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Cycle Time Measurements
Here are just a few of the many Cycle Times you should consider for your Supply Chain.
All of these measures should not only calculate the days (or hours) from the start and
finish, but also between the various steps in between.
Customer Order Promised Cycle Time:
The anticipated or agreed upon cycle time of a Purchase Order. It is gap between
the Purchase Order Creation Date and the Requested Delivery Date.
This tells you the cycle time that you should expect (NOT the actual)
Customer Order Actual Cycle Time:
The average time it takes to actually fill a customers purchase order.
This measure can be viewed on an Order or an Order Line
level.
The measure starts when the customers order is
sent/received/entered. It is measured along its various
steps of the order cycle. Through credit checks, pricing, warehouse picking and shipping. The measure ends at
either the time of shipment or at the time of delivery to
the customer (sometimes tracked
by using an EDI #214). This "actual" cycle time should be compared to the
"promised" cycle time.
Manufacturing Cycle Time:
Measured from the Firm Planned Order until the final production is reported.
It usually takes into account the original planned production quantity versus
the actual production quantity. Example: X% of the planned quantity must be
completed on a production run or the cycle time should not be considered.
Purchase Order Cycle Time:
Measured from the creation of the PO to the receipt at your location
(Distribution Center, Hub etc). One of the keys here is not not have your RDD
(Requested Delivery Date) exceed the agreed to lead time. If it does, it may
artificially inflate your Lead Time.
Additionally, any in-between points available will add value to the metric.
Example: Creation of the PO, Shipment from the Vendor, Receipt at the DC. This
will tell you the manufacturing time vs the transit time.
Inventory Replenishment Cycle Time:
Measure of the Manufacturing Cycle Time plus the time included to deploy the product to
the appropriate distribution center.
Cash to Cash Cycle Time:
The number of days between paying for Raw Materials and getting paid for product.
Calculated by Inventory Days of Supply plus Days of Sales Outstanding minus Average
Payment Period for Material.
Supply Chain Cycle Time:
The total time it would take to satisfy a customer order if all inventory levels
were zero. It is calculated by adding up the longest lead times in each stage of
the cycle.
Our goal is to guide companies that are
looking to optimize their Supply Chain. Unfortunately, we do not currently have
the resources to answer individual questions.
Contact:
john@supplychainmetric.com
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