Fundamentals Of Supply Chain Management -

According to the Supply Chain Council’s SCOR model (Plan, Source, Make, Deliver, Return), every supply chain rests on five fundamental pillars:

If you cannot measure it, you cannot manage it. Every supply chain professional must monitor a dashboard of five fundamental KPIs. fundamentals of supply chain management

| KPI Category | Metric | Formula | Why it matters | | :--- | :--- | :--- | :--- | | Reliability | On-Time In-Full (OTIF) | (% of orders delivered on time and complete) | Measures customer satisfaction. | | Responsiveness | Order Fulfillment Cycle Time | (Order to delivery time) | Measures speed. | | Agility | Upside Supply Flexibility | (Time to increase production 20%) | Measures ability to handle demand spikes. | | Cost | Total SCM Cost | (% of revenue spent on SCM) | Measures efficiency. | | Asset Efficiency | Cash-to-Cash Cycle | (DSO + DIO - DPO)* | Measures liquidity. | *DSO = Days Sales Outstanding; DIO = Days Inventory; DPO = Days Payable Outstanding. According to the Supply Chain Council’s SCOR model

This involves payment terms, credit insurance, and consignment. Fundamentally, the financial flow dictates who pays whom and when. If you cannot measure it, you cannot manage it

Effective SCM relies on specific metrics (KPIs) to measure success and methodologies to improve processes.

This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand. Planning involves:

Fundamental principles are tested by current realities: