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Supply Chain Performance Metrics Process, Remendations 2 This document gives an overview of the different metrics that can be used to measure supply chain performance ? The Supply Chain CoE’s objective is to define a benchmarking framework capable of: – Comparing generic metric performances for use on projects. – Capturing further benchmarking data in a consistent format. ? The London Shop’s task: – Develop an overview of the different metrics to measure supply chain performance. – Select the most important metrics that can be used across industries. – Discuss how the most important metrics link other operational metrics within each stage of the supply chain. – Suggest how the supply chain CoE should continue concerning this topic. 3 We used information from several sources during our project ? Internal and external documents: – High level benchmarking framework for supply chain performance (H .Cook): ? Shop Study (March 1997) accessing information from available experts and past projects. – Supply chain benchmarks and best practice (Dow Polyurethane amp。 Epoxy April 1995). – Supply Chain Benchmark Assessment (March 1997). – Supply chain appraisal and benchmarks: (client X September 1997). ? Discussions with supply chain CoE: – Graham Colclough. – Andrew Man. – Lee Sherman. – Deborah Huff (Cap McKinsey). 4 Possible data sources ? CIPS (UK): Purchasing (amp。 Supply Chain). ? APICS (US): Supply Chain. ? CAPS (US): Purchasing amp。 Supply Chain (US amp。 Legal): – Research Benchmark Industry Listings ( ? NAPM (US): Purchasing. ? Kaiser Associates: Benchmark Specialist Consultant. ? US University Research: New global initiative (investigating entry opportunities—Bob Ackerman). 5 Performance measurement is an important but plex subject This document’s an initial step in the right direction. Companies see the need for metrics. . . . . . but developing the “right” set of metrics is a challenge ? “If you can’t measure, you can’t manage, you can’t motivate” ? Establishing the proper measures within an anisation enhances continuous ? No monly used “model”. ? Business issues that warrant performance measurement: – Differ between industries. – Differ within industry. – Change overtime. There is no one “right” answer Focus Accountability Communication Linking strategy to action Assigning accountability to take action when needed Measuring progress towards goals through interactive munication and education 6 We used a generic supply chain framework as a basis for our analysis . . . Supply Chain Framework Suppliers Purchasing Information Flow Forecasting amp。 Production Planning Customer Service Inventory Management Inbound Logistics Manufacturing Maintenance Marketing amp。 Sales Outbound Logistics Integrated Supply Chain Management Customers This framework aligns with the CoE POV and is also similar to framework for the supply chain diagnostics inventory database. 7 . . . and concluded there are three strategic objectives we should focus on when analysing the supply chain Key metrics must give information on how a pany is performing against old strategic objectives. Strategic objectives: Quality Time Cost Products/services according to customer expectations On agreed time At reasonable cost Purchasing Information Flow Forecasting amp。 Production Planning Inventory Management Inbound Logistics Manufacturing Maintenance Marketing amp。 Sales Outbound Logistics Integrated Supply Chain Management Customer Service Supply Chain Framework NB: Boundaries ? NPDI ? Support functions Tailor to pany specific (BSC) objectives 8 We began with a brainstorming session on the key drivers for quality, time and cost The plete picture can be found in the appendix. ? We looked at the supply chain from the customer’s perspective. ? We brainstormed on “what could go wrong along the supply chain”: – What are drivers of performance from a quality, time and cost point of view. Price Service Product quality Product quantity Product delivery Late arrival Late delivery Inventory cost Product cost Production cost Delivery cost Customer service cost Quality Time Cost 9 Making their client specific warrants attention ? Respect all sources of data: ? Understand their relationships—the “causal tree”: ? Recognised CrossIndustry。 InIndustry and InCompany similarities and differences. Blindsided Intuition Opinion Discussion Survey Functional Measures KPIs External Best Practice Qualitative Quantitative Objective 1 KPI KPI KPI KPI Objective 2 ? KPI and xxx measure ?―Dual service‖ measures (cost amp。 time) ?―Hard wired‖ and tennons ? Pushpull 10 Making their client specific warrants attention (cont.) ? Recognise CrossIndustry。 InIndustry。 and InCompany similarities and differences. ? Interface the solution to the current cl