Supply Chain Benchmarking - Transportation Research Board
advertisement
23 October 2006 Supply Chain Benchmarking Mark Hermans Management Consultants Where Innovation Operates Agenda Introduction to PRTM Supply Chain Benchmarking and Metrics Impact of Congestion on Business Performance Conclusions Q&A Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |2 Our Expertise: Operational Strategy PRTM is the premier operational strategy consulting firm Marketplace realities have created new operational requirements Without the right operational strategy, even strong business strategies fail Business Business Strategy Strategy -- -- -- -- -Where Where and and why why we’ll we’ll win win Operational Operational Strategy Strategy -- -- -- -- -How How we’ll we’ll win win Operations Operations -- -- -- -- -Executing Executing to to win win We focus on the critical link between business strategy and execution Operational strategy structures your business operations and economics for competitive advantage We help you establish a winning operational strategy…and realize it Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |3 Supply Chain Innovator Primary architects of the Supply Chain Operations Reference-model® (SCOR®) Co-founded the Supply-Chain Council—which now has close to 1,000 corporate members worldwide (www.supply-chain.org) Founded The Performance Measurement Group (www.pmgbenchmarking.com) to offer secure online benchmarking services Recently wrote Strategic Supply Chain Management, a comprehensive and practical guide to supply chain management “This book will serve as a timeless tool for those looking to transform their organization’s supply chain into a sustainable competitive advantage.” — Jim Miller, Cisco Systems, Vice President, Operations PRTM has conducted more than 1,000 supply chain projects Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |4 Introduction to Supply Chain Benchmarking and Metrics Management Consultants Where Innovation Operates Fact-Based Supply Chain Benchmarking Quantitative Fact-Based Performance Scorecards PRTM’s Performance Measurement Group (PMG) Supply Chain Benchmarking Database is the industry standard Company X Performance Key Perspectives (Selected Benchmarking Participants) Level 1 Metrics Supply Chain Performance Versus Custom Population 0 – 20% Major Opportunity Internal-Facing Customer-Facing Delivery Performance to Request Delivery Performance/ Quality 89% 86% Fill Rate Order Fulfillment Lead Time Perfect Order Fulfillment Sample Data Only 99% 100% 81% 106 Total Inventory Days of Supply 4.9 2.3 Days 98% 86% 115 Days 14.5% 80 – 100% BestIn-Class 89% 28 Days Supply Chain Management Cost 60 – 80% Advantage 90% 5.0 Days Upside Flexibility (20% Increase) Flexibility and Responsiveness Supply Chain Response Time Cost 40 – 60% Average Or Median 20 – 40% Disadvantage 20 101 8 Days 68 Days 8.3% 6.1% 64 Days 39 Days 86 Days 57 Days Assets Cash-to-Cash Cycle time 152 Qualitative Process, Practice and Systems Maturity Assessments Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |6 Supply-Chain Operations Reference Model The SCOR® Framework Encompasses the Full Supply Chain, Including Customer and Supplier Collaboration Plan Source Source Make Make Deliver Deliver Return ® Supply-Chain Operations Reference-model® (SCOR®) is a registered trademark of the Supply-Chain Council, Inc. Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |7 Balanced Set of Performance Metrics Level 1 SCOR® Supply Chain Management Metrics Delivery Performance/ Responsiveness Delivery Performance 9 Order Fulfillment Lead Time 9 Production Flexibility Total Supply Chain Management Cost Flexibility Asset Management Cost 9 9 9 Inventory Days of Supply 9 Cash-to-Cash Cycle Time 9 Net Asset Turns 9 Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |8 Company Level 1 Scorecard Level 1 SCOR Supply Chain Management Metrics Delivery Performance/ Responsiveness Delivery Performance 9 Order Fulfillment Lead Time 9 Production Flexibility Flexibility Cost Asset Management 9 9 9 Total Supply Chain Management Cost 9 Inventory Days of Supply Cash-to-Cash Cycle Time 9 Net Asset Turns 9 Performance Versus Comparison Population Key Perspectives 0–20% Major Opportunity Metrics 20–40% Disadvantage 40–60% Median 60–80% Advantage 80–100% Best in Class Your Org. On-time Delivery to Request (%) 91.0% 98.1% 94.0% 99.7% 8.0 2.6 65 18.5 12.2% 6.4% 48.9 21.2 59.0 28.1 1.4 2.8 On-time Delivery to Commit (%) CustomerFacing Metrics Order Fulfillment Lead Time (days) Upside Production Flexibility (days) Total Supply Chain Management Cost (% of Product Revenue) Inventory Days of Supply InternalFacing Metrics Cash-to-Cash Cycle Time (days) Net Asset Turns Example Company Data Improvement Goals Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL |9 Impact of Congestion on Business Performance Management Consultants Where Innovation Operates Importance of Supply Chain Management It improves the top line It improves the bottom line Best-in-class companies have 25% higher sales growth than other companies Best-in-class companies have 40% higher profitability than median companies Sales Growth Relative Profitability 160% Percentage of Industry Average Percent Year Over Year Change 18% 15% 25% 12% 9% 6% 3% 0% 40% 120% 60% 80% 40% 0% BICC Non-BICC Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary Source: The Performance Measurement Group BICC Median WICC CONFIDENTIAL | 11 Impact of Congestion on Company Performance Increased Order Fulfillment Lead Times Increased Inventory Congestion Lower Delivery Performance Lost Revenue Due to Increased StockOuts and Delays in New Product Introductions Increased Supply Chain Costs: Inbound & Outbound Freight and Distribution costs Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 12 Many Factors Impact Supply Chain Performance U.S. U.S. Transportation Transportation System System Performance Performance Economic Economic Growth Growth • GDP growth • Demand for goods and services • Demand for transportation • Customer preferences (cost, service) Company’s Company’s Supply Supply Chain Chain Capabilities Capabilities • Port throughput capacity • Lead time variability • Rail and road infrastructure capacity • Alternative routings/modes Company Company Supply Supply Chain Chain Performance Performance • Total supply chain management cost • Fill rate • Inventory levels • Maturity of supply chain processes and systems End-to-end End-to-end Supply Supply Chain Chain Configuration Configuration • • • • • Supplier locations % imports Performance targets Network configuration, DCs, stores Product portfolio Note: sample factors; not a complete overview Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 13 Supply Chain Costs Are 4-15% Of Revenue Best-in-Class Median Total Supply Chain Management Costs (% of Revenue) 14% 12.3% % of Revenue 12% 10% 10.7% 10.7% 10.0% 9.2% 9.1% 7.4% 8% 6% 6.6% 5.4% 5.3% 5.5% 4.2% 4.8% 4% 3.6% 3.4% 3.5% Pharmaceutical Semiconductor 2% 0% Automotive Industrial Chemical & Advanced Materials Computer Consumer Goods Telecommunications Equipment Source: The Performance Measurement Group Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 14 U.S. Supply Chain Costs Are Rising Total Supply Chain Management Costs (% of revenue) 14.0% 13.1% 11.7% 12.0% Percentage 11.0% 10.0% 9.4% 9.7% 9.9% 8.0% 6.2% 6.0% 4.0% 5.3% 3.7% 4.2% 4.5% 5.1% 2.0% 0.0% 1997-1999 2000-2001 2002 2003 2004 2005 Year Best-in-class Average Source: The Performance Measurement Group Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 15 U.S. Inventories Are Increasing Too Inventory Days of Supply 100.0 90.7 90.0 80.0 83.2 84.6 86.9 74.6 Days 70.0 69.1 60.0 50.0 40.0 30.0 34.8 34.5 27.6 20.0 27.2 23.9 17.7 10.0 1997-1999 2000-2001 2002 2003 2004 2005 Year Best-in-class Average Source: The Performance Measurement Group Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 16 Conclusions Management Consultants Where Innovation Operates Key Take-Aways Benchmarks show that supply chain performance is a key driver of overall company performance, and therefore also U.S. economic performance Benchmarks indicate that congestion cost is impacting company’s supply chain costs and inventory Use SCOR based supply chain metrics to provide fact-based foundation for transportation policy decisions and to measure policy impacts Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 18 Thank you! Mark Hermans Principal, PRTM Management Consultants T: +1.202.756.1789 F: +1.202.756.7256 mhermans@prtm.com Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 19 Appendix Introducing PRTM Management Consultants Where Innovation Operates Who We Are PRTM is the premier operational strategy consulting firm, focusing on operational innovations that drive growth, boost profitability, and set new standards for market leadership Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 21 PRTM Global Experience 30 years of operational strategy and innovation More than 500 consultants worldwide − Aerospace and Defense 16 offices worldwide − Automotive Over 1,200 clients and 6,000 projects 90% level of repeat business Major commercial and government sectors: − Chemicals and Process Industries − Communications and Media − Consumer Goods − Electronics and Computing − Energy − Financial Services Bangalore Boston Chicago Dallas Detroit Frankfurt Glasgow London Munich New York Orange County Paris Shanghai Silicon Valley Tokyo Washington, D.C. − Government − Life Sciences and Healthcare − Industrial Products − Software Transportation Research Board 23 October 2006 | © 2006 PRTM Proprietary CONFIDENTIAL | 22
