Retail Supply Chain's Kpis
Key Performance Indicators of Retail Sector and its Improvement Opportunities
Abstract
This paper attempts to track key performance indicators (KPIs) in order to figure out the performance of the Supply Chain in the retail sector. It also focuses on inventory replenishment strategies and capacity utilization in the retail sector. In recent years, this sector has spent considerable amount of time and money trying to improve its operations in such a way so as to respond efficiently to customers’ needs. This has led to several developments like the introduction of automated store ordering, usage of RFID and etc.
The KPIs helps in directly analyzing the performance of every specific activity and operation and hence also helps in zeroing down to the exact root of the problem, if any, and thus helps the managers to rectify them. The Improvement Opportunities are further explained in detail for achieving a better performance.
The Key Performance Indicators (KPIs)
The KPIs are segregated into different categories accordingly as follows:
Supply Chain and Logistics: The network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product.
• % of time spent picking back orders: Number of hours spent on picking back orders as a percentage of working hours.
• Sales order by FTE : This indicator measures the number of customer orders that are processed by full time employees per day. This helps evaluate the workforce cost per order.
• Scrap (or leftover) value %: Scrap (or leftover) value as a percentage of production value.
• Inventory Accuracy: Most Advanced Planning Systems calculate net inventory requirements. If the book inventory used as the basis for these calculations has a high error, the net inventory requirements generated will not reflect the true inventory needs. The inventory error should be factored into the safety stock calculation to protect
Abstract
This paper attempts to track key performance indicators (KPIs) in order to figure out the performance of the Supply Chain in the retail sector. It also focuses on inventory replenishment strategies and capacity utilization in the retail sector. In recent years, this sector has spent considerable amount of time and money trying to improve its operations in such a way so as to respond efficiently to customers’ needs. This has led to several developments like the introduction of automated store ordering, usage of RFID and etc.
The KPIs helps in directly analyzing the performance of every specific activity and operation and hence also helps in zeroing down to the exact root of the problem, if any, and thus helps the managers to rectify them. The Improvement Opportunities are further explained in detail for achieving a better performance.
The Key Performance Indicators (KPIs)
The KPIs are segregated into different categories accordingly as follows:
Supply Chain and Logistics: The network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product.
• % of time spent picking back orders: Number of hours spent on picking back orders as a percentage of working hours.
• Sales order by FTE : This indicator measures the number of customer orders that are processed by full time employees per day. This helps evaluate the workforce cost per order.
• Scrap (or leftover) value %: Scrap (or leftover) value as a percentage of production value.
• Inventory Accuracy: Most Advanced Planning Systems calculate net inventory requirements. If the book inventory used as the basis for these calculations has a high error, the net inventory requirements generated will not reflect the true inventory needs. The inventory error should be factored into the safety stock calculation to protect
References: • Beamon BM (1999) Measuring supply chain performance. • Gunasekaran A, Patel C, McGaughey RE (2004) A framework for supply chain performance measurement. • Gunasekaran A, Tirtiroglu E (2001) Performance measures and metrics in a supply chain environment. • Michael Armstrong (3rd Edition) Performance Management: Key Strategies and Practical Guidelines • Peter Meindel, (2007) Supply Chain Management • Schwarz LB (2004) The stat of practice in supply chain management: a research perspective, inapplications of supply chain management and e-commerce research in industry. • http://www.citehr.com • http://www.dmsretail.com