Monitoring these KPIs allows organizations to drive continuous improvement in their end-to-end supply chains, mitigate disruption risks, and extract more value from suppliers and logistics partners through enhanced collaboration and data sharing.
KPI |
Definition
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Business Insights [?]
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Measurement Approach
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Standard Formula
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Backorder Rate More Details |
The percentage of orders that cannot be fulfilled from current inventory and are waiting for restocking.
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Indicates stock availability issues and can highlight inefficiencies in inventory management.
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Percentage of orders that cannot be filled at the time a customer places them due to lack of stock.
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(Total Backordered Units / Total Units Ordered) * 100
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- A rising backorder rate may indicate supply chain issues or increased demand that isn't being met.
- A decreasing rate can signal improved inventory management or a decline in demand.
- Are there specific products that frequently end up on backorder?
- How does our backorder rate compare with industry benchmarks or seasonal fluctuations?
- Improve demand forecasting and inventory replenishment processes.
- Diversify supplier base to mitigate the risk of stockouts.
- Implement just-in-time (JIT) inventory systems to better align production with demand.
Visualization Suggestions [?]
- Bar charts comparing backorder rates by product or category.
- Heat maps to identify times of the year or conditions when backorder rates increase.
- High backorder rates can lead to customer dissatisfaction and lost sales.
- Chronic backorders may indicate deeper issues in supply chain management that need to be addressed.
- Inventory management systems like Fishbowl or NetSuite to monitor and optimize stock levels.
- Supply chain management platforms to streamline ordering and supplier communication.
- Link backorder rate tracking with customer service platforms to proactively communicate with customers and manage expectations.
- Integrate with procurement systems to quickly respond to backorder issues by accelerating reorder processes.
- Improving the backorder rate often requires investment in inventory and may increase carrying costs.
- Conversely, a high backorder rate can erode customer trust and satisfaction, impacting long-term customer value and brand reputation.
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Capacity Utilization More Details |
The percentage of the total manufacturing or production capacity that is being utilized at any given time.
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Helps in assessing the efficiency of production operations and identifying potential areas for capacity expansion.
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Measures the percentage of the total manufacturing or production capacity that is actually being used over a set period.
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(Total Output / Maximum Possible Output) * 100
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- Increasing capacity utilization may indicate growing demand or improved operational efficiency.
- Decreasing utilization could signal overcapacity or production issues.
- Are there specific production lines or facilities that consistently operate at full capacity?
- How does our capacity utilization compare with industry standards or benchmarks?
- Invest in predictive maintenance to minimize downtime and maximize equipment utilization.
- Implement lean manufacturing principles to optimize production processes and reduce waste.
- Regularly review and adjust production schedules to match demand fluctuations.
Visualization Suggestions [?]
- Line graphs showing capacity utilization over time.
- Stacked bar charts comparing utilization rates across different production lines or facilities.
- High capacity utilization can lead to increased wear and tear on equipment, raising maintenance costs.
- Underutilized capacity can result in inefficient resource allocation and reduced profitability.
- Manufacturing execution systems (MES) for real-time monitoring of production processes and equipment utilization.
- Enterprise resource planning (ERP) software to align production schedules with demand forecasts.
- Integrate capacity utilization data with maintenance management systems to schedule preventive maintenance during off-peak periods.
- Link with sales and operations planning (S&OP) processes to align production capacity with sales forecasts.
- Increasing capacity utilization can lead to higher production output and potentially lower unit costs.
- However, overutilization may result in decreased product quality and employee burnout.
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Cash-to-Cash Cycle Time More Details |
The time it takes for a company to convert its investment in inventory and other resources into cash flows from sales.
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A critical measure for understanding the liquidity and efficiency of the supply chain operations.
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The time taken from spending cash on raw materials to receiving cash from customer payments.
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(Days of Inventory + Days of Receivables) - Days of Payables
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- A decreasing cash-to-cash cycle time may indicate improved inventory management or faster sales cycles.
- An increasing cycle time could signal issues with inventory turnover, sales slowdown, or extended payment terms.
- Are there specific products or categories that contribute significantly to the cash-to-cash cycle time?
- How does our cycle time compare with industry benchmarks or historical data?
- Optimize inventory turnover by identifying slow-moving or obsolete stock and taking appropriate actions.
- Negotiate favorable payment terms with suppliers to extend the cash-to-cash cycle and improve cash flow.
- Implement lean manufacturing or just-in-time (JIT) principles to reduce inventory holding costs and shorten the cycle time.
Visualization Suggestions [?]
- Line charts showing the trend of cash-to-cash cycle time over time periods.
- Stacked bar charts comparing cycle times for different product lines or business units.
- Extended cash-to-cash cycle times can strain working capital and limit investment in growth opportunities.
- Short cycle times may lead to stockouts and missed sales opportunities if not managed effectively.
- Enterprise resource planning (ERP) systems with integrated inventory and sales modules for real-time tracking and analysis.
- Financial management software to monitor cash flow and working capital requirements.
- Integrate cash-to-cash cycle time tracking with financial planning and analysis (FP&A) processes to align working capital management with strategic goals.
- Link cycle time data with sales and operations planning (S&OP) to ensure inventory levels support demand forecasts and sales targets.
- Reducing the cash-to-cash cycle time can improve liquidity and financial stability, but may require upfront investments in process improvements or technology.
- Extending the cycle time may provide short-term cash flow benefits, but could lead to missed sales opportunities and increased carrying costs in the long run.
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CORE BENEFITS
- 34 KPIs under Supply Chain Project Management
- 15,468 total KPIs (and growing)
- 328 total KPI groups
- 75 industry-specific KPI groups
- 12 attributes per KPI
- Full access (no viewing limits or restrictions)
FlevyPro and Stream subscribers also receive access to the KPI Library. You can login to Flevy here.
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Compliance Rate with Industry Standards More Details |
The percentage of supply chain operations that comply with relevant industry standards and regulations.
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Insights into the level of adherence to regulatory and quality standards, crucial for minimizing risk and improving marketability.
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The percentage of operations or products meeting specified industry standards and regulations.
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(Number of Compliant Operations or Products / Total Operations or Products) * 100
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- An increasing compliance rate with industry standards may indicate a proactive approach to regulatory changes and a commitment to quality and safety.
- A decreasing rate could signal potential non-compliance issues, increased risks, or a lack of adaptability to evolving industry standards.
- Are there specific areas of the supply chain where compliance issues are more prevalent?
- How do our compliance rates compare with industry benchmarks or regulatory changes?
- Regularly review and update internal processes to align with changing industry standards and regulations.
- Invest in training and education for supply chain staff to ensure awareness and understanding of compliance requirements.
- Implement robust monitoring and auditing systems to identify and address non-compliance issues promptly.
Visualization Suggestions [?]
- Line charts showing compliance rates over time to identify trends and potential areas of improvement.
- Pie charts to visualize compliance rates by specific standards or regulations.
- Non-compliance with industry standards can lead to legal and financial penalties, as well as reputational damage.
- Inconsistent compliance may result in disruptions to the supply chain and impact overall operational efficiency.
- Compliance management software to track and manage adherence to industry standards and regulations.
- Regulatory intelligence platforms to stay updated on changes in industry standards and regulations.
- Integrate compliance data with quality management systems to ensure alignment with product quality standards.
- Link compliance tracking with supplier management systems to assess and address non-compliance issues within the supply chain.
- Improving compliance rates can enhance brand reputation and customer trust, leading to potential business growth and competitive advantage.
- However, increased focus on compliance may require additional resources and operational adjustments, impacting cost and efficiency.
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Cost of Goods Sold (COGS) Efficiency More Details |
A measure of how effectively a company is managing its direct costs associated with producing the goods it sells.
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Insights into how effectively a company is managing its production costs, impacting overall profitability.
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Measures the direct costs attributable to the production of the goods sold by a company.
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Total Costs of Goods Sold / Total Number of Units Sold
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- An increasing COGS efficiency may indicate improved cost management or production processes.
- A decreasing efficiency could signal rising production costs or inefficiencies in the supply chain.
- Are there specific areas of the production process where costs are consistently higher?
- How does our COGS efficiency compare with industry benchmarks or competitors?
- Implement lean manufacturing principles to reduce waste and improve cost-effectiveness.
- Regularly review and renegotiate supplier contracts to ensure competitive pricing.
- Invest in technology and automation to streamline production processes and reduce labor costs.
Visualization Suggestions [?]
- Line charts showing COGS efficiency over time to identify trends and patterns.
- Pareto charts to identify the most significant cost drivers in the production process.
- Low COGS efficiency may lead to reduced profitability and competitiveness in the market.
- Failure to address inefficiencies could result in higher production costs and reduced margins.
- Enterprise resource planning (ERP) systems to track and analyze production costs in real-time.
- Cost management software to identify areas of overspending and opportunities for cost reduction.
- Integrate COGS efficiency tracking with financial systems to understand the impact on overall profitability.
- Link with procurement and inventory management systems to optimize purchasing and inventory levels.
- Improving COGS efficiency can lead to cost savings and improved profitability, but may require initial investment in process improvements.
- Conversely, declining COGS efficiency can erode profit margins and impact the financial health of the organization.
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Customer Order Cycle Time More Details |
The total time it takes for a company to complete a customer order, from order placement to delivery.
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Indicates efficiency in processing and fulfilling orders, directly affecting customer satisfaction.
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The total time from when a customer places an order to when they receive the product.
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Sum of all individual Order Cycle Times / Total Number of Orders
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- Customer order cycle time may increase during periods of high demand or supply chain disruptions.
- A decreasing cycle time could indicate improved operational efficiency or better inventory management.
- Are there specific stages in the order fulfillment process that consistently cause delays?
- How does our cycle time compare with industry benchmarks or customer expectations?
- Implement process automation to streamline order processing and reduce manual errors.
- Invest in transportation and logistics optimization to minimize delivery lead times.
- Regularly review and optimize inventory levels to meet demand without excess stock.
Visualization Suggestions [?]
- Gantt charts to visualize the timeline of each customer order from placement to delivery.
- Line graphs showing the average cycle time over specific time periods to identify trends.
- Extended cycle times can lead to customer dissatisfaction and potential loss of business.
- Inconsistent cycle times may indicate inefficiencies or bottlenecks in the supply chain.
- Enterprise resource planning (ERP) systems to track order progress and manage inventory levels.
- Transportation management software to optimize delivery routes and reduce lead times.
- Integrate customer order cycle time data with customer relationship management (CRM) systems to better understand customer expectations and preferences.
- Link cycle time tracking with production planning systems to align manufacturing schedules with order fulfillment needs.
- Reducing cycle time can improve customer satisfaction and retention, leading to increased sales and revenue.
- However, overly aggressive reductions in cycle time may strain resources and increase operational costs.
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In selecting the most appropriate Supply Chain Project Management KPIs from our KPI Library for your organizational situation, keep in mind the following guiding principles:
It is also important to remember that the only constant is change—strategies evolve, markets experience disruptions, and organizational environments also change over time. Thus, in an ever-evolving business landscape, what was relevant yesterday may not be today, and this principle applies directly to KPIs. We should follow these guiding principles to ensure our KPIs are maintained properly:
By systematically reviewing and adjusting our Supply Chain Project Management KPIs, we can ensure that your organization's decision-making is always supported by the most relevant and actionable data, keeping the organization agile and aligned with its evolving strategic objectives.