Lecture 6

Question 1

Talk about the key principles of metrics

Answer 1

– A common language across the logistics system
– Accurate data
– The metrics should be aims at similar objective, or should have different metrics for different objectives
– Use metrics- but not too many!
– Members of the logistics systems should participate in defining the metrics, and how they are to be evaluated

Question 2

Give examples of the metrics which can be used to measure performance of third party logistics providers.

Answer 2

• Number of delivery forms
• Anomalies upstream
• Returned documents
• Missing
• Breakages
• On time delivery and reliability
• Information concerning delivery problems
• Service rate upstream
• Service rate third party
• Real service rate

Question 3

How to determine which set of metrics should be used?

Answer 3

• The critical point is to be able to define metrics that will capture the value added by the logistics provider and therefore eliminate the source of friction
• Remembering that the goal of performance measurement is the constant improvement of the service company’s performance.

Question 4

Which activities can be measured?

Answer 4

1. Planning: quality, timeliness, productivity
2. Control: control activities. Which may occur yearly, half-yearly, quarterly, or monthly, look for any differences between planning goals and actual results. Analysis of the differences leads to corrective action

Question 5

Why is performance measurement important?

Answer 5

*Better control over operation
* Seven R’s” of logistics
– The right materials
– The right quantity
– The right condition
– The right time
– From the right source
– With the right service
– At the right price.
* Increase Competitiveness
* Effect the strategic choices that are made

Question 6

What are the 3 strategies that manufacturers usually adopt when dealing with risks?

Answer 6

o Inventory management – build up buffer stock.
o Sourcing – developing contingency strategies for specific suppliers or supply chain links.
o ‘Acceptance’ – doing nothing as costs of mitigation outweigh benefits.

Question 7

What are the external risks to supply chains?

Answer 7

1. Environmental: extreme weather, earthquakes, tsunamis, floods, volcanic eruptions
2. Geopolitical: terrorism, political tensions between different countries (e.g. Russia/Ukrain war)
3. Economic: ‘Supply shocks’ - the volatile nature of shipping rates; ships getting stuck; Covid
4. Technological: technology failure/outage; ‘cyber terrorist’ attack

Question 8

What is supply chain management software?

Answer 8

Supply Chain Execution (SCE)

Question 9

What does SCE software typically include?

Answer 9

o Transport Management Systems (TMS)
o Warehouse Management Systems (WMS)
o Inventory Management Systems
o Order Processing

Question 10

What are the supply chain planning (SCP) designed to do?

Answer 10

Supply Chain Planning systems are designed to:
o Relate demand forecasts for products with the coordination of supply
o Schedule manufacturing and provide the relevant data for metrics for performance analysis.