• 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.
Information Flow Forecasting & Production Planning Manufacturing Purchasing Inbound Logistics Maintenance Marketing & Sales Outbound Logistics Customer Service
Accountability
Focus
Communication
Measuring progress towards goals through interactive communication and education
There is no one “right” answer
This document’s an initial step in the right direction.
• 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.
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We used information from several sources during our project
• Internal and external documents:
• The Supply Chain CoE’s objective is to define a benchmarking framework capable of:
– Comparing generic metric performances for use on projects. – Capturing further benchmarking data in a consistent format.
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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Performance measurement is an important but complex subject
Companies see the need for metrics. . .
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We used a generic supply chain framework as a basis for our analysis . . .
Supply Chain Framework
Objective 2 KPI KPI
• Recognised Cross-Industry; In-Industry and In-Company similarities and differences.
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. . . and concluded there are three strategic objectives we should focus on when analysing the supply chain
– High level benchmarking framework for supply chain performance (H .Cook): • Shop Study (March 1997) accessing information from available experts and past projects. – Supply chain benchmarks and best practice (Dow Polyurethane & Epoxy April 1995). – Supply Chain Benchmark Assessment (March 1997). – Supply chain appraisal and benchmarks: (client X September 1997).
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Possible data sources
• CIPS (UK): • APICS (US): • CAPS (US): Purchasing (& Supply Chain). Supply Chain. Purchasing & Supply Chain (US & Legal):
. . . 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.
• 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.
QualityTimeCostPriceService
Product quality
Product quantity
Product delivery
Late arrival
Late delivery
Inventory cost
Product cost
Production cost
Delivery cost
• Discussions with supply chain CoE:
– Graham Colclough. – Andrew Morgan. – Lee Sherman. – Deborah Huff (Cap McKinsey).
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– 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).
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We began with a brainstorming session on the key drivers for quality, time and cost
• “If you can’t measure, you can’t manage, you can’t motivate” • Establishing the proper measures within an organisation enhances continuous