WIPP Data Blog

In the dynamic world of supply chain management, tracking the right metrics is pivotal. Beyond the common ones like inventory turns or cost savings, there are dozens of overlooked metrics that hold immense potential. We’ll uncover seven of these hidden gems that can supercharge your supply chain efficiency, reduce costs, and bolster resilience. Let’s dive in and explore the metrics that can revolutionize your supply chain strategy.

RFQ to PO Time

Efficiency is paramount in procurement, and RFQ to PO Time ensures a swift procurement process. It measures the time from RFQ receipt to PO issuance. Alternatively, you can evaluate the time between and inventory min/max trigger and PO creation to optimize your inventory management. These ensure that there are no gaps in fulfilling requests and purchases.

To further refine this metric, implement and ABC classification based on priority and importance. A-class items are critical, B-class are mid-range, and C-class are less vital. Set targets for each class, assign resources to those tasks, and hold your team accountable for hitting those targets. RFQ to PO Time, combined with ABC classification, enhances procurement efficiency.

Percent of Profit tied to each supplier

Relying solely on one supplier for profit is a risky proposition. The Percent of Profit metric is the ultimate de-risking strategy to ensure a stable income stream for your business. There are two ways to measure this critical metric. First, if you have a dual source for a particular product or service, you can consider 100% of your profit to be de-risked. Alternatively, you can prorate your profit risk based on the units provided by each supplier.

However, it’s important to exercise caution; you don’t necessarily need to change all of your suppliers today. The goal is to strike the right balance between diversification and maintaining effective supplier relationships for long-term success. If a supplier is tied to 100% of your profit, you might be OK with that. Just ensure that you have other measures in place.

Percent of Profit tied to a single country or region

This metric is similar to the previous one. The difference is that you focus on location rather than supplier. If all of your suppliers are in a hurricane zone, then you’re at risk every single summer.

Inbound Miles traveled

Analyzing the distance between your location and your suppliers’ location is a key aspect of supply chain management for improved sustainability. This metric provides valuable insights into the efficiency and cost-effectiveness of your supply chain operations.

It’s important to note that the goal isn’t necessarily to achieve zero miles; instead, it’s about striking a balance with other metrics while seeking opportunities to reduce this distance where feasible. Reducing Inbound Miles Traveled can lead to cost savings and streamlined logistics, contributing to the overall optimization of your supply chain.

Forecasted Days until Stockout

Forecasted Days until Stockout is a vital metric in inventory management, closely related to the concept of days of supply. However, it goes a step further by factoring in not only current on-hand supply but also tracking numbers and estimated delivery dates. This metric is particularly beneficial for products with upcoming production.

While the objective is to maximize Forecasted Days until Stockout, it’s essential to strike the right balance. Once you reach 14-30 days, the accuracy of future predictions becomes diminished, due to changes in production.

The ultimate cash savings opportunity is to minimize the days on hand while simultaneously maximizing the forecasted days until a stockout occurs. This balance ensures efficient inventory management and helps you meet customer demand while minimizing carrying costs.

Distance Traveled in Warehouse

The world has seen a boom in warehouse space and the Distance Traveled in a Warehouse is a valuable metric, especially when your workforce is primarily responsible for picking inventory, as opposed to automation.

To measure, you can add GPS trackers for every person on your staff. Or, you can create “standard distance” where you know where an employee will be and you know where the target location is. Then you measure the distance between the two points.

The primary goal is to continually rebalance inventory locations within the warehouse to minimize the distance traveled by employees. This reduces walking time, increases productivity, and ultimately contributes to cost savings.

Percent of Suppliers with Contingency Plan

Contingency plans are great ways to reduce risk in cases of unforeseen disruptions like natural disasters. To assess your supply chain’s readiness, calculate the Percent of Suppliers with Contingency Plans.

The formula is straightforward: Suppliers with Plans/Total Suppliers×100%

You can also weight this by the total spend or profit contribution of that supplier.

This metric holds particular significance for critical or sole-source suppliers, where any disruption can severely impact your business. Collaborate with suppliers lacking contingency plans to develop them, bolstering the resilience of your supply chain. Prioritizing contingency planning is a key strategy for mitigating risks and ensuring business continuity.

Conclusion

Embracing these metrics isn’t just about staying competitive; it’s about gaining a strategic advantage in an increasingly complex business landscape. By incorporating these insights into your supply chain strategy, you can unlock new levels of efficiency, cost savings, and adaptability. So, don’t let these valuable metrics remain hidden in the shadows. Start tracking them today and pave the way for a smarter, more resilient, and future-ready supply chain. Your journey towards supply chain excellence begins here.

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