Every organization that wants to organize and manage their supply chain metrics must deploy some key performance measurement systems; this is because the average metrics needed for managing and measuring the success of an organization’s supply chain system varies by industry, company, and scale of business. Why does Supply Chain performance matter?
To ensure that every organization fulfills its long term goal, management must gain insight into how its supply chain performs and understand the necessary areas for improvement.
From sales, finance, Human Resources, productivity, quality, and the entire product life cycle, measuring the supply chain performance will help an organization achieve its short and long term goal. In addition, it is very important for an organization to measure its supply chain performance because the lack of a collaborative framework to house metrics will greatly increase the likelihood that resources will be wasted on developing duplicate and conflicting metrics.
Supply chain measurement ensures control over organizational behaviors thereby saving the firm from revenue loss and poor long term growth. Therefore, if you want to keep your company in track, it is vital to implement the primary strategies for measuring supply chain performance.
Metrics to consider in measuring supply chain performance
Some of the metrics to be considered when measuring supply chain performance include the following:
- Collaboration between supply chain partners: At present, the supply chain has become increasingly competitive; however collaboration in the supply chain can help build trust with customers, ensure transparency, and maintain compliance with authoritative entities.
- Effective Key Performance Indicators: Effective Key Performance Indicator (KPI) management starts with some important areas that both parties need to agree to. The primary areas are the major principles that will guide the rest for a more detailed and statistical KPIs found in the Service Level Agreement.
- Risk management methods: As your supply chain grows in complexity and regulations evaluate the extent of your chain’s resilience and how it relates to risk management. Determine what kind of changes you can make to improve specific segments of your supply chain.
- Aiding measurement and efficiency using supply chain technology: In today's competitive market, technology offers the best tools to simplify the supply chain; technology can also be used to increase visibility and enable organizations to have better control and stay ahead of their competitors.Identify and employ the right technologies to streamlining your supply chain and optimize productivity.
- RFID, AIDC, and IOT Systems: The benefits of using RFID-, AIDC-, and IoT- based technologies are quite enormous, each of these logistics technologies enable organizations to meet the high demands of its customers, increase profitability and lower expenses.
- Supply Chain Visibility: At present, the ability to see more clearly and deeper into the supply chain makes the chain safer and more secure. In addition, there are so many technologies that can make the goal of achieving supply chain visibility easier to achieve.
Finally, the importance of measuring the supply chain system is enormous. From finance, productivity, product life cycle, and quality, measuring supply chain performance is essential for every organization that wants to achieve long term and short term goals. In addition, it is important to remember that the lack of a collaborative framework to house metrics will greatly increase the likelihood that a company’s performance measurement system (PMS) will provide inadequate management support, and that resources will be wasted on developing duplicative, unaligned and even conflicting metrics. Therefore, every organization must identify and implement the right strategies for the overall improvement of the performance of its supply chain performance.