Operations Management: An Integrated Approach, 5th Edition

SUPPLY CHAIN PERFORMANCE METRICS

A company can use traditional financial measures such as return on investment (ROI), profitability, market share, and revenue growth, as well as traditional inventory performance measures such as customer service levels, inventory turns, weeks of supply, and inventory obsolescence (all discussed in Chapter 12).

Let's look at how a large state university used several metrics to analyze how well its supply chain achieved the following initiatives. The first initiative was a spend analysis. This was a strategic review of spend data across all purchase and payment methods to increase compliance and identify new organization-specific contracting and cost containment opportunities. The university also evaluated its level of progress in strategic sourcing. The purpose of the supply base management initiatives was to leverage the university's buying power and maximize the value of its strategic supplier business relationships. A third initiative concerned contract management. This initiative concerned the development and implementation of a university-wide best-in-class contract pricing agreement that would assure the university the “least total cost” for products and services required from external suppliers. The fourth initiative evaluated the use of collaborative buying. This examined how well the university had used local, regional, and national collaborative buying business partners to further leverage buying power. The last initiative was concerned ...