The 10 drivers/metrics that make your supply chain better
Discover the top metrics and drivers every manufacturer needs to track for optimizing operations, managing costs, and driving profitability in a competitive market.
In the manufacturing industry, staying competitive requires more than just efficient production lines—it demands a deep understanding of your business’s financial health and operational efficiency.
By tracking key metrics and drivers, you gain critical insights into everything from cost management to market demand, enabling you to make informed decisions that drive profitability and resilience in a rapidly changing market.
These aren’t just numbers; they are the pulse of your entire operation, and they will help you navigate challenges and seize opportunities with confidence.
The top 10 most popular manufacturing drivers and metrics created by Pluvo users:
- Forecasted Demand – Predicts future market demand.
- Reorder Point – Determines optimal inventory reorder level.
- Cost per Supplier – Analyzes supplier costs.
- Production Efficiency – Measures production process efficiency.
- Inventory Turnover Rate – Tracks inventory turnover speed.
- Geopolitical Risk Impact – Assesses the financial impact of geopolitical risks.
- Transportation Cost per Unit – Monitors transportation costs per unit.
- Supply Chain Resilience Score – Evaluates supply chain resilience in scenarios.
- Logistics Efficiency – Measures logistics efficiency.
- Carrying Cost – Calculates the cost of holding inventory.
Demand Forecasting Drivers
Driver Name: Forecasted Demand
Purpose: Predict future market demand based on historical sales data and market trends.
Forecasted Demand = (Average Sales Last 12 Months) * (1 + Market Growth Rate)
- Average Sales Last 12 Months: Sum of sales from the last 12 months / 12.
- Market Growth Rate: Projected growth rate based on market analysis (e.g., 0.05 for 5% growth).
Inventory Reorder Point Drivers
Driver Name: Reorder Point
Purpose: Determine the optimal point to reorder inventory to avoid stockouts and minimize carrying costs.
Reorder Point = (Average Daily Usage * Lead Time) + Safety Stock
- Average Daily Usage: Total usage over a specified period / number of days in the period.
- Lead Time: Time it takes for new stock to arrive.
- Safety Stock: Extra stock held to mitigate risk of stockouts due to demand fluctuations.
Supplier Cost Analysis Metrics
Metric Name: Cost per Supplier
Purpose: Analyze and compare costs from different suppliers to identify opportunities for cost savings.
Cost per Supplier = (Total Cost from Supplier) / (Number of Units Purchased)
- Total Cost from Supplier: Total amount paid to a specific supplier.
- Number of Units Purchased: Total units acquired from that supplier.
Production Efficiency Metrics
Metric Name: Production Efficiency
Purpose: Measure the efficiency of the production process to identify areas for improvement.
Production Efficiency = (Actual Output / Maximum Potential Output) * 100
- Actual Output: Number of units produced in a given period.
- Maximum Potential Output: Maximum number of units that could be produced under ideal conditions.
Inventory Turnover Drivers
Driver Name: Inventory Turnover Rate
Purpose: Track how quickly inventory is sold and replaced over a period, aiding in optimizing stock levels.
Inventory Turnover Rate = Cost of Goods Sold / Average Inventory Value
- Cost of Goods Sold (COGS): Total cost of goods sold during a period.
- Average Inventory Value: (Beginning Inventory + Ending Inventory) / 2.
Geopolitical Risk Impact Drivers
Driver Name: Geopolitical Risk Impact
Purpose: Assess the financial impact of geopolitical risks on supply chain costs.
Geopolitical Risk Impact = (Base Cost) * (1 + Risk Factor)
- Base Cost: Standard cost without considering geopolitical risks.
- Risk Factor: An adjustment percentage representing the estimated impact of geopolitical factors (e.g., 0.10 for 10%).
Transportation Cost Optimization Metrics
Metric Name: Transportation Cost per Unit
Purpose: Optimize logistics by monitoring transportation costs per unit.
Transportation Cost per Unit = Total Transportation Cost / Number of Units Shipped
- Total Transportation Cost: Sum of all costs related to transporting goods.
- Number of Units Shipped: Total units shipped in the period.
Scenario Planning for Supply Chain Disruption Metrics
Metric Name: Supply Chain Resilience Score
Purpose: Model different scenarios to evaluate supply chain resilience against potential disruptions.
Supply Chain Resilience Score = (Scenario Probability) * (Impact of Disruption)
- Impact of Disruption: The financial or operational impact if the scenario occurs, expressed in monetary terms.
- Scenario Probability: Estimated likelihood of a specific disruption scenario (e.g., 0.2 for 20% likelihood).
Logistics Efficiency Drivers
Driver Name: Logistics Efficiency
Purpose: Measure the efficiency of the logistics operations to identify opportunities for cost reduction.
Logistics Efficiency = (On-Time Deliveries / Total Deliveries) * 100
- On-Time Deliveries: Number of deliveries made on or before the scheduled time.
- Total Deliveries: Total number of deliveries made in the period.
Cost of Carrying Inventory Drivers
Driver Name: Carrying Cost
Purpose: Calculate the annual cost of holding inventory to optimize stock levels.
Carrying Cost = (Average Inventory Value) * (Carrying Cost Percentage)
- Average Inventory Value: (Beginning Inventory + Ending Inventory) / 2.
- Carrying Cost Percentage: Annual carrying cost rate (e.g., 0.25 for 25%).
Speak with one of our customer success managers to see which metrics would be best for your business. Book a demo today! 🌧️
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