Supply chain analytics is the application of mathematics, statistics, predictive modeling and machine-learning techniques to find meaningful patterns and knowledge in order and shipment thereby improving forecasting and efficiency ensuring on time delivery and lower cost. Supply chain analytics, which starts with the procurement of raw materials and extends through production, distribution and aftermarket services, depends on effective interaction to integrate the functions of many departments internal and external.The goal of such integration is supply chain visibility: the ability to view data on goods at every step in the supply chain.
- Supply Chain is a complete value chain – sourcing, manufacturing, distribution and logistics
- One key challenge is lack of real-time data visibility, with no common view across all businesses and channels.
- Lack of flexibility in the sourcing & distribution network is another problem often encountered resulting in less profitability.
- Production line imbalance and sub optimal batch sizes, creating asset under utilization.
- Irregular reviews of safety stock levels, causing frequent stock-outs or excess inventory.
Supply Chain Performance Indicators
Perfect Order Measure
Inventory Value
Inventory in Days
Fill Rate
Supplier Payables
Average Payment Period
Inventory Turnover Ratio
Turn Earn Index
Unit COGS
Material Supply Index
Perfect Order Measure
The Perfect Order Measure calculates the error-free rate of each stage of a Purchase Order (error in order forecasting for procurement, error in warehouse pickup process, error in invoicing and error in shipping orders etc.).
Inventory Value
The Inventory held by the business is a direct reflection of the procurement efficiency. Inventory is cash and should be held as minimum as possible. A key objective of the Supply chain is to ensure uninterrupted process with minimum inventory.
Inventory in Days
The number of days it would take to run out of supply if it was not replenished.
Inventory on hand / average daily usage
Fill Rate
The percentage of a customer’s order that is filled on the first shipment. This can be represented as the percentage of items, SKUs or order value that is included with the first shipment.
Supplier Payables
This PI show the total of payments pending against the good and services received to conduct the business. A close watch should be kept to keep this value under the threshold level to ensure business continuity.
Average Payment Period
The average time from receipt of materials and payment for those materials.
(Materials Payables/Total Cost of Materials) * Days in Period
Inventory Turnover Ratio
ITR helps us to measure the number of times we sell or turn our average inventory kept in the warehouse.
it measures the number of opportunities to earn profit that we experience each year from our working capital invested in the inventory. It is calculated by dividing Cost of Goods (COGs) sold by the average inventory investment.
ITR: COGs / [(Opening Stock-Closing Stock)/2]
Turn Earn Index
TEI helps us to combine the gross margin and turnover.
TEI: (ITR) x (Gross Profit %) x 100
Unit COGS
This PI shows the average Cost of Goods Sold per unit. It is a measure of effective price negotiations and can be compared with the growth in procurement qty to check the efficiency of the system
Material Supply Index
This information show the ability of the supply chain to organise the material on time with disrupting the production/ process. It is calculated as the production/ process time lost due to material shortage divided by the total time available.
