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KPI Library – Supply Chain

Supply Chain Effectiveness

Description:

The measure of how well an organisation can move product/services from conception to the customer. The attributes of an effective supply chain will offer transparency, flexibility and alignment to tailor the system to the strategic benefit of the organisation. In recent years, supply chain outsourcing has been re-examined and greater emphasis built upon a partnering approach. This has the benefit of adding a degree of control/influence across organisational boundaries; allowing increased opportunity to measure performance, improved coordination of the system and improved capability to cater for fluctuations in demand. An appropriate level of supply chain integration with partners is therefore considered to be advantageous in the development of an effective supply chain. 

Calculation:

An overall calculation might be: The average time taken (days/weeks/months/years) to source, design/make and deliver a product/service from order to customer receipt. However, there are often parts of the supply chain that need to be measured, e.g. the time taken from order to delivery of raw materials to a factory.

Example:

The average delivery time of ballast and cement to a building site from two separate suppliers.