APICS - CSCP 2020 Module 3 Section C

The key processes that supply chain managers need to be able to perform related to measuring, analyzing, and improving the supply chain are

• Gathering performance data

• Analyzing performance

• Improving performance.

Each of these processes is introduced next. Note that these are general overviews. The information required to plan and execute these processes is presented later in this sections topics.

Prerequisites to these processes involve setting measurement system objectives and planning what to measure:

• Determining organizational objectives and how to measure and incentivize their success

• Selecting metrics that are meaningful and promote desired behavior, yet are feasible and cost-effective to measure

The process of gathering performance data involves the following steps:

• Determining the data to be collected as inputs to chosen metrics

• Finding source(s) for the necessary dataincluding allowed external sources (e.g., reporting agencies, suppliers)

• Assessing data collection feasibility; for example, for customers/suppliers:

  • Assessing availability, quality, and cooperation levels

  • Planning and executing data collaboration projects when feasible

  • Finding alternative data sources (i.e., proxies) as needed

• Assessing data accuracy impact (e.g., distance-based freight rates might be used unless actual freight rates would significantly improve decisions)

• Choosing the method of gathering each type of data (e.g., manual estimate, manual measurement, automated information system)

• Determining the method of reporting the data (e.g., who, how, what, and when for manual or what events trigger automatic submission)

• Setting up these processes and systems as needed (e.g., using projects)

• Gathering and submitting data during normal operations

• Entering manual data in information systems/tools in the proper format and using controls to minimize data entry errors

• Validating data for relevance, reliability, and accuracy (e.g., compare to historical data to see if wide discrepancies exist; if so, investigate)

• Archiving the data in a role-restricted repository (database) for ease of access and reference by appropriate parties

For example, performance data could be shipping and arrival dates, percent completion of a manufacturing process, number of defects, actual costs, and so on.

In another example, financial data for suppliers might include information directly from suppliers and/or their publicly available financial statements but also data from credit reports, bank references, or third-party ratings such as Moodys ratings, Fitchs ratings, or Dun & Bradstreet reports.

The process of analyzing performance involves the following steps:

• Formulating questions that the performance information or model outputs should be able to answer

• Turning data (raw observations and measurements) into information:

  • Placing it in context (e.g., comparing to baselines, goals, benchmarks, or past results)

  • Using the data as inputs for ratio analysis, formulas, or models

  • Using the data for comparisons across supply chain organizations to see if there is a net improvement for all

• Validating information and tools for relevance, reliability, and accuracy (i.e., compare ratios to historical ratios or use historical data in models)

• Making interpretations (e.g., viable options, status, trends, or forecasts)

• Selecting formats and media appropriate to the information and audience

• Preparing reports at predetermined intervals and on request

• Presenting reports

Performance information might include shipment status, fill rate, on-time delivery variance, forecasted number of quality rejects, and so on. Reports can take the form of dashboards, regular status reports, updates, recommendations, formal presentations, and so on.

The process of improving performance involves the following steps:

• Accepting feedback from decision makers and supply chain participants

• Preparing recommendations for short-term or incremental improvement

• Enacting approved short-term or incremental changes

• Periodically auditing processes (including the measurement process itself) against strategic or long-term objectives

• Preparing recommendations for changes to processes or metrics that better align with strategic or long-term objectives

• Preparing recommendations as needed for making continuous improvement become part of the organizations philosophy (e.g., lean, six sigma)

• Using change management and/or project management to enact strategic or long-term improvements to processes or performance