Our supply chain and procurement manager is focused on keeping inventory costs down, but we are frequently running out of key materials, which delays production. How do we design weekly Scorecard metrics to balance inventory costs with production needs?

Question

Tyler Smith · Accepted Answer

Procurement is a delicate balancing act. If you focus solely on keeping inventory costs down, you run the risk of stockouts. If you focus only on production, you end up with too much tied-up capital. You need metrics that balance both.

Your procurement manager should own metrics that track both efficiency and reliability:
- Inventory turnover ratio: This tracks how quickly your stock is sold or used over a specific period.
- Supplier on-time delivery rate: Track the percentage of purchase orders delivered on time by your vendors.
- Critical stockout incidents: Track the number of times production was delayed due to missing materials.

These metrics force your procurement manager to focus on both cost and reliability. They help you maintain the right amount of inventory to keep production running smoothly without tying up too much cash.