One set of supply chain metrics that can exhibit a strong relationship is forecast error, finished goods inventory and perfect order fulfilment. If the ability to forecast is poor, it is reasonable to expect that the ability to deliver orders on time and in full (OTIF) to customers will be impacted. Additionally, if forecasting capabilities are weak, suppliers may also struggle to provide on-time performance that could also impact stock availability, leading to lower customer service.
A second supply chain benchmark example involves these supply chain metrics: supplier on-time, supplier quality and inventory levels. Often as a result of poor supplier relationship management, long lead times, insufficient capacity or ineffective demand forecasting, supplier performance is impacted. When supplier performance is uncertain, companies often take the decision to buffer with inventories. Higher raw materials and finished goods inventories are also usually accompanied by high inventory obsolescence (or write-offs), particularly for companies with short product life cycles. In some cases, poor supplier performance may also have a negative impact on plant use.
A third supply chain benchmark example involves these supply chain metrics: forecast error, plant use and inventory. In response to unpredictable surges in demand, supply chains might make short-term changes in the production plan to accommodate urgent orders. This typically results in lower plant use and often higher inventory levels to serve as a buffer.