What Are the Assessment Indicators for Supply Chain Management?-数夫软件

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What Are the Assessment Indicators for Supply Chain Management?

Published on: 2024-04-07

What are the key assessment indicators for supply chain management? As the saying goes, nothing can be accomplished without rules or standards. If you have any experience in supply chain management, you will find that so-called supply chain management is actually about assessing various indicators. So what are the main ones?

What Are the Assessment Indicators for Supply Chain Management?

Supply chain management assessment indicators include:

(1) On-time delivery rate for customer orders.

This is the most important indicator for measuring your company's customer order delivery level. It is directly linked to customer experience and satisfaction, and it is a major indicator that distinguishes your company's supply chain management level from that of competitors.

Its formula is: number of orders delivered on time and in full within a period / total number of orders * 100%.

(2) Forecast accuracy.

This is the focus of disputes between the sales department and the planning department at every sales and operations coordination meeting. Sales often blames planning for insufficient flexibility, while planning blames sales for inaccurate forecasts. Therefore, every enterprise should calculate forecast accuracy and analyze the causes of inaccuracy.

For the formula for forecast accuracy, there is no universal formula in the industry. A reference formula is: (1 - ABS(A - F) / F) * 100%, where F = monthly forecast quantity and A = monthly actual quantity.

(3) Master plan achievement rate.

Since sales blames planning or the supply chain for insufficient flexibility, the next series of indicators is used to assess planning, starting with the master plan achievement rate.

The so-called master plan refers to the feedback plan output by planning to sales after receiving the sales forecast and considering the constraints of materials, inventory, and capacity. It includes shipment quantities for each product line. The granularity may not be detailed down to specific models, and the feedback shipment quantity should be less than or equal to the sales forecast.

Its formula is: actual shipment quantity / planned shipment quantity * 100%.

(4) Internal order fulfillment rate.

After the master plan is completed, the month for executing the master plan begins. After receiving customer orders, sales needs to generate sales orders internally, namely internal orders, including models, quantities, and shipment time. The internal orders are then included in the master production schedule (MPS), generating the corresponding manufacturing work orders.

The internal order fulfillment rate is an important indicator used to assess the supply chain's ability to meet real customer demand. Its formula is: number of internal orders completed on time and in full / total number of internal orders * 100%.

(5) On-time completion rate of manufacturing work orders.

As mentioned above, after receiving internal orders, the planning department generates manufacturing work orders according to the production schedule. Therefore, the on-time completion rate of manufacturing work orders determines the internal order fulfillment rate, in line with the guideline of focusing on nodes and assessing level by level.

Its formula is: number of work orders completed on time and in full / total number of work orders * 100%.

(6) Capacity utilization rate.

This is an important indicator to consider when preparing the master production plan.

Its formula is: capacity utilization rate = (load time - downtime) / load time.

(7) Supplier on-time delivery rate (by plan).

This is an important indicator for assessing suppliers' ability to deliver on demand.

If a supplier's delivery rate against the procurement plan is poor, work orders and schedules must be adjusted according to the supplier's newly committed delivery plan. This will cause the supply chain to lose agility and flexibility, and then affect the on-time delivery rate of customer orders.

Therefore, supplier on-time delivery rate is an extremely important assessment indicator on the material supply side. Its formula is: number of purchase orders delivered on time according to plan / total number of purchase orders * 100%.

(8) Supplier on-time delivery rate (by commitment).

This is an indicator for assessing the achievement rate between the delivery time and delivery quantity committed by suppliers and the actual delivery time and delivery quantity. It is the bottom line for delivery assurance on the supply side.

Its formula is: number of purchase orders delivered on time according to commitment / total number of purchase orders * 100%.

(9) Inventory turnover days (Days Sales Inventory).

This is an important indicator that estimates how many days current inventory can sustain sales based on sales forecasts. It is increasingly replacing the three traditional inventory indicators of inventory amount, inventory turnover, and obsolete inventory ratio, because it is directly linked to sales velocity and more intuitively reflects the rationality of inventory.

Its formula is: 360 / inventory turnover times. In practical use, you can divide the forecast demand quantity for the next month by the number of days in the next month to obtain the average daily demand quantity. Then divide the current inventory quantity by the average daily demand quantity for the next month to obtain inventory turnover days.

(10) Supply chain operating cost ratio.

This is an indicator for measuring supply chain operating costs. Its formula is: (warehousing cost + transportation cost) / sales revenue. Note: warehousing cost = loading and unloading fee * warehouse throughput + rent per square meter * storage area; transportation cost = unit freight rate of each transportation mode * cargo weight.

(11) Delivery cycle.

This is the core indicator for measuring supply chain flexibility. It determines how long customers usually need to wait to receive goods after placing an order, and it is an important factor customers pay attention to when deciding whether to place an order.

Its formula is: customer order processing cycle + production cycle + logistics cycle.

What Are the Assessment Indicators for Supply Chain Management?

In today's highly competitive business environment, companies are constantly seeking ways to improve supply chain performance. To effectively measure and optimize their supply chain operations, enterprises rely on a set of basic key indicators. These indicators act as road signs, providing valuable insights into key areas of supply chain management. Soonfor Software has focused for more than 20 years on the development and promotion of home furnishing management software, management consulting, intelligent manufacturing, and intelligent marketing, providing comprehensive and mature solutions for the digital management of home furnishing enterprises. For the marketing side, operations side, manufacturing side, and supply chain side of home furnishing enterprises, it has launched products and services such as intelligent manufacturing, intelligent marketing, management consulting, and management software.

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