Time for a Supply Chain Metrics Cleaning


Ask yourself, “Are your supply chain metrics bogging you down?” ” To manage a supply chain containing complex dependencies between teams, departments and partner companies across international boundaries requires a rich set of metrics. However, companies often have too many independent metrics that can cause conflicts amongst competing supply chain functions. Functionally isolated metrics lead to sub-optimized supply chain performance.

Supply Chain Metrics - Gaining Visibility in a Data-rich World


The second part of Drucker’s quote, “if you can't measure it, you can't improve it,” really brings home the importance of having the right set of metrics. In the field of supply chain management, we have created an abundance of metrics and key performance indicators (KPIs). For the past 30 years I have been involved with multiple efforts to build a set of supply chain metrics and have learned a few things along the way.

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6 Benefits of Effective a Reverse Logistics System & The 9 Core RevLog Metrics to Track


With the purpose of optimizing supply chain efficiency and asset recovery rates, applying a reverse logistics system has increasingly become a tool that positively impacts profitability as well as assisting an organization in meeting sustainability goals. With the growth of sustainability initiatives , more companies have adopted the use of recycled materials in production and have developed procedures for the responsible disposal of products that cannot be recycled or reused.

Metrics that Matter: Customer Service


Inventory accuracy and minimizing stockouts are very important to customer satisfaction, but a few other metrics also impact the ability to meet customer expectations. Companies can use these metrics to help ensure they are doing everything possible to satisfy their customers at a manageable and sustainable cost. It’s easy to meet delivery expectations if you carry excess inventory, but it’s an expensive and impractical solution. Choosing Metrics.

How to Sustain a Lean Culture in Manufacturing & Supply Chain


Today I will discuss how a company can sustain a lean culture once they have implemented lean practices in order to achieve continuous improvement. Your company has started the lean journey, but how do you sustain it? Let's first talk about first setting the stage, then give you practical practices and tactics to achieve a sustainable lean culture, and then provide core key performance indicators (KPIs) to track your progress. Once implemented, Lean has to be sustained.

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5 supply chain management tips for retail for sustained profitability

6 River Systems

These are the two factors that are essential for the long-term sustainability of any retail business, and achieving them requires implementing smart supply chain management tips and strategies. Here are five supply chain management tips for the retail industry to bring in sustainable profits.

Building a Triple A Supply Chain: Ten Tactics That Work

Supply Chain Shaman

Only supply chains that are agile, adaptable, and aligned provide companies with sustainable competitive advantage.” Over the last six years, we studied the connection between business results (growth, operating margin, inventory turns and Return on Invested Capital (ROIC)) and the link to company characteristics. Reward teams for cross-functional metrics. Focus functional metrics to improving reliability.

The DDAE Model – Metrics, Ranges and Next Steps


Prerequisite #3: Flow-Based Metrics. The DDAE model uses different metric emphases within each of the operational, tactical and strategic relevant ranges to promote and protect flow today and into the future. Operational metrics emphasize reliability, stability and velocity to determine relevant information and materials in the Operational Relevant Range. Strategic metrics emphasize contribution margin, working capital control and customer base control and development.

Speed up your eCommerce Business with Inventory Management Software


Inventory management plays a vital role in building a sustainable, scalable and profitable eCommerce business. No matter how expert you are, how bigger or smaller your business may be, what products you sell, or who do you serve, lack in your inventory management can bring bigger challenges in your business success. Thus, inventory Management Software is really an essential tool for your business to gear itself up. What is Inventory Management System?

Why Have We Not Reduced Inventory?

Supply Chain Shaman

This year supply chain leaders will celebrate thirty years of progress in supply chain management; but we have not made progress on one of the funamentals: inventory management. I think that it is time for us to take the litmus test and ask the hard questions, “Have our practices impacted days of inventory? Have the early adopters of inventory optimization seen a reduction in inventory on their balance sheets?” Ownership of Inventory as a Metric.

Six Ways Warehouse Inventory Management Software Optimizes Efficiency


The Warehouse Inventory Management Software market grew to $1.4B Warehouse Inventory Management software and systems help reduce infrastructure costs and enable the reallocation of existing IT resources to drive productivity improvements, according to IDC. Warehouse Inventory Management Software is seeing increased adoption as manufacturers expand globally through mergers, acquisitions, and regionally-focused manufacturing strategies.

Looking Beyond Red Arrows

Supply Chain Shaman

It is hard work to maintain the status quo in metrics performance. A balanced portfolio of metrics delivers the greatest value. As a result, supply chain leaders focus on unrealistic goals of inventory or costs, they will throw the system out of balance. It is seldom a story of the translation of supply chain transformation to improve dynamic organizational capabilities or sustained balance sheet results. 2) Focus on a balanced portfolio of metrics.

Announcing the Supply Chains to Admire 2015

Supply Chain Shaman

It is for this reason, that we analyze the patterns of the Metrics That Matter using orbit charts over the period of 2006-2014. The analysis is designed to analyze supply chain leader success on a portfolio of metrics. In our analysis of the 2015 Supply Chains to Admire work, we analyzed 320 companies in 23 industries on growth, operating margin, inventory turns and Return on Invested Capital (ROIC) for the time period of 2006-2014. The performance levels are hard to sustain.

Inventory Turnover – A Formula For Achieving Game Changing Results!

Supply Chain Game Changer

As we have discussed in other blog posts we have tackled Inventory Turnover several times, amongst many other challenges. Your challenge may be trying to improve Inventory performance or trying to create a transformational improvement in some other area. Otherwise you will be begging for support which will be very difficult to get and sustain. There are many, many metrics that are involved in running a business. Subscribe Here! Email Address.

Why Demand-Driven Manufacturing is Focused on Metrics for Action


There are two subordinate measurements: Inventory and Operating Expense. These three measurements cover the gambit of what needs to be measured because they are directly related to customer orders, cash captured inside the organization, and the cash it takes to turn inventory into sales. Demand-driven managers know that having too many metrics leads to conflicting measurements. We call these Metrics for Action. Metrics for Action. Driving Continuous Improvement.

Double Inventory Turnover In 9 months!

Supply Chain Game Changer

World Class Inventory Turnover Breakthrough Elements! “If we are truly a Supply Chain Services Company, then why is our Inventory Turnover only at 7?”, I had just joined the company and in studying their financial performance it stood out to me that if we were truly a Supply Chain Services company then having only 7 Inventory turns was extremely uninspiring. Could we double inventory turnover? Setting the Target to Double Inventory Turnover.

Financial Benchmarking for Inventory Turns and Working Capital


Using so called orbit charts, we have benchmarked companies on EBIT% versus Inventory Turns. That benchmark helped to reveal the ‘best practice frontier’, which in turn helped in setting aggressive but aligned targets for EBIT% versus Inventory Turns. As recaptured in Figure 1, the inventory turns are a measure on the ‘cash’ side of the triangle. Figure 1 – Aligning EBIT% and Inventory Turns to align the Supply Chain Triangle.

7 Key Factors that Underpin the Success of your Inventory Optimization Initiative

Supply Chain Opz

From the most basic to the most advanced organization, Inventory Optimization is a critical goal and one which underpins the effectiveness of the supply chain operation. Inventory Optimization requires an organization to sustain and maintain the right mix of cost versus service. In this article we will examine inventory optimization processes as part of a structured sequential journey and examine seven of the key factors in delivering the optimal mix of stock.

Double Inventory Turnover In 9 months!

Supply Chain Game Changer

Check out World Class Inventory Turnover Breakthrough Elements! “If we are truly a Supply Chain Services Company, then why is our Inventory Turnover only at 7?”, I had just joined the company and in studying their financial performance it stood out to me that if we were truly a Supply Chain Services company then having only 7 Inventory turns was extremely uninspiring. days of Inventory in the company. Excess and Obsolete (E&O) Inventory .

Let the Design Begin…

Supply Chain Shaman

It could no longer be just about inventory levels. To balance new requirements for customer service with a wider product platform, the focus needed to shift to be on the form (raw, semi-finished goods, and finished products) and function (design of cycle inventories, seasonal builds, safety stock and customized product strategies) of inventory. This analysis needed to be completed monthly and fed to newer forms of inventory optimization technologies.

How Do Inventory Risks Impact Your Business?


Understanding the types of inventory risks that may be impacting your business will shed light on the best strategies to mitigate against these risks for your inventory control needs. Types of inventory risk. There are different types of inventory risks that threaten every inventory manager. Let’s take a look at the impact of inventory risk on both the supply and demand of inventory stock. Mitigating inventory risks.

Companies Collect Faster, Pay Slower and Hold a lot Less Inventory

Material Handling & Logistics

Top companies now collect from customers over two weeks faster, pay suppliers nearly three weeks slower, and maintain less than half the inventory of typical companies in their industry, according to new working capital research from The Hackett Group Inc. There is also a direct relationship between sustained working capital optimization and improved earnings and profitability, according to another study by The Hackett Group.

Supply Chain Scope: New Study Shows Rise in US Inventories; California Estimated to Improve Freight Efficiency by 25% in 2030


A new study by the SupplyChainDigest analyzing the main components of working capital: Days Sales Outstanding (DSO), Days Inventory Outstanding (DIO), and Days Payables Outstanding (DPO) revealed an uptick in DIO. Sustainable Freight Action Plan for California is estimated to Improve Freight Efficiency by 25% in 2030. California Sustainable Freight Action Plan. New Study Shows a Rise in US Company Inventories.

The Correlation Between Accurate Inventory Control and Sales Growth


Inventory control is much more than just having enough quantities of inventory stock on hand. Therefore, it makes sense that a direct relationship exists between inventory control and sales. Accurate inventory control helps a business to maintain the right amount of stock necessary to operate at optimum levels. Requiring the accurate management of a business’ raw material and other inventory purchases that will eventually be turned into goods for sale.

Corporate Risk and the Growing Case for Sustainable Chemical Management

UL EHS- Sustainability

Building out an inventory of chemicals is crucial to fully understanding how exposed your business might be – not only to regulatory non-compliance but also to the risk of pollution or breaches of internal health and safety policies. For Kimberly Williams, an inventory services manager for the chemical data management business SiteHawk, an accurate chemical inventory is the foundation for your overall chemical management initiatives and globally harmonized system (GHS) compliance.

How To Ensure Best Practice Use Of Your Business Intelligence Dashboards


Understanding how to use business intelligence tools correctly is essential to ensuring a consistent level of sustainable growth and ongoing business success. This dashboard collects key financial health indicators from marketing activities and displays financial metrics to provide senior management and investors with performance results to help them determine future marketing spend. This dashboard can deliver sales metrics including costs, revenue, profits and incremental sales.

Three Lies and a Truth

Supply Chain Shaman

Here is the list: Supply chain technology implementations have reduced inventory. Here they are: The Lie of Inventory Reduction. Repeatedly, I heard that supply chain applications have saved costs, reduced inventory and improved customer service. However, the results were not sustained and the impact cannot be seen on the balance sheets. I also believe that it is because the organization is not incented to manage cash-to-cash metrics.

Logistics Company


2 Key Inventory Metrics Your Logistics Company Should Be Measuring. ADOH represents how much inventory a process has stored expressed in terms of how many days that process could sustain activity by consuming the stored inventory. Because it is unrealistic to remove all inventory, the goal is to reduce ADOH to minimum levels while sustaining stability of the processes within the supply chain. Inventory Carrying Cost.

Balancing Cash, Cost and Service: The Supply Chain Triangle


Over the last 5 years I have seen many companies launching inventory reduction programs. When launching an inventory reduction program, companies should be aware that inventory, as a part of Cash, should always be balanced with Cost and Service. They can increase the inventory and as such require more cash. Sourcing in Asia, the leveling of production and rounding to full trucks are measures that lower the cost but they increase inventory.

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Quick Start Guide to Using Machine Learning for Demand Planning


Without baseline metrics on what you want to improve on and why, how can you be confident your strategy is working? And because machine learning systems get smarter over time, having a consistent method of measurement is even more important to ensure you can accurately track how outcomes and ROI are improving against established metrics. After you’ve established your project objectives, it’s time to build a solid baseline/foundation for a successful and sustainable initiative.

The Best Practice Frontier in the 3D Supply Chain Triangle


Sales tries to increase service to sustain top-line. Ensure continued alignment by sharing inventory turns as a KPI. Figure 1 shows it for inventory and service. The idea is that more service, typically comes with a higher inventory (or lower turns). They increase the service but require a higher inventory. Figure 1 – The best practice frontier – Inventory vs Service. Figure 4 shows that inventory can be substituted by cost, and vice versa.

2020 Requires Big Wings and Feet

Supply Chain Shaman

Granular data by volume is a must to be able to manage replenishment, network design, and inventory targets. Companies that directly connect financial data to supply chain data without creating a feasible plan at an item/location level rate themselves significantly lower on S&OP effectiveness creating higher costs, levels of inventory and order short shipments. A simplistic view is that supply chain excellence is the trade-off of cost, inventory and customer service.

What does it take to build a best-in-class supply chain?


12-hour days, hair on fire supply constraints, excess inventory, completely manual processes, imbalanced supplier terms and conditions, poor cash to cash. Tracking success: Metrics matter. Now Avaya is leading the way, exceeding industry benchmarks in 11 key metrics. The company has reduced supply chain expense by 50% and decreased cash tied up in net inventory by 94%. Rigorous tracking of these metrics helps Avaya feel confident it’s on track to realize success.

Carter’s: A Story of Supply Chain Leadership

Supply Chain Shaman

Over the period of 2009-2015, only 88% of companies made improvement on the Supply Chain Metrics That Matter. (As As a group, these metrics have the highest correlation to market capitalization. They include growth, inventory turns, operating margin and Return on Invested Capital (ROIC)). As a group, public companies want to make progress to both drive and sustain metrics performance, but they cannot. Performance on the Supply Chain Metrics That Matter.

Tell Me Why

Supply Chain Shaman

As a result, tor most companies, the goals are unclear and the financial metrics are not well-understood. We believe that the test of a true leader is the ability to not only drive higher levels of performance, but to sustain competitive advantage over time. This year-over-year comparison, enables visualization of performance on two metrics. In Figure 3, the orbit chart is on inventory turns and operating margin. Metric balance is difficult for supply chain teams.