Supply Chain Expertise and Technology Blog by TMC, a division of C.H. Robinson

Have You Checked Your Numbers? Know What Key Indicators Reveal About Your Supply Chain Health

supply-chain-metricsAs individuals, we are advised to periodically check our health numbers (weight, blood pressure, cholesterol, etc.) to assess our overall wellbeing. In some cases, certain numbers will be right on track, while others may indicate an issue.

This analogy can happen in businesses, too. Companies can either be proactive about understanding their numbers, or they can wait for painful symptoms to show up—via customer complaints—and then, through trial and error, figure out what’s causing the issues.

Here are some key supply chain indicators to look for when evaluating your overall business performance:

Be proactive: Know your on-time delivery and perfect order numbers
In today’s rapidly changing market, businesses cannot afford to be reactive. By the time an issue is finally identified and analyzed, several hundred—or even thousands—current or potential customers could have been negatively impacted, or even lost. Therefore, it is very important for businesses to check numbers periodically and really understand which key metrics need to be reviewed regularly to provide a good representation of their overall health.

For example, a perfect on-time delivery (OTD) is meaningless if the product shipped is the wrong one. This is where compound metrics, like perfect order fulfillment (POF), play an important role—especially for retail and ecommerce businesses.

When OTD and POF don’t align
I personally experienced a non-perfect order situation with an ecommerce giant and can attest to the statement that 100% OTD is not enough. I trusted and depended on their 100% OTD guarantee so much that last year, when my daughter’s birthday was approaching, I had no hesitation about ordering party supplies from the online store only a couple days before the big day.

I received my shipment the morning of the party, as promised. But when I opened the package, inside were crayons and a wallet instead of my order. OTD and the condition of the products were perfect, but it was the wrong product: 0% order fulfillment.

After this experience and knowing that customer trust is critical for businesses, I wondered how the company was able to track and control numbers of imperfect orders with millions of suppliers shipping products every day. I did some research and found some interesting examples of how this can be controlled:

  • Require sellers to adhere to a “supplier code of conduct”
  • Rate sellers with significant consideration to “perfect order fulfillment”
  • Provide a tool for sellers to track their metrics to assess if they are meeting targets
  • Provide a recommended action plan and best practices in case performance targets need to be improved
  • Remove selling privileges if performance is not aligned to expectations

TMS technology can help track performance
Fortunately, some of these practices can be applied to any business interested in proactively controlling and improving key performance metrics. There are supply chain and logistics tools that enable companies to have more visibility of overall performance, as well as tracking performance at the order level. Technology like a transportation management system (TMS) is a good example, because it can track important information at the order or shipment level, capturing metrics beyond OTD, while allowing businesses to track and analyze important elements in customer orders (number of claims, percentage of customer rejections, exception reasons, etc.).

Some TMS platforms have built-in business intelligence tools with carrier and supplier scorecards ready.  Information in carrier scorecards can then be used to determine if a carrier should have “preferred carrier” status or not. With this information, companies can take action to tackle specific issues that are driving metrics in the wrong direction and affecting the overall health of the company. Information can also be used to facilitate negotiations or drive internal process improvements using analysis of exception codes.

Knowing your numbers, grow customer satisfaction
Knowing your numbers will help you keep loyal, satisfied customers and allow you to determine appropriate actions to maintain an overall healthy business.

Three key points to remember:

  1. Know your numbers. Proactively track key indicators and work to improve the overall health of your company. Leverage technology!
  2. Have contingency plans. There will be exceptions even with a history of perfect metrics, so have a backup plan in place. Learn from the situation and keep improving your processes.
  3. Do not underestimate power of customer service. Having a great customer service team is crucial. They can make the difference in losing or winning customers.

If you’re ready to explore how TMS technology can support multichannel operations, read our white paper, Improve a Multichannel Supply Chain Management with TMS Technology, or connect with one of our supply chain experts.

 

Comments

Alba Y. Duarte

Very insightful! Quite frequently businesses do become strictly reactive, falling progressively behind their competitors. It is good to know that TMS offers tools that facilitate moving to a more proactive approach.

6.15.17

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