Performance to promise

Performance to Promise Dates: When a Distributor places a Purchase Order against a Manufacturer, he has certain expectations on when he will receive the items ordered. His original expectation is the OnTime Delivery Metric. However, the manufacturer may give him a revised estimate as to when they expect to fill the order. The manufacturers promise is called the “Performance to Promise Date Metric”.

Example: ABC Company Orders 2 Products on Purchase Order #1234, with a Requested Ship Date of June 10.
The first item is in-stock and ships on June 10th..
The second item is on backorder. The manufacturer estimates that the 2nd item will ship by July 1.
The item is manufactured and ships out on June 28.
The Performance to Promise Date is 100% (items ship ontime or early)
*However, if the 2nd item does not ship till July 2nd, then it’s late. The Performance to Promise Date is 50%.

Other Metrics

Inventory Months of Supply:
Inventory On Hand / Avg Monthly Usage
(the Avg Monthly Usage is typically the yearly forecast divided by12)

Inventory Rationalization:
An analysis that categorizes your inventory by various categories. Examples-
- Current Inventory levels of A,B,C products
- Inventory turns of A,B,C
- Value of Slow Moving product (those products you may have more than “x” number of weeks worth)

Material Value Add.
- Sell price minus material cost divided by material cost.

Upside Flexibility:
The ability of a manufacturer to meet additional demand requirements. This is usually compared as a percentage over the original order. This is protection for the buyer. It allows for the actual demand to be higher than the forecasted quantity.

SUPPLY CHAIN MANAGEMENT METRICS