HOW TO MEASURE SUPPLY CHAIN PERFORMANCE

E d w a r d H . F r a z e l l e , P h . D . • perfectly fillable with the exact quantity of each item available for delivery within the customer-specified delivery window, • perfectly picked with the correct quantities of the correct items, • perfectly packaged with the customer-designated packaging & labelling, • perfectly shipped without damage, • perfectly delivered in the customer-designated time window and to the customer-designated location, • perfectly communicated with order status reports available 24 hours a day, • perfectly billed with on-time payment, and • perfectly documented with customer-specified documentation means including paper, fax, EDI, and/or Internet. Suppose each of these nine supply chain activities were performed correctly (assuming performance independence) 90% of the time. Then more than 60% of the orders would be imperfect. If each of these activities was performed correctly 95% of the time, 40% of the orders would be imperfect. If each of the activities is performed correctly 99% of the time, 90% of the orders would be perfect. If each of these activities were performed correctly 99.95% of the time, then 99.5% of the orders would be perfect. | 21

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