If you're in the supply chain business, right up there with Newton's law of gravity stands Murphy's other law stipulating that demand and supply, if left to their own tendencies, will always tend to diverge and get you in trouble. Welcome to the world of predictive demand and supply planning whose mission is to predict imbalances as far in advance as possible, in order to provide ample time and opportunity to design and implement corrective sales and operations solutions. So how do we design a system for identifying potential issues and expressing them via a commonly understood key process indicator (KPI) where the cause and effect of our actions can be readily measured? Read this article by the former director of Dell's operations and demand management.
kpi for inventory director
becomes a quick reference KPI for understanding on a daily basis how the business stands in terms of meeting targeted CLTs (i.e., as backlog decreases, CLT decreases). Thus, when operations talks to sales, or sales to customers, the common language should be the predicted CLT to ship or deliver the order. It may not be good news, but at least you preempt their questions and provide an accurate, intelligent response (which may at least eliminate the unkind words!). In a make-to-stock (MTS) business,