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Essential KPIs for Supply Chain Planning, Manufacturing, and Logistics

Key Performance Indicators (KPIs) are critical tools for measuring the effectiveness of supply chain operations across various functions, including planning, manufacturing, and logistics. By focusing on the right KPIs, organisations can gain valuable insights into their performance, identify areas for improvement, and drive strategic decision-making. This article explores the top KPIs that every supply chain leader should monitor to ensure operational excellence and achieve business objectives.

We will delve into each KPI category, explaining its significance and how it contributes to the overall success of the supply chain. Additionally, we will discuss how Trace Consultants can assist organisations in tracking and optimising these KPIs to enhance their supply chain performance.

1. Business Process KPIs

Business process KPIs are designed to measure the efficiency and effectiveness of various supply chain processes, such as order-to-cash, procure-to-pay, and plan-to-produce. These KPIs help organisations identify bottlenecks, streamline workflows, and improve process efficiency. Common business process KPIs include cycle time, process lead time, and first-pass yield.

How Trace Consultants Can Help:

Trace Consultants assists organisations in mapping their supply chain processes and identifying the most relevant KPIs to monitor. By providing expertise in process optimisation and performance measurement, Trace Consultants helps businesses improve their operational efficiency and achieve their strategic goals.

2. Manufacturing Planning and Scheduling KPIs

Manufacturing planning and scheduling KPIs focus on the efficiency and effectiveness of production processes. These KPIs include metrics such as production cycle time, machine utilisation, schedule adherence, and overall equipment effectiveness (OEE). Monitoring these KPIs allows organisations to optimise their production schedules, reduce downtime, and increase output.

How Trace Consultants Can Help:

Trace Consultants offers support in implementing manufacturing planning and scheduling KPIs, helping organisations track and optimise their production processes. By providing insights into production efficiency and resource utilisation, Trace Consultants ensures that businesses can meet their manufacturing targets and improve overall productivity.

3. Distribution Planning KPIs

Distribution planning KPIs measure the efficiency and effectiveness of distribution processes, including order fulfilment, delivery performance, and inventory turnover. These KPIs are essential for ensuring that products are delivered to customers on time and in the right quantities, while minimising distribution costs.

How Trace Consultants Can Help:

Trace Consultants provides expertise in distribution planning and optimisation, helping organisations track key distribution KPIs and improve their performance. By implementing best practices in order fulfilment and delivery planning, Trace Consultants ensures that businesses can achieve high levels of customer satisfaction and reduce distribution costs.

4. Inventory Management KPIs

Inventory management KPIs focus on the efficiency of inventory control processes, including inventory turnover, days of inventory on hand (DOH), stockout rate, and carrying costs. These KPIs help organisations maintain optimal inventory levels, reduce excess stock, and minimise the risk of stockouts.

How Trace Consultants Can Help:

Trace Consultants assists organisations in implementing inventory management KPIs and optimising their inventory control processes. By providing advanced inventory planning tools and strategies, Trace Consultants helps businesses maintain the right balance between supply and demand, reducing costs and improving service levels.

5. Global Trade Management KPIs

Global trade management KPIs measure the efficiency of international trade processes, including customs clearance, compliance with trade regulations, and international shipping times. These KPIs are crucial for organisations that operate in global markets, as they help ensure smooth cross-border operations and minimise delays and penalties.

How Trace Consultants Can Help:

Trace Consultants offers expertise in global trade management, helping organisations monitor and improve their performance in international trade. By providing guidance on regulatory compliance and logistics optimisation, Trace Consultants ensures that businesses can navigate the complexities of global trade and achieve timely and cost-effective deliveries.

6. Transportation Management KPIs

Transportation management KPIs focus on the efficiency and effectiveness of transportation processes, including on-time delivery, transportation costs, and freight capacity utilisation. These KPIs are essential for ensuring that goods are moved efficiently across the supply chain, minimising transportation costs while meeting customer delivery expectations.

How Trace Consultants Can Help:

Trace Consultants provides support in tracking and optimising transportation management KPIs, helping organisations improve their logistics operations. By implementing best practices in route planning, carrier selection, and freight optimisation, Trace Consultants ensures that businesses can achieve high levels of transportation efficiency and cost-effectiveness.

7. Warehouse Management KPIs

Warehouse management KPIs measure the efficiency of warehouse operations, including order picking accuracy, warehouse utilisation, labour productivity, and inventory accuracy. These KPIs are critical for ensuring that warehouse operations run smoothly, with minimal errors and high levels of productivity.

How Trace Consultants Can Help:

Trace Consultants offers expertise in warehouse management, helping organisations implement KPIs that track and improve warehouse performance. By providing guidance on warehouse layout optimisation, workforce management, and inventory control, Trace Consultants ensures that businesses can achieve efficient and error-free warehouse operations.

8. Demand Planning KPIs

Demand planning KPIs focus on the accuracy and effectiveness of demand forecasting processes, including forecast accuracy, demand variability, and bias. These KPIs are essential for ensuring that supply chain operations align with actual market demand, minimising the risk of overproduction or stockouts.

How Trace Consultants Can Help:

Trace Consultants assists organisations in implementing demand planning KPIs and improving their forecasting processes. By providing advanced demand planning tools and techniques, Trace Consultants helps businesses achieve accurate demand forecasts, leading to better inventory management and production planning.

9. Sales & Operations Planning (S&OP) KPIs

Sales & Operations Planning (S&OP) KPIs measure the effectiveness of the S&OP process, including metrics such as forecast accuracy, inventory levels, service levels, and financial performance. These KPIs are essential for ensuring that the S&OP process aligns with business goals and drives operational efficiency.

How Trace Consultants Can Help:

Trace Consultants provides support in implementing S&OP KPIs and optimising the S&OP process. By facilitating cross-functional collaboration and providing insights into demand and supply alignment, Trace Consultants ensures that businesses can achieve their sales and operations targets while maintaining high levels of customer satisfaction.

Optimising Supply Chain Performance with Trace Consultants

Monitoring the right KPIs is essential for achieving operational excellence in supply chain planning, manufacturing, and logistics. By focusing on the KPIs outlined in this article, organisations can gain valuable insights into their performance, identify areas for improvement, and drive strategic decision-making.

Trace Consultants, with its extensive experience in supply chain optimisation, provides the guidance and support needed to implement and track these KPIs effectively. Whether your organisation is looking to improve process efficiency, optimise production schedules, or enhance demand planning, Trace Consultants can help you achieve your supply chain goals.

For more information on how Trace Consultants can assist your organisation in tracking and optimising supply chain KPIs, reach out to their team of experts today.

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The Growing Importance of Scope 3 Emissions in ANZ

As the global conversation around climate change intensifies, organisations in Australia and New Zealand (ANZ) are increasingly recognising the need to address their carbon footprints. While much attention has traditionally been given to direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2), there is a growing focus on Scope 3 emissions, which encompass all other indirect emissions that occur throughout the value chain.

Scope 3 emissions often represent the largest share of an organisation's carbon footprint, making them a critical area for companies aiming to meet ambitious sustainability goals. However, managing these emissions is complex and requires a comprehensive strategy that addresses various aspects of the supply chain, product lifecycle, and partnerships.

This article explores six key dimensions that ANZ organisations can focus on to develop a winning Scope 3 emissions strategy. By prioritising these areas, companies can not only reduce their environmental impact but also gain a competitive advantage in a market that increasingly values sustainability.

1. Supplier and Customer Selection: Integrating Carbon as a Key Metric

One of the foundational steps in managing Scope 3 emissions is integrating carbon considerations into the selection and engagement of suppliers and customers. For organisations in Australia and New Zealand, this means evaluating potential partners not just on cost or quality but also on their carbon footprint and commitment to sustainability.

Key Actions:

• Supplier Engagement: Collaborate with suppliers to encourage the setting of carbon reduction targets. This might involve providing incentives for suppliers who demonstrate significant efforts to reduce their emissions.
• Customer Collaboration: Work closely with customers who are also prioritising sustainability to create synergies that reduce emissions across the value chain. This can include joint efforts in logistics, product design, and waste management.

By embedding carbon as a critical dimension in supplier and customer relationships, ANZ organisations can ensure that every link in their value chain contributes to their overall sustainability goals.

2. Product Specifications and Solutions: Driving Innovation for Low-Carbon Products

Another crucial dimension of a successful Scope 3 strategy is the reassessment of product specifications and solutions. This involves challenging traditional product designs and material choices to minimise the use of virgin resources and reduce lifecycle emissions.

Key Actions:

• Revisiting Product Formulations: Evaluate and challenge historical product formulations to identify opportunities for reducing material thickness, substituting high-carbon materials, and exploring alternative solutions.
• Developing Low-Carbon Products: Innovate by designing new products with significantly lower lifecycle emissions. This can include using recycled materials, increasing product durability, and designing for end-of-life recyclability.

For organisations in Australia and New Zealand, product innovation not only helps reduce Scope 3 emissions but also positions the company as a leader in sustainability, which is increasingly valued by consumers and investors alike.

3. Partnerships: Collaborating for Decarbonisation

Effective partnerships across the value chain are essential for achieving significant reductions in Scope 3 emissions. By working with other organisations, particularly in sectors that are critical to the supply chain, ANZ companies can drive decarbonisation efforts more effectively.

Key Actions:

• Targeted Partnerships: Establish partnerships with suppliers, customers, and even competitors to co-develop low-carbon product lines. This collaboration can include joint investments in research and development (R&D) and technology aimed at reducing emissions.
• Investing in Innovation: Pool resources with partners to invest in cutting-edge technologies and processes that reduce carbon emissions. This could involve exploring renewable energy options, improving energy efficiency, or developing new materials with lower carbon footprints.

In the ANZ context, where industries like agriculture, mining, and manufacturing play a significant role, such partnerships can be particularly impactful in driving large-scale sustainability initiatives.

4. End-of-Life Solutions: Embracing Circular Economy Principles

A comprehensive Scope 3 emissions strategy must also consider the end-of-life phase of products. By embracing circular economy principles, ANZ organisations can reduce emissions associated with waste and the disposal of products.

Key Actions:

• Recycling and Circular Solutions: Develop and promote recycling programs that allow products to be reused or repurposed at the end of their life. This reduces the need for new raw materials and cuts down on emissions from waste management processes.
• Securing Recycled Materials: Work with suppliers to secure a steady supply of recycled or low-carbon raw materials for use in new products. This not only reduces emissions but also helps mitigate the environmental impact of resource extraction.

Implementing end-of-life solutions is particularly relevant in Australia and New Zealand, where the disposal of waste in remote areas can have significant environmental impacts. By focusing on circular economy practices, companies can turn potential waste into a valuable resource.

5. Green-Portfolio Strategies: Building New Sustainable Business Segments

As part of a Scope 3 emissions strategy, ANZ organisations should consider expanding or creating new business segments focused on sustainability. Green-portfolio strategies involve developing products and services that inherently reduce emissions and meet the growing demand for sustainable options.

Key Actions:

• Developing Green Businesses: Identify and invest in new business segments that align with sustainability goals. This could include renewable energy projects, sustainable agriculture practices, or eco-friendly consumer products.
• Enhancing Existing Capabilities: Leverage existing capabilities to transition traditional products and services into more sustainable offerings. For example, a manufacturing company might shift from producing high-carbon products to those with a lower environmental impact.

For companies in Australia and New Zealand, green-portfolio strategies can provide a competitive edge in markets increasingly driven by environmental consciousness. Moreover, these strategies align with national goals to reduce carbon emissions and promote sustainable development.

6. Value Chain Integration: Enhancing Control Over Emissions

Finally, a successful Scope 3 emissions strategy involves integrating more deeply into the value chain to gain better control over emissions. For ANZ organisations, this could mean expanding operations upstream or downstream to manage the environmental impact more effectively.

Key Actions:

• Upstream Integration: Consider integrating operations with suppliers to ensure that raw materials and components are sourced sustainably. This might involve acquiring or partnering with suppliers who meet strict environmental standards.
• Downstream Integration: Expand into areas of the value chain closer to the consumer, such as distribution and retail, to influence how products are delivered, used, and disposed of. This can help ensure that emissions are managed effectively throughout the product lifecycle.

In the ANZ region, where industries often span vast geographic areas, deeper value chain integration can provide the necessary oversight to achieve significant reductions in Scope 3 emissions.

The Path Forward for ANZ Organisations

As the pressure to address climate change intensifies, Australian and New Zealand organisations must prioritise the development of robust Scope 3 emissions strategies. By focusing on these six key dimensions—supplier and customer selection, product specifications and solutions, partnerships, end-of-life solutions, green-portfolio strategies, and value chain integration—companies can not only reduce their carbon footprints but also drive sustainable growth.

Implementing a successful Scope 3 emissions strategy requires a commitment to innovation, collaboration, and continuous improvement. For ANZ organisations, the journey towards sustainability is not just a regulatory or ethical obligation but a strategic opportunity to lead in a rapidly evolving market. By taking bold actions across these six dimensions, companies can position themselves at the forefront of the global transition to a low-carbon economy.

The time to act is now. With the right strategies in place, Australian and New Zealand organisations can make a significant impact on reducing global emissions, securing their long-term success in a sustainable future.

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‍Contact us today, trace. your supply chain and procurement consulting partner.

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Supply Chain Sustainability Reporting Series by Emma Woodberry

Part 3 – Modern Slavery in the supply chain and reporting obligations

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What is Modern Slavery?

Modern slavery describes a workforce that is exploited during their employment, without an option to leave or refuse due to threats, violence, coercion, deception or abuse of power. It comes in many forms including human trafficking, forced labour, child labour, and debt bondage.

Due to the nature of the work involved in production, processing, packaging and transport of goods, there is a high risk of modern slavery in most supply chains in Australia – these risks vary by industry and are heightened in imported food produce and textiles.

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Modern Slavery Reporting

Modern Slavery reporting helps to hold organisations accountable for their actions and policies, ensuring they are taking steps to prevent and address modern slavery within their operations and supply chains. Australia’s Modern Slavery Act 2018 has encouraged transparency and ethical practices for Australian organisations to help identify patterns and hotspots, which can be targeted for prevention efforts. A recent independent review of the Act has identified key changes that will impact organisations existing reporting, including:

Increased modern slavery due diligence requirements

Requiring organisations to have due diligence processes in place to effectively identify risks in their supply chains through supplier assessment

New mandatory reporting criteria

The threshold for reporting on Modern Slavery risks in the supply chain via a published Modern Slavery statement has been reduced from $100m to $50m annual consolidated revenue

New penalties for non-compliance

Financial penalties are likely to be introduced for failure to comply to with any of The Acts requirements, such as failing to publish a modern slavery statement or failing at having an appropriate due diligence process in place.

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Understanding your supply chain’s risk of Modern Slavery

When looking to understand the level of risk in your supply chain, it’s important to understand the inherent risk based on your industry and types of goods and services you offer. For most Australian operations, the risk is focused on supplier’s supply chains, and depending on where operations are based, transport and logistics processes.

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Given the need for increased due diligence coming into legislation, trace. takes a two-way approach to modern slavery risk assessments:

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1: Assess current maturity in supplier due diligence and risk assessment

- Review internal processes, systems and data used when selecting and onboarding suppliers

- Assess existing risk assessment processes and outcomes to determine effectiveness

- Identify opportunity to uplift and improve due diligence and risk management

2: Identify and assess modern slavery risks within the value chain

Map out the value chain in providing goods and services, including supplier’s supply chains

Assess modern slavery risk by each supplier and identify actions taken to date

Identify improvement opportunities and develop an implementation plan

Develop / update modern slavery statement and publish in line with The Modern Slavery Act 2018

Determine adequate reporting required to ensure ongoing transparency and risk management

Modern Slavery is one element of sustainability reporting for organisations, feeding into broader ESG objectives. You can read more about supply chain sustainability reporting in our first article, and Scope 3 carbon emissions in our second.

Get in touch today to see how we can help you identify the effectiveness of your due diligence processes, or assess your risk for Modern Slavery in the supply chain.

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Emma Woodberry

Senior Manager

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