Question

You work in the Supply Chain Department as the manager.

Your boss comes in one day and states you have a great metrics package consisting of: Purchase Order Back Log, Requisition-to-PO Cycle Time, Supplier On-Time-Delivery, Freight Cost, Inventory Turns and Purchase Order Payment Terms. You are performing very well in all categories and managing the supply base nicely; however, these are all lagging indicators of the health of our supply chain, both internally and externally. In other words, these are all measurements using historical information.
Please propose four leading indicators (other than what is currently in your metrics package outlined above) that may indicate the health or resiliency of the supply chain (internally and externally). For example, supply chain lead time to support manufacturing needs is a leading indicator of how the supply base will be able to support future manufacturing needs

Answer 1

As leading indicators for supply chain health, one could consider Supplier Capacity Utilization, Product Development Cycle Time, Supply Chain Flexibility and Responsiveness, and Forecast Accuracy to predict future performance and adapt strategically.

Step-by-step explanation:

When considering leading indicators for the health of the supply chain, here are four potential metrics that could be monitored:

• Supplier Capacity Utilization: This measures the extent to which a supplier's production capacity is being used. A high level of utilization can indicate a strained supplier, which might lead to delays or inability to meet increased demand.
• Product Development Cycle Time: This tracks the time it takes from concept to market for new products. Shorter cycle times can indicate a more agile and responsive supply chain capable of adapting to market demands.
• Supply Chain Flexibility and Responsiveness: The measure of how quickly a supply chain can adjust to changes in demand, supply disruptions or other external factors without significant performance loss.
• Forecast Accuracy: By measuring the disparity between forecasted and actual demand, this reflects the supply chain's ability to predict market conditions and plan accordingly.

These indicators help in proactively managing the supply chain and in making strategic decisions to avoid future disruptions.