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What are the most commom metrics used for Supply Chain?

Written by: Jon Hansen

Article Overview: Member Question: What are the most commom metrics used for Supply Chain? Francisco, Logistics and Supply Chain Professional Argentina

What are the most commom metrics used for Supply Chain?

Francisco, the most common metrics are not necessarily the most effective metrics to measure supply chain performace.

While I have provided links (see below) to 3 recent articles I have written on this very subject; Why Six Sigma Initiatives Fail, Is There a Poor "Herbie" Anywhere in the Oracle SCM Area and, Optimization Modeling and the Modern Supply Chain, my recent response to a question regarding the viability of the SCOR model is worth repeating here.

Response Excerpt:

While I am in the process of completing an evaluation of the SCOR methodology, my initial findings have raised a number of red flags relative to the repeated references to supply "chains' and what some of the research material has cited as the "5 steps (to) repeat over and over again between suppliers, the company, and customers." This concern with SCOR methodology includes the assertion that "each step is a link in the supply chain that is critical in getting a product successfully along each level."

The fact remains that close to 85% of all initiatives fail to achieve the expected results, and the recommendations the SCOR methodology suggest are a "sequential" approach to both testing the veracity of and structuring the guidelines for an organizational supply "practice."

In essence, it is reflective of the traditional equation-based models in which an attempt is made to establish a "set" chain of characteristics in which stakeholder adoption or compliance is a key component.

With the emergence of the Metaprise, the term supply chain has been dropped and replaced with the more appropriate "supply practice" moniker. In this methodology, an agent-based model is utilized to first understand the unique operating attributes of diverse stakeholders, and then seeks to develop an “adaptive” model whereby the prescribed "process" reflects and therefore adapts to stakeholder characteristics and objectives.

For example, when Boeing refers to a complex adaptive network, what they are really discussing is using an agent-based model whereby the unique operating attributes of key stakeholders are first understood individually and then (through a collaborative effort) are linked collectively through establishing what they refer to as "flow paths." This latter exercise is tied into identifying the common points of connectivity between seemingly disparate stakeholders (and stakeholder objectives). In essence, it reflects a theory of process I discovered and developed starting in 1998 and what I have come to call "strand commonality."

What I like about the Boeing story (as well as similar case references) is that it creates a context or a point of reference in real-world applicability than can be easily recognized from a general market perspective.

So as you pursue a greater understanding of the various models that are being offered as the "new standard" for measuring supply practice performance (including agent-based modeling), you should keep in mind that an effective methodology understands and then adapts to the real-world operating attributes of your organization, and not the other way around.

In the meantime, here is one of the many links to sites, which provide an overview of the SCOR model.

Below, I have also provided a link to Part 7 of my 7 part series Dangerous Supply Chain Myths. Titled Enabling Technology: The Emergence of the Metaprise, the post will provide a brief introduction to the methodology I had referenced.

If you are inclined to drill down even further into the actual methodologies that form the foundation for many of the metrics which are used to "measure" supply chain efficiency, here is the link to an article I just posted this evening.

Links:

To obtain the links and corresponding reference material, please contact the author.

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Article Tags: 5 steps, adaptive model, adaptive network, assertion, emergence, herbie, initial findings, metrics, moniker, recent articles, red flags, research material, scor, scor model, sequential approach, sigma initiatives, six sigma, stakeholders, veracity, viability



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