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ISYOURSUPPLYCHAINCOMPETITIVE?HOWDOYOUKNOW?BLAIRRWILLIAMSProfessorandDirector,PolytechnicUniversity.Brooklyn,[e-mail]718-260-3835OBJECTIVESANDOUTLINEOBJECTIVE:TOHELPYOUDETERMINEIFYOURCOMPANYHASACOMPETITIVESUPPLYCHAIN.OUTLINE:ELEMENTSOFASUPPLYCHAINSCORMODELANDMETRICSBENCHMARKINGIMPLICATIONSBESTPRACTICESINFORMATIONSOURCESDEFINITIONOFASUPPLYCHAINASUPPLYCHAINCOVERSTHEFLOWOFMATERIALS,INFORMATIONANDCASHACROSSTHEENTIREENTERPRISESUPPLYCHAINMANAGEMENTISTHEINTEGRATEDPROCESSOFPLANNING,SOURCING,MAKINGANDDELIVERINGPRODUCT,FROMRAWMATERIALTOENDCUSTOMERELEMENTS-SUPPLYCHAINMANAGEMENTPLAN-SOURCE-MAKE-DELIVER-MEASURE•SUPPLYCHAININFRASTRUCTURE•TRANSFEROFINFORMATION,MATERIALSANDCASH•DEMANDMANAGEMENT•CUSTOMERORDERMANAGEMENTPROCESS•FORECASTING•CUSTOMERPARTNERSHIPS•SOURCING•SELECTING,QUALIFYING,PARTNERING,MEASURINGANDPROVIDINGFEEDBACKTOKEYSUPPLIERSELEMENTSOFSUPPLYCHAINMANAGEMENTPLAN-SOURCE-MAKE-DELIVERSUPPLYORMANUFACTURINGPROCESSFACTORYSCHEDULINGINVENTORYMANAGEMENTLEADTIMEREDUCTIONLOGISTICALPROCESSTRANSPORTATION,WAREHOUSING,DISTRIBUTION,DELIVERYGLOBALPERFOMANCEMEASUREMENTS-SCORSUPPLYCHAINCOUNCIL(SCC)SCCISANINTERNATIONALPROFESSIONALBODYFORSUPPLYCHAINMANAGEMENT(SCM)SYSTEMSANDPRACTICESDEVELOPEDANDENDORSEDTHESCOR(SUPPLYCHAINOPERATIONSREFERENCEMODEL)ASACROSSINDUSTRYSTANDARDFORSCMSPECIALINDUSTRYGROUPSAEROSPACEANDDEFENCECOMPUTERS&ELECTRONICSEQUIPMENTPHARMACEUTICALS&CHEMICALSUTILITIES-TELECOMMUNICATIONSRETAIL-CONSUMERPACKAGEDGOODSDEFENSEANDINDUSTRIALSEMICONDUCTORSSCORMODELBUSINESSPROCESSREENINEERING‘ASIS’TO‘TOBE’METRICSBENCHMARKINGIMPLICATIONSBESTPRACTICEANALYSISPROCESSREFERENCEMODELBASEDON‘BESTINCLASS’RESULTSCHARACTERIZEMANAGEMENTPRACTICESIDENTIFYSOFTWARESOLUTIONSLEVELIMETRICSDELIVERYPERFORMANCEPERFECTORDERFULFILLMENTPRODUCTIONFLEXIBILITYTOTALSUPPLYCHAINMANAGEMENTCOSTMATERIALACQUISITIONCOSTCASHTOCASHCYCLETIMETOTALINVENTORYDAYSOFSUPPLYASSETTURNSLEVELIMETRICSDELIVERYPERFORMANCE-%THEPERCENTAGEOFORDERSTHATAREFULFILLEDONORBEFORETHECUSTOMER’SREQUESTEDDATELEVELIMETRICSPERFECTORDERFULFILLMENT-%DELIVEREDCOMPLETEWITHALLITEMSONTHEORDERINTHEQUANTITYREQUESTEDDELIVEREDONTIMETOCUSTOMER’SREQUESTDATEDELIVEREDINPERFECTCONDITIONWITHTHECORRECTCONFIGURATIONANDCOMPLETE&ACCURATEDOCUMENTATIONLEVELIMETRICSPRODUCTIONFLEXIBILITY-DAYSTHENUMBEROFDAYSREQUIREDTOACHIEVEANUNPLANNED,SUSTAINABLE20%INCREASEINPRODUCTIONLEVELIMETRICSTOTALSUPPLYCHAINMANAGEMENTCOST-$’sSUMOFCOSTSOF:ORDERMANAGEMENTMATERIALSACQUISITIONINVENTORYCARRYINGSUPPLYCHAIN-FINANCE,PLANNINGANDMISLEVELIMETRICSMATERIALACQUISITIONCOST-$’sSUMOFCOSTSTOMANAGE:COMMODITYMANAGEMENT&PLANNINGSUPPLIERQUALITYENGG.INBOUNDFREIGHT&DUTIESRECEIVINGANDMATERIALSTORAGEINCOMINGINSPECTIONMATERIALPROCESSENGG.&TOOLINGLEVELIMETRICSCASHTOCASHCYCLETIME-DAYSTHENUMBEROFDAYSBETWEENPAYINGFORRAWMATERIALSANDGETTINGPAIDFORPRODUCT,ASCALCULATEDBY:INVENTORYDAYSOFSUPPLYPLUSDAYSOFSALESOUTSTANDING(RECEIVABLES)MINUSAVERAGEPAYMENTPERIODFORMATERIAL(PAYABLES)CtoCCTIME=INVDAYS+DAYSREC–DAYSPAYLEVELIMETRICSTOTALINVENTORYDAYSOFSUPPLY(THEAVERAGECOSTOFINVENTORYDIVIDEDBYTHECOSTOFGOODSSOLD)TIMES365TOTALINVENTORYDAYSSUPPLY=INVENTORYx365COGSLEVELIMETRICSASSETTURNS–NUMBERTOTALREVENUEDIVIDEDBYTOTALASSETS=TOTALREVENUETOTALASSETSBENCHMARKINGANDBESTPRACTICESDELIVERYPERFORMANCETOREQUEST%(8/2000)BICAverMedianPharmasandChemical98.978.491.9Computers82.856.458.8ConsumerPackagedGoods98.472.384.4DefenseandIndustrial98.069.471.7ElectronicEquipment97.467.674.2Semiconductors84.562.064.8Telecommunications94.863.472.6DELIVERYPERFORMANCETOREQUEST%RANGE–62%TO98%(20to30%pointsperIndustryGroup)IMPLICATIONSMOSTFUNDAMENTALMEASUREMENTOFCUSTOMERSATISFACTIONINDICATESHOWWELLTHESUPPLYCHAINISCONFIGURED&INTEGRATEDDELIVERYPERFORMANCETOREQUEST%BESTPRACTICESORDERTRACKINGSYSTEMSTOCOMPAREREQUESTEDVSACTUALDATESATLINEITEMLEVELDEMANDVISIBILITYTOSUPPLIERSCONSOLIDATION,PACKINGANDDELIVERYOUTSOURCED.DELIVERYDIRECTLYTOCUSTOMERPOINTOFUSEONLINEATPANDORDERSTATUSAVAILTOCUSTOMERBENCHMARKINGANDBESTPRACTICESUPSIDEPRODUCTIONFLEXIBILITY(8/2000)DAYSBICAverMedianPharmasandChemical18.4229.3120Computers9.753.438.5ConsumerPackagedGoods9.4144.860.0DefenseandIndustrial16.796.136.0ElectronicEquipment9.073.360.0Semiconductors30.0188.5175.0Telecommunications9.641.730.0UPSIDEPRODUCTIONFLEXIBILITYDaysRANGE–9to230DAYS(6to10timeswithinIndustryGroup)IMPLICATIONS–MEASUREOFCOMPANY’SSUPPLYFLEXIBILIYINCREASEINPRODUCTIONWITHOUTCAPITALINVESTMENTUPSIDEPRODUCTIONFLEXIBILITYDaysBESTPRACTICESEFFECTIVESUPPLIERPARTNERSHIPSSYNCHRONIZINGOPERATIONSACROSSTHECOMPANYTOREDUCERAMPTIMEHIGHPERFORMANCEMANUFACTURINGTECHNIQUES–DEMANDPULL,CELLULARMFG,MULTISKILLEDFORCEBUILD/CONFIGURETOORDER–MODULARDESIGNBENCHMARKINGANDBESTPRACTICESTOTALSUPPLYCHAINMANAGEMENTCOSTS(8/2000)%OFREVENUEBICAverMedianPharmasandChemical5.010.311.2Computers4.39.48.4ConsumerPackageGoods4.111.39.1DefenseandIndustrial3.29.48.9ElectronicEquipment5.111.411.4SemiconductorsTelecommunications3.78.68.2TOTALSUPPLYCHAINMANAGEMENTCOSTS%OFREVENUERANGE–3to11%(doublewithinInd