How Daks Couriers Tailors its supply chain to be client specific.
What do you Measure? Key Performance Indicators (KPIs) are vital to managing anything effectively. What’s that great acronym for KPIs? They need to be Smart.
The common mistake in using KPIs is to have too many! I have seen businesses that produce monthly Supply Chain KPIs that resemble the New York Phone Book! (OK, for anyone under 35, go and Google ‘Phone Book’)
Sure, within a business lots of different KPIs are required, but try to ensure you customise the KPIs for each ‘level’ of management with in the business.
Also make sure that the KPIs you use, also drive the right behaviours!
For me, some really important KPIs are these:
Attribute Definition Level 1 Metric Supply Chain Reliability The performance of the supply chain in delivering: the correct product, to the correct place and customer,at the correct time, in the correct condition and packaging, and with the correct quantity and documentation.
- Delivery Performance
- Fill rates
- Perfect Order Fulfilment
Supply Chain Responsiveness The velocity at which the supply chain provides products to the customer.
- Order Fulfilment Lead Time
Supply Chain Flexibility The agility of a supply chain in responding to market place changes to gain or maintain competitive advantage.
- Supply Chain Response Time
- Production Flexibility
Supply Chain Costs The costs associated with operating the supply chain
- Cost of Goods Sold
- Total SC Management Costs
- Value-added Productivity
- Warranty/Returns Processing Costs
Supply Chain Asset Management Efficiency The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.
- Cash-to-cash Cycle Time
- Inventory Days of Supply
- Asset Turn
Additional KPIs that are really useful in helping you reduce costs are these: (because they highlight high cost areas)
- Cost per Order Processed
- Cost per Order Handled
- Cost per Unit Delivered
- Average Order Value (track this to look for low value / high cost orders)