Supply Chain Drivers
Logistics Drivers Facilities These are physical locations where merchandise is stored, assembled or manufactured. Two major types of facilities are production sites and storage sites. Decisions regarding the role, location, capacity, and flexibility of facilities have a significant impact on the supply chain’s performance. Facilities related metrics include; capacity, utilisation, cycle time of production, cycle time, flow time efficiency, product variety, processing/setup/down/idle time, average production batch size, and production service level.
Inventory This includes all unprocessed material, raw materials being processed and completed merchandise. Change in inventory policies can alter the supply chain performance. For instance, a stationery shop can be responsive by stocking large amounts of stationery and satisfy customer demand from stock. However, a large inventory increases costs, rendering it less efficient. Stock reduction would make it more efficient but less responsive.
Inventory related metrics include; average inventory, products with more than a specified number of days of inventory, average replenishment batch size, average safety inventory, seasonal inventory, fill rate, and fraction of time out of stock. Transportation Transportation involves moving inventory from one supply chain location to another. Transportation can take form with different combination of modes and routes, each with its own performance characteristic.
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Transportation related metrics include; average inbound and outbound transportation cost, average incoming and outbound shipment size, average inbound and outbound transportation cost per shipment and fraction transported by mode. ? Cross-Functional drivers Information This consists of data and analysis concerning all other drivers, that is, facilities, inventory, transportation, pricing and customers.
It is arguably the biggest supply chain driver as it directly affects each of the other drivers. Timely and accurate information will enhance coordination and better decision making. Information related metrics include; forecast horizon, frequency of update, forecast error, seasonal factors, variance from plan, and ratio of demand variability to order variability. Sourcing
Sourcing involves choosing partners to perform a particular supply chain activity such as production, transportation, storage, or management of information. This decision variable establishes functions that a company may undertake and those that it may outsource. Sourcing related metrics include; days payable outstanding, average purchase date, range of purchase price, average purchase quantity, fraction on-time deliveries, supply quality, and supply lead time.
Pricing Pricing determines the amount a company will charge for goods and services offers in the supply chain. Pricing affects the behaviour of the customer buying a product or accessing a service, thus affecting supply chain performance. Pricing related metrics include; profit margin , days sales outstanding, incremental fixed cost per order, incremental variable cost per unit, average sale price, average order size, range of sale price, and range of periodic sales.
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