Maximizing profitability: The keys to measuring supply chain performance
How can you effectively assess supply chain performance and identify areas for improvement?
Understanding the Challenges of Profitability Measurement
The growing complexity of modern supply chains makes measuring profitability more difficult than ever. Factors such as globalization, supplier diversity, fluctuating logistics costs and rising customer expectations add further layers of complexity.
Total supply chain costs
This indicator covers all costs associated with supply chain management, including transport, storage, labor and order processing. By keeping a close eye on these costs, companies can identify inefficiencies and savings opportunities.
Inventory turnover rate
This KPI measures the number of times inventory is sold and replaced over a given period. A high turnover rate indicates efficient inventory management and improved profitability.
Customer service rate
This indicator measures the supply chain’s ability to meet customer needs in terms of delivery times, product availability and service quality. A high customer service rate is often correlated with increased profitability thanks to customer loyalty.
Product Life Cycle Cost
This KPI takes into account all the costs associated with creating, manufacturing, distributing and selling a product throughout its lifecycle. By understanding these costs, companies can determine the real profitability of their products.
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