Inventory Control Metrics

Proper inventory management can mean cost savings for a supply chain department but if no control measures exist then it's hard to determine if those cost savings are being realized.  Holding inventory is costly but it could mean the difference between a sale and no sale.  Many companies would rather hold inventory then loose a sale without realizing how much money they are loosing in the process. 

Companies like Wal-Mart have mastered the art of inventory control and spend millions of dollars per year to perfect this art.  Most companies don't have the same resources as Wal-Mart to manage their inventory.  Simple inventory control metrics exist that can be implemented to make the process of measuring inventory easy.

These are inventory related metrics that all supply chain managers should look at:

-  Average Inventory:  Average amount of inventory carried.  This can be tracked on a simple Excel spreadsheet.

-  Products with High Levels of inventory:  Identifies which products are carrying high levels of inventory.

-  Average Replenishment Batch:  Controls the replenishment batch measured by stock keeping unit.

-  Average Safety Inventory:  Measures the average amount of inventory on hand when a replenishment order arrives.

-  Seasonal Inventory:  Measures the amount of both cycle and safety inventory purchased due to seasonal changes.

-  Fill Rate:  Measures the orders that were met on time over a specified number of units.

-  Fraction of time out of stock:  Measures the time that a particular product had zero inventory.

These measurements can be easily tracked by a supply chain analyst in an Excel spreadsheet.  Keeping historical data of the metrics can be used for trending and other managerial purposes.
 

Financial Score Cards

Shrinking budgets and corporate efficiency initiatives are making the scorecard a popular mechanism for measurement in the banking industry. A branch scorecard is nothing more than a monthly or weekly report showing metrics particular to each financial unit. To allow for consistency the metrics have to be standard for all business units measured. In addition the scorecard has to show trending so with each update the previous month's numbers have to be listed as well. A popular platform for displaying a scorecard is the intranet. With the intranet a large number of people can consistently view the scorecard. Executives can use a scorecard to hold managers accountable for their branch operations. With this tool an executive can identify the areas of concern for each branch. For example when looking at the number of transactions per FTE the two variables that can be used are 1.The number Tellers 2. Number of teller transactions. Using the number of employees as the Numerator and Number of Teller Transactions as the Denominator one can create a ratio. This ratio will be used to see if the branch unit is operating over capacity or has too many tellers compared to other branches. One has to take into consideration the demographics of a particular branch when evaluating the scorecard metrics. If one branch is located close to a university the number of new accounts will be significantly higher compared to a branch with no demand for new accounts. This can skew the scorecard and create swings in demand from branch to branch. Open communication with the branch manager of that branch can explain differences in rations.

Marketing ROI tips

Before taking on the challenge of creating an ROI analysis for a company’s marketing campaign there are several things a person has to remember.  The most important being the validity of the data.  Nobody will believe your results if they don't know where your data is coming from so make sure you understand every aspect of your analysis, down to the most minute detail. The second thing is to make the analysis simple.  Don't crown your analysis with unnecessary numbers and graphs.  Focus on one particular metric and work on explaining the details behind that metric.  As an example if you use the ROI measurement you want to start by saying "The ROI for this campaign was 150%" and this is where the numbers came from.  Do a deductive analysis by starting with the general and work your way down to the specific.  This way you will be less likely to lose people and drown them with too much data.  The third thing is to keep your analysis consistent from one campaign to the next.  Don't keep changing your numbers and metrics every time you present your findings.  It usually takes several presentations before everyone is on board.  People hate surprises and will tune you out if they are confused.  If you do decide to change a metric make sure you explain what you did first.  The last thing and most important thing is to have accurate numbers.  As an analyst the worst thing you can do is have inaccurate data. If you lose trust in your numbers especially from executives you will have a hard time recovering.  It's better to have a few simple "ACCURATE" metrics then a dozen obscure shady metrics. Keep these points in mind and you will succeed with your ROI measurements in the future.