Performance Measurement Flashcards
(25 cards)
What makes a good performance measure?
Quantitative, easy to understand and calculate, encourages appropriate behavior, visible, well-defined, encompasses outputs & inputs, measures only what is important, multidimensional, uses economies of effort, facilitates trust.
What are the three different types of performance metrics?
- Measure
- Metric
- Index
Define ‘Measure’ in the context of performance metrics.
Requires no calculations and with simple dimensions.
Define ‘Metric’ in the context of performance metrics.
Involves a calculation or a combination of measurements, often in the form of a ratio.
Define ‘Index’ in the context of performance metrics.
Combines 2 or more metrics into a single indicator, usually used to track trends in the output of a process.
What is the cash-to-cash cycle?
A measure of how long a company’s cash is tied up in the production and sales process before being converted back to cash.
What are the three parts of calculating the Cash-to-Cash cycle?
- Days of Inventory
- Days of Receivables
- Days of Payables
What is the formula for calculating the Cash-to-Cash cycle?
(+) Days of Inventory + (+) Days of Receivables - (-) Days of Payables
What does a higher value in Days of Payables indicate?
It indicates a company holds its cash longer, increasing its investment potential.
What is the Inventory Turnover calculation?
Inventory turnover = COGS / Average Inventory.
What does inventory turnover indicate?
It is one of the best indicators of efficiency of turning inventory into sales.
Define ‘Margin Percentage’ with an equation.
(Margin / Sales price) x 100.
How is the markup percentage calculated?
(Cost x Markup Percentage) + Cost.
What are the Performance Classification categories?
- Time
- Quality
- Cost
- Other/Supporting
True or False: Successful development of a supply chain metrics program is a result of individual effort.
False
What is the relationship between SCM and financial performance?
SCM is a means to improving financial performance.
What impact do logistics techniques such as JIT and VMI have?
They reduce inventory levels and capital required.
What is the formula for calculating Return On Assets (ROA)?
ROA = Profit / Assets utilized.
What does the Cash-to-Cash cycle measure?
It measures liquidity and value in supply chain management.
Fill in the blank: The _______ cycle is the time between a company’s initial investment in working capital and its cash collection.
Cash-to-Cash
What does a lower value in Days of Receivables indicate?
A company collects its money in a shorter period of time.
What is the significance of benchmarking retailer inventory turnover?
It helps compare efficiency across different retailers.
What is the calculation for Margin?
Sales price - costs of goods.
What does the term ‘perfect order’ refer to in logistics?
It is a combination of on-time delivery, complete order, accurate product selection, and damage-free delivery.
