IS YOUR SUPPLY CHAIN COMPETITIVE? HOW DO YOU KNOW?,BLAIR R WILLIAMS Professor and Director, Polytechnic University. Brooklyn, New York blairrwatt.net 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 ENTERPRISESUPPLY CHAIN MANAGEMENT IS THE INTEGRATED PROCESS OF PLANNING, SOURCING, MAKING AND DELIVERING PRODUCT, FROM RAW MATERIAL TO END CUSTOMER,ELEMENTS -SUPPLY CHAIN MANAGEMENT PLAN-SOURCE-MAKE-DELIVER-MEASURE,SUPPLY CHAIN INFRASTRUCTURETRANSFER 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 MANAGEMENT PLAN-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 PRACTICESDEVELOPED 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 & PLANNINGSUPPLIER 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 365TOTAL INVENTORY DAYS SUPPLY= INVENTORY x 365COGS,LEVEL I METRICS,ASSET TURNS NUMBERTOTAL REVENUE DIVIDED BY TOTAL ASSETS = TOTAL REVENUETOTAL ASSETS,BENCHMARKING AND BEST PRACTICES,DELIVERY PERFORMANCE TO REQUEST % (8/2000)BIC Aver Median Pharmas and Chemical 98.9 78.4 91.9 Computers 82.8 56.4 58.8 Consumer Packaged Goods 98.4 72.3 84.4 Defense and Industrial 98.0 69.4 71.7 Electronic Equipment 97.4 67.6 74.2 Semiconductors 84.5 62.0 64.8 Telecommunications 94.8 63.4 72.6,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)DAYSBIC Aver Median Pharmas and Chemical 18.4 229.3 120 Computers 9.7 53.4 38.5 Consumer Packaged Goods 9.4 144.8 60.0 Defense and Industrial 16.7 96.1 36.0 Electronic Equipment 9.0 73.3 60.0 Semiconductors 30.0 188.5 175.0 Telecommunications 9.6 41.7 30.0,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,