When assessing the efficiency of a supply chain, it’s easy to get caught up in the intricacies of cost analysis. We’ve all heard the old adage that ‘time is money’; there is often a stress on the importance of reducing costs to maximise profits, minimise outlay and keep every stakeholder happy.
While all businesses are centred around making money, it’s important to consider other factors as well. Soft metrics are the non-cost considerations a supply chain should take into account in order to enhance their success.
Maximise success with these metrics
Modern operations occur in a digital and interconnected environment. This provides businesses with opportunities to utilise technology to innovate and streamline productivity. A measure of how your supply chain employs technology can reveal areas in which workflow may be improved to ensure increased stakeholder oversight and visibility. This can then result in a more efficient redirect of resources.
For example, using a Transportation Management System will enable businesses to digitise and in some cases, automate their shipping and delivery. Not only does this minimise the manpower needed in this area, it also allows increased oversight of where and when goods are being delivered.
Pairing risk and resilience
Risk management has always been a key component of the supply chain. Recognising risks, and employing proactive solutions to mitigate them, boosts efficiency and maximises productivity. However, Chuck Intrieri has noted that many supply chains do not know how to effectively practice resilience. Responding to an issue with resilience involves “a supply chain entity [continuing] to exist and maintain productive value as if nothing happened”.
Taking this soft metric into consideration enables supply chains to plan for failure and respond quickly and effectively in the event of a delay. Embedding collaboration and flexibility into processes also enables chains to recover ahead of their competitors, and increase both output and stakeholder confidence. Considering not only the risk, but how your supply chain will bounce back, is crucial to success.
Specific metrics for supply chains
As mentioned above, technology has enabled supply chains to become much more visible. The result is that companies now have access to a plethora of data that enables them to develop analytics. This can be used to identify areas for improved efficiency, cost reduction, or even where current processes are ineffective or have broken down. Ensuring your supply chain has the resources it needs for every step of the process to be as clear as possible is a key goal for businesses focused on strategic improvement.
Perfect order measurement
Having clear and understandable goals is essential to any teamwork environment. One metric that often gets overlooked in the face of minimising cost is the percentage of orders or shipments in which a mistake has not been made. Making perfect orders a priority for your supply chain should be a key aim across every stage, from procurement to delivery. The result will be a team dedicated to success (especially when this is incentivised) and a majority of satisfied customers.
Moving an industry forward
Above all, soft metrics should be utilised to drive supply chain industries forward. Any and all improvements should be sought after, as they promise benefits across several stages. There is also the potential for these to be adapted into other complementary industries. Therefore, the most important metric is clear and free communication and collaboration along the supply chain process. Even for direct competitors, collaboration promises improved efficiency and accountability, and has also been shown to benefit consumer confidence. An open and honest industry ultimately benefits everyone.
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