Design vs. Performance Hierarchies Management Planning Supervisor Operator Performance @ Stores Suppliers’ Performance Indicators Hierarchies respond to the Aggregation Property of KPIs : Hierarchies respond to the Aggregation Property of KPIs Watch out for independent performance vs. interdependent performance! Detail, Frequency, Scope : Detail, Frequency, Scope Detail, Frequency, Scope : Detail, Frequency, Scope Types of Metrics : Types of Metrics What is Success, After All? Performance Types : Performance Types Do More > Productivity With Less > Financial Better > Quality Faster > Velocity Success > Satisfaction Productivity Measurements : Productivity Measurements Do more with less Resource conservation Resource utilization Process efficiency Productivity is measured at the resource level, identifying the expected output of its consumption. : Productivity is measured at the resource level, identifying the expected output of its consumption. What’s the resource? What’s the Output? Pr = Output r Consumption r Identify resources involved in every process and activity… : Identify resources involved in every process and activity… Human Resources Facilities Machinery Equipment Fleet Inventory Systems Then, quantify associated outputs… : Then, quantify associated outputs… Resources Logistics & Supply Systems Outputs Can you tell what the logistics/SCM output should be? Velocity Measurements : Velocity Measurements Cycle times Response times Elapsed processing times Measuring Time : Measuring Time A cycle time measurement will capture the total elapsed time of an activity from beginning to end. It’s like having customers, stores, consumers and suppliers with stop watches… t1 t4 t0 t2 t3 t5 Where to start? Where to end? : Where to start? Where to end? Elapsed Time in Hours Velocity Indicators at the Distribution Center > Association with Productivity Metrics : Velocity Indicators at the Distribution Center > Association with Productivity Metrics Quality Measurements : Quality Measurements Likelihood of mistakes Deviation from goal Defects Overall satisfaction Unwanted variability “Manufacturing” perfect purchase orders is the real goal! : “Manufacturing” perfect purchase orders is the real goal! What is takes to “create” a perfect purchase order? Perfect Order in Food Logistics : Perfect Order in Food Logistics Complete Order (Discrete Measure 1 or 0, Not Continuous Measure as Case Fill) On-Time Delivery (1 hour +/- range (FDI) or 30 min +/- range (GMA)) Damage-Free Shipment Accurate Invoice (Non-Invoiceable Items have Accurate Invoice =0) Source: Grocery Manufacturers of America and Food Distributors International (FDI) Financial Measurements : Financial Measurements Cost of resources employed Cost of activities performed Financial implications of current performance Management intuition at work! : Management intuition at work! Cost of Logistics Resources + Cost of Holding Logistics Assets People & Assets Logistics Expenses Views by Resource, Activity (Output), Process Logistics Decision Objective = Max (Corporate EVA) Logistics Decision = Min (Operating Cost + Capital Cost + Lost Sales) Ways to Present Financial Indicators : Ways to Present Financial Indicators Aggregate/Absolutes Per Unit/Activity Relative Terms (%) 3D View of Performance Measurements : 3D View of Performance Measurements Mapping of SC Metrics vs. Corporate Goals : Mapping of SC Metrics vs. Corporate Goals

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