Your supply chain is the backbone of your business. But are you equipped with the right tools to keep it running smoothly?
Understanding essential systems and knowing which KPIs to track can make all the difference in achieving success.
From improving efficiency to driving growth, it all starts with the right setup.
Not sure where to begin?
Watch the video below to explore the must-have systems and uncover strategies to optimize your supply chain performance.
In part one, we covered the physical side of supply chains. Now, let’s shift gears to the systems and KPIs that drive operational success. Whether you’re new to a company or taking on a new role, it’s essential to evaluate these areas to get up to speed quickly on how the supply chain is functioning.
Demand Planning and Forecasting
Accurate forecasting is essential to avoiding supply chain disruptions. The question is whether the organization uses a formal demand planning system or relies on manual methods like spreadsheets. Forecasting requirements vary by industry—some sectors face static demand with occasional spikes, while others see steady demand with seasonal surges. The key is having a tool that fits your company’s needs and delivers reliable, accurate forecasts.
Supplier Management
Supplier performance can make or break a supply chain. Effective supplier management involves tracking performance metrics like on-time and in-full delivery. When evaluating a supply chain, assess whether systems are in place to manage supplier relationships and ensure they consistently meet performance standards.
Warehouse Management Systems (WMS)
Warehouse operations rely heavily on the right management systems. A WMS ensures inventory is tracked accurately and efficiently, supporting everything from order picking to storage. Depending on the complexity of the business, WMS solutions can range from basic to highly sophisticated, with features like batch tracking and multi-temperature control. The goal is to match the system’s capabilities to the warehouse’s needs.
Transport Management Systems (TMS)
Transport management systems optimize the logistics of moving goods. Whether it’s for selecting carriers for outbound orders or managing a fleet of trucks, TMS plays a vital role in reducing transportation costs, improving efficiency, and ensuring timely deliveries.
Routing and Scheduling Systems
For businesses managing multiple deliveries, routing and scheduling tools are crucial. These systems plan the most efficient delivery routes, ensuring vehicles follow the best paths, saving time, and cutting costs. This is especially important in industries with high-volume, multi-stop deliveries.
KPIs: The Metrics That Matter
KPIs are essential for assessing supply chain performance, but less is often more. Instead of measuring everything, focus on a few key metrics that align with business goals.
One important KPI is SIFOT (Supply in Full On Time), which tracks supplier reliability. If suppliers fail to deliver as expected, it causes a ripple effect throughout the supply chain. Similarly, DIFOT (Delivery in Full On Time) measures how well the business meets customer delivery commitments.
Other important KPIs include Inventory Record Accuracy (IRA), which ensures stock levels are accurate, and financial metrics like cost per case or cost per pallet, which help assess the efficiency of operations. Productivity metrics, such as picks per hour, provide insights into warehouse performance and highlight areas for improvement.
By regularly evaluating systems and KPIs, businesses can maintain an efficient, responsive, and cost-effective supply chain.
Watch the Part 1 in through link: Understanding Supply Chains Part 1- Physical Processes
Related articles on this topic have appeared throughout our website, check them out:
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated January 25, 2023, under the title “Understanding Supply Chains Part 2- Systems & KPIs“.
