In almost any sporting
event, more points win. In supply chain, less cost wins. But just as the
scoreboard reflects a game’s winner, and the total logistics cost disclosed in
the annual report might identify supply chain winners, neither tells the entire
story. Total logistics cost is only part of the picture for today’s ever
changing, dynamic supply chains. Using supply chain scorecards, more granular
metrics or key performance indicators (KPIs) can be tracked to gain insight
from past performance, permit enhanced overall management and to proactively
drive continuous improvements.
TRANSPORTATION SCORECARD
With the average company
spending 4.6% of sales on transportation costs (Gartner, 2014), it is important
to have a set of scorecards that closely monitors not just the annual freight
spend but the overall health of the transportation network. The right scorecard
is going to help identify ‘leakage’ defined as cost increasing or service
degrading. An example of a Network Overview Scorecard is shown below. Other
tactical metrics tracked include prime carrier tender acceptance, lane
variance, spot market, freight brokerage and expedited activity. These scorecards all provide insight and an
assessment of the operational execution for a transportation network.
Supply Chain Scorecard 1
Transportation management
and the scorecards used to report on this function are not limited to tactical
execution. Stepping back from the day- to- day to evaluate the transportation
network for improvements from a strategic standpoint is another opportunity to
improve performance. Be aware strategic improvements require a change
management component in many cases.
These improvement initiatives often involve working with other groups
and functions within the business, as well as internal and external
stakeholders. A few sample strategic metrics include weight or cube
utilization, mileage and out-of-region shipping, mode utilization (modal
shifts), accessorial costs and benchmarking.
Good transportation
scorecards reveal past performance variance to the baseline or plan, and
identify root causes of the variances so corrective actions can be taken to get
back on track.
WAREHOUSE SCORECARD
Warehousing and
distribution costs the average company 2.3% of sales (Gartner, 2014), which
means detailed metrics for this function can help ensure the year is finished
under budget. An example of a DC
Operations Scorecard is shown below. These scorecards include some version the
five most common metrics for warehouse operations: Safety, Quality/Accuracy,
Service Level, Productivity and Cost.
Supply Chain Scorecard 2
Any hourly DC associate
knows there are ‘easy’ orders to pick and ‘hard’ orders to pick based on a number
of factors. Managers responsible for
these operations need good scorecards to help track how this “easy” and “hard”
work is morphing and potentially impacting the operation in a positive or
negative way.
The list of metrics that
help track these factors driving work effort in the warehouse are:
Mix – Pallet Pick, Carton
Pick , Each Pick, and Average Cartons/Inbound Container.
Profile – Units/Order,
Units/line, Lines/Order and Cube/Unit.
Productivity – Cartons/Man
Hour, Shipped Units/Man Hour, Standard hours and Non-Standard hours.
Flow – Inbound and
Outbound Volumes by month, week, and day.
Any discussion of DC
Scorecards must also focus on important metrics that can make or break a
budget. These include wage rates, straight-time hours, OT hours and training
hours for both full-time and temporary labor, direct hours and indirect hours.
These types of warehouse
scorecards serve as good gauges of performance to plan and improve the chances
of coming in under budget.
VENDOR SCORECARD
Supply chain professionals
can have transportation and distribution operations executing like this year’s
Super Bowl champs. Throw in a bunch of vendors who are not playing by the rules
(vendor compliance guidelines) and a vendor scorecard can reveal a retailer’s
costs growing, service levels plummeting and consumption of capital and
resources increasing.
The vendor’s product
(internal manufacturing, contract manufacturing or use of outside suppliers) is
what is moving through transportation and distribution networks. When vendors
do not execute to the prescribed guidelines, retailers incur “avoidable costs”
that negatively impact the business. A comprehensive vendor scorecard will
track the vendors’ performance as well as communicate supply chain exception
event info to the vendor so corrective action can be taken.
The vendor scorecard
tracks detailed metrics in the following categories: Early/Late Shipments, ASN
Accuracy, ASN Late/Missing, Freight and Routing , PO Fill Rate, Product
Ticketing, Carton Labeling, Floor Readiness and Chargebacks (type, quantity and
$). An example of a vendor scorecard is shown below.
Supply Chain Scorecard 3
Those not using a
scorecard to track vendor performance need only ask themselves whether they
want their vendors to correct compliance issues. If improved vendor performance is the goal,
the vendor scorecard is the best way to consistently communicate expectations,
share performance results and drive improved compliance. While vendor scorecards and compliance where
made popular by retailers, they are finding use among many companies that rely
on internal or outside suppliers for finished goods.
Whether the Super Bowl or
almost any sporting event, a champion can be decided by a single play called at
the end of the game. Using supply chain scorecards, any supply chain manager
can have what’s needed to call the winning play.
- See more at:
http://blog.ryder.com/2015/03/supply-chain-scorecards/#sthash.rJzDRYbu.dpuf