SUPPLY CHAIN METRICS
suppliers through to customers or stores. The challenge of a supply chain is the length, scope, geographic reach, number of internal and external stakeholders and participants, and overall complexity. No other activity has all this – suppliers and factories around the world and global customers. Supply chains are non-linear, not linear as some project them. There are supply chains within supply chains. Viewing nonlinear supply chains as linear contributes to performance issues and to measuring operations. All these make it difficult to select the proper metrics. There are numerous metrics. Good metrics should measure the
“Supply chains are non-linear, not linear as some project them. There are supply chains within supply chains. Viewing non-linear supply chains as linear contributes to performance issues and to measuring operations.�
performance of the total supply chain, more exactly the process. KPIs (key performance indicators) must be measurable. As a result, numerous metrics are about the logistics components. Some of these are good. However, they do not present a view of the total supply chain. Plus, many have little or no use for the C-suite. Assessing logistics parts is a node-link approach and does not recognize the supply chain process. Supply chain management is a process that is often measured by its logistics costs. That approach is a root cause of issues.
Such computations do not measure the supply chain or its performance and can include factors outside of the supply chain. In addition, the way accounting treats supply chain costs is dated. They go back a hundred years before supply chain management and global activity were recognized. Supply chains are being transformed. The Amazon Effect has stimulated the beginning of a global supply chain revolution. It is moving beyond e-commerce/B2C and is crossing industries and markets.
SEPTEMBER 2017 33