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BPLO 410

The document discusses measuring supply chain performance, emphasizing the importance of efficiency and effectiveness in meeting customer requirements. It outlines various types of benchmarking, key performance indicators (KPIs), and performance measures that organizations can use to evaluate and improve their supply chain activities. Key areas of focus include delivery timeliness, product availability, responsiveness, and quality, with specific metrics provided for assessing performance.

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victor kelvin
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12 views6 pages

BPLO 410

The document discusses measuring supply chain performance, emphasizing the importance of efficiency and effectiveness in meeting customer requirements. It outlines various types of benchmarking, key performance indicators (KPIs), and performance measures that organizations can use to evaluate and improve their supply chain activities. Key areas of focus include delivery timeliness, product availability, responsiveness, and quality, with specific metrics provided for assessing performance.

Uploaded by

victor kelvin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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BPLO 410: STRATEGIC SUPPLY CHAIN MANAGEMENT.

Name: MUTHENYA KELVIN MUMO


Reg No: BPL/MG/2707/09/18

MEASURING SUPPLY CHAIN PERFORMANCE.

1. Benchmarking in supply chain.

2. Types of benchmarking.

3. Key performance indicators.

4. Supply chain performance measures.


SUPPLY CHAIN PERFORMANCE.
Supply chain performance refers to the activities involved in supply chain that are vital in
meeting the requirements of customers with efficiency and effectiveness. The include but not
limited to:

1. Delivering products or service on time.

2. Making the product available to customers when needed.

3. Quick responsiveness to customer orders.

4. Offering quality products and services to customers.

BENCHMARKING IN SUPPLY CHAIN.


Benchmarking is evaluating the performance of organization by comparing standards with
other organizations. Benchmarking helps organizations to continue improving and refining their
processes.

Through benchmarking an organization is able to compare it's supply chain activities with those
of other organizations and adopt new activities or improve their activities in order to have a
competitive advantage in the market.

Types of Benchmarking.
1. Internal benchmarking

It is commonly used in organizations that have a number of branches or stores that use the
same supply chain process. It involves comparing and contrasting ways in which supply chain
process are done in those facilities. This helps in ensuring that all branches are at the same level
and give the same output. Example Supermarkets with a number of outlets across the country
can use internal benchmarking.

2. External benchmarking.

This is used by organizations that have already exhausted their different ways of performance
improvement through internal benchmarking and are seeking to identify the new techniques
used by other organizations to improve on performance. External benchmarking gives the
organization an opportunity to get to know and adopt different methods and procedures which
result to significant improvements.
3. Competitive benchmarking.

This is used by companies that are facing stiff competition from their comoetitors and their
practices and strategies are of no match with their competitors. It involves identifying strengths
and weakness through competitive benchmarking studies and the company improves it's
performance based on the results from they study.

4. Practice benchmarking.

Involves adooting the key and best oractices of competitors in order to improve the overral
performance of supply chain. It involves using competitors data and getting the difference in
strategies and practices in order to get appropriate opportunities.

5. Performance benchmarking.

Involves estimating, analysing and use of Key Performance Indicators (KPI's) in collecting
appropriate data on supply chain performance. It differs with practice benchmarking in tabt ut
takes keen interest on performance rather than strategies and practices.

KEY PERFORMANCE INDICATORS (KPI's)


This are tools that are used in measuring,monitoring and evaluating the supply chain
performance. They significantly help in optimizing cost, time, product and service quality of an
organization.

They include.

1. Quality Kpi's

2. Inventory Kpi's

3. Delivering Kpi's

4. Cost saving Kpi's


1. Quality Kpi's
They inculde.

1.Compliance rate.

This ensures that an organization does not breach the contractual policies after entering in to a
contract, it acts as a legal security. It also ensures that an organization is aware of all the
penalties in the event of a breach of contract.

2. Purchase order accuracy.

This helps an organization in tracking the activities of their suppliers, that is, ensure that they
are delivering the right products or services and at the right time.

3. Supplier defect rate.

This helps in determining the ability of a supplier to provide quality products or services. It is
done by measuring the supplier defect rate on the defect types.

2. Inventory Kpi's
They include:

1. Inventory aging.

This involves coming up with an inventory aging report which shows the period of time spent by
all the items in the store or warehouse. Helps in identifying the slow moving, medium moving
and fast moving inventory.

2. Inventory turnover ratio.

It is the ratio between the total number of inventory sold over the avearge inventory in a year.
This helps in inventory planning.

3. Inventory carrying cost.

This helps in determining the overall cost of holding inventory.


3. Delivery Kpi's.
1. Supplier lead times.

This helps in determining the amount of time spent between when an order is made and when
the supplier delivers that order to the organization.

2. Emergency purchase rate.

Measured by comparing the emergency purchases to the total number of purchases made over
a given period of time.

3. Vendor availability.

This is used to measure the ability of a vendor or suppliers to respond to emergency demands.
Helps in determining the level of reliability of a supplier.

4. Purchase order cycle time.

Measured from the moment a purchase order is submitted to the time when it is sent to the
supplier.

4. Cost saving Kpi's


They inculde.

1. Procurement Return on Investment (ROI).

This helps in determining the overall profitability and the cost saving benefits in supply chain
function.

2. Cost reduction.

Measures the level of hard saving achieved through cost management techniques. Measured
by comparing the initial cost and the present or new cost.

3. Cost avoidance.

Helps in taking actions that help to reduce future costs.


SUPPLY CHAIN PERFORMANCE MEASURES.
This is an approach that is used to determine gow the supply chain system is performing.
Organizations can use the following ways to measure the performance of their supply chain.

1. Customer service Level measurement.

2. Tracking inventory levels e.g Raw materials, finished goods, work in progress and spare parts.

3. Measuring the level of resource utilization. Eg. Manufacturing, human,logistics,financial and


storage resouces.

4. Tracking cost of raw materials.

5.Tracking revenue from sold goods.

6.Tracking cost of expired goods.

7. Tracking cost of goods returned by customers and to suppliers.

8.Tracking penalties for late delivering of orders to customers and by supplier

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