Question 1

What are the key performance indicators (KPIs) you would track to measure supply chain efficiency?

Accepted Answer

To measure supply chain efficiency, I would track several key performance indicators across different functional areas. For inventory management, important KPIs include inventory turnover ratio, days of supply, and inventory accuracy. For transportation and logistics, I would monitor on-time delivery rate, perfect order rate, freight cost per unit, and lead time. Production KPIs would include capacity utilization, production cycle time, and overall equipment effectiveness (OEE). For procurement, I would track supplier on-time delivery, supplier quality incidents, and purchase price variance. Customer-focused metrics would include order fill rate, perfect order fulfillment, and backorder rate. Financial KPIs would include total supply chain cost as a percentage of sales, cash-to-cash cycle time, and return on supply chain fixed assets. Additionally, I would monitor sustainability metrics like carbon footprint and compliance with environmental regulations. The specific KPIs prioritized would depend on the company's strategic objectives and industry requirements.

Question 2

How would you handle a major supply chain disruption?

Accepted Answer

When facing a major supply chain disruption, I would implement a structured response approach. First, I would activate the crisis management team and establish clear communication channels with all stakeholders. Immediate assessment of the disruption's impact on inventory levels, production schedules, and customer orders would be critical. I would prioritize customers based on strategic importance and contractual obligations, communicating transparently about potential delays. For supply-side disruptions, I would activate alternative suppliers from our pre-approved vendor list or expedite qualification of new sources. If production is affected, I would reallocate capacity to critical products and consider temporary outsourcing options. For logistics disruptions, I would identify alternative transportation modes or routes. Throughout the crisis, I would maintain a centralized information dashboard to track recovery metrics and ensure coordinated decision-making. Post-disruption, I would conduct a thorough analysis to identify vulnerabilities, update risk mitigation strategies, and potentially redesign aspects of the supply chain to increase resilience against similar future disruptions. This might include diversifying the supplier base, increasing safety stock for critical components, or implementing more robust monitoring systems.

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