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SCMMS2 (Fach) / Supply Chain Performance Measurement (Lektion)
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- What are reasons for performance measurement? Increase Transparency Understand current performance Anticipate upcoming problems (bottlenecks, expected stock outs) Structure key areas of interest Improve coordination Increase sustainability (fact based decision making) & control support communication and coordination between supply chain partners allocate resources Improve performance Facilitate benchmarking and identification of best practices Define target levels and objectives Set incentives and track performance
- What are challenges for supply chain performance measurement? Within companiy : Functional silos with different KPIs Legacy IT systems Intended lack of transparency, e.g. focus on KPIs with good performance Qualitative KPIs difficult to evaluate Across Companies: Limited interest to share performance with supplier/customer Different focus of interest (e.g. delivery performance vs cost)Definition of performance measures not aligned (e,g, service levels) IT systems not capable to exchange data (e.g. investment requirement) Difficult alighment of targets With whom to align KPI(numerous customers with different definitions)
- Describe the KPI management process Targets defined: Definition of KPIs and targets Definition of responsibilities Monitoring: On-going performance measurement against defined KPIs Deviation analysis and corrective actions Reporting: Regular (e.g., monthly, quarterly) reports to management and process owners Track record of performance KPI Review: Re-negotiation of targets (on a regular basis) Means and processes to allow for the KPIs to adapt to changed customer needs and supply options Organisation Procedural and structural measures to ensure an effective KPI management Supporting tools
- Name the different levels of performance indicators 1. Senior Management Metrics Aggregate KPIs, give first order indication of performance against pre-defined targets Alerts senior management to key areas of deviation where to direct efforts 2. Indicator Metrics Medium-level KPIs to be used for diagnosis and/or advance warning of deviation Provide functional management with an additional level of metrics to diagnose problems anddevelop action plans to proactively adress future difficulties 3. Detailed metrics Specialized metrics defined for function to understand day-to-day performance and identify problems Metrics should be easily aggregated to provide information to high levels
- What is the Primary use of SCOR? To describe, measure and evaluate supply chain configurations
- What does SCOR contain of? Standard descriptions of management processes A framework of relationships among the standard processes Standard metrics to measure process performance Management practices that produce best-in.class performance
- What is the SCOR model based on? 1. Process Modeling 2. Performance Measurements 3. Best Practices
- What does the pillar "Process Modeling" consist of? Plan : Processes that balance aggregate demande and supply to develop a course of action which best meets sourcing, production and delivery requirements Source: Processes that procure goods and services to meet planned or actual demand Make : Processes that transform product to a finished state to meet planned or actual demand Deliver : Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management Return : Processes associated with returning or receiving returned products
- What are the standard SCOR definitions? Level 1 Scope : Differentiates business, defines scope, framework language Level 2 Configuration : Differentiates complexity, capabilities, framework language Level 3 Activity : Names Tasks, links, metrics,tasks and practices, framework language
- Describe the different levels of Performance measurements Level 1 Metrics : Primary, high level measures, that may cross multiple SCOR processes. Customer 1. Reliability (Attribute) Perfect order fulfillment (Metric) 2. Responsiveness Order Fulfillment Cycle Time 3. Agility Supply Chain Flexibility, Adaptability 4. Cost Supply chain management cost, costs of goods sold Internal 1. Assets Cash-to-Cash cycle time Return on Supply chain fixed assets Return on working capital Level 2 Metrics: Associated with narrower subset of processes, e.g. metric related with delivery performance
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- Describe the third pillar "Best Practices" "A current, structured, proven and repeatable method for making a positive impact on desired operational results." 7 Steps for a benchmarking Project Supply Chain Definition SC Prioritization SC Strategy Selecting Metrics Sourcing Data Creating a Balanced SCORcard Performing Benchmark
- What are the steps of designing a alanced scorecard? 1. Develop company strategy Measures must relate to the strategy and should reflect crit. success factors measures must be interrelated 2. Determine critical success factors (goals) What must be achieved to survive or what will cause the company to fail if it is not achieved Determine success factors for each of the four perspectives 3. Determine the activities that drive the achievement of critical goals Must understand the linkages between the activities and the goals 4. Develop metrics to evaluate performance Provide feedback and also indicate problem areas Metrics may be financial, non financial, trends, surrogates, internally or externally