How to Improve and Fulfill Your Supply Chain KPIs

The major Supply Chain KPIs for most companies is profitability, which is revenue divided by the investment of the company, revenue is the difference between sales and costs.

If you don’t measure before and after implementing a change in a process, you can’t quantify the impact of the change. That’s why Precisely defines Supply Chain KPIs (Key Performance Indicators), in order to have a set of indicators to focus on. Improving these indicators will direct your business processes towards reaching improvement goals.

How can Supply Chain KPI activities improve profitability for a company?

• Decreased costs – this is the classic historical objective of Supply Chain Managers; to keep the cost as low as possible, while maintaining or improving the service level for internal or external customers. But it is not the one to focus on any longer.

• Decreased investments – this has become more and more relevant in the last decade, as it’s not just about revenue anymore. The focus has turned to profitability and getting the most revenue from the smallest investment. Investments are a dividing factor in profitability, so reducing investments will have a bigger effect in profitability than the same reduction in cost.

• Improving sales – Supply Chain hasn’t traditionally focused on adding value, but in the last 10 years there is a trend demanding Supply Chain to become more strategic, add value and increase sales. Supply Chain managers can do this by improving service levels to increase customer satisfaction.

Customer Service KPIs (KPI value to be increased)

This group is divided in three subgroups: Demand Variability, Supply Variability, and Performance to plan

Demand variability: indicators that will measure the variability of the demand

Supply Variability: these KPIs reflect the variability of supply from vendors

Performance to plan: measuring the actual execution against the operations plan

Cost KPIs (KPI value to be decreased)

This group is divided into two subgroups: Inventory and Operating Costs

Inventory: Indicators that will measure inventory costs

Operating Costs: KPIs that reflect the cost of the activities of the process

Investment KPIs (KPI value to be decreased)

This group is divided in three subgroups: Infrastructure, Inventory and Equipment

Infrastructure: indicators measuring the investments in physical locations

Inventory: KPIs that reflect the investment of all stock on the shelves of the warehouse

Equipment: measuring the investments in machinery, spare parts, tools etc.

Applying Precisely’s Lean Data Management to Supply Chain KPIs

Precisely allows companies to fulfill these KPIs from two main angles:

• By improving the quality of ERP data, companies can expect different benefits, such as:
  • Removing a source of errors for forecasting and decisions.
  • Eliminate ERP data errors in spare parts data that could affect production. Only having spare parts that the operations really need, no more, no less.
  • Improvements in Plant Maintenance operations and increasing the useful life of machinery.

• Streamlining business processes will:
  • Reduce the overall cycle time by removing waste around the process.
  • Instead of manual or email based processes, Winshuttle allows companies to streamline workflow processes that removes rework and delays from the processes.
  • For example, stock can be managed with cleaner and better materials information which will eliminate ERP data errors that could have meant higher/lower inventory levels. This also leads to smaller warehouses.

In summary, the Precisely platform utilizes lean applications that streamline data collection, data validation and data movement. Using existing investments, these lean applications are built iteratively in short cycle times, to help you meet and exceed your Supply Chain KPIs, and improve process efficiency.

To learn more read our eBook Best Practices for SAP Automation and understand the questions to ask and best practices to follow at each step of your journey, ensuring you get both faster processes and better data.