Optimize supply chain performance with visibility metrics. Discover how real-time tracking and predictive insights drive efficiency and customer satisfaction.

Romain Fayolle

One of the fundamental priorities for a manufacturing company or distributor is to ensure that its supply chain operations are constantly optimized. In the end, supply chain performance dictates a company's bottom line and, in some cases, even customer satisfaction levels.

Supply chain performance refers to the effectiveness of each stage in optimizing costs, reducing inefficiencies, improving speed, and meeting customer expectations. That said, supply chain management can be tough, even under optimal conditions. Whenever one supply chain component underperforms, it can trigger a domino, resulting in extensive negative impacts that snowball.

Supply chain visibility metrics are crucial for maintaining process integrity, finding bottlenecks, and taking action to optimize effectiveness. Improved visibility throughout the supply chain helps businesses detect problems earlier, optimize operations, and be more resilient to disruptions.

This article explores the role of visibility metrics in assessing supply chain performance, identifies important metrics to target, and outlines how to produce a visibility-centric performance measurement method.

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Benefits of Visibility Metrics in Supply Chain Performance

*How to Measure Supply Chain Performance with Visibility Metrics*

Visibility metrics enable businesses to track real-time data across various supply chain stages, from procurement to delivery. These metrics help companies monitor and analyze processes to ensure everything operates as intended. By understanding these metrics, businesses can identify gaps, enhance decision-making, and improve customer satisfaction.

The benefits of leveraging visibility metrics include the following:

Enhanced Operational Efficiency: Real-time monitoring helps identify and eliminate inefficiencies.
Improved Risk Management: Early identification of disruptions allows for quicker responses.
Better Customer Experience: Visibility metrics ensure reliable deliveries and transparent communication.
Cost Improvements: Data-driven insights that help streamline operations and improve cost structures. Additionally, visibility metrics assist in maintaining optimal inventory levels, thereby keeping inventory costs down.

7 Visibility Metrics to Measure Supply Chain Performance

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Supply chain leadership tends to measure supply chain performance from different lenses using different metrics. However, focusing on those aligning with visibility goals is essential for ensuring seamless operations and customer satisfaction. Here are the top 7 most critical visibility metrics:

On-Time Delivery (OTD)

Whenever the customer orders, the best practice is to provide a delivery date. On-time delivery indicates the proportion of deliveries completed on or before the promised or planned delivery date. This metric directly measures how effectively a business meets customer expectations.

Over time, it also helps to analyze and improve the areas of concern, if any, for specific areas, product types, or a particular set of customers. For this, the supply chain should try building different views of the data, such as:

Track OTD rates for different transportation modes to identify bottlenecks from a particular mode.
Adopt real-time scenario planning to improve areas like route planning and detailed scheduling at the production line.

Order Accuracy

Order accuracy measures the percentage of perfect orders. Perfect orders are the ones delivered without any errors, such as incorrect items or quantities. High order accuracy indicates a well-coordinated supply chain and helps maintain customer trust. To improve the Order Accuracy metric, companies should:

Analyze order accuracy at different stages, such as picking, packing, and shipping, to identify where errors occur.
Integrate the latest but simple tech solutions, such as barcode scanning and RFID technology, to minimize human errors.
Run quality checks in the warehouse to verify order accuracy before dispatch.

Inventory Turnover

Inventory turnover is the rate at which business inventory is sold and replenished over a period of time. This metric reflects how efficiently inventory is managed and is also a sign of how effective demand forecasting is.

To improve inventory turnover, companies should:

Produce or procure in smaller quantities but with the capability of quick replenishments. The replenishment cycle is a function of the underlying production or procurement lead times.
Track inventory levels at the warehouse level in real time to avoid overstocking or stockouts. Move inventory between warehouses whenever necessary to improve service. However, depending on the product size, this is usually an unnecessary expense and highlights poor distribution planning.
Use predictive analytics to align inventory replenishment with demand forecasts.
Maintain optimal inventory levels by using visibility metrics to track and optimize them. This ensures consistent revenue and an effective inventory management system.
Set maximum inventory levels to prevent overstocking and inventory-related risks by establishing limits and calculating them using specific formulas before placing purchase orders.

Lead Time Variability

Lead time variability measures the variation in time from order to delivery. Lead times are consistent and suggest a great supply chain, but variability suggests issues. To improve it, the company must:

Monitor lead time variability for different suppliers and transportation modes.
Use visibility platforms to identify factors contributing to variability, such as customs delays or production issues.
Collaborate closely with suppliers to establish clear expectations and minimize variability.

Perfect Order Rate

The perfect order rate tracks the percentage of orders delivered without any issues or errors. Order-related issues can be of different types, such as delays, inaccuracies, or damage. It provides a 360-degree view of the supply chain’s overall performance. While measuring the perfect order rate, ensure to:

Monitor this metric across different regions and product lines to identify patterns.
Use predictive analytics to anticipate disruptions and maintain high perfect order rates.
Establish cross-functional teams to review perfect order metrics and implement improvement initiatives regularly.

Fill Rate

The fill rate measures the percentage of customer orders that can be fulfilled without backorders or delays. For a made-to-stock environment, this means having the stocks ready at the time of getting the order. It is measured at the SKU/warehouse level. It helps assess how well a company meets customer demand with its current inventory levels. The fill rate can be measured at line-item (LIFR) or a more stringent order level. To improve the fill rate, companies must:

Track fill rates at the SKU and warehouse level to identify which products are frequently out of stock by location.
Integrate demand-sensing to align inventory with real-time consumption.
Add automated reordering systems to keep stock levels optimized.

Supply Chain Cycle Time

Supply chain cycle time measures the total time it takes from receiving an order to delivering it to the customer. This metric includes all the lead times, such as order processing and delivery lead time, and indicates how efficiently the supply chain operates as a whole.

Companies must:

Track cycle times at different stages and break them into components to identify delays and opportunity areas. Continuously review and optimize processes to shorten cycle times without compromising quality.
Use digital twins to simulate the impact of potential changes on cycle time.

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Implementing Visibility Metrics and Inventory Turnover in Your Supply Chain

Implementing visibility metrics requires a strategic approach that integrates technology, process improvements, and stakeholder collaboration.

Here’s how to put visibility metrics into practice effectively:

Invest in Integrated Technology Platforms

Choose platforms that provide real-time visibility throughout supply chains. Advanced planning & scheduling (APS) tools, IoT-enabled tracking, RFID, and barcodes linked to predictive analytics platforms can offer deep insights into the supply chain. Additionally, consider using inventory management software to optimize the picking and packing process, improve inventory accuracy and efficiency, conduct regular inventory audits, and calculate optimal inventory levels.

Ensure that the technology chosen can integrate with existing systems, such as ERP, WMS, and TMS platforms, for seamless data sharing.

Foster Data Standardization

Data inconsistency is a common barrier to effective visibility. Standardizing data formats across different systems and partners ensures that metrics are accurate and actionable.

Implement data governance policies that define standard data formats and sharing protocols across the supply chain.

Collaborate with Supply Chain Partners

Visibility metrics are most effective when all stakeholders are aligned. Collaborate with suppliers, logistics providers, and other partners to establish shared visibility goals and ensure data is available across the entire supply chain.

Create supplier portals that share real-time data on order status, lead times, and inventory levels.

Train Teams to Use Visibility Tools

Technology and data are only as effective as the teams using them. Train employees across the supply chain to understand and leverage visibility metrics for better decision-making.

Conduct regular training sessions that cover new visibility tools and best practices for using metrics to drive performance.

Overcoming Common Challenges in Measuring Visibility Metrics

Measuring visibility metrics can come with its own set of challenges. These include data fragmentation, resistance to change, and difficulty integrating legacy systems. Resolving these problems is crucial for successfully migrating to a visibility-centric performance measurement strategy. Additionally, effective use of visibility metrics can improve inventory management practices, keeping inventory costs down by optimizing stock levels and improving overall operational efficiency.

Here are some tips to overcome the most common challenges:

Data Fragmentation: Implement cloud-based solutions that centralize data storage and ensure real-time access for all stakeholders.
Resistance to Change: Foster a culture that values continuous improvement and educate teams on the benefits of using visibility metrics.
Legacy System Integration: Use middleware solutions or API connectors to bridge gaps between legacy systems and new technology platforms.

Building a Stronger Supply Chain Visibility with Holocene

Supply chain performance evaluated with visibility metrics is more than information. It is about insights for decision-making, operations, and customer retention. Here at Holocene, we understand that visibility metrics are strategic and provide customized solutions to improve supply chain performance.

Our technology products provide real-time data insights and predictive analytics, which work with your current methods. With Holocene as your partner, you can leverage visibility metrics to create an agile, effective, and customer-centric supply chain. Additionally, our solutions help you maintain optimal inventory levels, ensuring consistent revenue and effective inventory management. We also assist in setting maximum inventory levels to prevent overstocking and mitigate inventory-related risks.

Contact us today to learn how Holocene can help you integrate visibility metrics and transform your supply chain management for maximum impact and success.

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