Assess
Prioritise and analyse key performance indicators
Understanding, setting and selecting key performance indicators is a key step ahead of choosing any supply chain assessment option.
In this section you will learn:
- How to link a supply chain assessment to your strategic goals
- What a KPI is
- About the two types of KPIs
- Which type of KPI is appropriate for your stage of supply chain maturity
How does a supply chain assessment link to the ministry of health's existing goals?
A supply chain assessment must be aligned to performance attributes and strategic goals. In the context of this analysis, a supply chain assessment helps to objectively determine whether a functional outsourcing opportunity exists for the ministry of health. The assessment must link to specific performance attributes and associated strategic goals.
An illustrative example of strategic goals is given below:
Performance attribute
Strategic goals (illustrative)
1. Reliability
To consistently get orders right and ensure product quality standards are met
2. Responsiveness
To achieve a consistent cycle time in the speed of provision of products and service
3. Agility
The ability to respoind to changes (external influences) that impact the supply chain
4. Cost
The cost associated with operating the supply chain - value and efficiency
5. Assets
Effective utilisation of assets in managing the optimal fulfillment of supply chain services
What is a key performance indicator (KPI)?
Strategic goals are often measured using key performance indicators (KPIs). A KPI is a standard for measurement of process performance in a supply chain. A KPI measures the ability of a process to achieve the strategic objective(s) associated with performance attributes. KPIs provide the standard for measurement of supply chain performance. KPIs are overarching and applicable to all three supply chain assessment approaches. There are two types of KPIs that measure performance within the functional framework:
Core KPIs
Core KPIs are the ‘must-have’ performance metrics to conduct any supply chain assessment and are essential to assess supply chain functions and activities. Setting and selecting core KPIs as performance metrics for each of the functional areas is a key step ahead of choosing any supply chain assessment option. The purpose is to have a baseline set of ‘must-have’ KPIs/performance metrics which will be applied and measured as individual activities with the healthcare supply chain. Typical core KPIs include forecast accuracy, on time in full delivery, price compliance, stock-outs, warehouse cost, and outbound on-time delivery.
A typical example is illustrated below:
Functional Area
Core KPI’s used for a Supply Chain Assessment
Forecasting
- Forecast accuracy
- Source of funds
Procurement
- Vendor on-time and in full delivery rate (OTIF)
- Percent of international reference price paid
Freight forwarding
- Shipping time
- Order accuracy
- Freight forwarding cost
Warehousing and Inventory Management
- Stocked according to plan
- Stockout rate by tracer commodity by level in the system
- Stock accuracy Order fill rate
- Wastage from damage, theft and expiry
- Cost of warehousing operation
Distribution
- On-time delivery to Facility (OTIF)
- Percentage of orders placed by health facilities as emergency orders
Human Resources
- Staff turnover rate
Data and Information
- Facility reporting rates on time
Optional KPIs
Optional KPIs are appropriate for more developed health supply chain system assessments. They complement core KPIs and are appropriate for the assessment of more developed public health supply chain systems. They may provide a more detailed analysis of specific performance areas. Optional KPIs may be adapted to country custom and practice.
See an example of optional KPIs below:
Functional Area
Optional KPI’s used for a Supply Chain Assessment
Forecasting
- Supply plan accuracy
Procurement
- Percentage of orders place as emergency orders
- Supplier fill rate
- Procurement methods employed
- Percentage of health products procured listed on the National
- Essential Medicines List or similar document for other products
- Customs clearance time
Freight Forwarding
- Clearing time (from port to primary warehouse)
Warehousing and Inventory Management
- Stock turn per annum
- Number/duration of temperature excursions in cold storage facility
- Stockout rates of one or more tracer products by facility
- Order turnaround time
- Percentage of incoming batches tested for quality
- Percentage of product batches tested that meet quality standards
Distribution
- On-time delivery to Facility (OTIF)
- Percentage of orders placed by health facilities as emergency orders
Human Resources
- Staff turnover rate
Data and Information
- Facility reporting rates on time