Supply Chain Dive’s Best of 2018: As Disruptions Accelerate, Supply Chains Learn to Measure Them

“At a time when supply chains are growing increasingly complex, disruptions such as natural disasters, cyberattacks and geopolitical conflict can have a significant impact on speed and sourcing. For many organizations, lean tactics and consolidation of suppliers can also amplify risks when there’s a kink in the system.

As the profitability of many organizations is now highly-dependent upon an optimally-performing supply chain, managers need to move beyond traditional metrics. They must now look to new key performance indicators that can measure their ability to survive and recover from a major disruption.

No matter how organizations calculate and quantify their ability to handle supply chain disruptions, it’s essential to establish KPIs that can guide decision-making.

“In the implementations we have done, humans will receive reports about these KPIs on a weekly basis, and they might follow how their financial or operational performance will change as risk increases or decreases,” Simchi-Levi said.”