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Computing Key Performance Indicators

PROCESS CONTROL
The problems along the supply chain that create uncertainty and
variability are most often caused by errors. If deliveries are missed or are
late, if orders are lost, if errors are made in filling out forms, if items with high
obsolescence rates (like PCs) or perishable items are allowed to stay too long in
inventory, if demand forecast errors are made, if plant and equipment are not
properly maintained, then the supply chain can be disrupted, thereby reducing
supply chain performance. Thus, at any stage in the process, statistical
process control charts can be used to monitor process performance.

SCOR
The supply chain operations reference (SCOR ) model is a supply chain diagnostic
tool that provides a cross-industry standard for supply chain
management. It was developed and is maintained by the Supply Chain
Council, a global not-for-profit trade association organized in 1996 with
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membership open to companies interested in improving supply chain efficiency
primarily through the use of SCOR. The Supply Chain Council (SCC) has almost
1,000 corporate members around the world, including many Fortune 500
companies. The purpose of the SCOR model is to define a companys
current supply chain processes, quantify the performance of similar
companies to establish targets to achieve best-in-class performance,
and identify the practices and software solutions that will yield best in
class performance.
It is organized around a set of five primary management processes
plan, source, make, deliver, and return, as shown in Figure below. These
processes provide a common set of definitions, or building blocks, that
SCOR uses to describe any supply chain, from simple to complex. This
allows supply chains for different companies to be linked and compared.
Supply Chain Enablers

A primary feature of the SCOR model is the use of a set of performance

indicators or metrics to measure supply chain performance. These
metrics are categorized as customer-facing or internal-facing as
shown in Table below. Customer-facing metrics measure supply chain
delivery reliability, responsiveness, and flexibility with respect to
customers and suppliers. Internal-facing metrics measure supply chain
cost and asset management efficiency. The metrics may be used for
multiple supply chain processes.

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Table : SCOR Performance Metrics

These metrics are used to develop a SCORcard that measures both a
companys current supply chain performance for different processes and
its competitors metrics. The company then projects the level of metrics
it needs to be on a par with its competitors, to have an advantage over
its competitors, or to be superior. The value associated with these measured
improvements in performance is then projected for the different performance
attributes. For example, a company may know that the industry median fill rate
is 90% and the industry best-in-class performance is 99%. The company has
determined that its current fill rate is 65%, and that a fill rate of 90% will give it
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parity with its competitors, a 95% fill rate will give it an advantage, and a 99% fill
rate will make it superior to most of its competitors. The company may then
project that the improvement in its fill rate plus improvements in the other supply
chain reliability attributes (i.e., delivery performance and perfect order fulfillment)
will increase supply chain value by $10 million in revenue. This process wherein a
company measures its current supply chain performance, compares it to its
competition, and then projects the performance levels it needs to compete is
referred to as gap analysis. SCOR then provides a framework not only for
measuring performance but for diagnosing problems and identifying practices and
solutions that will enable a company to achieve its competitive performance
objectives.

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ASSIGNMENT

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CASE PROBLEM

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