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Need suggestion on supply chain KPI

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  • #29385

    Guest
    Participant

    I now lead a project to prepare KPI (key performance indicator) to rate the performance of supply chain. Now we have the indicators like Commitment to Request, Availability to Commitment and comparison of Demand, Commitment and Availability. Demand is the PO on hand and Commitment is the Order confirmation and Availability is the Product Output plus Beginning Stock.
    If you have done the job alike before, could you please give me some suggestions to do the job better.
    Thanks
    Zhu Jiong Yi
    Shanghai/ China

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    #75172

    RR Kunes
    Member

    Please remeber that the metric drives the action. Don’t pick metrics that are not actionable.
    What is it that you are attempting to do with the supplier?
     

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    #75181

    Jack Stuart
    Participant

    RRKunes is right:  What gets measured gets done.  But it has been my experience that any more than 5 measurements at a time are too many.  You must put forth an effort to completely describe the performance in 5 or fewer measures.  Keep in mind that there are ALWAYS conflicting desires and your metrics must take that into account. Remember Deming said that everything should be evaluated as cost, quality and/or schedule.    
    In supply chain either infinite stock or zero lead-time will provide excellent service.  However, costs will go up with infinite stock.  And zero leadtime could risk quality.  If any of your critical 5 measures fall below your standards, another level of 5 diagnostic metrics may be developed to help tell what is wrong with the critical measure.  This way, if all is well, there are only 5 metrics to worry about and both you and the supplier know it.  If something is wrong, then the lower metrics are not punishments, but true y=f(x) clues to fixing the shortfalls.  That way they are not embarassments.

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    #75253

    RR Kunes
    Member

    Obtain a copy o Mil-std-1535 it is a pretty good approach to controling suppliers. You can get it free off the internet

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    #75254

    Terence
    Member

    It looks like iSixSigma has some mil standards located at https://www.isixsigma.com/st/data/.
    Terence

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    #75288

    Guest
    Participant

    Thanks for your information. In fact, what I am now measuring is the performance of inbound logistics performance, such as order fulfillment, production plan fulfillment etc.
    The problem is mainly about how to fix the calculation time basis of the indicators. Because here is mass production, so the planning mode is made to stock. Really, what is being produced or has been produced during the reported period could not be related to certain order request in the same period. So the control meets some problems.
    The target of the measurements is to reduce inventory in order to reduce the working capital of the company.
    If you have some good experiences or know-how, pls let me know it.
    Thanks.

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