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Measuring Performance in Supply Chain Management

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  1. OUTLINE • Questions? Comments? • Any stories about interactions with supply chains? • Quiz Results Average= 1.48, Max = 1.5, Min = 1.2, std. dev. = 0.07 • Number correct = 26/29 • Return Quiz • Discuss homework • Chapter 3 and 4 (Chopra) • Performance • Types of networks • Creating a live histogram of your choice

  2. Measuring Performance • What should measuring performance accomplish?

  3. Measuring Performance • What should measuring performance accomplish? • Basis for understanding the system • Influence behavior in the system • Provide information about results • Provide information that will initiate actions to improve the system • Create accountability in individual operations • The concept of Supply Chain Management requires that overall performance be measured, but intermediate points must also be measured to insure accountability

  4. Measuring Performance (continued) • Typical internal measures • % orders on time • Inventory turns • Cycle time • Costs/Goods sold • Aging of orders

  5. Measuring Performance (continued) • Typical supply chain measurements • Cycle time • % orders on time (service level) or fill rate • Order aging • Comparisons to competitors (Bench marking) • Responsiveness to changes in demand • End items sold/Total costs • Market Share

  6. Chapter 4 – Designing the distribution network in a Supply Chain • Move and store product between stages • The structure of the network influences: • Response time • Variety of products • Availability of products • Customers’ experience • Visibility of orders • Returnability

  7. Some basic relationships in a supply network • Lower response times require more facilities • Inventory costs increase with the number of facilities • Transportation costs decrease with the number of facilities • Total logistics costs vary parabolically with the number of facilities – there is an optimum number of facilities

  8. Major types of distribution networks • Definition: Inventory Turns = Annual Sales/ average inventory • Or Annual costs/Average inventory • Manufacturing Storage with direct shipping (drop) • Manufacturing Storage with direct shipping and in transit merge • Distributor Storage with carrier delivery • Distributor Storage with Last Mile delivery (not carrier) • Manufacturer/Distributor Storage with customer pickup • Retail Storage with customer pickup

  9. Summary • Who owns what matters! • Choice of network has long term consequences • Exclusivity • Customer preference

  10. Summary • Who owns what matters! • Choice of network has long term consequences • Exclusivity • Customer preference

  11. “Mr. Osborne, may I be excused? My brain is full”

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