Description
This is a presentation on measuring performance of a supply chain.
Supply Chain Performance Measures
Click to edit Master subtitle style
Importance of SC Metrics
?Identify avenues for improvement in SC. ?Evaluate the impact of SC projects on
bottom line.
?Increasing chances of convincing top
management.
What is Benchmarking
?Qualitative Benchmarking ?Comparing best practices among organizations. ?Quantitative Benchmarking ?Comparing levels of measured performance. ?Assessment of Performance Gaps. ?Competitive Benchmarking ?Quantitative Benchmarking between companies. ?Identifies superior relative performance.
3
SCOR Benchmarking - Presentation
How to Measure Performance in Real Life
?Financial statements of annual reports. ?Databases such as Prowess (CMIE) in Indian and
COMPUSTAT in USA.
?Professional entities like supply chain council can
provide information to its members.
?Intuitive and logical Methods. ?ERP and other data management systems.
Inventory Metrics
?Raw Material Inventory (in Days) ?Work in Process Inventory (in Days) ?Finished Goods Inventory (in Days) ?Length of Internal Supply Chain (in Days) ?Inventory Turnover
Calculate Raw Material /FG Inventory in Days
= ?RM Inventory ?(in Days) FG Invento ry In Days = Average RM Inventory x365 Cost of raw material for a year Average FG Inventory x365 Cost of FG for a year
Length of internal supply chain
?On average , how much time the
material stays in the internal supply chain.
?Length of internal supply chain = RM
+ WIP+ FG Inventory (in Days) Inv in RM WIP FG Channel
Days(2001)
HUL Godrej
53 50
2 16
25 23
75 110
Identify appropriate SC for the business situations in 2008 in Paint Industry
SC Stage Company A Company B Company C 55 11 29 62 4 43
Raw Material40 Work in Process Finished Inv 14 42
Inventory Turnover Ratio
How many times the firm sells its inventory Intuitively Which is better ? Higher or lower inventory turnover ratio
Inventory Turnover of Few Selected Firms
Food Worst 1.2 Textile Machinery Metal 1.9 5.3 45.2 1.2 5.5 17.1 2.5 5.5 42.5
Average 4.0 Best 31.0
Financial Measures
?Supply Chain Costs ?Working Capital ?Return on Assets
Internal Supply Chain Costs
Costs + Inventory holding costs
?Supply Chain Inefficiency Ratio ?= Internal SC costs/ Net Sales * 100
?Internal Supply Chain Costs = Distribution
Working Capital
Accounts Payable and Receivables
?Accounts Payable is the money that the firm
owes to its suppliers and service providers.
?Accounts Receivable is the money that the
firm gets from its customers.
Working Capital
?Working Capital = Inventory + Accounts
Receivable – Accounts Payable.
?Working Capital Productivity = ?Net Sales / Working Capital
HUL : Working Capital Management
1991
Financial year Raw Materials & SparesDays
1993
1995
1997
1999
2001
2003
2005
80
WIP-days
77 13 40 15 85 60
62 6 35 14 89 28
48 3 27 6 75 9
53 2 26 7 83 5
53 2 25 11 97 -6
60 3 29 14 115 -9
65 2 23 15 110 -5
17 32 14 73 69
Finished Goods-days
Average Debtor days
Average Creditor -days
Net WC Cycle-days
National Dairy Development Board – pays farmers the next day after the Successful milk procurement
Financial Distribution Strategy and Lost Sales
Account Inventory Lost Sales Bad Debts Receivable High Low Low High High Low
Customer Service
?Order Lead Time ?Delivery Reliability ?Case Fill Rate ?Line Fill Rate ?Out of Stock
Order Lead Time
?Time elapsed between the receipt of the
customer order and delivery of goods to the customer.
How much is customer order lead time for FMCG supply chains ?
Delivery Reliability
?Fraction of customer orders that are
successfully delivered to the customer’s premises within the promised lead time. order supply chains!
?Becoming extremely important in make to ?What would be the cost of delay of one day
for Boeing supplier ?
Case Fill/Line Fill
Case Fill: Ratio of Total Number of cases supplied to Total Number of Cases Ordered. This can be done basis PO, Customer, and Date range. Line Fill: No. Of SKUs which were supplied in full or partial in a P.O. or per Distributor or for a date PO Number range Distributor Name Date Depot SKU No. Ordered Qty
(Cases) Dist 23 REL1232 12-Apr-2007 Jaipur 700077 700083 ADBT891 18-Apr-2007 Bhiwandi 700085 700089 Total 100 70 60 120 350
Supplied Qty (Cases) 80 45 60 0 185
Case Fill (for Dist 23) = Supplied Qty in Cases / Order Qty in Cases = 185/350 = 52.86% Line Fill (SKU Fill) Dist 23: 3 out of 4 SKUs were either supplied in Full or Partial. Hence Line Fill for Dist 23 is 3/4 = 75%
?Supply chain has taken a target of case fill
Case/line fill improvement at Marico
improvement
?Idea is to reserve stocks for Modern trade
supplies
?Tracking is done at PO level
?Work also done on improving sales forecasts to
Out of Stock
?Fraction of time the product is not
available on the shelf. 8.3%.
?average out of stock for retail stores is
?72% of the root causes could be found in
the store
?lost or misplaced inventory ?poor shelving or storage systems ?inadequate or erroneous stock measurement.
SCOR Model
The SCOR® model – an industry open standard
? SCOR is a supply chain process reference model
containing process elements, metrics, and best practices including risk and environmental management ? Organized around the five primary management processes of Plan, Source, Make, Deliver and Return ? Any interested organization can participate in its continual development
Plan
Deli ver Retur n
Sour ce Retur n
Mak e
Delive r Retur n
Source Return
Make
Deliv er Return
Sour ce Retur n
Mak e
Deli ver Retur n
Sour ce Retur n
Suppliers’ Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customer’ s Customer
26
SCOR Benchmarking - Presentation
SCOR Processes
Level 1
Scope
SupplyChain Source
Level 2
Configuration
S1 Source Stocked Product
Level 3
Activity
S1.2 Receive Product
Level 4
Workflow
Level 5
Transactions
ED I X ML
Differentiates Business
Differentiates Complexity
Names Tasks Sequences Steps Links, Metrics, Job Details Tasks and Practices Framework Language Industry or Company Specific Language
Links Transactions Details of Automation
Defines Scope Differentiates Capabilities
Framework Language
Framework Language
Technology Specific Language
27
Standard SCOR definitions SCOR Benchmarking - Presentation
Company/Industry
Performance Metrics
?SCOR metrics: Standard Strategic (Level 1) Metrics Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability† Cost Supply Chain Management Cost Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed † upside and downside adaptability metrics Assets
Return on Working Capital
28 SCOR Benchmarking - Presentation
Intern al
Custo mer
Developing SCORCARD
Philosophy ?You need to have the most data where performance is most critical ?You need to have least data where performance is least critical
For Every Select Superior Advantage
Parity
Level 1 Metric Level 1 Metric Level 1 Metric andLevel 2 Metric Level 2 Metric andLevel 3 Metric
29
SCOR Benchmarking - Presentation
A Metrics Architecture
Supply-Chain SCORcard Reliability Reliability Reliability Reliability Reliability Ext ern al Reliability Reliability Reliability Reliability Reliability Reliability Reliability S/A/P
S
Level-1 Metric
Perfect Order Fulfillment
Level-2 Metric
Level-3 Metric
Summary
Perfect Order Fulfilment % Orders Delivered in Full
% Orders Delivered in Full Delivery Performance to Commit Date Accurate Documentation
Delivery Item Accuracy Delivery Item Accuracy Delivery Quantity Accuracy Delivery Quantity Accuracy Delivery Performance to Commit Date Date Achievement Location Achievement Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Perfect Condition % Orders Received Damage-Free
Date Achievement Location Achievement Shipping Documentation Accuracy Billing Documentation Accuracy % Orders Received Damage-Free
Perfect Condition
30
SCOR Benchmarking - Presentation
Metrics Selection
Supply-Chain SCORcard Responsivene ss Responsivene ss Ext Responsivene ern ss al Responsivene ss Flexibility Cost Assets Inte rnal Assets Assets Assets
P P A Upside Supply-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
S/A/P
A
Level-1 Metric
Order Fulfilment Cycle Time
Level-2 Metric
Level-3 Metric
Summary
Order Fulfillment Cycle Time
Source Cycle Time Make Cycle Time Deliver Cycle Time
Source Cycle Time Make Cycle Time Deliver Cycle Time Upside Supplly-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
31
SCOR Benchmarking - Presentation
Planning Data Gathering: Sources of Data
? Financial Data
? Company Annual Reports, Cost Center Reports ? Must be Verified by Financial Team (Controller)
? Non-Financial Data
? Customers
Delivery Performance ? Total Cycle-Time Performance ? IT Systems ? Process-to-Process Transactions ? Planning System Parameters (Lead Times) ? Suppliers ? 3PL Providers
?
32
SCOR Benchmarking - Presentation
Data Gathering Plan
? Consider where the transactions may be ? Look at who owns the data ? Organize to alert data owners to gather data ? Collect and assess Data Quality
Metric
Process
Owner Logistics 3PL Provider
Due Date 2/2/2008 2/15/2008 2/22/2008
Status Complete 50% Collected Not started
On-Time Delivery D1.16 Undamaged D1.17
Order Fulfillment D1.1 – D1.17 Deliver Team Cycle Time Etc…
33 SCOR Benchmarking - Presentation
Creating the SCORcard
?Based on average data averaged over many
samples ?Comes from root transactions, not aggregates ?Six-Sigma team support a big help
Attribute SAP Metric (level 1) You Parity Adv Superior Gap
Reliability
S
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
97%
Response
A
14 days
Flexibility
P
62 days
Cost
P
12.2%
Assets
34
A
35 days
SCOR Benchmarking - Presentation
Interpreting the Data
? Used for choosing target performance ? Critical to understand Performance in a particular Demographic ? Can be “internal” (competing against other supply chains in
same company) ? Aligns Strategy, Performance, and Performance Goals
Attribute SAP Metric (level 1) You Parity Adv Superior
Gap
Reliability
S
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
97%
92%
95%
98%
1%
Response
A
14 days
8 days
6 days
4 days
8 Days
Flexibility
P
62 days
80 days
60 days
40 days
0
Cost
P
12.2%
10.8%
10.4%
10.2%
1.4%
Assets
35
A
35 days
45 days
33 days
20 days
2 Days
SCOR Benchmarking - Presentation
Supply Chain Council: An independent, non-profit global association
? Formed in 1996 to create and evolve a standard for the
supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations accepted framework – the SCOR® process reference model – for evaluating and comparing supply chain activities and their performance about how companies are capitalizing on those tools
? SCC has established the supply chain world’s most widely
? SCC continually advances its tools and educates members
? With membership open to all interested organizations
36
SCOR Benchmarking - Presentation
Comprehensive Financial Models
Comprehensive Financial Model
?Economic Value Added Model : ?= Net Operating Profit After Tax – ? Cost of Capital x Capital Employed.
?Developed by Stern and Stewart Company ?Calculates the net value generated by the
firm for its shareholders
Economic Value Added Model
Four Perspectives of BSC
?Customer Perspective
?Customer Retention, Customer Value
?Internal Business Perspective
?Cost, Quality and Time Measures
?Innovation and Learning Perspective
cycle time
?% of sales from new products, new product
?Financial Perspective
?Working capital, return on assets
Customer Perspective
? Number of customer contact points is a measure of
service quality. If there are numerous possible contact points exist at each link in SC potential for miscommunication, waste, and delayed response increases. to compare one SC to respond time to a customer order to the time and competing SC respond time. can be used to assess how the customer perceives the relationship between customization and response time.
? Relative customer order response time is a measure
? The Customer perception of flexible response measure
? Customer value ratio (CVR)= survey measure/cost per
order ? For Example: If the average survey response is 4.2 and
Business Process Perspective
? The SC cost of ownership measure captures the costs across the SC associated with
purchasing, holding inventory, poor quality, and delivery failure
? The SC cycle efficiency = Total value added time/total time in the SC. For example: if the
total value?added time is 10 days and the total time in the SC is 50 days, then SC cycle efficiency equals 0.20.If it is 1.00, which indicates that nonvalue?added time does not exist in SC.
? The Number of choices/average response is a measure of the ratio that relatives how
effectively the SC is able to offer variety to its customer. For example: if the SC offers 20 different order configuration and order cycle time is 4 days, the ratio is 20/4=5.
? The percentage of SC target costs achieved measure is focus on nonfinancial improvements
(such as quality, time, and flexibility)
Innovation and Learning Perspective
? The Product finalization point measure the
postponement.
? The Product category commitment ratio
? measures the SC partnerships that truly exist and the
potential risk within SC relationship.
? The Number of shared data sets/total data sets.
? The Performance trajectories of competing
technologies
? measure is to monitor the potential substitute of
competitors technologies.
Financial Perspective
? Profit margin by SC partner
? captures the percentage of SC profits being earned by each SC partner
? Cash? to? cash cycle ? Customer growth & profitability
? measures the sales and profits generated annually by each major customer
? Return on SC assets is
? consumer profitability divided by the average SC assets deployed during the
period
doc_456403516.pptx
This is a presentation on measuring performance of a supply chain.
Supply Chain Performance Measures
Click to edit Master subtitle style
Importance of SC Metrics
?Identify avenues for improvement in SC. ?Evaluate the impact of SC projects on
bottom line.
?Increasing chances of convincing top
management.
What is Benchmarking
?Qualitative Benchmarking ?Comparing best practices among organizations. ?Quantitative Benchmarking ?Comparing levels of measured performance. ?Assessment of Performance Gaps. ?Competitive Benchmarking ?Quantitative Benchmarking between companies. ?Identifies superior relative performance.
3
SCOR Benchmarking - Presentation
How to Measure Performance in Real Life
?Financial statements of annual reports. ?Databases such as Prowess (CMIE) in Indian and
COMPUSTAT in USA.
?Professional entities like supply chain council can
provide information to its members.
?Intuitive and logical Methods. ?ERP and other data management systems.
Inventory Metrics
?Raw Material Inventory (in Days) ?Work in Process Inventory (in Days) ?Finished Goods Inventory (in Days) ?Length of Internal Supply Chain (in Days) ?Inventory Turnover
Calculate Raw Material /FG Inventory in Days
= ?RM Inventory ?(in Days) FG Invento ry In Days = Average RM Inventory x365 Cost of raw material for a year Average FG Inventory x365 Cost of FG for a year
Length of internal supply chain
?On average , how much time the
material stays in the internal supply chain.
?Length of internal supply chain = RM
+ WIP+ FG Inventory (in Days) Inv in RM WIP FG Channel
Days(2001)
HUL Godrej
53 50
2 16
25 23
75 110
Identify appropriate SC for the business situations in 2008 in Paint Industry
SC Stage Company A Company B Company C 55 11 29 62 4 43
Raw Material40 Work in Process Finished Inv 14 42
Inventory Turnover Ratio
How many times the firm sells its inventory Intuitively Which is better ? Higher or lower inventory turnover ratio
Inventory Turnover of Few Selected Firms
Food Worst 1.2 Textile Machinery Metal 1.9 5.3 45.2 1.2 5.5 17.1 2.5 5.5 42.5
Average 4.0 Best 31.0
Financial Measures
?Supply Chain Costs ?Working Capital ?Return on Assets
Internal Supply Chain Costs
Costs + Inventory holding costs
?Supply Chain Inefficiency Ratio ?= Internal SC costs/ Net Sales * 100
?Internal Supply Chain Costs = Distribution
Working Capital
Accounts Payable and Receivables
?Accounts Payable is the money that the firm
owes to its suppliers and service providers.
?Accounts Receivable is the money that the
firm gets from its customers.
Working Capital
?Working Capital = Inventory + Accounts
Receivable – Accounts Payable.
?Working Capital Productivity = ?Net Sales / Working Capital
HUL : Working Capital Management
1991
Financial year Raw Materials & SparesDays
1993
1995
1997
1999
2001
2003
2005
80
WIP-days
77 13 40 15 85 60
62 6 35 14 89 28
48 3 27 6 75 9
53 2 26 7 83 5
53 2 25 11 97 -6
60 3 29 14 115 -9
65 2 23 15 110 -5
17 32 14 73 69
Finished Goods-days
Average Debtor days
Average Creditor -days
Net WC Cycle-days
National Dairy Development Board – pays farmers the next day after the Successful milk procurement
Financial Distribution Strategy and Lost Sales
Account Inventory Lost Sales Bad Debts Receivable High Low Low High High Low
Customer Service
?Order Lead Time ?Delivery Reliability ?Case Fill Rate ?Line Fill Rate ?Out of Stock
Order Lead Time
?Time elapsed between the receipt of the
customer order and delivery of goods to the customer.
How much is customer order lead time for FMCG supply chains ?
Delivery Reliability
?Fraction of customer orders that are
successfully delivered to the customer’s premises within the promised lead time. order supply chains!
?Becoming extremely important in make to ?What would be the cost of delay of one day
for Boeing supplier ?
Case Fill/Line Fill
Case Fill: Ratio of Total Number of cases supplied to Total Number of Cases Ordered. This can be done basis PO, Customer, and Date range. Line Fill: No. Of SKUs which were supplied in full or partial in a P.O. or per Distributor or for a date PO Number range Distributor Name Date Depot SKU No. Ordered Qty
(Cases) Dist 23 REL1232 12-Apr-2007 Jaipur 700077 700083 ADBT891 18-Apr-2007 Bhiwandi 700085 700089 Total 100 70 60 120 350
Supplied Qty (Cases) 80 45 60 0 185
Case Fill (for Dist 23) = Supplied Qty in Cases / Order Qty in Cases = 185/350 = 52.86% Line Fill (SKU Fill) Dist 23: 3 out of 4 SKUs were either supplied in Full or Partial. Hence Line Fill for Dist 23 is 3/4 = 75%
?Supply chain has taken a target of case fill
Case/line fill improvement at Marico
improvement
?Idea is to reserve stocks for Modern trade
supplies
?Tracking is done at PO level
?Work also done on improving sales forecasts to
Out of Stock
?Fraction of time the product is not
available on the shelf. 8.3%.
?average out of stock for retail stores is
?72% of the root causes could be found in
the store
?lost or misplaced inventory ?poor shelving or storage systems ?inadequate or erroneous stock measurement.
SCOR Model
The SCOR® model – an industry open standard
? SCOR is a supply chain process reference model
containing process elements, metrics, and best practices including risk and environmental management ? Organized around the five primary management processes of Plan, Source, Make, Deliver and Return ? Any interested organization can participate in its continual development
Plan
Deli ver Retur n
Sour ce Retur n
Mak e
Delive r Retur n
Source Return
Make
Deliv er Return
Sour ce Retur n
Mak e
Deli ver Retur n
Sour ce Retur n
Suppliers’ Supplier
Supplier
Internal or External
Your Company
Customer
Internal or External
Customer’ s Customer
26
SCOR Benchmarking - Presentation
SCOR Processes
Level 1
Scope
SupplyChain Source
Level 2
Configuration
S1 Source Stocked Product
Level 3
Activity
S1.2 Receive Product
Level 4
Workflow
Level 5
Transactions
ED I X ML
Differentiates Business
Differentiates Complexity
Names Tasks Sequences Steps Links, Metrics, Job Details Tasks and Practices Framework Language Industry or Company Specific Language
Links Transactions Details of Automation
Defines Scope Differentiates Capabilities
Framework Language
Framework Language
Technology Specific Language
27
Standard SCOR definitions SCOR Benchmarking - Presentation
Company/Industry
Performance Metrics
?SCOR metrics: Standard Strategic (Level 1) Metrics Attribute Metric (Strategic) Reliability Perfect Order Fulfillment Responsiveness Order Fulfillment Cycle Time Agility Supply Chain Flexibility Supply Chain Adaptability† Cost Supply Chain Management Cost Cost of Goods Sold Assets Cash-to-Cash Cycle Time Return on Supply Chain Fixed † upside and downside adaptability metrics Assets
Return on Working Capital
28 SCOR Benchmarking - Presentation
Intern al
Custo mer
Developing SCORCARD
Philosophy ?You need to have the most data where performance is most critical ?You need to have least data where performance is least critical
For Every Select Superior Advantage
Parity
Level 1 Metric Level 1 Metric Level 1 Metric andLevel 2 Metric Level 2 Metric andLevel 3 Metric
29
SCOR Benchmarking - Presentation
A Metrics Architecture
Supply-Chain SCORcard Reliability Reliability Reliability Reliability Reliability Ext ern al Reliability Reliability Reliability Reliability Reliability Reliability Reliability S/A/P
S
Level-1 Metric
Perfect Order Fulfillment
Level-2 Metric
Level-3 Metric
Summary
Perfect Order Fulfilment % Orders Delivered in Full
% Orders Delivered in Full Delivery Performance to Commit Date Accurate Documentation
Delivery Item Accuracy Delivery Item Accuracy Delivery Quantity Accuracy Delivery Quantity Accuracy Delivery Performance to Commit Date Date Achievement Location Achievement Accurate Documentation Shipping Documentation Accuracy Billing Documentation Accuracy Perfect Condition % Orders Received Damage-Free
Date Achievement Location Achievement Shipping Documentation Accuracy Billing Documentation Accuracy % Orders Received Damage-Free
Perfect Condition
30
SCOR Benchmarking - Presentation
Metrics Selection
Supply-Chain SCORcard Responsivene ss Responsivene ss Ext Responsivene ern ss al Responsivene ss Flexibility Cost Assets Inte rnal Assets Assets Assets
P P A Upside Supply-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
S/A/P
A
Level-1 Metric
Order Fulfilment Cycle Time
Level-2 Metric
Level-3 Metric
Summary
Order Fulfillment Cycle Time
Source Cycle Time Make Cycle Time Deliver Cycle Time
Source Cycle Time Make Cycle Time Deliver Cycle Time Upside Supplly-Chain Flexibility Total Supply Chain Management Cost Cash to Cash Cycle Time Days Sales Outstanding Days Payables Outstanding Inventory Days of Supply
31
SCOR Benchmarking - Presentation
Planning Data Gathering: Sources of Data
? Financial Data
? Company Annual Reports, Cost Center Reports ? Must be Verified by Financial Team (Controller)
? Non-Financial Data
? Customers
Delivery Performance ? Total Cycle-Time Performance ? IT Systems ? Process-to-Process Transactions ? Planning System Parameters (Lead Times) ? Suppliers ? 3PL Providers
?
32
SCOR Benchmarking - Presentation
Data Gathering Plan
? Consider where the transactions may be ? Look at who owns the data ? Organize to alert data owners to gather data ? Collect and assess Data Quality
Metric
Process
Owner Logistics 3PL Provider
Due Date 2/2/2008 2/15/2008 2/22/2008
Status Complete 50% Collected Not started
On-Time Delivery D1.16 Undamaged D1.17
Order Fulfillment D1.1 – D1.17 Deliver Team Cycle Time Etc…
33 SCOR Benchmarking - Presentation
Creating the SCORcard
?Based on average data averaged over many
samples ?Comes from root transactions, not aggregates ?Six-Sigma team support a big help
Attribute SAP Metric (level 1) You Parity Adv Superior Gap
Reliability
S
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
97%
Response
A
14 days
Flexibility
P
62 days
Cost
P
12.2%
Assets
34
A
35 days
SCOR Benchmarking - Presentation
Interpreting the Data
? Used for choosing target performance ? Critical to understand Performance in a particular Demographic ? Can be “internal” (competing against other supply chains in
same company) ? Aligns Strategy, Performance, and Performance Goals
Attribute SAP Metric (level 1) You Parity Adv Superior
Gap
Reliability
S
Perfect Order Fulfillment Order Fulfillment Cycle Time Ups. Supply Chain Flexibility Supply Chain Mgmt Cost Cash-to-Cash Cycle Time
97%
92%
95%
98%
1%
Response
A
14 days
8 days
6 days
4 days
8 Days
Flexibility
P
62 days
80 days
60 days
40 days
0
Cost
P
12.2%
10.8%
10.4%
10.2%
1.4%
Assets
35
A
35 days
45 days
33 days
20 days
2 Days
SCOR Benchmarking - Presentation
Supply Chain Council: An independent, non-profit global association
? Formed in 1996 to create and evolve a standard for the
supply chain for the benefit of helping companies rapidly and dramatically improve supply chain operations accepted framework – the SCOR® process reference model – for evaluating and comparing supply chain activities and their performance about how companies are capitalizing on those tools
? SCC has established the supply chain world’s most widely
? SCC continually advances its tools and educates members
? With membership open to all interested organizations
36
SCOR Benchmarking - Presentation
Comprehensive Financial Models
Comprehensive Financial Model
?Economic Value Added Model : ?= Net Operating Profit After Tax – ? Cost of Capital x Capital Employed.
?Developed by Stern and Stewart Company ?Calculates the net value generated by the
firm for its shareholders
Economic Value Added Model
Four Perspectives of BSC
?Customer Perspective
?Customer Retention, Customer Value
?Internal Business Perspective
?Cost, Quality and Time Measures
?Innovation and Learning Perspective
cycle time
?% of sales from new products, new product
?Financial Perspective
?Working capital, return on assets
Customer Perspective
? Number of customer contact points is a measure of
service quality. If there are numerous possible contact points exist at each link in SC potential for miscommunication, waste, and delayed response increases. to compare one SC to respond time to a customer order to the time and competing SC respond time. can be used to assess how the customer perceives the relationship between customization and response time.
? Relative customer order response time is a measure
? The Customer perception of flexible response measure
? Customer value ratio (CVR)= survey measure/cost per
order ? For Example: If the average survey response is 4.2 and
Business Process Perspective
? The SC cost of ownership measure captures the costs across the SC associated with
purchasing, holding inventory, poor quality, and delivery failure
? The SC cycle efficiency = Total value added time/total time in the SC. For example: if the
total value?added time is 10 days and the total time in the SC is 50 days, then SC cycle efficiency equals 0.20.If it is 1.00, which indicates that nonvalue?added time does not exist in SC.
? The Number of choices/average response is a measure of the ratio that relatives how
effectively the SC is able to offer variety to its customer. For example: if the SC offers 20 different order configuration and order cycle time is 4 days, the ratio is 20/4=5.
? The percentage of SC target costs achieved measure is focus on nonfinancial improvements
(such as quality, time, and flexibility)
Innovation and Learning Perspective
? The Product finalization point measure the
postponement.
? The Product category commitment ratio
? measures the SC partnerships that truly exist and the
potential risk within SC relationship.
? The Number of shared data sets/total data sets.
? The Performance trajectories of competing
technologies
? measure is to monitor the potential substitute of
competitors technologies.
Financial Perspective
? Profit margin by SC partner
? captures the percentage of SC profits being earned by each SC partner
? Cash? to? cash cycle ? Customer growth & profitability
? measures the sales and profits generated annually by each major customer
? Return on SC assets is
? consumer profitability divided by the average SC assets deployed during the
period
doc_456403516.pptx