One of the most valuable business metrics you can measure are the “cycles” or “turns” in your supply chain – that is, the periods of time between two events or points of reference. This metric can be used to monitor both individual and overall performance of a business.
Properly measuring a cycle requires more than simply defining the beginning and end points. Each individual step and process must also be measured from start and finish, and the more granularity of data the better; processes should be timed down to the day, hour, and minute. While ensuring everything is measured and documented seems like a front-loaded process, the resulting visibility and problem-solving capabilities, backed up by actionable data, makes the work completely worthwhile.
Cycles are an integral part of the supply chain. The speed of an inventory cycle, how quickly we move from one cycle to the next, often represents a company’s overall supply chain efficiency. Businesses tracking cycle times have an advantage because they can recognize and correct issues quickly, before things get out of hand. The step-by-step, detailed information you receive about your business provides visibility and broadens your planning options.
Some of the cycles you should consider measuring:
- Promised Customer Order Cycle Time – The anticipated period between order creation and expected delivery date
- Actual Customer Order Cycle Time – The actual period between order creation and delivery; the time it takes to fulfil a customer’s order
- Cash to Cash Cycle Time – The period of time between payment for raw materials and payment for the produced product(s)
- Supply Chain Cycle Time – The period of time it would take to satisfy a customer’s demands if inventory levels were at zero
- Manufacturing Cycle Time – The period of time between planned order and final production of the product
- Inventory Replenishment Cycle Time – The manufacturing cycle time + the time it takes to send the product to the correct distribution center