Performance Measures for Supply Chain Management (back to catalog)

OverviewSample 1Sample 2Sample 3Sample 4Sample 5Sample 6About the Author

...our final "speed" metric is the so-called cash-to-cash cycle, or cash conversion cycle (briefly described in modules SCM101 and SCM104). Here we try to approximate the average time between a company's outlay for materials and labor to build a product and the moment the company gets paid for selling the product. This length of time is approximated by:

Cash-to-Cash Cycle = Inventory
(days' supply)
+ Accounts Receivable
(in days)
 –  Accounts Payable
(in days)

...Recall days of supply of inventory ("days of inventory") from the prior discussion of inventory metrics; this is the average time inventory waits in a warehouse. Accounts receivable is the number of days it takes to collect payment from your customers, and accounts payable is how long you wait to pay your suppliers. For example, if a company had 45 days of inventory, and its accounts receivable were 30 days and its accounts payable were 35 days, then the calculation would be:

Cash-to-Cash Cycle = 45 + 30 – 35 = 40 days

In this case your cash-to-cash cycle is 40 days from the moment you pay for raw materials to the time you get paid from customers...


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SCM105 Specifications

Title: Performance Measures for Supply Chain Management

4.3 / 5  (1199 ratings)

Total Reading Time: Approx. 1 - 2 hours (for average readers)

Word Count: Approx. 11,000 words


Certificate: Counts toward Fundamentals of Supply Chain Management

Datasheet:  Download


  1. Introduction
  2. Alignment of Metrics with Business Strategy
  3. Service Metrics - Build-to-Stock
  4. Service Metrics - Build-to-Stock (continued)
  5. Service Metrics - Build-to-Order
  6. Inventory Metrics
  7. Speed Metrics
  8. Financial Metrics
  9. Bullwhip Metric
  10. "Bad" Metrics
  11. Applying Metrics Across the Entire Supply Chain
  12. Conclusions
  13. Test Your Knowledge
  14. Feedback
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