Read Why do business professionals choose ready-to-use KPIs? to find out the answers to these questions:
The issue of Inventory management has several facets- 'ensuring that sufficient quantity is available at all times', 'minimum wastage occurs', 'cost in carrying the contingency volume is least' etc. Many would agree that pile-ups are of no use no matter how scarce the inputs are. This calls for obtaining the stocks only when they are needed.
The most modern concept in managing stocks that meets all these requirements is that of JIT (Just in Time). To achieve this, a really impressive integration is needed between the operations of concerned organization and its suppliers. This lowers the resources that go in procuring and managing inventory as the expenses that earlier went into 'holding' inventory get eliminated almost completely.
Implementing these strategies sets the stage for employing yet another management tool that is potent to enough to bring all 'countable factors' under one roof. Balanced Scorecard wins the battle in this scenario. One can out down the important metrics in the form of KPIs (Key Performance Indicators) to be referred to in later stages. Such a measurable approach forms a well 'tested and tried' route to be treaded on.
This is the actual scorecard with Inventory and Warehousing Performance Indicators and performance indicators. The performance indicators include: inventory balanced scorecard, balanced scorecard designer, process perspective, part count accuracy, days of supply, lead time, obsolescence and deterioration, financial perspective, insurance, gross margin roi, avg. cost per order, lost sales analysis, storage efficiency, inventory turnover rate, inventory levels, space utilization, customer perspective, return rate, cancellation rate, non-conformance analysis, pilferage and spoilage, price of non-conformance (ponc), target ponc improvement, quality-percentage defect.
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"Before writing a single line, I formulated some guiding principles, one of them was: "If our clients ask, "How can I find a good KPI for..." - I want this book to provide a perfect answer."