definition and validation of supply chain mettrics.

As you begin to define the metrics you want to create, proper documentation of your measurement is essential. The definition for your metric should be agreed upon by senior management. The agreed upon definition should be published in an easy to access method. Ideally, it would be on the report itself or on a separate tab.
The definition should spell out:
1. The purpose of the measurement (ex: this metric tracks our service level to our end customer)
2. What is included in the measurement (ex: includes all customer orders that are shipping from the NJ location)
3. What is excluded from the measurement (ex: excludes all orders shipped overseas)
4. The math behind the metric (ex: Customer lines ordered/Customer lines shipped).
5. Does your definition match your customers definition? ( ex: you might measure Fillrate on a line level basis, your customer might measure service from you on a case level).

VALIDATION

The importance of validation can not be over emphasized. Validation is a critical step in creating metrics. It is not enough to believe that you have defined your metric properly. You need to do your due diligence. You need to make sure that the data that you are publishing is correct. Since business decisions are often made as a result of metrics, the numbers you publish must be accurate. They must be bullet proof. Any errors could result in a non-trust of your measurements.
To validate your metric:
1. Compare the raw data used in your calculation from a direct data dump from your software system.
2. Does the total number of lines match?
3. Is your metrics missing any lines? Does it include any lines it shouldn't?
4. Do a hand calculation of the results. Does it match your metric?
5. Have someone else validate your metric. Sometimes a second or third set of eyes can add insight.

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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For information on Inventory Turns, Fill Rate Measurement, Backorder Reporting or any other Supply Chain Metric, click on the links to the left. The text that appears on this website is the opinion of the webmaster. Metrics may or may not be uniform across all industries. All data listed here may be used as a general guide, but it's accuracy is not guaranteed. Please consult a qualified Supply Chain professional for more details on Supply Chain Measurements. Other Supply Chain Websites
This site is owned and maintained by Michelle Taras & John Taras CPIM, PMP

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VendorManagedInventory.com - information on Vendor Managed Inventory
InventoryTurns.com - additional information on how to calculate inventory turns or inventory turnover.
SupplyChainManagementNews.com - News stories about Supply Chain Management
SupplyChainDefinitions.com - various definitions of supply chain terms
SupplyChian.com - various supply chain info (yes, i know it's mis-spelled)
SupplyChainPurchasing - a new site Michelle is developing. All about Supply Chain Purchasing.

other...
DangerousTricks.com - my 14 year old son is working on his first website. The site has video's of people doing extreme stunts.