Want to understand your supply chain better? It’s crucial to focus on the right systems and track relevant KPIs.
But what are the systems every business should have?
Watch the video for insights and practical tips to improve your supply chain performance and decision-making.
Last week, we explored the physical processes in supply chains. This time, we’re focusing on the systems and KPIs that underpin efficient supply chain operations. Whether you’re stepping into a new role or evaluating an organization’s supply chain, these insights will help you identify key areas for improvement.
Systems to Examine
Demand Planning and Forecasting
Effective supply chains start with understanding demand. Is the organization using advanced tools, or are they relying on spreadsheets? Forecasting accuracy is vital but challenging, especially in industries with fluctuating or seasonal demand. A robust demand planning system can make all the difference in ensuring smooth operations.
Supplier Management
On the supply side, managing supplier performance is critical. Are there systems to track adherence and efficiency? Many organizations struggle here, making it a priority area for evaluation.
Warehouse Management Systems (WMS)
A WMS is essential for efficient warehouse operations. Depending on the business’s complexity, it could range from a simple system to a tier-one solution with advanced features like batch tracking, temperature control, or recall capabilities. The question to ask is whether the system supports the organization’s specific needs.
Transport Management Systems (TMS)
TMS tools streamline transportation by optimizing carrier selection for deliveries or managing in-house fleets. They ensure cost-effective logistics and improve fleet utilization, making them indispensable for both small and large-scale operations.
Routing and Scheduling Systems
For businesses managing multi-drop deliveries, routing and scheduling tools maximize delivery efficiency by carefully planning each route, reducing costs, and saving time.
Key Performance Indicators (KPIs)
Too many KPIs can dilute focus, so it’s best to stick to a few critical metrics tailored to each management level. For example, executives might monitor high-level outcomes, while warehouse managers track operational performance.
Important KPIs to Monitor
- SIFOT (Supply In Full On Time): Measures supplier reliability and directly impacts outbound logistics.
- DIFOT (Delivery In Full On Time): Tracks how well customer orders are fulfilled.
- Inventory Record Accuracy (IRA): Ensures stock accuracy for seamless operations.
- Financial Metrics: Examples include cost per case or pallet throughput.
- Productivity Metrics: Such as picks per hour, which vary by industry.
By focusing on these systems and KPIs, you’ll uncover valuable insights to optimize any supply chain. What other systems or metrics do you prioritize? Share your thoughts!
Catch up with the Part 1 here: Understanding Supply Chains Part 1- Physical Processes
Related articles on this topic have appeared throughout our website, check them out:
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated January 25, 2023, under the title “Understanding Supply Chains Part 2- Systems & KPIs“.
