KPI - The Best KPI (Key Performance Indicator) for Supply Chain & Logistics
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- Опубликовано: 10 июн 2024
- Yes, quite possibly the best KPI (Key Performance Indicator) for Supply Chain & Logistics.
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👇 TIMESTAMPS (in case you want to skip) 👇
0:00 Intro
0:33 Probability of a perfect order
1:54 Order Entry Accuracy
2:49 Inventory Availability
3:22 Warehouse DIFOT Service Level
3:48 Carrier Delivers
4:08 Customer Accepts Order
4:23 Accurate Invoice Paid
4:34 Accurate Reflection of your Performance
6:45 Summary
8:14 Outro
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One more great and simply way of answering KPI for Supply Chain. Thanks
It's a good KPI isn't it ?
I really like the holistic view of the system that this approach provides!! Thank you very much for sharing this with us!!
Glad it was helpful!
Yep, what a fantastic KPI indeed! The fact it forces everyone to collaborate to improve that number which of course improves the business is simply fantastic! Great video again Rob! Thank you!
It works really well!
Beautifully explained. Gets us on the path to excellence.
Glad you found it helpful. It's a great KPI isn't it?
I totally agree. Rob is a good teacher.
simply superb...it epitomizes the all the KPI put together!!
Glad you like it
Thanks Rob, very well explained and very thought provoking
Our pleasure.
I have watched and loved all of videos. I am going to join supply chain consulting and will recommend this channel to all.
Please do!
This is a fantastic presentation Rob! I think this is a fantastic KPI. Thanks for sharing.
Glad you like it
I have NEVER looked at all the KPIs this way!.... So it can be 64%, like the example that you showed. The inventory availability kills it so many times. Wow, really great video.
Not many people look at it this way. But it's a great way to get cross functional improvement.
thank you for the video. You put everything in plain words.
Can't help it, I'm a plain person!
Impressive! I like the process well simplified. Thank You.
Glad you liked it.
Thanks Rob for sharing all these interesting videos. All the information is really useful. Greetings from Lima Perú.
Happy to share knowledge. I hope it helps!
This is excellent lecture Rob. Best wishes for you.
Thanks
That is really inspirincing lecture about SCM's KPI
An important topic I think. Glad you liked it.
well Thank you very much for all this information it really helped me in my carrier of studying supply chain management.
Glad it was helpful!
Thanks rob very insightful !
Glad you found it helpful.
super easy to understand and right on!
Glad you think so!
Thanks for the video. Got a different perspective to look overall.
Glad it was helpful!
Thank you so much for this video
Most welcome 😊
Great lecturing Thanks!!!
Thanks for the feedback.
Very well explained , Thank you
So nice of you
Simply superb productive Explaination
Glad you liked it
Love this
Great content!!! Thank you for the presentation
Glad you liked it!
Truly beneficial talk, thank you so much 🤝
So nice of you
Thank you for this video!
You are so welcome!
Excellent Tutorial
Glad you liked it
Keep it up, Rob!
I plan to 🙂
Great video!
Glad you enjoyed it
Interesting video! THANK YOU, I needed it honestly ^-^
Glad it was helpful!
Lovely work!!!
Thank you! Cheers!
Very helpful! Thank you!!
Glad it was helpful!
You have brought me back to the days I worked at Philips Components in West Palm Beach, Florida. We made tantalum capacitors and I worked in the Quality Control Department as an assistant to the manager. I loved this environment and working on policies & procedures within manufacturing. Oh how I wish I had met you during that time. You are a wealth of information!
LOL. Sounds you had a very interesting role.
well said !
So inspiring
Glad it was helpful
At the start of the video I'm sitting here yelling DIFOT it's DIFOT!! hehe Ok you've made me take a note pad a pen out now. Info Value Town!
Haha. Glad you got something from it.
What is DIFOT ? Can you please elaborate
Great Informations
Thank You
Awesome
Thanks
Hi Rob,
Thank you for this great explanation about DIFOT, you pretty much cover all the important points in such short video. Would you have any presentation about Vendor Scorcard KPI? How to evaluate a supplier considering delivery (in full & on time) and quality of the product/service?
Regards,
Gilly
I'm sure we can come up with one for you...
Excellent video, thanks. Inventory Availability might need a breakout of all the process related to reach that final KPi. Same happens to all the different main processes listed in here. Like your approach.
Yes. It might need a video on each one!
@@supplychainsecrets If you do .. you know what is my pick already.. .lol. Thank you
I'm not into supply chain (yet) but i found this very informative, I am curious to know how data science can be incorporated into this
Data is heavily used in Supply Chain. From network design, cost to serve, inventory planning and many more aspects.
Hi ! Very clear your explanations! Could you please tell me for which industry this KPI was analyzed? Thanks!
It's a bit of an average across a number of industries.
Hi Rob,
Thank you for this great information. Is this applicable for wholesale and retail?
Yes of course
Hey Rob, thanks for this. Very informative. How did you multiply the percentages to arrive at Probability of 64%
Take each one and multiply it by the next.........
Thank you for this! Very interesting, just what I was looking for. Where did you find the industry standard performance kpi? And the lead performer kpi?
Ah, we own a Benchmarking Company 🙂
Rob a great incite into this KPI. Could you in coming weeks give some feedback on the duration of KPI's - most exist in a standard portfolio of reports but i am curious as to how when to introduce a new KPI to drive improved performance in a particular function or operational aspect? For example inventory availability could be impacted by an unmeasured lead time from receipt to put away and subsequent availabity. Should a KPI be introduced to measure this and for how long?
Interesting question. Most KPIs of course are ongoing, but there is no reason why an extra KPI can't be added for a specific period.
I really enjoyed this explanation; but I have a question. You mentioned near the end of your video to focus on Inventory Availability which is understandable especially from a customer perspective. However, the flip side may be if you have too much inventory that leads to waste. Especially in industries which have items with a limited shelf life. How about including a KPI that better measures the customer demand in terms of frequency and volume - so that the inventory can be more accurately predicted? And for companies that are merely distributors they of course would require a counter inventory availability to source products and materials as well. For what its worth to add to this discussion as a Procurement manager, I always ensure my Supply Chain has multiple suppliers with upfront approved products by the organization to ensure alternative sources are available.
Good point. Forecasting accuracy is the key!
Excellent video, I have a question. What type of indicator should be used to predict budget variables in countries with high inflation.
Sorry that's a question for an economist......
Thumbs up .
Thanks
I think the 1st and 2nd measure (order entry accuracy and inventory availability) should be linked with the warehouse DIFOT%.
the warehouse DIFOT includes picking the right order, and the order should be in stock.
so the calculations should exclude the warehouse DIFOT%
your thoughts?
I actually like them separate, as it helps us clearly identify where issues exist.
@@supplychainsecrets agree 80% inventory availability has a bigger & direct business loss of missing out on sale.
Hi, thanks for the video! I understand the idea of improving the KPI, however, how do you make sure that you do not incur higher costs by increasing the inventory availability than you will earn through the improvement of the perfect order probability? I mean surely it is a big advantage for a firm to provide more perfect orders, yet, it can be very costly to always have all of the inventory on stock for an order. Yours sincerely Camille Siersbæk.
You would think so, I agree. Higher service must require extra inventory. But in fact the opposite is true if you really focus on service as in this KPI. This article mighgt help: www.logisticsbureau.com/supply-chain-levers-part-5/
Thanks Rob nice teaching, but i didn't understand how we got the 68% and the 93%
Those are from our Benchmarking studies for clients. So from a sample of 1,000 companies we know that 'Parity' or the average, should be 68% + and 'Advantage' or Best in Class should be 93% +
Great explanation Rob! Is there a blog/video post on how lean six sigma or other process improvement initiatives improve the KPIs? I'm looking for something that links LSS methodologies with the overall Supply Chain performance of a firm.
Don't think there is one. I'll see if we can make one.
Great KPI and explanation. Any insight on how you go about tracking any of those metrics?
Not sure what you mean by tracking. They could be recorded, maybe on a spreadsheet and graphed to show the trend.
@@supplychainsecrets just seems like a lot of that data would be difficult to capture/track/record.
First of all thanks for such a really nice explanation But there is a counter when a company tries to increase it's probability of perfect order (POPO) KPI there is going to be cost associated with this like the money blocked in inventory if one keep it's inventory 100%. So my question is improving POPO is beneficial in all the cases or there are some cases where on should keep the inventory lesser for the betterment of the business
Our research over the last 20 years shows the opposite, Across all industries. As service increases, so costs fall.
Nice video! The nature of the KPI is well explained. However, I still have doubts about the differences between DIFOT and IFOT. I didn’t get it very well, I tried to look for it on internet but all pages define them as the same. Can some one help me out with this please?
I’m an industrial engineer student and I’m planning to do a master on SCM so I’ll appreciate it!!
Don't too hung up on abbreviations and definitions. In this example I have split DIFOT and IFOT. Normally people use DIFOT to mean it was delivered to the customer in full on time. In this case I have used it in 2 ways. To describe the warehouse having the order 'ready' IFOT for Delivery (maybe we can call that RIFOT) and then I have included the more traditional usage under the carrie delivery. Hope that helps.
Hi, thanks for the video!
I would love to know some KPI that help me to improve the receiving process in a pharma warehouse!
i love your videos, keep it going
greetings from Chile!
Think about what is 'wrong' with your receiving process, what might be the causes, and measure those! Often it is around accuracy, or time required to check and get product on the system, ready for sale.
This may sound silly but I would like to see how you came up with 64% just by multiplying.
Not silly at all. Lots of people don't get it at first. the 64% is the 'sum' of the other results. .98 x .8 x .9 x .98 x .95 x .98 = .64 (64%). Put t it another way. Most companies measure DIFOT. .98 in this example. But 2% error was made even at the order entry stage. So that creates an impact up front. If you only measure DIFOT, all you are measuring is the % that you Delivered In Full On Time, where you got the order 100% correct, where you had 100% of the stock available. etc etc. Does that make sense?
It does appear to be a low number, but the process is correct. The 36 percent is the culmination of the the failures
in your opinion, is it better to measure this at item level or order line level or order level ?
All three are useful. But to pick one, maybe order line
Can you show HOW to calculate these KPIs? step by step in an excel, all the variables needed, and how to do this? Please and thanks
All of these calculations are very simple and follow the same approach. How many 'actions' took place? How many of these 'actions' were accurate. for example total deliveries = 2000, total deliveries made in full on time = 1850. So DIFOT % = 1850/2000 = 92.5 %
what is the most common difficulty all business have in terms of supply chain management.?
Understanding their cost to serve
@Learning With Israr
hello sir very helful videos ..
in logistic sir for entrt level for wat job can we apply as fresher in entry level....
Anything.... Depending on your skills, experience, qualifications. Starting with a warehouse job is good experience.
What are the best kpi for an inbound and outbound logistics officer in a cement campany
I would measure things like SIFOT, DIFOT, vehicle capacity and time utilisation, cost per tonne.......
I'm curious to know, what was your instruction to be prepared for working in the supply chain industry
Network and study 😉 There are some videos here on the topic.
I'm currently studying supply chain management and I have a doubt whether to choose a career in supply chain or in the freight forwarding industry, which one do you believe is better in terms of future development and salary??
Thank you in advance
@@claudiolg7054 Supply Chain being a broader discipline, will have more opportunities than freight forwarding.
@@supplychainsecrets thank you for the tipp
Depending on the nature and condition of the inventory you are dealing with, its better to have an out-of-stock of a popular product/service, than to have an out of date or obsolete stock.
That is certainly one view. Though in reality, as you suggest, it's a lot more complex. I can't think of many businesses though, that would be happy to be out of stock of a popular product/service. There are some good techniques to analyse this such as Turn/Earn Ratios.
Out-of-stock of popular demand product means you cut wasteful production and account for acurate inventory replenishment. The balance then hangs in the trade off between time and product numbers.
You are correct regarding the turn earn ratios. I see wisdome in you you insight and want to learn from you as I am still a student in this field
I am still using the normal ratios I learned for decision making. However I need to further develop my inventory analysis and forecasting methodes. I am starting from qualitative methodes to constuct performance indicators.
Thanks for the given excellent information iam basically Indian having 7 years experience in supply chain and logistics but I eagerly looking for job in abroad like USA or Europe or gulf and Asian.
So what will I do for enter into supply chain there as also how is supply chain industry there.
This is always difficult. I'll make a video on it this week.
I'm curious to know the size of the company in question and what was their strategy. It's quite an achievement to go from 64% to 93% in 2 years and 9 months.
It was about $100 million + as I recall.
@@supplychainsecrets thank you.
Am studying event management how i can use Kpi methodology in event corporate company or what is the major Kpi for it
KPIs are not hard. Decide what the important outcomes are, and measure those.
Sir, please use Microsoft Excel for demonstration.
I'll try that in a future videos......
im confused how you started with 6 percentages and ended up with five percentages. what happened to do this?
Each of the six gets multiplied by the next one. 5 calculations = 5 results.
Not for nothing (as they say) but when the teacher is good with communication, people will understand, and I am happy that you communicated this so easy understandable. I really dont care much for metrcs, and KPI, inventory strategy, but least I get a little more understanding of KPI. However, I did have to stop the video and calculate how you obtained your numbers as this is a first for me understanding KPI. Thank you and please do continue your videos, I really appreciate you sharing your knowledge so much. Peace be with you
My pleasure. Glad it was helpful. That is the beauty of video. You can reply a section, pause it.........watch it again.
How does the SMART system measure up with Difot and other measurements of a computer
How does the SMART system measure up with Difot and other measurements of a company?
@@frankclarke6651 SMART is merely a reminder of what a KPI should be. (Specific, Measurable, Achievable, Relevant and Time Bound)
👍
what is the formula, how have you reached to the certain number , what is the process , can you explain the formula a bit more elaberatively.
Just take the first result, multiply it by the next result etc etc. .98 x .80 etc etc
for the accurate invoicing paid , is not it related more to finance KPIs
Yes it is, but it is also a Supply Chain KPI. If the customer does not get an accurate invoice or pay it on time it might be down to a supply chain problem...
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Glad you like the channel
Thank you and well explain, would like to have ur email id
Best to connect on linkedn.