Supply chain management cost metrics

Companies also find, as they mature, that it is difficult to get the complement of metrics necessary to view the supply chain as a system. There are six metrics in supply chain management that are tightly woven with intrinsic trade-offs. These metrics are asset utilization, days of inventory (or inventory turns), forecast accuracy, customer service (on-time delivery of orders shipped complete), cost of goods, and revenue growth. 

If you have a conversation with the finance department or on Wall Street, you will hear different views of what value means. The definition of value from a finance person would include, of course, money. Within this book, we will begin to understand different perspectives on what value means and show how supply chain management and operations affect an organization s financial performance. In the next chapter, we will discuss the monetary value of a firm in greater depth, but for now, taken together, firm value includes ROIC, growth rate, and cost of capital. It is incredibly beneficial for supply chain professionals to understand how these factors are affected by supply chain activities. In the end, you will not only know how operational metrics are affected by your decisions but you will also grasp how financial metrics are influenced by your decisions. 

In essence, 35% of the published articles addressing instruments and methods of supply chain control deal with business metrics, 20% with the balanced scorecard and 16% with supply chain costing. Further methods are supply chain target costing and process mapping (Bacher, 2004 106). Publications by Neely et al. (1995) and Neely (2005) focusing on supply chain performance management and measurement confiim this statement... 

Competitiveness is the fourth C in our list of concepts. Managing the competitiveness of a supply chain requires two sets of choices—the choice of the metrics of competition as well as responses to competitors choices. Typical metrics used include lead time, cost, profit, product variety, consistency, service level, fill rate, and others. For a monopolist, it is important to identify appropriate metrics to coordinate optimal choices across the supply chain. However, competition has an impact on the feasible... 

The initiative that underpinned the e-supply chain project was the development of a Balanced Scorecard on a data warehouse management system. The GW sites could access the data warehouse with appropriate password control and compare the site performance with other sites for range of metrics related to customers, suppliers, quality, factory, cost, growth and innovation. 

The second reconunendation was to use SCOR metrics to measure and manage global supply chain performance. In addition to those shown in Table 23.2, MJN tracked returns as a percentage of sales, product quality, and product cost. Another structure was established to report progress to the PAC. 

INVENTORY-RELATED METRICS Inventory-related decisions affect the cost of goods sold, the C2C cycle, the assets held by the supply chain, and its responsiveness to customers. A manager should track the following inventory-related metrics that influence supply chain performance ... 

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