Metrics for SCM

Nota:

• Cost: "The money spent to acquire a raw material, a product, or a service." (Elrod,Murray & Bande, 2013)

1. Total Costs

   Nota:

   • Total Costs: "Refers to all the costs incurred to manufacture a product. This includes costs of raw materials, labor, transportation, distribution, marketing, administrative, overhead, as well as fixed costs such as acquisition of property, machinery, and other longterm investments." (Elrod,Murray & Bande, 2013)
   1. Identifies overall costs
   2. Difficult to obtain
2. Distribution Costs

   Nota:

   • Distribution Costs: "Costs incurred when products are transported from one place to another." (Elrod,Murray & Bande, 2013)
   1. Isolate a important cost
   2. Difficult to classify
3. Information Processing Costs

   Nota:

   • Information Procesing Costs: "Costs incurred when orders are taken, when invoices are prepared, and when discounts are given"  (Elrod,Murray & Bande, 2013)
   1. Isolate a important cost
   2. Not disclosed to public
4. Inventory Costs

   Nota:

   • Inventory Costs: "Costs associated with storing all elements of a product, from raw materials to finished goods."  (Elrod,Murray & Bande, 2013)
   1. Bring low inventory levels
   2. Cannot be extinguish 100%
5. Manufacturing Costs

   Nota:

   • Manufacturing Costs: "Costs incurred in production of a product" (Elrod,Murray & Bande, 2013)
   1. Measures a key cost
   2. Difficult to classify
6. Inventory Obsolescence

   Nota:

   • Inventory Obsolescence: "Costs associated with inventories that are obsolete, or those products whose value has depreciated over time" (Elrod,Murray & Bande, 2013)
   1. Identifies costs to extinguish
   2. Cannot be extinguish 100%
7. Finished Goods Inventory

   Nota:

   • FGI Cost: "Cost of finished products that are present in inventory, warehouse, or in-transit." (Elrod,Murray & Bande, 2013)
   1. Critical performance measure
   2. Higher overhead cost = Higher total cost
8. Return On Investment

   Nota:

   • ROI: "Ratio of net profit in relation to the investment on total assets."(Elrod,Murray & Bande, 2013)
   1. Higher ROI=Higher investment
   2. Difficult to measure
9. Warehouse Costs

   Nota:

   • Warehouse Costs: "Costs associated with the maintenance of storage spaces; key contributors to this cost are rent, utilities, maintenance, and labor costs." (Elrod,Murray & Bande, 2013)
   1. Identifies storage costs
   2. Varies widely with industry
10. Incentive Costs

    Nota:

    • Incentive Cost: Incentives give to employees, managers, executives and new products. 
    1. Identifies sale incentives costs
    2. Difficult to identify
11. Intangible Costs

    Nota:

    • Intangible Costs: "Non-quantifiable costs and costs not associated with one particular product" (Elrod,Murray & Bande, 2013)
    1. Identifies critical cost factors
    2. Difficult to measure
12. Financial Cost

    Nota:

    • "Financial performance measures are used to track and manage costs." (Elrod,Murray & Bande, 2013)
    1. Direclty measure
    2. Difficult to obtain

Nota:

• Quality: "The perception that the product or service meets the consumer’s demand." (Elrod,Murray & Bande, 2013)

1. Perceived Value of the Product

   Nota:

   • "It is crucial to know their satisfaction level using the product. This measure helps the company understand how the product satisfies the market." (Elrod,Murray & Bande, 2013)
   1. Identifies desires and demand from customers
   2. Difficult to obtain
2. Buyer-Supplier Relationship

   Nota:

   • "Supply chain management can be improved with increased coordination among different departments, as well as healthy relationships between buyers and suppliers."  (Elrod,Murray & Bande, 2013)
   1. Improved relationship supplier-company
   2. Not always a healthy relation
3. Shipment Errors

   Nota:

   • "Determining the location and severity of shipping errors" (Elrod,Murray & Bande, 2013)
   1. Identifies and assist errors
   2. Difficult to isolate the root cause
4. Accuracy

   Nota:

   • "Measuring accuracy considers the ratio of correctly produced products to incorrectly produced products." (Elrod,Murray & Bande, 2013)
   1. Identify accuracy with minimal waste
   2. Difficult to isolate
5. Number of Faulty Notes Invoiced

   Nota:

   • "This measure helps determine the frequency of incorrect invoices. Errors include improper condition of the shipment, late shipments, shipment of incorrect items, or damage to the products" (Elrod,Murray & Bande, 2013)
   1. Identifies trends and rectified errors
   2. Difficult to identify faulty invoices

Nota:

• Time: duration of a specific events

1. Order Lead Time

   Nota:

   • Order Lead Time: " This is the period of time beginning with the customer placing an order until the time the order is delivered" (Elrod,Murray & Bande, 2013)
   1. Customer can know the waiting time
   2. Measure can be wrong
2. Customer Order Path

   Nota:

   • Customer Order Path: "The time spent traversing different processes before completing the order." (Elrod,Murray & Bande, 2013)
   1. Helps identify the idle time
   2. Difficult to carry out
3. Effectiveness of Scheduling the Tecniques

   Nota:

   • " Scheduling decides when an activity should start and when it should end, depending on the availability of the resources."  (Elrod,Murray & Bande, 2013)
   1. Helps using resources efficiently
   2. Not equitative with products or tasks
4. Product Development Cycle Time

   Nota:

   • " Product development cycle time refers to the time consumed by raw materials to go through various assemblies to design a new product."  (Elrod,Murray & Bande, 2013)
   1. Introduce products quickly
   2. Varies greatly
5. Product Lateness Time

   Nota:

   • Product Lateness Time: "The difference between the delivery date and the due date." (Elrod,Murray & Bande, 2013)
   1. Identifies delays and task consuming time
   2. Solution may not alter
6. Average Lateness Time

   Nota:

   • " This measure captures late deliveries. The average lateness time is calculated by summing all the late times, followed by dividing by the total number of late orders" (Elrod,Murray & Bande, 2013)
   1. Results used for scheduling decision
   2. Not identify errors
7. Average Earliness Time

   Nota:

   • " The average earliness time is determined by averaging the times of all early deliveries" (Elrod,Murray & Bande, 2013)
   1. Factor in customer satisfaction
   2. Not identify specific problems
8. Manufacturing Lead Time

   Nota:

   • " The time from point of order release until order shipped is manufacturing lead-time" (Elrod,Murray & Bande, 2013)
   1. Identifies overall manufacturing time
   2. Could mask errors and lag times

Nota:

• Flexibility: "ability to adapt to change by the company" (Elrod,Murray & Bande, 2013)

1. Range of Products and Services

   Nota:

   • " Useful to evaluate the company’s ability to introduce new products in the market"   (Elrod,Murray & Bande, 2013)
   1. Less products = More rapid reaction
   2. More products = Less flexible
2. Capacity Utilization

   Nota:

   • " It is calculated as the ratio of total actual capacity to the designed capacity" (Elrod,Murray & Bande, 2013)
   1. Determinate equipment utilization
   2. High utilization in wrong products
3. Volume Flexibility

   Nota:

   • " This measure determines the ability to change the level of production in response to market demand."(Elrod,Murray & Bande, 2013)
   1. Identifies response rate
   2. Difficult to calculate
4. Plant Volume Flexibility

   Nota:

   • "This measure captures the ability of a company to change the volume produced, depending on demand" (Elrod,Murray & Bande, 2013)
   1. Output volume change measurement
   2. Equipment and process design unflexible
5. Delivery Flexibility

   Nota:

   • "This measure assesses the company’s ability to schedule delivery dates" (Elrod,Murray & Bande, 2013)
   1. Identifies rate on guarantees
   2. Difficult to measure
6. Labor Flexibility

   Nota:

   • " This measure defines the number of tasks an employee can perform" (Elrod,Murray & Bande, 2013)
   1. Take tasks in case of emergency
   2. Working saturation
7. Modification Flexibility

   Nota:

   • "Modification flexibility refers to company’s ability to modify a product or product line without incurring high transition penalties." (Elrod,Murray & Bande, 2013)
   1. Customner have products quickly
   2. It could be expensive
8. Expansion Flexibility

   Nota:

   • " Ability of a firm to expand rapidly" (Elrod,Murray & Bande, 2013)
   1. Easily if demand increase
   2. It could be overhead costs