Top nine KPIs to measure and mitigate supply chain disruption

From semiconductors to construction materials, recent supply chain upheavals - with material shortages, ports congestion, and the consequences of a global pandemic resulting in production disruptions and factory shutdowns—have made it difficult for consumers to get hold of everyday products. While customers scramble to find even baby formula, there lies a bigger concern for those in the supply chain world: Is this going to be our “new normal” for the long haul? Not only are companies fighting against a myriad of political and environmental challenges, but a growing inflation could just be the last straw. Disruption is not new, but there is disagreement among organizations as to how to cement the cracks across the entire chain while still remaining profitable. Rather than cement, it’s time to redefine supply chain instead.

End-to-end visibility of supply chain performance will be a key differentiator for this purpose, but data visibility is just the tip of the iceberg. Leaders need to set the right key performance indicators (KPIs), measure, and analyze the results so they can orchestrate their entire supply chain with ease. With the right KPIs in place, organizations can become agile enough to identify bottlenecks, eliminate manual errors, analyze risks, and predict outcomes to increase resilience during uncertain times. Knowing which vendor, product lines, and routes are at risk empowers you to be agile enough to change course at any given time with confidence.

Top Order Fulfilment KPIs to Unblock Bottlenecks

In 2015, Target’s entry into Canada came to a halt with mismatched inventory and barcode issues on Barbie toy cars that led to over $2 billion in losses. A classic case of poor order fulfillment and frustrated customers; the toy car fiasco was so overwhelming that it has kept Target out of the Canadian market ever since. Having a smooth order fulfillment system that communicates effectively with customers about shipping is an essential part of being able to compete in today’s fast-paced environments. Here are a few KPIs to support your order fulfilment goals:

• Perfect Order Rate (POR): This indicates the rate at which goods have been shipped out without any damage, inaccuracies, or delivery issues. Reaching a 100% perfect order is a top goal many product companies strive for, since its symbiotic with customer experience. The POR KPI can be adversely affected by lack of inventory, mismanagement of goods in the warehouse, or incomplete orders being shipped out. If the POR is low, you should be able to quickly backtrack to various underlying metrics to find the root cause. For example, was the inventory low on the given day? Or were there any check issues in the “pick and pack” process which resulted in incomplete products being shipped? These are details that need to be at your fingertips to make necessary changes.

• On-Time Delivery (OTD): Delivering your goods on time not only means goods are out of your warehouse fast but also means increased collaboration with your customers and greater loyalty. Delays can occur due to inventory issues, manual errors, or damaged goods. The lower the OTD rate, the higher order cancellations will be. For example, if you notice OTD has dropped over a specific period, your next step would be to break down the reasons by analyzing various metrics such as inventory inaccuracies, supplier delays, late pickups, and return rates. This will help you derive insight-driven actions using unified analytics across all points of your supply chain.