Final answer:
On-time performance, productivity, and labor costs are key KPIs used to measure the efficiency and effectiveness of a company's supply chain. On-time performance assesses delivery punctuality, productivity measures resource utilization, and labor costs determine workforce-related expenses.
Step-by-step explanation:
Key Performance Indicators (KPIs) are crucial for gauging the efficiency and effectiveness of a company’s supply chain. Two significant KPIs to consider are on-time performance and productivity. On-time performance is essential for maintaining the reliability of the supply chain, ensuring that goods reach their destinations as scheduled. It indicates the percentage of shipments delivered within the set time frames, reflecting the supply chain’s punctuality and time management.
Productivity, on the other hand, determines how efficiently resources, including labor and production inputs, are being used to produce an output. Higher productivity in the supply chain often translates to lower costs and higher output, making it a vital KPI. Enhanced productivity can often be achieved through technological advancements, improved transportation methods, and strong labor policies that respect labor rights while promoting efficiency.
Another critical aspect is labor costs, which involves tracking the expenses associated with workforce management within the supply chain. Monitoring labor costs helps ensure that the labor force is efficiently utilized while also contributing to the overall financial performance of the company. These KPIs help managers focus on areas that directly influence the bottom line, rather than transitory elements that may affect individual employees but not the firm’s production capacity and profitability.