Collecting and analyzing the correct metrics is vital to the health of your supply chain. But are you paying attention to the right data? The Vested Group has gathered some of the top supply chain metrics that businesses should track to keep moving in a positive direction... Enjoy!

Cash-to-cash cycle time:

This metric tells you the length of time between when you pay suppliers for materials and when customers pay for the final finished product. You want the cycle time to be as short as possible. Tracking this metric will help identify potential causes of cash flow issues. The most efficient companies have cash-to-cash cycle times of less than one month.

Use this formula to calculate cash-to-cash cycle time:
Cash-to-cash cycle time = receivable days + inventory days – payable days

Supply chain cycle time:

Supply chain cycle time measures how long it would take to complete an order if inventory levels were zero. This KPI provides an overview of the efficiency of your entire supply chain.

Use this formula to calculate supply chain cycle time:
Supply chain cycle time = time it takes to order and receive supplies + order fulfillment cycle time

Customer order cycle time:

Customer order cycle time tracks the number of days between your company receiving a purchase order and completing customer delivery. It helps measure the responsiveness of your supply chain and how well you’re providing customer service.

Use this formula to calculate customer order cycle time:
Customer order cycle time = actual delivery date – purchase order creation date

Gross margin return on investment (GMROI):

The gross margin return on investment measures how much money a company makes on a specific inventory investment. Tracking this metric gives your company insight into which inventory items are especially poor or especially good performers. In general, a GMROI of 200 to 225 is considered respectable.

Use this formula to calculate gross margin return on investment:
Gross margin return on investment = gross profit / [(opening inventory in the period – closing inventory in the period) / 2] x 100

Supply chain cost per unit sold: 

Supply chain cost per unit sold measures your supply chain costs compared with how many of a given item your company sells.

Use this formula to calculate supply chain cost per unit sold:
Supply chain cost per unit sold = supply chain costs for a product over period / number of units sold in that period

There’s no shortage of KPIs and metrics that can provide supply chain and business leaders with invaluable insights into their operations.