FUZZY METRICS IN SUPPLY CHAIN AGILITY: CHAIN PERFORMANCE

For each process and sub-process, the corresponding performance measures are identified as shown in the tree diagram [figure-1].The supply chain performance measurement system must measure each of the factors which come under: Resource, Output, and Flexibility as each type is vital to the overall performance success of the supply chain. Each of the three types of measures have important characteristics and the measure of each of these affects the others. Therefore, the supply chain performance measurement system must contain at least one individual measure from each of the three identified types. The individual measures chosen from each type must coincide with the organization’s strategic goals.


Fig1Fuzzy Metrics in Supply
Figure 1: Performance Measures for Each Process and Sub-Process in a Supply Chain

Resources

Resource measures include: inventory levels, personnel requirements, equipment utilization, energy usage, and cost. Resources are generally measured in terms of the minimum requirements (quantity) or a composite efficiency measure. Efficiency measures the utilization of the resources in the system that is used to meet the system’s objectives.

The following are a few example lists of supply chain resource performance measures:
• Total cost: Total cost of resources used.
• Distribution costs: Total cost of distribution, including transportation and handling costs.
• Manufacturing cost: Total cost of manufacturing, including labor, maintenance, and re-work costs.
• Inventory: Costs associated with held inventory
• Return on investment (ROI): Measures the profitability of an organization. The return on investment is generally given by the ratio of net profit to total assets.

Output

Output measures include: customer responsiveness, quality, and the quantity of final product produced. Many output performance measures are easily represented numerically, such as: number of items produced; Time required to produce a particular item or set of items; number of on-time deliveries (orders).

The following are a few example lists of supply chain output performance measures:
• Sales: Total revenue.
• Profit: Total revenue less expenses.
• Fill rate: Proportion of orders filled immediately:
• On-time deliveries: Measures item, order, or product delivery performance.
• Product lateness: Delivery date minus due date.
• Percent on-time deliveries: Percent of orders delivered on or before the due date.
• Number of backorders: Number of items backordered due to stock out.
• Customer response time: Amount of time between an order and its corresponding delivery.
• Manufacturing lead time: Total amount of time required to produce a particular item or batch.
• Shipping errors: Number of incorrect shipments made.
• Customer complaints: Number of customer complaints registered.

Flexibility

Flexibility is an important consideration in supply chain performance. Flexibility is a measure of responsive potential. Indeed, flexibility is vital to the success of the supply chain, since the supply chain exists in an uncertain environment. It is a seldom used in supply chain analysis, which can measure a system’s ability to accommodate volume and schedule fluctuations from suppliers, manufacturers, and customers.

Based on the performance measures the flexibility is classified as follows:
• Volume flexibility: The volume flexibility measures proportion of demand that can be met by the system.
• Delivery flexibility: Delivery flexibility measures the percentage of slack time offered in delivery dates.
• Mix flexibility: Mix flexibility measures either the range of different product types that may be produced during a particular time period or the response time between product mix changes.
• New product flexibility: It is defined as the ease with which new products are introduced to the system. The introduction of new products will generally involve some time for development and set-up.