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Inventory Turns(Inventory Turnover): The number of times that yourinventory cycles or turns over per year. It is one of the most commonly usedSupply Chain Metrics.

Calculation: A frequently used method is to divide the Annual Cost of Sales by

the Averae Inventory !evel."#ample: Cost of Sales $ %&'. Averae Inventory $ %'.

%&' * %' $ ' Inventory Turns

+,Inventory Turns can be a movin number."#ample: ,ollin - Month Cost of Sales $ %-'. Current Inventory $%/ %-' * %/ $ / Inventory Turns

0ro1ected Inventory Turns: 2ivide the 3Total Cost of - Month Sales 0lan3 bythe 3Total Cost of 4oal Inventory3"#ample: The Total Cost of - Month Sales 0lan is %/. Total Cost of4oal Inventory $ %5 %/ * %5 $ 6 0ro1ected Turns

Turns can be vie7ed usin Cost 8alue ,etail 8alue or even in 9nits. ustma;e sure that you

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time of a 0urchase +rder. It is ap bet7een the 0urchase +rder Creation 2ateand the ,equested 2elivery 2ate.This tells you the cycle time that you should e#pect (=+T the actual)

Customer +rder Actual Cycle Time:

The averae time it ta;es to actually fill a customer@s purchase order. Thismeasure can be vie7ed on an +rder or an +rder !ine level.The measure starts 7hen the customers order is sent*received*entered. It ismeasured alon its various steps of the order cycle. Throuh credit chec;s

pricin 7arehouse pic;in and shippin. The measure ends at either the timeof shipment or at the time of delivery to the customer (sometimes trac;ed byusin an "2I -/). This 3actual3 cycle time should be compared to the3promised3 cycle time.

Manufacturin Cycle Time:

Measured from the Birm 0lanned +rder until the final production is reported. Itusually ta;es into account the oriinal planned production quantity versus theactual production quantity. "#ample: D of the planned quantity must becompleted on a production run or the cycle time should not be considered.

0urchase +rder Cycle Time:Measured from the creation of the 0+ to the receipt at your location(2istribution Center ?ub etc). +ne of the ;eys here is not have your ,22(,equested 2elivery 2ate) e#ceed the areed to lead time. If it does it mayartificially inflate your !ead Time.Additionally any in>bet7een points available 7ill add value to the metric."#ample: Creation of the 0+ Shipment from the 8endor ,eceipt at the 2C.This 7ill tell you the manufacturin time vs. the transit time.

Inventory ,eplenishment Cycle Time:Measure of the Manufacturin Cycle Time plus the time included to deploy the

product to the appropriate distribution center.

Cash to Cash Cycle Time:The number of days bet7een payin for ,a7 Materials and ettin paid for

product. Calculated by Inventory 2ays of Supply plus 2ays of Sales+utstandin minus Averae 0ayment 0eriod for Material.

Supply Chain Cycle Time:The total time it 7ould ta;e to satisfy a customer order if all inventory levels7ere Eero. It is calculated by addin up the lonest lead times in each stae ofthe cycle.

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20M+: 2efects 0er Million +pportunities

20M+ is a Si# SimaF calculation used to indicate the amount of defects in aprocess per one million opportunities.To calculate: Total =umber of 2efects * Total =umber of +pportunities for a

2efect. Then multiply the ans7er by - Million.

The challene here is determinin e#actly 7hat qualifies as a defect. Somedefects can pass throuh a quality inspection and have little impact on the end

product. +ther defects can result in re>7or; or scrap.

20M+ is sometimes used instead of 2efect per 9nit to allo7 for comparisonbet7een processes 7ith different levels of comple#ity.

FSi# Sima uses statistical analysis to measure a company@s performance by

identifyin defects in a manufacturin process. The oal of Si# Sima is toreduce process output variation to G or > si# standard deviations. This results inno more than &./ defects per million opportunities.

FILL RATE

Bill ,ate definitions and calculations can vary reatly. In the broadest senseBill ,ate calculates the service level bet7een parties. It is usually a measureof shippin performance e#pressed as a percentae of the total order.

Sample Bill ,ate Metrics:

!ine Count Bill ,ate: The amount of order lines shipped on the initial shipmentversus the amount of lines ordered. This measure may or may not ta;e intoconsideration the requested delivery date (see +n Time 2elivery)e#ample> AHC Company orders - products (one order line each) on its0urchase +rder -&/. The manufacturer ships out line items on March - andthe remainin & items on March -. The Bill ,ate for this 0urchase +rder isD. It is calculated once the initial shipment ta;es place.Calculation: =umber of +rder !ines Shipped on the Initial +rderF * Total

=umber of +rder !ines +rdered (*- $ D)

SJ9 Bill ,ate: The number of SJ9

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April the SJ9 Bill ,ate is 6DCalculation: =umber of SJ9s Shipped on the Initial Shipment * Total =umberof SJ9s +rdered (&*/ $ 6D).

Case Bill ,ate: The amount of cases shipped on the initial shipment versus the

amount of cases ordered.e#ample>AHC Company orders ' products that total cases. Themanufacturer ships out -/ cases on &*-*- and the remainin ' cases on&*-*-. The Bill ,ate for this 0urchase +rder is D. It is calculated once theinitial shipment ta;es place. The number of +rder !ines is not considered inthis calculation. This Bill ,ate measure ives 37eiht3 to the order lines thatare shipped out.Calculation: =umber of Cases Shipped on the Initial +rder * Total =umber ofCases +rdered. (-/* $ D)

8alue Bill ,ate: Same as above e#cept the order line value is used instead ofcases.Calculation: 8alue of +rder !ines Shipped on the Initial +rder * Total 8alue ofthe +rder (%/*%6 $ 5D)

Khat happens if a customer orders - products but then decides to e#pediteout 1ust one of themL Should the other products be counted as a Bill ,ate3miss3L (- shipped * - ordered $ -D). The ans7er is no. Nou should factorrushed lines out of your Bill ,ate calculation. This can usually be done byidentifyin the routin code (as in an SA0 system) or by the carrier (B"2).

F=+T": 3Shipped on the Initial +rder3 > usually refers to the first shipmentout of the primary 7arehouse. Therefore if an order line ships out of analternate shippin facility and it ships out on*before the first shipment out of the

primary 7arehouse then it is considered a G to the Bill ,ate.