Key Financial Measures of Supply Chain Performance Flashcards
Why is performance management sometimes poorly executed?
Lack of preparation
Not linking measures to strategic aims
Too many measures
Measures may distract from focusing on the most important measures
Not measuring enough or not frequently enough
Name some of the performance management challenges
Data collection - accurate, relevant, up-to-date
Future proofing - measures should be forward looking, drive continuous improvement
Culture - needs to be central to business culture
Reward - standards and measures are most effective when linked to reward mechanism
Conflict - if ineffective, can lead to conflict
What are the 2 categories of performance measures?
Objective measures - quantifiable, less open to interpretation
Subjective - qualitative, more difficult to measure
What do performance measures include?
Service Level Agreements - formal statement
Key Performance Indicators - focus on critical success factors (quality, cost reduction, CI)
Outline the structured process/approach to managing performance
Areas for measurement
Determine measures - direct, detailed and; consistent
Comparison standards - expectations
Monitor - collecting and making data available
Evaluate
Improve - CI plans in place to bridge gaps
What are the main types of performance measures?
Cost based metrics - TCO (purchase price, finance, cost of usage, disposal), inventory costs, physical flow costs, transaction costs
Process-based metrics - vital, outlines SC efficiency, drive out wastes, minimise risk: cycle time, throughput, capacity, bottlenecks, batching
SERQUAL
Time - OTIF, response
Finance
What does SERVQUAL stand for and what does it look to measure?
Service Quality Gaps - identify key dimensions of service quality
Tangibles - facilities, premises & equip
Reliability - consistency, delivery
Responsiveness - adapting to customer needs/ prompt
Assurance - instilling confidence, knowledge and courtesy of staff
Empathy - caring service, understanding customers
What are the key service gaps?
Management perception gap Specification gap Service delivery gap Customer comms gap Perceived quality gap
What are the key measures you can use to identify the return on investment?
Dividend per share - no. share issued/total paid
Dividend yield - £ of dividend per share/£ per share
Earnings per share - net profit generated/no. of shares issued
Return on shareholders’ funds - net profit generated/(share capital+reserves)
Other than financial formulas for measuring financial performance, name 2 others
Volume of sales generated - revenues, pricing profitability, growing at market rate
Measures - year on year growth, profit margin
What is liquidity in finance terms?
Organizations accessibility to cash
Name 2 common liquidity ratios
Current ratio - current assets to ensure current liabilities can be made (current assets:current liabilities)
Acid test ratio - stocks are harder to turn into cash ((current assets-stock):current liabilities)
What are the different areas/aspects a balanced scorecard looks at?
Financial perspective
Internal perspective
Customer perspective
Supplier perspective
