{"id":278,"date":"2021-08-25T12:20:58","date_gmt":"2021-08-25T11:20:58","guid":{"rendered":"\/blog\/?p=278"},"modified":"2022-05-04T14:41:37","modified_gmt":"2022-05-04T13:41:37","slug":"the-key-replenishment-indicators-2","status":"publish","type":"post","link":"\/blog\/the-key-replenishment-indicators-2\/","title":{"rendered":"The key replenishment indicators"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

The health crisis triggered by COVID-19\u00a0placed a lot of attention on the issue\u00a0of replenishment.\u00a0Whatever their field of activity,\u00a0companies\u00a0tested the\u00a0solidity and resilience of their\u00a0supply\u00a0chain\u00a0and reflected on the\u00a0status\u00a0of their stock.\u00a0This is an opportunity to provide an overview of the key replenishment indicators.\u00a0<\/p>\n\n\n\n

Supply and replenishment are primarily based on all the actions taken every day by your purchasing teams. It is essential for them to have clear and precise indicators in order to continually improve the purchasing process. The process is in part responsible for savings made by the company, the resilience of its supply chain and its ability to create value and manage its stock well. <\/p>\n\n\n\n

General indicators<\/strong> <\/h2>\n\n\n\n

The number of suppliers<\/strong>\u00a0<\/h3>\n\n\n\n

Having a significant number of suppliers secures your replenishment. The more suppliers you have, the less dependent you are on each of them. Your purchasing teams also benefit from greater negotiating power to obtain the best offers, both in terms of costs and supply lead times. However, be careful not to have too many suppliers as you would run the risk of a decline in productivity in your purchasing function, which would then have to deal with a greater number of administrative tasks. Here, as elsewhere, it\u2019s all a question of balance. <\/p>\n\n\n\n

The number of electronically processed orders<\/strong>\u00a0<\/h3>\n\n\n\n

Electronic order processing reduces cycle times and increases the overall efficiency of your purchasing function. Resorting to ERP and WMS, as well as the automation of tasks permitted by all digital technologies – from artificial intelligence to 5G and the Internet of Things (Iot) – are your greatest allies in this area. <\/p>\n\n\n\n

The commitment level of your purchasing teams<\/strong>\u00a0<\/h3>\n\n\n\n

There is a strong correlation between the level of employee commitment and their productivity, as the most committed are also the most motivated and therefore more likely to obtain the best results. Don\u2019t hesitate to make use of working from home as everything suggests that this strengthens the commitment of your employees. <\/p>\n\n\n\n

The performance indicators applied to the delivery<\/strong> <\/p>\n\n\n\n

Availability of the supplier<\/strong>\u00a0<\/h3>\n\n\n\n

The availability of your suppliers is essential for the reliability of your supply chain but also for good management of your stock. This availability rate is determined by comparing the number of orders placed with the supplier with the number of confirmed orders. This indicator makes it possible to measure the ability of a supplier to comply with the demands and constraints associated with each purchase order. <\/p>\n\n\n\n

Supplier lead\u00a0time<\/strong>\u00a0<\/h3>\n\n\n\n

Measured in days, the supplier lead time corresponds to the time between the confirmation of an order by the supplier and it actually being available from the moment it leaves the factory or is received in the warehouse. The shorter the lead time, the more you can also demonstrate your responsiveness to your customers. <\/p>\n\n\n\n

Duration of the procurement cycle<\/strong>\u00a0<\/h3>\n\n\n\n

The duration of the procurement cycle is also determined in days and measures the time between the purchase order and the expected delivery date. This indicator includes the risk map and its analysis contributes to improving the resilience of the supply chain.  <\/p>\n\n\n\n

Average\u00a0execution lead time<\/strong>\u00a0<\/h3>\n\n\n\n

Order execution lead times have an impact on delivery speed, productivity and stock management. For this reason they are an important indicator of performance. <\/p>\n\n\n\n

Compliance with delivery deadlines<\/strong>\u00a0<\/h3>\n\n\n\n

The punctuality of deliveries is clearly a key performance indicator. It influences the fluidity of the supply chain and the customer satisfaction level. <\/p>\n\n\n\n

Urgent\u00a0dispatch rate<\/strong>\u00a0<\/h3>\n\n\n\n

Urgent dispatches enable you to respond to unexpected circumstances and avoid stock shortages. Monitoring this indicator also makes it possible to reduce transit costs but also limit recourse to express transportation that could affect your carbon footprint. As such, it is very likely to fit within the broader framework of your CSR commitments. <\/p>\n\n\n\n

Quality monitoring indicators<\/strong> <\/h2>\n\n\n\n

Compliance rate<\/strong>\u00a0<\/h3>\n\n\n\n

The compliance rate measures the number of times where the agreements concluded with your suppliers are properly observed. If there are too many lapses it might be justified to impose penalties, as these lapses naturally have consequences for the reliability of your procurement and therefore the whole of your business. <\/p>\n\n\n\n

Supplier defect rate<\/strong>\u00a0<\/h3>\n\n\n\n

The supplier defect rate measures the number of defective products or orders. An indispensable performance indicator, it also makes it possible to establish the reliability of your suppliers. In particular, the number and significance of the delays but also the number of product change requests demand all your attention. <\/p>\n\n\n\n

Compliance with orders<\/strong>\u00a0<\/h3>\n\n\n\n

The order compliance rate enables you to ensure that suppliers deliver exactly what was ordered and within the agreed deadlines. Like the other quality indicators, it makes it possible to define comparatives between your different suppliers. <\/p>\n\n\n\n

The indicators applied to stock management<\/strong> <\/h3>\n\n\n\n

Here again it\u2019s all a question of balance: to replenish well, you need to know how much to order and at what time. The objective is to avoid having both too little stock and too much stock to guarantee the performance of your warehouses. <\/p>\n\n\n\n

Too little stock increases the risks of stock shortages and, therefore, a decline in sales but also dissatisfaction or even loss of customers. For its part, too much stock entails a rise in WCR (Working Capital Requirement) but also tied-up capital and cash flow problems, an increase in fixed and variable expenses, a drop in margins and a risk of obsolescence of the stored products.  <\/p>\n\n\n\n

The\u00a0ABC\u00a0method<\/strong>\u00a0<\/h3>\n\n\n\n

As a first step, it is therefore essential to distinguish products that constitute the main stock value from those that are more incidental. This is the principle of the ABC method: <\/p>\n\n\n\n

  • A\u00a0items\u00a0constitute\u00a070 %\u00a0to\u00a080 %\u00a0of the stock value and\u00a010 %\u00a0to\u00a020 %\u00a0of the\u00a0total products\u00a0in stock.\u00a0<\/li>
  • B\u00a0items\u00a0constitute\u00a015 %\u00a0to\u00a025 %\u00a0of the stock value and\u00a020 %\u00a0to\u00a030 %\u00a0of the total products in stock.\u00a0<\/li>
  • C\u00a0items constitute\u00a05\u00a0%\u00a0of the stock value and more or less\u00a050 %\u00a0of the total products in stock.<\/li><\/ul>\n\n\n\n

    The order\u00a0point<\/strong>\u00a0<\/h3>\n\n\n\n

    This kind of rigorous approach makes it possible to establish an order point for each kind of item i.e. a minimum stock level that, once reached, must trigger a new order. The order point is particularly suitable for just-in-time supply chains.  <\/p>\n\n\n\n

    Several indicators make it possible to accurately determine the order point. <\/p>\n\n\n\n

    • The replenishment lead time<\/strong>, which includes all the stages between placing an order with the supplier and actually receiving the items.  <\/li><\/ul>\n\n\n\n
      • The consumption lead time <\/strong>for stock, which corresponds to the sales rhythm for the stored product. <\/li><\/ul>\n\n\n\n
        • The safety stock <\/strong>that makes it possible to guarantee the availability of products during their supply.  <\/li><\/ul>\n\n\n\n

          The economic quantity to be ordered <\/strong>is an indispensable performance indicator. It aims to identify the optimum order level for minimising the total annual cost of stock management. It is based on a balance between the costs of acquiring (order placement costs + transport costs + costs of receiving) and holding the stored products.  <\/p>\n\n\n\n

          <\/p>\n","protected":false},"excerpt":{"rendered":"

          The health crisis triggered by COVID-19\u00a0placed a lot of attention on the issue\u00a0of replenishment.\u00a0Whatever their field of activity,\u00a0companies\u00a0tested the\u00a0solidity and resilience of their\u00a0supply\u00a0chain\u00a0and reflected on the\u00a0status\u00a0of their stock.\u00a0This…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[3],"tags":[165,166],"class_list":["post-278","post","type-post","status-publish","format-standard","hentry","category-latest-articles","tag-key-replenishment-indicators","tag-purchasing"],"aioseo_notices":[],"_links":{"self":[{"href":"\/blog\/wp-json\/wp\/v2\/posts\/278"}],"collection":[{"href":"\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"\/blog\/wp-json\/wp\/v2\/comments?post=278"}],"version-history":[{"count":2,"href":"\/blog\/wp-json\/wp\/v2\/posts\/278\/revisions"}],"predecessor-version":[{"id":572,"href":"\/blog\/wp-json\/wp\/v2\/posts\/278\/revisions\/572"}],"wp:attachment":[{"href":"\/blog\/wp-json\/wp\/v2\/media?parent=278"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"\/blog\/wp-json\/wp\/v2\/categories?post=278"},{"taxonomy":"post_tag","embeddable":true,"href":"\/blog\/wp-json\/wp\/v2\/tags?post=278"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}