AI algorithms analyze historical data to build highly accurate demand forecasts and optimize delivery routes.
This occurs when small fluctuations in demand at the retail level cause progressively larger fluctuations at the wholesale, distributor, and manufacturer levels. Effective SCM works to mitigate this inefficiency through better communication. fundamentals of supply chain management
| KPI | Formula / Definition | Target Direction | |-----|----------------------|------------------| | Inventory Turnover | COGS / Average Inventory | Higher (faster) | | Cash-to-Cash Cycle | DSO + DIO – DPO | Lower (shorter) | | Fill Rate | % of customer demand met from stock | Higher (>95%) | | On-Time Delivery | % of orders delivered by promised date | Higher (>98%) | | Supply Chain Cost as % of Sales | Total SCM cost / Total sales | Lower | | Perfect Order Rate | (OTIF + Undamaged + Accurate doc) | 100% theoretical | AI algorithms analyze historical data to build highly
Returning is the reverse logistics piece. It handles the return of defective, excess, or unwanted products from customers. This requires a responsive and flexible network to support customers who have problems with delivered products or need to recycle materials. 3. Key Objectives of Supply Chain Management | KPI | Formula / Definition | Target
Focuses on minimizing waste and reducing inventory levels. It works best for predictable industries with stable demand.
Every supply chain manager monitors three distinct flows. You cannot master SCM without visualizing these simultaneously.