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,Click to edit master text styles,Second level,IS YOUR SUPPLY CHAIN COMPETITIVE? HOW DO YOU KNOW?,BLAIR R WILLIAMS,Professor and Director, Polytechnic University.,Brooklyn, New York,blairrw 718-260-3835,OBJECTIVES AND OUTLINE,OBJECTIVE:,TO HELP YOU DETERMINE IF YOUR COMPANY HAS A COMPETITIVE SUPPLY CHAIN.,OUTLINE:,ELEMENTS OF A SUPPLY CHAIN,SCOR MODEL AND METRICS,BENCHMARKING,IMPLICATIONS,BEST PRACTICES,INFORMATION SOURCES,DEFINITION OF A SUPPLY CHAIN,A SUPPLY CHAIN COVERS THE FLOW OF MATERIALS, INFORMATION AND CASH ACROSS THE ENTIRE ENTERPRISE,SUPPLY CHAIN MANAGEMENT IS THE INTEGRATED PROCESS OF PLANNING, SOURCING, MAKING AND DELIVERING PRODUCT, FROM RAW MATERIAL TO END CUSTOMER,ELEMENTS -SUPPLY CHAIN MANAGEMENTPLAN-SOURCE-MAKE-DELIVER-MEASURE,SUPPLY CHAIN INFRASTRUCTURE,TRANSFER OF INFORMATION, MATERIALS AND CASH,DEMAND MANAGEMENT,CUSTOMER ORDER MANAGEMENT PROCESS,FORECASTING,CUSTOMER PARTNERSHIPS,SOURCING,SELECTING, QUALIFYING, PARTNERING, MEASURING AND PROVIDING FEEDBACK TO KEY SUPPLIERS,ELEMENTS OF SUPPLY CHAIN MANAGEMENTPLAN-SOURCE-MAKE-DELIVER,SUPPLY OR MANUFACTURING PROCESS,FACTORY SCHEDULING,INVENTORY MANAGEMENT,LEAD TIME REDUCTION,LOGISTICAL PROCESS,TRANSPORTATION, WAREHOUSING, DISTRIBUTION, DELIVERY,GLOBAL PERFOMANCE MEASUREMENTS - SCOR,SUPPLY CHAIN COUNCIL (SCC),SCC IS AN INTERNATIONAL PROFESSIONAL BODY FOR SUPPLY CHAIN MANAGEMENT (SCM) SYSTEMS AND PRACTICES,DEVELOPED AND ENDORSED THE,SCOR,(SUPPLY CHAIN OPERATIONS REFERENCE MODEL) AS A CROSS INDUSTRY STANDARD FOR SCM,SPECIAL INDUSTRY GROUPS,AEROSPACE AND DEFENCE,COMPUTERS & ELECTRONICS EQUIPMENT,PHARMACEUTICALS & CHEMICALS,UTILITIES - TELECOMMUNICATIONS,RETAIL - CONSUMER PACKAGED GOODS,DEFENSE AND INDUSTRIAL,SEMICONDUCTORS,SCOR MODEL,BUSINESS PROCESS REENINEERING,AS IS TO TO BE,METRICS,BENCHMARKING,IMPLICATIONS,BEST PRACTICE ANALYSIS,PROCESS REFERENCE MODEL,BASED ON BEST IN CLASS RESULTS,CHARACTERIZE MANAGEMENT PRACTICES,IDENTIFY SOFTWARE SOLUTIONS,LEVEL I METRICS,DELIVERY PERFORMANCE,PERFECT ORDER FULFILLMENT,PRODUCTION FLEXIBILITY,TOTAL SUPPLY CHAIN MANAGEMENT COST,MATERIAL ACQUISITION COST,CASH TO CASH CYCLE TIME,TOTAL INVENTORY DAYS OF SUPPLY,ASSET TURNS,LEVEL I METRICS,DELIVERY PERFORMANCE - %,THE PERCENTAGE OF ORDERS THAT ARE FULFILLED ON OR BEFORE THE CUSTOMERS REQUESTED DATE,LEVEL I METRICS,PERFECT ORDER FULFILLMENT - %,DELIVERED COMPLETE WITH ALL ITEMS ON THE ORDER IN THE QUANTITY REQUESTED,DELIVERED ON TIME TO CUSTOMERS REQUEST DATE,DELIVERED IN PERFECT CONDITION WITH THE CORRECT CONFIGURATION AND COMPLETE & ACCURATE DOCUMENTATION,LEVEL I METRICS,PRODUCTION FLEXIBILITY - DAYS,THE NUMBER OF DAYS REQUIRED TO ACHIEVE AN UNPLANNED, SUSTAINABLE 20% INCREASE IN PRODUCTION,LEVEL I METRICS,TOTAL SUPPLY CHAIN MANAGEMENT COST - $s,SUM OF COSTS OF:,ORDER MANAGEMENT,MATERIALS ACQUISITION,INVENTORY CARRYING,SUPPLY CHAIN - FINANCE, PLANNING AND MIS,LEVEL I METRICS,MATERIAL ACQUISITION COST - $s,SUM OF COSTS TO MANAGE:,COMMODITY MANAGEMENT & PLANNING,SUPPLIER QUALITY ENGG.,INBOUND FREIGHT & DUTIES,RECEIVING AND MATERIAL STORAGE,INCOMING INSPECTION,MATERIAL PROCESS ENGG. & TOOLING,LEVEL I METRICS,CASH TO CASH CYCLE TIME - DAYS,THE NUMBER OF DAYS BETWEEN PAYING FOR RAW MATERIALS AND GETTING PAID FOR PRODUCT, AS CALCULATED BY:,INVENTORY DAYS OF SUPPLY,PLUS,DAYS OF SALES OUTSTANDING (RECEIVABLES),MINUS,AVERAGE PAYMENT PERIOD FOR MATERIAL (PAYABLES),C to CC TIME = INV DAYS + DAYS REC DAYS PAY,LEVEL I METRICS,TOTAL INVENTORY DAYS OF SUPPLY,(THE AVERAGE COST OF INVENTORY DIVIDED BY THE COST OF GOODS SOLD) TIMES 365,TOTAL INVENTORY DAYS SUPPLY,=,INVENTORY,x 365,COGS,LEVEL I METRICS,ASSET TURNS NUMBER,TOTAL REVENUE DIVIDED BY TOTAL ASSETS,=,TOTAL REVENUE,TOTAL ASSETS,BENCHMARKING AND BEST PRACTICES,DELIVERY PERFORMANCE TO REQUEST,%,(8/2000),BIC Aver Median,Pharmas and Chemical98.978.491.9,Computers82.856.458.8,Consumer Packaged Goods98.472.384.4,Defense and Industrial98.069.471.7,Electronic Equipment97.467.674.2,Semiconductors84.562.064.8,Telecommunications94.863.472.6,DELIVERY PERFORMANCE TO REQUEST %,RANGE 62% TO 98%,( 20 to 30 % points per Industry Group),IMPLICATIONS,MOST FUNDAMENTAL MEASUREMENT OF CUSTOMER SATISFACTION,INDICATES HOW WELL THE SUPPLY CHAIN IS CONFIGURED & INTEGRATED,DELIVERY PERFORMANCE TO REQUEST %,BEST PRACTICES,ORDER TRACKING SYSTEMS TO COMPARE,REQUESTED VS,ACTUAL,DATES AT LINE ITEM LEVEL,DEMAND VISIBILITY TO SUPPLIERS,CONSOLIDATION, PACKING AND DELIVERY OUTSOURCED.,DELIVERY DIRECTLY TO CUSTOMER POINT OF USE,ON LINE ATP AND ORDER STATUS AVAIL TO CUSTOMER,BENCHMARKING AND BEST PRACTICES,UPSIDE PRODUCTION FLEXIBILITY,(8/2000),DAYS,BICAverMedian,Pharmas and Chemical18.4229.3120,Computers9.753.438.5,Consumer Packaged Goods9.4144.860.0,Defense and Industrial16.796.136.0,Electronic Equipment9.073.360.0,Semiconductors30.0188.5175.0,Telecommunications9.641.730.0,UPSIDE PRODUCTION FLEXIBILITY Days,RANGE 9 to 230 DAYS,(6 to 10 times within Industry Group),IMPLICATIONS ,MEASURE OF COMPANYS SUPPLY FLEXIBILIY,INCREASE IN PRODUCTION WITHOUT CAPITAL INVESTMENT,UPSIDE PRODUCTION FLEXIBILITY Days,BEST PRACTICES,EFFECTIVE SUPPLIER PARTNERSHIPS,SYNCHRONIZING OPERATIONS ACROSS THE COMPANY TO REDUCE RAMP TIME,HIGH PERFORMANCE MANUFACTURING TECHNIQUES DEMAND PULL, CELLULAR MFG, MULTI SKILLED FORCE,BUILD/CONFIGURE TO ORDER MODULAR DESIGN,BENCHMARKING AND BEST PRACTICES,TOTAL SUPPLY CHAIN MANAGEMENT COSTS,(8/2000),% OF REVENUE,BICAverMedian,Pharmas and Chemical5.010.311.2,Computers4.39.48.4,Consumer Package Goods4.111.39.1,Defense and Industrial3.29.48.9,Electronic Equipment5.111.411.4,Semiconductors,Telecommunications3.78.68.2,TOTAL SUPPLY CHAIN MANAGEMENT COSTS % OF REVENUE,RANGE 3 to 11%,( double within Industry Groups),IMPLICATIONS ,1 BILLION DOLLAR COMPANY WILL,SAVE,$50 million (5%) PER YEAR, IN SUPPLY CHAIN MANAGEMENT COSTS, OVER THEIR COMPETITION,TOTAL SUPPLY CHAIN MANAGEMENT COSTS % OF REVENUE,BEST PRACTICES,SCM VIEWED AS CRITICAL PROCESS AND INTEGRATED INTO BUSINESS PLANNING PROCESS,SINGLE EXECUTIVE OVERALL RESPONSIBILITY,ON LINE EDI AND PURCHASING,PAY ON RECEIPT (ELIMINATE RECONCILIATION OF INVOICES),BENCHMARKING AND BEST PRACTICES,MATERIAL ACQUISITION COST 1996,% OF REVENUE,BICAverMedian,Pharmas and Chemical 0.51.3,Computers & Electronics1.01.7,Consumer Package Goods1.11.7,Defense and Industrial1.02.6,Semiconductors0.51.3,Telecommunications1.01.9,Automotive1.83.5,MATERIAL ACQUISITION COST % OF REVENUE,RANGE ,0.4 to 3.5%,(double across industry groups),IMPLICATION ,A 1 BILLION $ CO.,SAVES,$10 MILLION (1%) PER YEAR IN MATERIAL BUYING COSTS PURCHASING, QUALITY AND DEVELOPMENT,MATERIAL ACQUISITION COST % OF REVENUE,BEST PRACTICES ,SUPPLIER PARTNERSHIPS,KEY SUPPLIERS ON PRODUCT DEVELOPMENT TEAMS,CERTIFIED SUPPLIERS DELIVER AT POINT OF USE,COMMODITY TEAMS FOCUS ON STRATEGIC PROCUREMENT ISSUES,BENCHMARKING AND BEST PRACTICES,CASHtoCASH CYCLE TIME (8/2000),DAYS,BIC,AverMedian,Pharmas and Chemical31.3120.296.8,Computers27.562.151.5,Consumer Package Goods 19.977.063.6,Defense and Industrial20.870.367.1,Electronic Equipment31.6116.3103.1,Semiconductors49.4110.3104.5,Telecommunications19.490.585.8,CASHtoCASH CYCLE TIME - DAYS,RANGE 20 to 120 days,( 2 to 4 times within Industry Groups),IMPLICATIONS ,50% TO 75% OF WORKING CAPITAL BECOMES AVAILABLE TO COMPANIES TO INVEST,CASHtoCASH CYCLE TIME - DAYS,BEST PRACTICES,CASH-RELEASE AGREEMENT FOR BLANKET ORDERS,THIRD PARTY RECONCILIATION AND PAYMENT OF RECEIVABLES,ABILITY TO MAINTAIN LOWER INVENTORY,LEVELS,BENCHMARKING AND BEST PRACTICES,INVENTORY DAYS OF SUPPLY,(BIC&Median96, Av.98),DAYS,BICAver Median,Pharmas and Chemical102120160,Chemical375460,Computers313876,Consumer Packaged Goods72,Defense and Industrial558085,Electronic Equipment3177,Semiconductors4976,Telecommunications508095,INVENTORY DAYS OF SUPPLY - DAYS,RANGE 20 to 120 days,(3 to 4 times within Industry Groups),IMPLICATIONS,FOR A 1 BILLION $ CO., WITH COGS OF 500 MILLION, DIFFERENCE OF 50 DAYS IS $100 MILLION!,SUPPLIERS SELECTED ON TOTAL COST OF OWNERSHIP (TCO), NOT JUST PURCHASE PRICE,INVENTORY DAYS OF SUPPLY - DAYS,BEST PRACTICES,AUTO REPLENISHMENT Ex. VMI,VISIBILITY OF DEMAND TO ALL KEY PARTICIPANTS IN SUPPLY CHAIN,CAPACITY AND SUPPLY CONSTRAINTS IDENTIFIED AND MANAGED,PRODUCT DESIGN INCLUDES PART STANDARDIZATION, CONFIGURABILITY, END OF LIFE MANAGEMENT,SOURCES OF INFORMATION,PRTN Insight Magazine,Supply Chain Council and SCOR - Publications,Arthur Andersen Knowledge Space,Performance Measurement Group Dimensions News,SUMMARY OF WHAT WE COVERED,IDENTIFIED SCOR METRICS,DEFINED HOW THE METRICS WERE CALCULATED,BENCHMARKED THE METRICS BY INDUSTRY GROUPING BY BIC, MEDIAN, AVERAGE, WIC,LOOKED AT THE IMPLICATIONS OF THE DIFFERENCES,COVERED SOME BEST PRACTICES,NEXT STEPS,CLASSIFY YOUR COMPANY IN AN INDUSTRY GROUP (CHECK SCC ON WEB),CALCULATE YOUR COMPANYS PERFORMANCE IN THE LEVEL I METRICS,PLOT WHERE YOUR COMPANY IS,ARE YOU COMPETITIVE?,NOW YOU KNOW!,INFORMATION,THANK YOU,MORE INFORMATION,email,BLAIR WILLIAMS,blairrw,
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