Five Measurable KPIs for Perfect Supply Chain Management

There is no standard definition of what constitutes as perfect supply chain management. The industry, the types of goods being handled and the scope of operation shall determine the attributes of perfection. What can be standardized are five key performance indicators that should serve as a foundation to assess if a supply chain management strategy is working well. These five key performance indicators are measurable, hence assessable and improvable.

• Supply chain reliability is about delivering the right item to the right person or entity at the right place and the right time, in the condition expected and in a manner that leaves no room for complaints, which includes the condition of the packaging. Delivery performance, fill rates and order fulfillment can be taken care of using the indicator of supply chain reliability.

• Supply chain responsiveness is the steadfastness of the whole system in place. How swiftly can an item be delivered to its intended destination and if it can be expedited further? This question will lead you to answers that can improve order fulfillment and reduce lead times.

• Supply chain flexibility is basically agility of a company and its entire apparatus that determines if the processes in place remain competitive. Response time and responsiveness, reliability and other metrics of efficiency will depend on flexibility. It is a measurable indicator and can be tested in a myriad of ways.

• Supply chain management always prioritizes costs. These are actually the easiest to determine. However, only costs calculated down to their least units should be factored in during consulting or review. Costs in broader contexts have little bearing on the actual measurability.

• Finally, it is asset management efficiency that should draw the focus of supply chain management. Is the demand being served with the assets stocked up, is the capital inflow and outflow being managed to maintain optimum assets to meet demands and is the cash to cash cycle time in accordance with the state of the inventory?