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oods % of products delivered on time Total supply chain cost as % of sales Cost per product sold as % of sales Cost as % of sales % of products delivered according to customer order (quantity/quality) % of customers satisfied with service % of products ordered already in stock Defect rate of products as % of production % of goods delivered according to order (quantity/quality) by supplier Time from order placement to reception of goods Time from production order to delivery into finished product warehouse Downtime as % of total production time % of goods delivered on time by supplier Cost as % of sales Cost as % of sales Cost as % of sales Number of stock turns/years Total Supply Chain Forecasting Purchasing Inbound Logistics Manufacturing Maintenance Inventory Management Marketing amp。 time) ?―Hard wired‖ and tennons ? Pushpull 10 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential Making their client specific warrants attention (cont.) ? Recognise CrossIndustry。 Sales Outbound Logistics Integrated Supply Chain Management Customer Service Supply Chain Framework NB: Boundaries ? NPDI ? Support functions Tailor to pany specific (BSC) objectives 8 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential 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 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential Making their client specific warrants attention ? Respect all sources of data: ? Understand their relationships—the “causal tree”: ? Recognised CrossIndustry。 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 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential . . . 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。 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 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential 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 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential We used a generic supply chain framework as a basis for our analysis . . . Supply Chain Framework Suppliers Purchasing Information Flow Forecasting amp。 Supply Chain). ? APICS (US): Supply Chain. ? CAPS (US): Purchasing amp。LO N D O NS H O PTHEDeveloping An Overview of Supply Chain Performance Metrics Process, Remendations McKinsey October 2022 2 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential 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 LShop/Ldn/22Oct97Rpfc/kf McKinsey ? Proprietary and Confidential We used information from several sources during our project ? Internal and external documents: – High level benchmarking framework for supply chain performance (H .Cook): ? Sh