Supply Chain performance measures define the activities involved in meeting end-customer requirements, essential inventory, and on-time and in-full delivery in a responsive manner. Supply Chain performance measures can be functional indicators and end-to-end supply chain indicators.
A supply chain is called efficient when it is well-organised and ensures perfect delivery of goods and services from us to the end-user. Supply Chain performance measures are methods to judge the performance of a supply chain system that can be divided into two groups:
1. Qualitative measures i.e. quality of goods and services and customer satisfaction;
2. Quantitative measures i.e. optimum utilisation of resources, the response time of supply chain, on-time and in-full delivery.
Supply chains need to improve continuously to survive in the market and stay ahead of competitors. KPIs (Key Performance Indicators) can be defined as practical and objective measurements of efficiency. KPIs help organisations to measure performance in terms of plan accuracy, product delivery, and inventory rates.
Different types of industries use different types of KPIs to improve performance. KPIs that are generally used for supply chains are:
- Customer order cycle time: the time duration between receipt of customer order and successful delivery is called customer order time. It should be low because more time taken for the delivery may upset customers.
- Inventory rates: the number of times inventory is sold over a specified period.
- Perfect order: an on-time, in-full and damage-free delivery is considered as a perfect order.
- Fill rate: the number of orders that can be satisfied with the available inventory.
- Cash to cash cycle time: it is the period between the date of raw material purchase and the date of receipt of money for sold goods.
Supply Chain Performance Measures and KPIs can provide a broad range of matrices that help to find and understand the pattern of shipments, logistics data, and customer behaviour. A comprehensive and customised supply chain analysis can strengthen the brand in the market.