Supply Chain Metrics

What Are Supply Chain Metrics?

Supply chain metrics are the numbers and ratios a company tracks to measure how efficiently it delivers goods to customers. Keys to efficiency in supply chain execution include how well and cost-effectively companies drive the flow of materials from procurement to delivery, including activities like production, warehousing and transportation.

The right metrics shed light on where to invest to achieve maximum returns.

Key Takeaways

• It’s vital to employ metrics and KPIs to assess how your supply chain is performing.
• Important KPIs for finance include cash-to-cash cycle times and gross margin return on investments.
• Inventory turnover ratios and inventory velocity are two central gauges of how well your company manages its intake and outflow of goods.
• A central KPI dashboard accessible to all stakeholders helps leaders stay on the same page and prioritize resources.

What are supply chain KPIs?

Supply chain key performance indicators (KPIs) quantify how well a supply chain is performing. Leaders need to decide which KPIs are most important to track.

Because there are many metrics that can add value, we often advise companies to divide supply chain KPIs into tiers based on functions. A company may decide on a bucket of top metrics that are most important to its business and watch some lower-tier KPIs occasionally.