Before you begin, access the KPI Scenario Chart. Now, assume that you are a supply chain manager and that the information in the chart portrays some of the key performance indicators (KPIs) that you routinely monitor to assess the efficiency of your network.
For this discussion, your groups will review the chart and answer the prompts related to the following scenarios:
Your deliveries to retail stores have not been on time lately, and neither have the departures of loaded trucks from your distribution centers. Load times are well within standards, but the trucks are just not getting on the road on time.
Additionally, while you have plenty of space in the warehouse, much of the inventory has been sitting there for much longer than you anticipated and seems to be gathering dust on the shelves.
Your vehicle fleet is reaching the end of its economic life span , and routine preventive maintenance is just barely staying ahead of repairs.
- What do you believe are the root causes for late deliveries? How would you adjust operations to improve this?
- How does the inventory situation in the warehouse contribute to the issue of late deliveries?
In this final scenario, it appears that the warehouse is routinely past inventory capacity, and product age and overall cycle time are increasing. Your vehicle fleet is just past its prime; however, it is holding together well due to a robust and thorough preventive-maintenance program. You are just barely meeting your delivery schedules, and trucks are often late when leaving the warehouse. It seems that, once they are at the warehouse, they wait for an excessive amount of time before being loaded and hitting the road again.
- What is the root cause behind the reduced number of on-time deliveries?
- How can a warehouse management system (WMS) affect the delivery performance of a supply chain?
Anything that is worth doing is worth measuring, or so the saying goes. One inescapable factor of supply chain management is the need to track key performance indicators (KPI). These are the metrics that businesses use to gauge how well the operation is fulfilling their priorities. KPIs will vary from job to job within a company and may be vastly different depending on what the priorities of the company are at any particular time. Some of these, however, are fairly consistent. KPIs such as on-time delivery, inventory age, inventory turn time, and fuel efficiency are metrics that will be present in almost any operation. These tools (among others) are used by supply chain management to determine the efficiency and efficacy of the overall operation.
Key questions to remember when establishing or reviewing KPIs are whether or not decisions are being made based on the data presented and whether the metric goals are current and achievable. Metrics for the sake of metrics can be one of the most frustrating things to deal with in supply chain management. In a perfect world, the management team would use each metric to make a specific decision related to daily operations. For instance, if the team is not achieving its on-time delivery goal, there are immediate actions that can be taken to improve the operation. If nothing else, metrics will highlight the need for management to further investigate an issue and find the root cause of the declining score. Additionally, it is critical to keep KPIs up-to-date with both the operations and the priorities of the business. It would be meaningless if you were exceeding a KPI goal but it was due to a technological advancement that was made three months prior. Such metrics need to be updated for current capacity and goals. Along the same lines, it is no use tracking a metric that does not matter to the company. If inventory age is meaningless to a particular operation, then there is no sense in wasting time to track and monitor the issue. Keep your metrics and your operation focused on the goals of the company and adjust as needed.
In this module, you will review metrics for a fictional supply chain operation and determine the best course of action to increase overall efficiency. There is usually no universally correct answer, so feel free to explore many different options in your discussion. Perhaps it will come down to a combination of items from your group being the best answer for improving the operation.