Supply Chain Management as a Strategic Issue
Smooth flow and performance of supply chain management is a complicated process. Supply chain management involves a lot of ···
Supply Chain Management as a Strategic Issue
Smooth flow and performance of supply chain management is a complicated process. Supply chain management involves a lot of tasks which each have their objectives and practices. Distribution monitoring and cost of inventory and warehousing are some of the many tasks involved in supply chain management.
KPIs are the success indicators which provide how the company will evaluate and measure the performance of particular activities relating to the project, service and production as well as other aspects of the workflow (Parmenter, 2015). Regarding various aspects that need close monitoring and control, the management needs to establish key performance indicator for each of its functional areas for optimal performance of the supply chain management.
供应链管理的顺畅流动和绩效是一个复杂的过程。 供应链管理涉及许多任务，每个任务都有其目标和实践。 分销监控以及库存和仓储成本是供应链管理中涉及的众多任务中的一部分。KPI 是成功指标，提供公司如何评估和衡量与项目、服务和生产以及工作流程其他方面相关的特定活动的绩效（Parmenter，2015 年）。 对于需要密切监控的各个方面，管理层需要为其每个职能领域建立关键绩效指标，以实现供应链管理的最佳绩效。
Improved Distribution System
The distribution system is responsible for managing the timely delivery of products to consumers. The system needs to be monitored to optimal performance in terms of cost of distribution, quality of work, service levels, and customer experience. However, there are factors which might affect the performance of the distribution system including poor information capturing, erroneous inventory requests, and low-value picking and packaging.
Distribution Cost Per-Unit
Managers are responsible for direct costs but not decisions that drive the costs. Nevertheless, the distribution cost is measured as the percentage of sales and is ideally supposed to be less than 1.6 per cent, but most organizations range between 2.9 per cent and 8.9 per cent. For instance, assuming the sales per month is 1,100 units.
And each unit average at $100 which gives a total of $110,000. Out of the total sales, 10 per cent make up distribution costs, that is, $11,000. Distribution is not performing well looking at other factors like production costs and other expenses, and hence the manager needs to come up with a strategy to reduce these costs.
Order Processing Accuracy
The supply chain work-flow should be efficient enough to ensure fast picking, packing, and delivery of products for shipment to the consumer. To improve order processing accuracy, the company can invest in technologies for handling various activities in production, transporting, and packing
Distribution Cycle Time
These are end-to-end delays in the supply chain. It can be calculated as lead time in inventory control. It is time the order was placed and delivery. The lower the lead time, the higher the performance.
经理负责直接成本，而不是驱动成本的决策。尽管如此，分销成本以销售额的百分比来衡量，理想情况下应该低于 1.6%，但大多数组织的范围在 2.9% 到 8.9% 之间。例如，假设每月的销售额为 1,100 件。
每个单位平均为 100 美元，总计 110,000 美元。在总销售额中，10% 构成分销成本，即 11,000 美元。考虑到生产成本和其他费用等其他因素，分销表现不佳，因此经理需要提出降低这些成本的策略。
Better Inventory Control
Inventory turnover is the key performance measure that evaluates how effective the company can move its inventories. It includes how the company can control its raw materials, work-in-progress and finished products. Inventory control involves the use of policies and systems like purchasing, shipping, receiving, storing and reorder levels. The measure gives insight into the supply chain efficiency, purchases and product demand.
It measures how well the company control purchase, shipping, receiving, storage and reorder. The system uses an inventory turnover ratio which is the cost of sold divided by average inventory. A performing company can move inventories quickly at premium prices. For instance, if the company made sales of $100,000 and has $2,000 of average inventory, then the turnover ratio is 50 times over.
100,000/2000 = 50:1
It means that the company is converting the inventory to sales efficiently.
库存周转率是评估公司库存转移效率的关键绩效指标。 它包括公司如何控制其原材料、在制品和成品。 库存控制涉及使用政策和系统，如采购、运输、接收、存储和再订购级别。 该措施可以深入了解供应链效率、采购和产品需求。它衡量公司控制采购、运输、接收、存储和重新订购的能力。 系统使用库存周转率，即销售成本除以平均库存。 表现良好的公司可以以溢价快速转移库存。 例如，如果公司的销售额为 100,000 美元，平均库存为 2,000 美元，则周转率是 50 倍。100,000/2000 = 50:1这意味着公司正在有效地将库存转化为销售。
Short Storage and Efficient Inventory System
The physical storage includes the warehouse and other inventory holding facilities. They involve activities related to holding material and other processes for counting and transacting inventories in the warehouse. The key performance measures are order picking and carrying the cost of the inventory. The reason for using this as the metric for performance is because inventory storage constitutes a significant part of supply chain management especially on controlling costs.
The company is performing well if these costs are maintained at the minimum and amount of inventory in the warehouse is enough to serve the immediate market. At any giving time, the company should have economic inventory quantity to minimize holding costs of inventory. Assuming that the warehouse required inventory levels are 2 per unit, then any extra unit will be an added cost to the company.
Therefore, carrying cost is the sum of the cost of capital or opportunity cost of inventory, cost of space, handling items, and deterioration. The total cost is expressed as the percentage of the cost of the inventory. The lower the cost of carrying inventory the higher the efficiency of the supply chain management.
Supply chain management should be product oriented to give customers quality services. Therefore, the company view the aspects of supply chain holistically. The primary intention is to provide quality service at a lower cost. The metrics for product value include the cost of goods sold, costs per unit, labour cost, and warehouse costs.
Cash-to-cash Cycle Time
Cash-to-cash cycle time is the period between paying for material and receiving payment from the customers (Bhutto, Abbas, ur Rehman, & Shah, 2015). It is calculated as material payment time minus customer order payment time. This metric is essential in supply chain management as it measures the operating cash in the inventory. During this period, there less cash available for productive purposes. Therefore, if the company has a fast cash-to-cash cycle time it is an indication that the supply chain is efficient and profitable.
Change in Production Plan
If the plant capacity is 1,100 per month, but the forecast sales are high, will require the company to produce more and increase the holding capacity of its warehouse. It is because the anticipated demand is high than the plant can handle at once.
现金到现金周期时间是从支付材料到收到客户付款之间的时间段（Bhutto、Abbas、ur Rehman 和 Shah，2015 年）。它的计算方法是材料付款时间减去客户订单付款时间。该指标在供应链管理中至关重要，因为它衡量库存中的运营现金。在此期间，可用于生产目的的现金较少。因此，如果公司的现金到现金周期时间很快，则表明供应链是高效且有利可图的。
如果工厂产能为每月 1,100 件，但预测销售额很高，则需要公司生产更多产品并增加其仓库的容纳能力。这是因为预期的需求量超出了工厂的一次性处理能力。
Bhutto, N. A., Abbas, G., ur Rehman, M., & Shah, S. M. M. (2015). Relationship of cash conversion cycle with firm size, working capital approaches and firm’s profitability: A case of Pakistani industries. Pakistan Journal of Engineering, Technology & Science, 1(2).
Parmenter, D. (2015). Key performance indicators: Developing, implementing, and using winning KPIs. John Wiley & Sons.