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Measuring Performance in Supply Chain Management

This article discusses the importance of measuring performance in supply chain management and provides an overview of typical measures used. It also explores the design of distribution networks and their impact on response time and customer experience.

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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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