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The Basics Of Supply Chain Metrics

Apr 21, 2008
Managing your supply chain is indeed an essential in any business setting. This is because if you can manage your supply chain efficiently, then you can enjoy a lot of advantages amongst the tough competition pitted against your business. What's more, with effective supply chain management, you can improve customer satisfaction because the process ensures the fast and quality delivery of goods to your customers. Thus, it is very important to make sure all aspects of the supply chain are in working order. The only way to do this is to implement supply chain metrics.

Technological advancements have certainly paid off, especially with the introduction of RFID tags. These tags are actually used to track shipments and pallets electronically. What's more, with the help of RFID tags, the management system of both stocks and orders is made more efficient. These tags make it very easy to track individual shipments in just about any part of the supply chain. Data is also maintained efficiently, especially when it pertains to serial codes, quantity, description, and information on the product itself. When you combine RFID data with the information you can get from barcodes, then you will have a lot of information at your hands. You may think this is a good thing when it comes to developing supply chain metrics, but it actually is not. Having all of these data and information will just add to the extraneous variables in the equation. It would then be difficult to accurately measure what you intend to measure in the first place. This can very well bring information overload for the management staff, which should be avoided because managers already have a lot to process to begin with. Bombarding them with all these data would just make things more complicated. Remember that less is more when you are delving into the field of metrics. This is according to Pareto's Principle, which states that 80% of the benefits you enjoy from any process actually come from just 20% of the activity as a whole. Thus, it is important to determine the appropriate metrics to use when measuring the efficiency and performance of your supply chain.

You just may hear of scorecards containing as many as 20 to 30 metrics at a time. Yes, this is indeed common in a lot of companies all over the world. The sad thing here is that most of these companies do not really know that the main reason why their supply chain metrics are not fulfilling the very purpose they exist in the first place is the fact that they are just too many in number. With these many metrics, you can easily find the interpretation of a particular metric going against that of another metric.

Having just the essentials for your supply chain metrics will definitely go a long, long way for you. If you are not too sure which particular metrics you should include, do not worry. There are several websites that offer quality information that you can use. Also, there are templates that you can use. Just make sure to go with the metrics that are indeed relevant for your company.
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