Companies track a wide range of metrics within the supply chain area.
Some of the most common ones are the following:
• On-time delivery
• Forecast accuracy
• Value-added productivity per employee
• Returns processing cost as a percentage of product revenue
• Customer order actual cycle time
• Perfect order measurement Let's take a look at the last measure in more detail. The perfect order measurement calculates the error-free rate of each stage of a purchase order-basically you are looking for a perfect order process (or at least as close to one as you can get)! It helps managers track the multiple steps involved in getting a product from a manufacturer to a customer in order to pinpoint processes that need improvement-a bit like TQM we learned about earlier. For example, a company can calculate its error rate at each stage and then combine these rates to create an overall metric of order quality. As an example, let's suppose the company identifies the following error rates:
• Order entry accuracy: 99.95 percent correct (five errors per 1,000 order lines)
• Warehouse pick accuracy: 99.2 percent
• Delivered on time: 96 percent
• Shipped without damage: 99 percent
• Invoiced correctly: 99.8 percent The company can then combine these individual rates into an overall perfect order measurement by multiplying them together: 99.95 99.2 96 99 99.8 94.04 percent. Given this particular example, what are some things the manufacturer might work on to bring the overall perfect order measurement higher? What would be the advantages to the firm of investing in making this already good number even better for customers?