Senior Supply Chain Specialist - 12 month contract

This position is a senior appointment within the organisation and will take full responsibility
for driving various projects aimed at strategically improving the supply chain function. The
focus of the projects will vary but will incorporate the full end to end supply chain function
with the aim to increase efficiency, reduce cost and improve the overall delivery percentage
of the function.

Key Objective's
* To perform a full end to end analysis of the supply chain function and identify potential
opportunities and discrepancies in the system
* Develop relationships with both suppliers and clients to fully understand the capabilities
and needs of both respectively in order to accurately understand the supply chain
environment
* To develop a strategic solution for the each identified potential opportunity within the
supply chain function
* Present a final overall plan including all elements of the supply chain strategic
improvement plan to senior management
* Drive cross functional teams to meet goals agreed with senior management

Supply Chain Balanced Scorecard

The Supply Chain Balanced Scorecard tracks a limited number of key metrics.
These metrics should be closely aligned to the companies strategic objectives. The
measurements usually cover 4 areas:
1. Financial - Example: The cost of manufacturing, warehousing, transportation
etc.
2. Customer - Example: Order Fill Rate, Backorder Levels, OnTime Delivery 3.
3. Internal Business - Example: Adherence-To-Plan, Forecast Error
4. Training: Example: In house Training Hours, APICS Membership/ Certification.
While the Balanced Scorecard approach was not specifically designed for the
Supply Chain, it does give a good guidance for your core measures. The central
idea is to focus on key metrics that have real meaning to your company. You don't
want to get lost in a sea of numbers that don't really mean anything. The Balance
Scorecard approach helps you to keep your measures aligned with your objectives.
These measures should be tracked over time (usually monthly) with specific targets
for each.

Supply Chain Balanced Scorecard was designed to help in measuring and controlling company
delivery service and associated aspects. This metrics set will help to measure the performance of
manufacturing, warehouse and delivery from various viewpoints, including customer satisfaction
and financial, giving key manager key performance indicators for supply chain business unit.
The metric pack includes such KPI (Key Performance Indicators) as Defects Per Million
Opportunities, Inventory Months of Supply, Claims percentage for freight costs, On-time pickups,
Transit time, On Time Line Count, Customer Order Promised Cycle Time, providing a flexible way to
improve supply chain unit performance.

Once you have developed your Supply Chain metrics, the next logical question
is...Is my result good or bad? Benchmarking allows you to compare your results to
other companies.
One of the keys to successful benchmarking is to rate your company against like
companies.
Backorder: An unfilled customer order. A backorder is demand (immediate or past
due) against an item whose current stock level is insufficient to satisfy demand.
This calculation can vary. Some companies count items that are not confirmed (not
allocated) and past the Requested Delivery Date (or Requested Ship Date). Other
companies may also count those items with stock confirmed, but past due
Other considerations:
1. Partials - what if a customer orders 100 pieces of an item. You currently have 90 pieces.
Should the 100 pieces be considered a backorder or should the backorder be considered 10
pieces (100 ordered - 90 available)? The answer is it depends. If the customer accepts a
shipment of a partial quantity, then the 90 pieces will ship out and the backorder is 10 pieces.
If the customer only accepts only full quantities, then the backorder is 100 pieces. This is
because, in the customers eyes, they ordered 100, but you did not ship them anything.
2. Multi Line Orders - what is a customer places an order for 3 different items and they
request you hold the order until you can ship it completely. You have inventory to fill the first
two items, but not the third. Are all 3 items then on backorder? While there is no specific
standard, generally you would only consider the third item as on backorder.

Backorders may be expressed in "pieces", "SKU's" or in "value". Backorder

calculations are often tracked at a variety of levels. Example: Customer, Division,
Total Company
Aged Backorder: Reports on backorders in past-due time buckets based on the
Requested Delivery Date/Requested Ship Date.

Here are just a few of the many Cycle Times you should consider for your Supply
Chain. All of these measures should not only calculate the days (or hours) from the
start and finish, but also between the various steps in between.
Customer Order Promised Cycle Time: The anticipated or agreed upon cycle time
of a Purchase Order. It is gap between the Purchase Order Creation Date and the
Requested Delivery Date.
This tells you the cycle time that you should expect (NOT the actual)
Customer Order Actual Cycle Time:
The average time it takes to actually fill a customers purchase order. This measure
can be viewed on an Order or an Order Line level.
The measure starts when the customers order is sent/received/entered. It is
measured along its various steps of the order cycle. Through credit checks, pricing,
warehouse picking and shipping. The measure ends at either the time of shipment
or at the time of delivery to the customer (sometimes tracked by using an EDI
#214). This "actual" cycle time should be compared to the "promised" cycle time.
Manufacturing Cycle Time:
Measured from the Firm Planned Order until the final production is reported. It
usually takes into account the original planned production quantity versus the
actual production quantity. Example: X% of the planned quantity must be
completed on a production run or the cycle time should not be considered.
Purchase Order Cycle Time:
Measured from the creation of the PO to the receipt at your location (Distribution
Center, Hub etc). One of the keys here is not not have your RDD (Requested
Delivery Date) exceed the agreed to lead time. If it does, it may artificially inflate
your Lead Time.
Additionally, any in-between points available will add value to the metric.
Example: Creation of the PO, Shipment from the Vendor, Receipt at the DC. This
will tell you the manufacturing time vs the transit time.
Inventory Replenishment Cycle Time:
Measure of the Manufacturing Cycle Time plus the time included to deploy the
product to the appropriate distribution center.
Cash to Cash Cycle Time:
The number of days between paying for Raw Materials and getting paid for
product. Calculated by Inventory Days of Supply plus Days of Sales Outstanding

minus Average Payment Period for Material.

Supply Chain Cycle Time:
The total time it would take to satisfy a customer order if all inventory levels were
zero. It is calculated by adding up the longest lead times in each stage of the cycle.
Our goal is to guide companies that are looking to optimize their Supply Chain.
Originally, we intended on answering questions about Inventory Control, Sourcing,
Manufacturing, Distribution and Supply Chain Metrics. However, we currently do
not have the resources to answer individual questions.
DPMO: Defects Per Million Opportunities
DPMO is a Six Sigma* calculation used to indicate the amount of defects in a
process per one million opportunities.
To calculate: Total Number of Defects / Total Number of Opportunities for a
Defect. Then multiply the answer by 1 Million.
The challenge here is determining exactly what qualifies as a defect. Some defects
can pass through a quality inspection and have little impact on the end product.
Other defects can result in re-work or scrap.
DPMO is sometimes used instead of Defect per Unit to allow for comparison
between processes with different levels of complexity.
*Six Sigma uses statistical analysis to measure a companies performance by
identifying defects in a manufacturing process. The goal of Six Sigma is to reduce
process output variation to + or - six standard deviations. This results in no more
than 3.4 defects per million opportunities.
Fill Rate definitions and calculations can vary greatly. In the broadest sense, Fill
Rate calculates the service level between 2 parties. It is usually a measure of
shipping performance expressed as a percentage of the total order.
Sample Fill Rate Metrics:
Line Count Fill Rate: The amount of order lines shipped on the initial shipment
versus the amount of lines ordered. This measure may or may not take into
consideration the requested delivery date (see On Time Delivery)
example- ABC Company orders 10 products (one order line each) on its Purchase
Order #1234. The manufacturer ships out 7 line items on March 1 and the

remaining 3 items on March 10. The Fill Rate for this Purchase Order is 70%. It is
calculated once the initial shipment takes place.
Calculation: Number of Order Lines Shipped on the Initial Order* / Total Number
of Order Lines Ordered (7/10 = 70%)
SKU Fill Rate: The number of SKU's (Stock Keeping Units) ordered and shipped
is taken into consideration. Above, we consider each Order Line to have an equal
value (1 ). Here, we count the SKU's per Order Line.
example: If on Line 1, the order was for 30 skus of product "AB" and on line 2,
they ordered 10 skus of item "AC". If Line 1 ships on April 1 and line 2 on April
20, the the SKU Fill Rate is 75%
Calculation: Number of SKUs Shipped on the Initial Shipment / Total Number of
SKUs Ordered (30/40 = 75%).
Case Fill Rate: The amount of cases shipped on the initial shipment versus the
amount of cases ordered.
example- ABC Company orders 6 products that total 200 cases. The manufacturer
ships out 140 cases on 3/1/01 and the remaining 60 cases on 3/10/01. The Fill Rate
for this Purchase Order is 70%. It is calculated once the initial shipment takes
place. The number of Order Lines is not considered in this calculation. This Fill
Rate measure gives "weight" to the order lines that are shipped out.
Calculation: Number of Cases Shipped on the Initial Order / Total Number of
Cases Ordered . (140/200 = 70%)
Value Fill Rate: Same as above, except the order line value is used instead of cases.
Calculation: Value of Order Lines Shipped on the Initial Order / Total Value of the
Order ($400/$500 = 80%)
What happens if a customer orders 10 products, but then decides to expedite out
just one of them? Should the other 9 products be counted as a Fill Rate "miss"? ( 1
shipped / 10 ordered = 10%). The answer is no. You should factor rushed lines out
of your Fill Rate calculation. This can usually be done by identifying the routing
code (as in an SAP system) or by the carrier (FEDX).
*NOTE: "Shipped on the Initial Order" - usually refers to the first shipment out of
the primary warehouse. Therefore, if an order line ships out of an alternate
shipping facility and it ships out on/before the first shipment out of the primary
warehouse, then it is considered a + to the Fill Rate.

Inventory Record Accuracy

A common calculation is:
Stratify SKU's: (annual usage X standard cost)
A items= items representing the top 80% of total dollars
B items= items representing the next 15% of dollars
C items= items representing the bottom 5% of dollars
Cycle count items (usually daily) using a random sample, within the following
groupings:
A items = 4 times per year
B items = 2 times per year
C items = 1 time per year
Items considered accurate if the actual on-hand quantity matches the perpetual
inventory quantity, within the following tolerances:
A items = plus or minus 1% quantity variance from perpetual balance
B items = plus or minus 3% quantity variance from perpetual balance
C items = plus or minus 5% quantity variance from perpetual balance
Target should be absolute minimum of 95% for MRP/DRP to function effectively;
99% for best-in-class
Note: Do NOT do a simplified Cycle Count, adding the positives and negatives, then
comparing the sum to the total stated inventory.
Example:
Item ABC: Stated Inventory = 100, Cycle Count = 95
Item BCD: Stated Inventory = 100, Cycle Count =105
In this example, if you add the Stated Inventory it equals 200. The Cycle Count sum equals
200 also. This does NOT mean that you have 100% accuracy.
This may sound obvious, but I've encountered many companies that use this method.
If the items above are A or B items, the the actual Cycle Count Accuracy is 0% (Neither item
is correct. Both are 5% off)

Inventory ABC Classification: a way to categorize/group your products. There are

a few different ways to set up an ABC Ranking, such as Velocity (times sold),
Quantity sold/Consumed or by Margin. But the most common method I have seen
is the Annual Sales Volume ranking. This method will allow you to identify the
small amount of products that usually account for most of your sales dollars (think
80/20 rule)

Here's one quick method for determining your ABC ranking based on Annual Sales
Volume:
1. Calculate the 12 month dollar usage for all of your products (volume X cost).
2. Rank the items in descending order by the dollar usage.
3. The "A" items are the top 80% of the total annual usage dollars.
4. The "B" items make up the next 15% of total annual usage.
5 The "C" items are the remaining items are the remaining 5% with >0 usage in the
past 12 months
6. Label zero-usage items can be labeled as "D".
You will also need to make a special consideration for your newer products. If you
don't have a full year of Sales Volume to reference, you need to use a yearly
forecast estimate instead.
There are also other considerations, such as "critical items" that may have low
usage, but need special monitoring because you can't run out of stock due to a
customer agreement. So your definition of A items may need to be customized.
Some companies use A, B, C, CA = 80%, B = 15%, C = 4%, C- = 1%
GMROI (Gross Margin Return on Inventory)
GMROI = (Unit Selling Price of an Item - Unit Inventory Value of an Item) X
Annual Demand for the item
Average Inventory Value of the product.
Notes:
Unit Inventory Value tells you what it costs you to make the product.
The Unit Selling Price - Unit Inventory Value tells you the margin.
-----------------------------------------------------------------------------------------------------------------------------------------Inventory Carrying Rate:
This can best be explained by the example below....
1. Add up your annual Inventory Costs:
Example:

$800k = Storage
$400k = Handling
$600k = Obsolescence
$800k = Damage
$600k = Administrative
$200k = Loss (pilferage etc)
$3,400k Total
2. Divide the Inventory Costs by the Average Inventory Value:
Example:
$3,400k / $34,000k = 10%
3. Add up your:
9% = Opportunity Cost of Capital (the return you could reasonably expect if you
used the money elsewhere)
4% = Insurance
6% = Taxes
19%
4. Add your percentages: 10% + 19% = 29%
Your Inventory Carrying Rate = 29%
--------------------------------------------------------------------------------------------------------------------------------Inventory Carrying Costs:
Inventory Carrying Cost = Inventory Carrying Rate (see above) X Average
Inventory Value
Example: $9,860,000 = 29% X $34,000,000
Inventory Turns (Inventory Turnover): The number of times that a companies
inventory cycles or turns over per year. It is one of the most commonly used
Supply Chain Metrics.
Calculation: A frequently used method is to divide the Annual Cost of Sales by the
Average Inventory Level.
Example: Cost of Sales = $36,000,000. Average Inventory = $6,000,000.
$36,000,000 / $6,000,000 = 6 Inventory Turns

OR
Inventory Turns can be a moving number.
Example: Rolling 12 Month Cost of Sales = $16,000,000. Current Inventory =
$4,000,000
$16,000,000 / $4,000,000 = 4 Inventory Turns
Projected Inventory Turns: Divide the "Total Cost of 12 Month Sales Plan" by the
"Total Cost of Goal Inventory"
Example: The Total Cost of 12 Month Sales Plan is $40,000,000. Total Cost of
Goal Inventory = $8,000,000
$40,000,000 / $8,000,000 = 5 Projected Turns
Turns can be viewed using Cost Value, Retail Value, or even in Units. Just make
sure that you're using the same Unit of Measure in both the Numerator and the
Denominator.
Although results vary by industry, typical manufacturing companies may have 6
inventory turns per year. High volume/low margin companies (like grocery stores)
may have 12 inventory turns per year or more.
Consult a qualified benchmarking company to help you set your target for your
inventory turns.
Please see the category links on the left side to view various Supply Chain
definitions.
On Time Performance

OnTime Shipping Performance is a calculation of the number of Order Lines

shipped on or before the Requested Ship Date versus the total number of Order
Lines. Throughout the following text, I refer to "shipped" ontime. BUT if actual
"delivery" data is available, it may be substituted and compared to the Requested
Delivery Date. (such as with an EDI#214 ).
*OnTime: Shipped on or before the requested ship date (except if the receiving
party does not accept early shipments).
Sample OnTime Metrics:
OnTime Line Count: The amount of order lines shipped OnTime* versus the
amount of lines ordered.

example- ABC Company orders 10 products (one order line each) on its Purchase
Order #1234. The Order has a Requested Ship Date of March 1. The manufacturer
ships out 5 line items on February 28 and 2 items on March 1 and the remaining 3
items on March 10. The OnTime LineCount for this Purchase Order is 70%. It is
calculated based on the Requested Ship Date OR, if available, substitute actual
Delivery Date vs Requested Delivery Date.
Calculation: Number of Order Lines Shipped on or before the Requested Date /
Total Number of Order Lines Ordered
(7/10 = 70%)
OnTime SKU Count: The number of SKU's (Stock Keeping Units) ordered and
shipped is taken into consideration. Above, we consider each Order Line to have an
equal value (1 ). Here, we count the SKU's per Order Line.
example: If on Line 1, the order was for 30 skus of product "AB" and on line 2,
they ordered 10 skus of item "AC". The Requested Ship Date is April 1st. If Line 1
ships on March 28 and line 2 on April 20, the the SKU Fill Rate is 75%
Calculation: Number of SKUs Shipped OnTime / Total Number of SKUs Ordered
(30/40 = 75%).
OnTime Case Count: The amount of cases shipped OnTime versus the amount of
cases ordered.
example- ABC Company orders 6 products that total 200 cases, on its Purchase
Order #1235. The manufacturer ships out 140 cases on 3/1/01 and the remaining 60
cases on 3/10/01. The Requested Ship Date is 3/1. The Case OnTime Rate for this
Purchase Order is 70%. The number of Order Lines is not considered in this
calculation. This OnTime measure gives "weight" to the order lines that are
shipped out.
Calculation: Number of Cases Shipped OnTime / Total Number of Cases Ordered .
(140/200 = 70%)
OnTime Value Rate: Same as above, except the order line value is used instead of
cases.
Calculation: Value of Order Lines Shipped OnTime / Total Value of the Order
($400/$500 = 80%)
Perfect Order Measurement: As with most other Supply Chain Metrics, there are
many variations to this measurement.
The Perfect Order Measure calculates the error-free rate of each stage of a
Purchase Order. This measure should capture every step in the life of an order. It

measures the errors per order line.

But how do you capture errors? Let's look at what happens when an error occurs.
Say for example, your warehouse picks and ships the wrong item. Once the
customer receives the order and notices the error, they contact the manufacturer
and notify them of the mistake. The manufacturer then enters a credit for the item
not shipped and an invoice for the item shipped in its place. For almost all errors
that occur, a corrective credit is issued. It is through an analysis of these credits that
you derive your metric. Most systems require a "reason code" to be used when
entering a credit. Tracking these reason codes and assigning them to a category
allow you to group them for the Perfect Order Measure.
Example:
Order Entry Accuracy: 99.95% Correct (5 errors per 10,000 order lines)
Warehouse Pick Accuracy: 99.2%
Delivered on Time: 96%
Shipped without Damage: 99%
Invoiced Correctly: 99.8%
Therefore, the Perfect Order Measure is 99.95% * 99.2% * 96% * 99% * 99.8% =
94.04%
There may be other fields used such as "The Sales Representative recommending
the correct item" or the "FillRate".
Performance to Promise Dates: When a Distributor places a Purchase Order against
a Manufacturer, he has certain expectations on when he will receive the items
ordered. His original expectation is the OnTime Delivery Metric. However, the
manufacturer may give him a revised estimate as to when they expect to fill the
order. The manufacturers promise is called the "Performance to Promise Date
Metric".
Example: ABC Company Orders 2 Products on Purchase Order #1234, with a
Requested Ship Date of June 10.
The first item is in-stock and ships on June 10th..
The second item is on backorder. The manufacturer estimates that the 2nd item will
ship by July 1.
The item is manufactured and ships out on June 28.
The Performance to Promise Date is 100% (items ship ontime or early)
*However, if the 2nd item does not ship till July 2nd, then it's late. The
Performance to Promise Date is 50%.

Transportation Metrics:
Freight cost per unit shipped: Calculated by dividing total freight costs by number
of units shipped per period. Useful in businesses where units of measure are
standard (e.g., pounds). Can also be calculated by mode (barge, rail,ocean,
truckload, less-than-truckload, small package, air freight, intermodal, etc.).
Outbound freight costs as percentage of net sales: Calculated by dividing outbound
freight costs by net sales. Most accounting systems can separate "freight in" and
"freight out." Percentage can vary with sales mix, but is an excellent indicator of
the transportation financial performance.
Inbound freight costs as percentage of purchases. Calculated by dividing inbound
freight costs by purchase dollars. It is important to understand the underlying
detail. The measurement can vary widely, depending on whether raw materials are
purchased on a delivered, prepaid, or collect basis.
Transit time: Measured by the number of days (or hours) from the time a shipment
leaves your facility to the time it arrives at the customer's location. Often measured
against a standard transit time quoted by the carrier for each traffic lane. Unless
you are integrated into your customers' systems, you will have to rely on freight
carriers to report their own performance. This is often an important component of
leadtime. Transit times can vary substantially, based on freight mode and carrier
systems.

Claims as % of freight costs: Calculated by dividing total loss and damage claims
by total freight costs. Generally measured in total and for each carrier. A high
number generally indicates packaging problems, or process problems at the carrier.
Freight bill accuracy. Calculated by dividing the number of error-free freight bills
by the total number of freight bills in the period. Errors can include incorrect
pricing, incorrect weights, incomplete information,etc. Generally measured in total
and for each carrier.
Accessorials as percent of total freight: Calculated by dividing accessorial and
surcharges by total freight expenditures for the period. Many freight carriers will
charge extra fees for trailer detention/demurrage, re-delivery, fuel increases, and

other expenses or extra services. Often, these are extra costs incurred due to
inefficient processes.
Percent of truckload capacity utilized : Generally used for shipments over 10,000
lbs. Calculated by dividing the total pounds shipped by the theoretical maximum.
For example, assume your trucks can hold 40,000 lbs. of product. During the prior
month, there were 675 shipments totaling 22.95MM lbs. The percentage utilization
was 85%. The 15% unused capacity is an opportunity for more efficiency.
Mode selection vs. optimal: This is calculated by dividing the number of shipments
sent via the optimal mode by the total number of shipments for the period. To
measure this, each traffic lane must have a designated optimal mode, based on
freight costs and customer service requirements.
Truck turnaround time: This is calculated by measuring the average time elapsed
between a truck's arrival at your facility and its departure. This is an indicator of
the efficiency of your lot and dock door space, receiving processes, and shipping
processes. This also directly affects freight carrier profits on your business.
Shipment visibility/traceability percent : Calculated by dividing the total number of
shipments via carriers with order tracking systems, by the total number of
shipments sent during a period. This is an indicator of the relative sophistication of
your carrier base, and one measure of the non-price value available from your
carrier base.
Number of carriers per mode: Calculated by counting the total number of freight
carriers used in a given period, by mode (ocean, barge, rail, intermodal, truckload,
LTL, small package, etc.). This is an indication of your volume leverage and
control over the transportation function.
On-time pickups: Calculated by dividing the number of pick-ups made on-time (by
the freight carrier) by the total number of shipments in a period. This is an
indication of freight carrier performance, and carriers' affect on your shipping
operations and customer service.
Various Supply Chain Metrics:

Inventory Months of Supply:

Inventory On Hand / Avg Monthly Usage
(the Avg Monthly Usage is typically the yearly forecast divided by12)
Inventory Rationalization:
An analysis that categorizes your inventory by various categories. Examples- Current Inventory levels of A,B,C products
- Inventory turns of A,B,C
- Value of Slow Moving product (those products you may have more than "x"
number of weeks worth)
Material Value Add.
- Sell price minus material cost divided by material cost.
Upside Flexibility:
The ability of a manufacturer to meet additional demand requirements. This is
usually compared as a percentage over the original order. This is protection for the
buyer. It allows for the actual demand to be higher than the forecasted quantity
Setting Goals for your Supply Chain Metrics:
Once you have an understanding of basic Supply Chain Metrics, focus on a limited number of
measurements that add value. Choose those metrics that will track your companies true
performance. You don't want to get into the trap of "analysis paralysis". Over-analysis leads
to confusion and sometimes conflicting goals. I would recommend picking 5 - 7 key
measures per functional area. These measures are sometimes referred to as KPI's (Key
Performance Indicators).
Once you have identified these metrics, you can then set your goals. This will enable your
organization/department to track it's performance to expectations. But how do you set these
goals? How do you determine what to target? At what point have you achieved Supply Chain
optimization?
Your overall company goals should be considered when setting your Supply Chain targets.
You want to make sure that your Supply Chain goals do not conflict with your company
objective. Targets can reflect how aggressive you want to be in pursuing change.
Some Guidelines.....
First, make sure you understand exactly what it is your measuring. What drives this measure?
What causes failure? Where do you need improvement? Once you can answer these
questions, you're in a better position to set your goals.
Some companies use a guideline of 10% improvement per year. But, this is a very general
guideline.

Benchmarking: One way to set your goals is Benchmarking. There are various
benchmarking services, that for a fee, will compare your company to other "like" companies.
You submit your answers to a set of questions. Those answers are averaged in with other
companies submissions. Averages are calculated and World Class levels are set.
As an example, if the average Fill Rate for your industry is 93% and your performing at a
80% level, then it's obvious you need to set an aggressive goal. However, if the industry
average is 93% and you're at 94%, you may want to target a minimal gain. Your aggressive
efforts should probably be focused in other areas. The caveat here is defining "like"
industries. Make sure the comparison your making is a fair one.
SMART goals :
Specific: Provide enough detail so that there is no question on what is being measured and no
question how the metric is calculated. You should be specific as to the measurement, goals
and responsible people/department.
Measurable: Here is where you use your metric. Make sure you have a reliable system in
place that will accurately measure your performance
Attainable: Will the Supply Chain projects you have scheduled for the year produce results
that will achieve your goal? The person setting the goal and the person responsible for
achieving the goal should agree with the target. If results are un-attainable or unrealistic, they
will have a de-motivating effect on your employees.
Realistic: Don't plan to do things if you are unlikely to follow through. Better to plan only a
few things and be successful rather than many things and be unsuccessful. Your Supply Chain
goals should be challenging, but realistic in relation to the improvement projects you have in
place.
Time frame: Identify when your targeting to hit your goal.
Example: Your current Fill Rate is 87% and your Supply Chain projects should improve your
measure to 93%. But is the 93% goal for the final month of the year OR is it averaged out
over a specific timeframe?
Customer Service Policy:
Additionally, make sure that your Supply Chain goals are aligned with your Customer
Service Policy.
Example: Your agreement to your customer might be a 95% Fill Rate, with an Order Cycle
Time of 10 days. Make sure that your goals reflect these customer agreements.
Supply Chain optimization is difficult to achieve. But with the right metrics in place and
proper goals set, you now know where to focus your improvement projects. You have just
gotten closer to Supply Chain optimization

Here are a few Supply Chain Acronyms:

ABC: Activity Based Costing
ABM: Activity Based Management
ANOVA: Analysis of Variance
AOQ: Average Outgoing Quality
APICS: American Production and Inventory Control Society
ASP: Application Service Provider
B2B: Business to Business
B2C: Business to Consumer
BB: Black Belt
BBC: Black Belt Champion (or Council)
BBS: Business Balanced Scorecard
BEST: Business Excellence through Speed and Teamwork
BOM: Bill of Materials
BTO: Built to Order
C&E: Cause & Effect
CAD: Computer Aided Design
CAM: Computer Aided Manufacturing
CPIM: Certified in Production and Inventory Management
CRM: Customer Relationship Management
CTQ: Critical to Quality
CTR: Cycle Time Reduction
DPMO: Defects Per Million Opportunities
DRP: Disribution Requirements Planning
DRP2: Distribution Resource Planning
DTF: Demand Time Fence
EDI: Electronic Data Interchange
EPR: Economic Profit Realized
FG: Finished Goods
FGI: Finished Goods Inventory
FIFO: First In First Out
FPO: Firm Planned Orders
GAAP: Generally Accepted Accounting Principles
IFO: Income From Operations
ISO: International Standards Organization
IT: Information Technnology
JIT: Just in Time
KPI: Key Performance Indicator
LCL: Less than Carload

LIFO: Last In First Out

LSL: Lower Specification Limit
LTL: Less than Truckload
MAP: Manufacturing Automation Protocol
MBB: Master Black Belt
MBO: Management by Objective
MDS: Material Dominated Scheduling
MIS: Management Information Systems
MRP: Materials Requirements Planning
MSDS: Material Safety Data Sheet
MTBF: Mean Time Between Failures
MTO : Made to Order
NDC: National Distribution Center
NPV: Net Present Value
OEM: Original Equipment Manufacturer
PAC: Production Activity Control
PDCA: Plan Do Check Act
PPM: Parts Per Million
RDC: Regional Distribution Center
ROA: Return on Assets
ROI: Return on Investment
ROP: Re-Order Point
RPI: Raw Product Inventory (components)
SCOR: Supply Chain Operations Reference model
SD or STD: Standard Deviation
SMART: Specific/Measurable/Ambitious/Realizable/Time-Phased
SPC: Statistical Process Control
USL: Upper Specification Limit
VMI: Vendor Managed Inventory
WIP: Work In Process