What defines key performance indicators (KPIs) in supply chain management?

Key performance indicators (KPIs) in supply chain management are defined as measurable values that demonstrate how effectively a supply chain is performing in relation to its objectives. KPIs are critical for assessing the efficiency and effectiveness of various supply chain processes, such as inventory management, order fulfillment, and delivery performance.

The use of measurable values allows organizations to track their progress over time, identify areas needing improvement, and make informed decisions to optimize supply chain operations. By focusing on specific metrics, businesses can align their supply chain performance with strategic goals, ensuring they meet customer expectations, reduce costs, and improve overall service levels.

In contrast, financial ratios evaluate the financial health of a business rather than specific supply chain activities. Employee performance metrics typically focus on individual staff productivity rather than supply chain processes as a whole. Market share statistics provide an understanding of a company's position in the industry but do not directly measure supply chain effectiveness. Overall, the essence of KPIs is that they are tailored to quantify performance in supply chain contexts specifically.