• Respect all sources of data:
Blind-sided Intuition Qualitative Opinion Discussion Survey Functional Measures KPIs External Best Practice Quantitative
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Performance measurement is an important but complex subject
Companies see the need for metrics. . .
Strategic objectives:
Supply Chain Framework Quality
Information Flow Forecasting & Production Planning Customer Service Products/services according to customer expectations
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We used a generic supply chain framework as a basis for our analysis . . .
Supply Chain Framework
• We looked at the supply chain from the customer’s perspective.
• We brainstormed on “what could go wrong along the supply chain”:
– What are drivers of performance from a quality, time and cost point of view.
Manufacturing
Purchasing Inbound Logistics Maintenance Marketing & Sales Outbound Logistics
Time
On agreed time
Integrated Supply Chain Management NB: Boundaries
– Research Benchmark Industry Listings (http://www.capsresearch//htm).
• NAPM (US): • Kaiser Associates:
Purchasing. Benchmark Specialist Consultant.
• US University Research: New global initiative (investigating entry opportunities—Bob Ackerman).
• “If you can’t measure, you can’t manage, you can’t motivate” • Establishing the proper measures within an organisation enhances continuous
Linking strategy to action Assigning accountability to take action when needed
• NPDI • Support functions
Inventory Management
Cost
At reasonable cost
Tailor to company specific (BSC) objectives
Key metrics must give information on how a company is performing against old strategic objectives.
LONDON SHOP
Developing An Overview of Supply Chain Performance Metrics
Process, Recommendations
McKinsey
October 2003
THE
This document gives an overview of the different metrics that can be used to measure supply chain performance
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We began with a brainstorming session on the key drivers for quality, time and cost
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Possible data sources
• CIPS (UK): • APICS (US): • CAPS (US): Purchasing (& Supply Chain). Supply Chain. Purchasing & Supply Chain (US & Legal):
• The London Shop’s task:
– Develop an overview of the different metrics to measure supply chain performance. – Select the most important metrics that can be used across industries. – Discuss how the most important metrics link other operational metrics within each stage of the supply chain. – Suggest how the supply chain CoE should continue concerning this topic.
Suppliers
Integrated Supply Chain Management
Inventory Management
Customers
This framework aligns with the CoE POV and is also similar to framework for the supply chain diagnostics inventory database.
Objective 2 KPI KPI
• Recognised Cross-Industry; In-Industry and In-Company similarities and differences.
Accountability
Focus
Communication
Measuring progress towards goals through interactive communication and education
There is no one “right” answer
This document’s.
. . . but developing the “right” set of metrics is a challenge • No commonly used “model”. • Business issues that warrant performance measurement:
– Differ between industries. – Differ within industry. – Change overtime.
• Discussions with supply chain CoE:
– Graham Colclough. – Andrew Morgan. – Lee Sherman. – Deborah Huff (Cap McKinsey).
McKinsey • Proprietary and Confidential
Customer service cost
The complete picture can be found in the appendix.
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Making their client specific warrants attention
Information Flow Forecasting & Production Planning Manufacturing Purchasing Inbound Logistics Maintenance Marketing & Sales Outbound Logistics Customer Service
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We used information from several sources during our project
• Internal and external documents:
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. . . and concluded there are three strategic objectives we should focus on when analysing the supply chain