Supply Support Performance Measures – Part 1

“When we talk about ‘smart transportation,’ it is more than moving cargo from A to B. Digitization within transport and logistics means seamless service to our customers, visibility in the supply chain, and driving a more efficient business.”

Soren Skou

In this final article on complex materiel performance measures for Performance Based Contracts (PBCs) I am going to look specifically at Supply Support performance measures.  While many of you reading this may ask why cover this since these performance measures are relatively simple and well-known, such as Delivered In Full On Time (DIFOT), there are a number tricks and traps to catch those new to this field which I’d like to cover.

Firstly, we need to define Supply Support performance measures since many people include performance measures that capture other aspects such a maintenance and staffing.  However, I have defined these more generally as Supportability performance measures (see Supportability Performance Measures).  My preference when referring to Supply Support performance measures is the Australian Standard in Defence Contracts (ASDEFCON) definition:

Supply means the comprehensive function of providing Products and Services needed by users at the time and place required, and includes identification, requirement determination, procurement, receipt, inspection, storage, distribution, stock recording and accounting, reclamation and disposal.

Using this definition Supply Support performance measures look at the timeliness, completeness and accuracy of orders (demands) for items, whether they be repairable items (e.g. a vehicle engine or large office printer) or consumable items (e.g. vehicle tyres or printer paper).  However, given the comprehensive scope of work in this definition it is unlikely that all sellers will be involved to the same degree.  For example, some sellers will simply deliver an item on demand based on agreed lead-times.  However, other sellers may be in deeply embedded in the buyer’s business undertaking inventory management using sophisticated spares modelling to find the right balance of quantity and location of items vs. cost of the inventory vs. downtime waiting for an item.  So what are Supply Support performance measures?

While there are many Supply Support performance measures available to the PBC practitioner these can be grouped into 3 main types:

  1. demand satisfaction performance measures;
  2. inventory holding performance measures; or
  3. customer wait time performance measures.

Given each of these groups of performance measures have different focus and application, in the next article we will explore each in turn including when to use (and not to use) and some common performance measures for each.

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