Flow Metrics - Integral part of the implementation

In almost all supply chains, we encounter the typical conflict of goals: OEE maximization vs. inventory reduction vs. service level optimization.

Individual, mostly cost-based targets of single functional departments lead to silo-optimization and mutual interference within the organization due to conflicting and misleading targets.

The cause is usually a lack of understanding that relevant information differs in the operational, tactical and strategic planning areas: Forecasts, for example, are needed for long-term planning, whereas actual customer demand is decisive in the short term.

The consideration of fixed costs, for example via key figures such as OEE, is also relevant in the strategic horizon, but leads to suboptimal decisions in the operational horizon. Optimal control of the supply chain therefore requires key figures that are aligned with the decision horizons and free of conflict.

Variability and silo optimization

In DDMRP, all decisions at the operational level are made in a way that promotes the flow of relevant information and materials. Flow has been identified as the most important and highest conflict-free goal, which does not promote variability or silo optimization.

Flow metrics are therefore key figures that consistently support this flow of relevant information and materials. For this purpose, only the information relevant for the respective decision horizon is included and conflicting goals are consistently eliminated.

Flow metrics, for example, take into account that neither sales nor full costs, but throughput - especially in the case of bottleneck resources - is operationally relevant.

Freedom from conflict

Moving to flow-based performance management does not necessarily require replacing all previous KPIs. However, potential conflicts must be eliminated and relevant information must be ensured at all levels of decision-making.

For this purpose, Camelot has established a structured approach as well as a set of established flow metrics based on various projects.

These are also an integral part of all SAP-based Camelot solutions for Demand-driven Supply Chain Management, where they optimally support decisions through intuitive and goal-oriented visualizations.