How to Evaluate Your Supply Chain

How to Evaluate Your Supply Chain

The supply chain is a number game, but evaluating your supply chain goes beyond looking at the number of products delivered or received. It accounts for the quality of each product and the revenue generated at the tail end of the process. A team of expert supply chain valuers aims to bridge the communication gap between various ERPs and suppliers. Learn how to evaluate your supply chain to arrive at the desired supply chain solutions.

Create a List of Key Performance Indicators (KPIs)

KPIs in the supply chain are measurable objectives that help businesses track their progress toward long-term goals. They include fill rate, inventory turnover, customer order cycle time, cash-to-cash cycle time, reasons for return, and more. KPIs vary depending on the needs and preferences of every business.

Whatever KPI you choose should best reflect each performance you want to track. Consider implementing a dashboard for each KPI with real-time markers for each solution you track.

Design Clear Goals & Expectations

It can be daunting to measure success if your business lacks defined goals. Below are the goals to consider when designing your business goals:

  • Identifying the supply chain problem: Is it higher costs? Lower delivery times? A waste reduction? Or an increase in customer satisfaction?
  • Determine how you will know if your goal has been achieved: Do you have multiple ways of measuring success? Are there any benchmarks before moving to another step?
  • Define the metrics for measuring success: What will success look like? How will you know you have achieved success? What are the acceptable ranges for each metric?

Track Your Leading Indicators

The leading indicators are early warnings that alert you to possible problems in your business. These indicators, which can be either positive or negative, might include the number of:

  • Orders shipped late or not shipped at all
  • Returns received for products never delivered
  • Complaints received from customers about quality issues
  • Customer service calls received about orders or other problems with your supply chain solutions

Leading indicators provide a picture of the impact on your overall business. They help you determine areas where you are exceeding expectations and areas where you need to improve.

Create a Clear Feedback Process

A feedback process gives you the ability to determine how well your suppliers meet your business expectations. It also gives you a better picture of your customers’ satisfaction.

Determine what type of information you need from your respondents. You may want to ask questions about the products’ quality, shipping costs, delivery time, or other aspects of supply chain performance. Ask these questions in a way that allows users to provide accurate answers.

Once you have gathered the required information, evaluate each response vs. the expectation. Create an evaluation form for each respondent. Compare the results during analysis for common problems that cut across each question.

Assess Your Supply Chain Representatives

The success of your supply chain solutions depends on the individual strengths of your representative. The most significant strengths to evaluate include:

  • Communication skills: If a representative has difficulty communicating with a distributor or supplier, hire someone with excellent communication skills. Doing so will help you get orders out and keep track of inventory at each location efficiently.
  • Problem-solving skills: Your supply chain representative should be able to identify and solve problems as they arise. They should also know how to keep their team members calm when issues need attention.
  • Organizational skills: Your representative must be able to manage and get products out on time. They should also help team members work together towards the same goal.

Supply Chain Solutions: Evaluation at a Glimpse

When evaluating your supply chain solutions, numerous variables exist, and it can be difficult to know where to begin. These tips can help identify seven core criteria: supplier capacity, supplier quality, risk mitigation, cost, measurement and control ability, the potential for growth and innovation, and the duration of the relationship. With these components, you are better informed about what to seek from various suppliers regarding inputs and their ability to execute your requirements.

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