Curious about your supply chain?
Discover the essential systems and KPIs to monitor for efficiency and growth.
What are the must-have tools for businesses?
Don’t miss out—watch the video and get the answers you need!
Welcome back to our exploration of supply chains. Last week, we covered the physical aspects; now we’re diving into systems and KPIs. This isn’t an exhaustive guide but offers practical insights, especially if you’re new to a role or organization and want to quickly assess supply chain performance.
These are the key areas I typically focus on when working with clients.
Demand Planning and Forecasting
Start at the customer end. Is there a formal system in place, or is everything on spreadsheets? Demand forecasting can be tricky depending on the industry—static demand with occasional surges or steady demand with seasonal peaks. Regardless, a tool for accurate forecasting is crucial.
Supplier Management
At the other end of the chain, supplier performance is critical. Many organizations overlook this. Evaluate how suppliers are managed and whether performance metrics like adherence are tracked effectively.
Warehouse Management Systems (WMS)
Does the organization have a WMS, and does it meet their operational needs? Functionality like batch tracking, temperature control, and recall management is vital in some industries. For simpler operations, a basic WMS may suffice, but it’s essential to check whether it supports their requirements.
Transport Management Systems (TMS)
TMS tools optimize carrier selection for cost-effective delivery or manage in-house fleets by tracking utilization, maintenance, and capacity. These systems are key for both B2C and B2B operations.
Routing and Scheduling Systems
For multi-drop deliveries, these systems ensure efficient route planning. They’re essential for operations with frequent, complex delivery runs.
KPIs: Measuring What Matters
When it comes to KPIs, less is more. Focus on a few key metrics tailored to each management level. For instance, high-level KPIs for executives and operational ones for warehouse managers.
Here are some of the essential KPIs:
- SIFOT (Supply In Full On Time): Tracks supplier delivery performance and sets the foundation for outbound logistics.
- DIFOT (Delivery In Full On Time): Measures customer delivery performance.
- Inventory Record Accuracy (IRA): Ensures stock accuracy to maintain service levels.
- Financial Metrics: Evaluate cost per case or pallet throughput.
- Productivity Metrics: For warehouses, this could mean picks per hour, tailored to industry norms.
By focusing on these systems and KPIs, you can quickly identify strengths and areas for improvement in any supply chain. What would you add to the list? Let me know your thoughts!
You can watch the Part 1 here: Understanding Supply Chains Part 1- Physical Processes
Related articles on this topic have appeared throughout our website, check them out:
- Top 6 Supply Chain KPIs: Keep Your Dashboards Simple
- Warehouse KPIs and Warehouse Performance
- No Supply Chain Strategy? Here’s How to Develop One
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated January 25, 2023, under the title “Understanding Supply Chains Part 2- Systems & KPIs“.
