What is performance benchmarking? Why is it increasingly being used when establishing purchasing performance goals and objectives?
Performance Measurements Supply Chain Performance Metrics and Benchmarking
Supply Chain Management (SCM) uses performance metrics and benchmarking to measure the performance of its internal supply chain organization and its external supply chain, i.e. the overall supply chain, in the following areas:
• Quality • Delivery • Service • Price
• Cost
• Compliance
• Lead times
• Responsiveness
Benchmarking uses Key Performance Indicators (KPI) to quantitatively measure how well the supply chain is performing in the areas above. Benchmarking measures the performance of a supply chain process relative to the organization’s process and relative to the process at other organizations. SCM uses benchmarking to identify performance gaps and areas needing improvement. Some of the commonly used SCM KPIs include:
• • Delivery
• • Returns
• • Cycle-time
• • Lead time
• • Inventory
• • cash-to-cash conversion
• • Costs
• • Staffing
• • Demand
• • Matericixal
• • Production
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