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5 Metrics To Measure The Effectiveness Of Your Supply Chain Strategy

October 10, 2013BY AMS Editor

Distributors need ways to gauge their operations to determine whether their supply chain strategy is effective or requires fine-tuning.

That’s why supply chain analytics are becoming increasingly important today. Companies are moving beyond implementing distribution ERP applications and starting to mine the data that is captured by these applications. However, it is essential that the metrics be tracked in a way that requires very little effort from the stakeholders.

To be executed well and to be useful, metrics should be:

  • Auto-generated by the ERP on a user-defined schedule.
  • Definable by the users with built-in tools and not limited to canned metrics provided by the software publisher.
  • Exception-based, as an option, so that users can focus on those items requiring attention.
  • Have the option of presentation in the form of key performance indicators (KPIs).

Once you have a handle on how to best track and monitor data, the next step is to determine what you’re going to look at. A recent post on the EBN website outlines five critical metrics for success.

  1. Finances: Be sure to have a financial plan in place. Analyze your income at a granular level rather than the aggregate.
  2. Business: Find out how to please your clients and what drives your success. Monitoring these factors will help guide you to which actions you should focus on.
  3. Customers: Know your audience and cater to it. You can’t keep your customers happy if you don’t know them.
  4. Vendors: Just like with customers, it’s crucial to know your suppliers. You need a strong basis around which to build relationships and partnerships.
  5. Quality: You should know the quality of everything from your products to your relationships with customers and suppliers.

As is the case with most things, execution is vital for a strong supply chain strategy. The use of business metrics is a very good idea and is critical to proactive management of the business. However, it’s simply not realistic to expect users to run reports daily or weekly. Therefore, adoption is likely to be successful only if the data can be accessed with very little effort from the users.

Source: EBN, September 2013

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