Managing the Supply Chain ‘This section is designed to ‘Describe supply chain metrics © Describe customer-focused metrics and how they can be used to improve overall satisfaction ‘¢ Explain the metrics used for measuring operations within the supply chain Identify how to use the SCOR® metrics Define the attributes of an efficiency-focused supply chain Define the attributes of a response focused supply chain Describe how to balance a supply chain’s efficiency and ‘responsiveness to match the organization's market and product, requirements Describe a new product or service introduction plan, esos Allalong the supply chain, managers are responsible for measuring results and ensuring that they re on target to meet thelr functional goals as well as support the organizational and strategic plans, Metrics must be identified for customers, finance, operations, and other departments that are involved! in supporting the supply chain. Finance, of course, is very keen about the cost of various operations and determines the breakeven point when the operation could become profitable. Metrics should cut across functions and ‘organizations in the supply chain to promote collaboration and Iinterdependencies. Topic 4: Supply Chain Metrics ‘Supply chain strategy and metrics choices Inthis topic we will lookat the relationship of supply chain strategy and the choice of metrics along with the different metrics for measuring the performance of supply chains, including customer-focused metries and ‘operational metrics (inchiding SCOR metrics and related financial metrics). Since i's not feasible to measure and monitor every supply chain goal or activity, managers have to choose a reasonable number of metrics that are related to the supply chain strategy. Some of the strategic attributes of supply chains are velocity visibility, variability, collaboration, trust, customer focus, and flexibility, Other attributesCustomer- focused metrics include security (risk management], compliance with all regulations, and environmental excellence (with a well-devaloped, profitable reverse supply chain). Any of these attributes could he woven into strategy, expanded into specific objectives, and subjected to measurement For instance, ifthe supply chain's strategy were to inerease the velocity with which information flows from che end customer back through the chain, objectives would be developed to assess the current state of the system and identify meirics to measure progress toward a specific goal. The key metric might bea measure of te actual velocity of communications. The goal could be to substitute direct transfer of data srom the point-of-sale via scanners, bar codes, and the Internet. A number of enabling objectives might be put in place for buying equipment, training staif, and so on. This KPI would be a true supply chain metric, because the process it measures crosses nodes No matter what strategy is being tracked and measured, a set of meaningful metrics is essential because “you get what you measure” While there is no guarantee of achieving the performance goala company decides to measure, i's a virtual certainty the company won't achieve what t fails to measure. Once a company determines the metrics to use, these metrics need to be communicated throughout the extended enterprise along with the benefits of achieving them, Lot's begin by looking at what matters to customers, which is a top priority. What do they care about, and what happens when their expectations are not met? The basic customer satisfaction premise is that if customer expectations are met or exceeded, the customer will be satisfied Customers have expectations about product avellability, performance, and service reliability. Fehibit 2-24 on the next page provides a comprehensive look at the metrics that are important ta customers Some of thece metrics were discussed previously, but they're worthy of reinforcement now. ‘What's mostimportaat about customer metrics is to measure what Is important to the customer. Pinpointing exactly what they value and expect may require customer interviews, questionnaires, online feedback surveys, and post-purchase follow-up calls, just to name a few methods for gathering that valuable data.Attibute | Metric Definition Exhibit 234: Customer-Focused Metrics “vaiabily | Stookouifrequency | Tre probability af ventory no being avaliable to meet eusiomer demand Fira Measures the impact of stoskcuts ovr ime (For exampe, fa customer requests 100 Noms but there are ony 92, the irate B92 | percent) (Desens stippedcompete | Alters ordered are preset h shipment [Baskerders ‘Aa urfiled err cr customer comrmiment Tmeneeded 6 | Speed of performance | The elapsee tine tom when a customer deliver customer der places an ord: until he product is delivered to the customer and is teady for use (e.g Inetatation) Dalvery consistency | The rumber of mos syeios meet the amount of ims plana for cemplation Fleabilty “Tha abilly fo accommodate urexpaciod or unusual customer requests ‘Malfunction woovery | Having a contingency plan in place For | equipment matunctios or service breakdowns; the ably to source an outof- stock customer item fom an alemate facility Product suppor | Response time io “The number of days it tates for customers to inquiries receive 2 response regarding an inquiry they have made ‘Response accuracy ‘A measure of wheihe’ the response Son) target and correct so that the customer doos no! requive addtional follow-up Customer cemplaints | The number of complains or amauni of negative feedback received fram customers (usualy within a given time frame) ‘Overall Repeat purchases ‘A measure of the customer completing satisfaction [|__| another purchase from the sameselier | Refers to other ‘The number of names provides by a previous | potantal customers purchaser as being potential customers |