Do You Have These Metrics in Your Supply Chain Dashboard?
October 6, 2020 | Staffing Blog
The supply chain is your business’ backbone. It supports your company by ensuring that the delivery of product to customers is efficient and consistent, and that you’re providing top-notch service to your customer base. As a result, if your supply chain set-up is lacking, it could have a negative effect on your company’s ability to survive and thrive. That’s why you need to have a robust supply chain dashboard to track performance.
Studies show that 79% of companies with high-functioning supply chains create revenue growth higher than the average in their industry. Conversely, 40% of companies are not paying attention to their supply chain performance metrics. Which side would you rather be on?
Understanding and Evaluating High-Performance Metrics
What are supply chain metrics exactly? To put it simply, they are parameters for your employees to follow which will help to define and assess your supply chain’s overall performance. The metrics help with monitoring key elements such as:
- Inventory accuracy.
- Turnover metrics.
- Inventory-to-sales ratio.
- And any other important contributors to your profit.
As you collect and analyze these key supply chain metrics, you will be able to eliminate weaknesses and capitalize on your strengths. Consider the following metrics to include in your supply chain dashboard to ensure that you are giving your company the best chance to succeed.
1. Perfect Order Rate
Keeping track of your perfect — or completely successful — order rates is valuable no matter what sector your company is in. The perfect order rate shows how often your deliveries are incident-free, also shedding light on how often incidents occur and when. Of course, the higher your perfect order rate percentage, the better. By looking at this metric, you will see why your customers choose to stick with you and why some customers are moving in a different direction.
2. Inventory Turnover
Assessing inventory turnover allows your company to fully equate how often an entire inventory is sold over a certain time frame. This information helps you to analyze and adjust:
- Production planning.
- Process strategy.
- Fulfillment capabilities.
- Marketing and sales management.
- And more.
Within this step, you can calculate the timing rates of shipping, and you can also compare this information with others in your industry to see where you stand. By performing this benchmarking analysis, you can determine where there is room for improvement and where you can maximize your strengths.
3. Reasons for Returns
Returns can create a significant dent in your profit rate. Therefore, it’s essential to know why and how often this is happening. Here you can see what the leading cause of return is and see if that’s something that can be altered within your systems and processes.
For example, if the most common reason for returns is because the wrong item is continually being sent to the customer, there is clearly a weakness within your team that needs to be addressed. However, if the product is damaged or flawed, it could be an issue with the product itself that needs to be addressed.
4. Days Sales Outstanding (DSO)
This metric shows how quickly you are able to gather and generate revenue from your customers. If your DSO is low, that’s considered healthy, as it means that it takes fewer business days to collect payment.
However, a high DSO shows that your company is taking longer to collect revenue, most likely because you are selling products to customers on credit. Therefore, evaluating your DSO allows you to evaluate performance and take steps to optimize revenue collection activity.
Creating Your Supply Chain Dashboard
As you continue to research metrics to include on your supply chain dashboard, you may start to feel a little overwhelmed. Don’t! Tools are available to help you organize all of the data that you need to track.
With modern data visualization tools, you can build dashboards that include the most important and relevant metrics in minutes. The tools are user-friendly and completely worth setting up to support your business.
Having the Right Team Makes a Difference
The other part of your company’s backbone is made up of your employees. It’s one thing to have efficient systems and processes in place, but you also need people who are going to fully commit to following them. This means you may need to find temporary workers to help fill gaps on your roster.
At Allegiance Staffing, we specialize in finding high-quality talent that have the skills and motivation to integrate with your company and support the supply chain. Reach out to us today to learn more about how we can provide you with vetted, capable talent that will make your success a priority.