If you are studying on SCM, it is necessary to know what metrics are usually used to evaluate a SCM or do comparison between companies. The following content are extracted from Manufacturing Planning & Control Systems for Supply Chain Management (Fifth edition): 

The supply chain council has developed many metrics to measure the performance of the overall supply chain. It has used these standardized measures to develop benchmarks for comparisons between companies.

Measure Description Best in class Average or medium

Delivery performance 

What percentage of orders is shipped according to schedule?

93%

69% 

Fill rate by line item

Orders often contain multiple line items. This is the percentage of the actual line items filled

97% 

88%

Perfect order fulfillment

This measures how many complete orders were filled and shipped on time 

92.4%

65.7%

Order fulfillment lead time 

The time from when an order is placed to when it is received by the customer

135days

225days 

Warranty cost of % of revenue

This is the actual warranty expense divided by revenue

1.2% 

2.4%

Inventory days of supply

This is how long the firm could continue to operate if all sources of supply were cut off 

55days

84days

Cash-to-cash cycle time 

Considering accounts payable, accounts receivable, and inventory, this is the amount of time it takes to turn cash used to purchase materials into cash from a customer

35.6days

99.4days 

Asset turns

This is a measure of how many times the same assets can be used to generate revenue and profit

4.7turns 

1.7turns

Source: supply chain council

Cash-to-cash cycle time integrates the purchasing, manufacturing, and sales/distribution cycles. It is a measure of cash flow. Cash flow indicates where cash comes from (its source), where cash is spent (it use), and the net change in cash for the year. Understanding how cash flows through a business is critical to managing the business effectively. Accountants use the term operating cycle to describe the length of time that it takes a business to convert cash outflows for raw materials, labors, etc. into cash inflows. This cycle time determines, to a large extent, the amount of capital needed to start and operate a business. 

Cash-to-cash cycle time is calculated by:

Cash-to-cash cycle time=inventory days of supply + days of sales outstanding – average payment period for material.

 

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