Ultimately, anyone working in supply chain management needs to know which KPIs are relevant to optimising their business. To help you, we’ve selected seven of the most important of them all.
The supply chain can be thought of as a company’s circulatory system. The various participating departments, including purchasing, production, transport and customer service, must be coordinated with one another. Quick decision-making is an important success factor for business, which is why you need intelligent, time-saving, easy-to-integrate, decision-relevant KPIs that can help you achieve your goals.
1. Perfect order index
The perfect order index measures the rate of error-free order processing across the entire supply chain process, and is also an excellent benchmark for overall supply chain performance. An in-depth analysis of the data allows problems to be investigated, located and corrected, including damage, delays, inaccuracies and inventory losses. The index can be measured periodically over time to measure progress in process improvement. The higher it is, the better, because it has a direct impact on customer loyalty.
2. Inventory days of supply
In other words, this refers to how many days would it take for stock to be used up if not replenished. Supply chain management endeavours to minimise inventory days in order to reduce the risk of an overstocked warehouse and outdated inventory. This minimisation exercise also provides additional financial benefits, since overstocking tends to curb the operating cash flow.
3. ETA (estimated time of arrival)
ETA refers to the planned arrival time of a means of transport at its destination in accordance with the agreed conditions. Estimations can be laborious and time-consuming, which is why calculations based on GPS data are usually kept relatively simple. They typically take into account just the current speed and a rough approximation of the route.
The reason why this metric is so important is that it has a direct impact on customer satisfaction.
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