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Supply Chain Performance Measurement - APICS

Supply Chain PerformanceMeasurementPresented by: David F. Ross, PhD, CFPIMAPICS Profession DevelopmentSlide-2 Meet Your Session LeaderIntroduction APICS member since 1986 13 Years Manufacturing and Distribution Industries 22 Years Enterprise Business Systems Education and Consulting Senior Manager, Professional Development APICS Articles and 6 Books in SCMS lide-3 Agenda Critical questions of SCM PM Goals and Performance attributes of SCM PM Obstacles to effective SCM PM SCM PM models Balanced scorecard model SCOR model SCM PM technical architecture Steps to creating a successful SCM PM programSlide-4 Critical Questions Why is SCM Performance Measurement important? What general approaches are available to measure Supply chains? What methods are available for setting Performance targets? How should a company get started?

Supply Chain Performance Measurement Presented by: David F. Ross, PhD, CFPIM APICS Profession Development

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Transcription of Supply Chain Performance Measurement - APICS

1 Supply Chain PerformanceMeasurementPresented by: David F. Ross, PhD, CFPIMAPICS Profession DevelopmentSlide-2 Meet Your Session LeaderIntroduction APICS member since 1986 13 Years Manufacturing and Distribution Industries 22 Years Enterprise Business Systems Education and Consulting Senior Manager, Professional Development APICS Articles and 6 Books in SCMS lide-3 Agenda Critical questions of SCM PM Goals and Performance attributes of SCM PM Obstacles to effective SCM PM SCM PM models Balanced scorecard model SCOR model SCM PM technical architecture Steps to creating a successful SCM PM programSlide-4 Critical Questions Why is SCM Performance Measurement important? What general approaches are available to measure Supply chains? What methods are available for setting Performance targets? How should a company get started?

2 Slide-5 Critical Questions Why is SCM Performance Measurement important?Slide-6 Goals of SCM Performance Measurement Better alignment of channel capabilities and customer requirements and expectation Increased optimization of collective channel operations Increased visibility to demand and Supply Increased opportunities for collaboration Increased opportunities for channel alignment Increased opportunities for information exchange Increased profitabilitySlide-7 SCM Performance Attributes Velocity Visibility Collaboration Trust Customer focus Flexibility Security (risk management) Compliance and Environmental ExcellenceSlide-8 Obstacles Hindering Performance Efforts Technical barriers, such as difficulty locating, cleansing, and integrating data from multiple sources Design problems that stem from not understanding how to use methodologies, strategy maps, and appropriate Performance indicators and targets Social constraints, such as an organizational culture adverse to Measurement and accountability, non-supportive executive team, unrealistic standards, and conflicting goalsSlide-9 Critical Questions Why is SCM Performance Measurement important?

3 What general approaches are available to measure Supply chains?Slide-10 SCM Performance Measurement Models Cash Velocity Balanced Scorecard SCOR The Logistics Scoreboard Activity-Based Costing (ABC) Economic Value-Added (EVA)Slide-11 Supply Chain PM Criteria Holistic approach Process-based Aligned with strategy A dynamic system Balanced approach A managerial tool Cover strategic, tactical and operations level Provide a forward looking (leading) perspective Tool for improvement Provide drill-down functionality Handling conflicting objectives Simple Comparability Relevant metricsSlide-12 Critical Questions Why is SCM Performance Measurement important? What general approaches are available to measure Supply chains? What methods are available for setting Performance targets?Slide-13 Balanced Scorecard SCM PM Strategy Communicate the strategic purpose of the balanced scorecard to Supply Chain partners Develop goals and measures consistent with the corporate and Supply Chain strategies Create schedules and assign responsibilities Drive managers to attain desired resultsSlide-14 Linking SCM to the Balanced ScorecardCustomerBenefitsFinancialBenefi tsSCMI mprovement Improved product/service quality Improved timeliness Improved flexibility Improved value Higher profit margins Improved cash flows Revenue growth Higher return on assets Product/process innovation Partnership management Information flows Threats/substitutesSCM Goals Waste reduction Time compression Flexible response Unit cost reductionCustomerPerspectiveFinancialPer spectiveInnovationand

4 LearningPerspectiveBusinessProcessPerspe ctiveSupply Chain ManagementMeasurementsSlide-15 Balanced Scorecard ModelSupply Chain Objective: Increased Channel FlexibilityAreaStrategic ThemeStrategic ObjectivesStrategic MeasuresFinancialIncreased Supply Chain flexibility Channel cost reduction Increaseprofit margins Increase cash flow Reduce channel inventoryCustomerPerception of flexible response to customers Customers drive product Service individualization Increase product variety Flexiblesupply channels Ability to deliver customized solutionsBusiness ProcessPostponement and value-added strategies Increase synchronization Increase communication Fast flow inventories Multi-purpose facilities Increaseinventory turns Increase efficiency/ utilization Optimize transportationInnovation and LearningIncreasedmaterial handling and process capabilities Increase core competencies Motivating/skilling workers Employee survey Personalscorecard Competency

5 ChecksSlide-16 SCOR ModelPlan Demand/Shipment Forecast Accuracy Adherence to Plans Inventory Turns Planning Cycle timeMake Production Costs Product Quality Changeover Times Capacity UtilizationSuppliersDeliver On-Time Shipment On-Time Delivery Order Fulfillment ReturnsSource Procurement Costs Vendor Lead Times Materials Quality Materials InventoriesReturn Packaging Return Carbon Footprint Energy ReductionCustomersSlide-17 SCOR Metrics and Performance AttributesPerformance AttributeAttribute DefinitionLevel 1 MetricSupply Chain reliabilityDelivery of right product, toright place, at right timePerfect order fulfillmentSupply Chain responsivenessSupply Chain speed providing product to the customerOrder fulfillment cycleSupply Chain flexibilityAgility of a Supply Chain to respond to marketplacechangeUpside Supply Chain flexibilityUpsidesupply Chain adaptabilityDownside Supply Chain adaptabilitySupply Chain costsCosts associated with operating the Supply chainSCM costCostof goods soldSupply Chain asset managementEffectiveness in managing assets to support demand satisfactionCash-to-cash cycle timeReturn on Supply Chain fixed assetsSlide-18 SCOR Metrics DetailLevel1 MetricDefinitionCalculationUpside SC flexibilityNumber of days an organization requires to achieve an unplanned sustainable 20% increase in quantities deliveredLeast amount of time required to achieve the increase considering source.

6 Make, and deliver componentsUpside SC adaptabilityAmount of increased production an organization can achieve and sustain in 30 days Largest sustainable quantity increase considering source, make, and deliver componentsDownside SC adaptabilityReduction in quantities ordered sustainable at 30 days prior to delivery with no inventory/ penalties Largest sustainable quantity decrease considering source, make, and deliver componentsSupply Chain FlexibilitySlide-19 SCOR Metrics Detail (cont.)Level2 MetricLevel 3 MetricCalculationInputLaborNumber of tasks a worker can performMachineEfficiency of using a flexible machineProcessMaterial HandlingNumber ofmovements and movement paths without incurring more costsRoutingNumber of alternative routings without incurring more costOperationNumber of products with alternative sequencing paths without incurring more costsOutputVolumeExtent of change in process volume without incurring more costsMixNumber and variety of products produced without incurring more PM Platform ArchitectureCustomersSalesTransportInven toryPurchasingDataWarehouseSalesTranspor tInventoryBIETLO perationalData LevelETL LevelData Warehouse LevelAnalyticalLevelUser LevelSlide-21 Excel Spreadsheet ExampleSCOR Supply Chain ProcessActualTargetPlanForecast Accuracy85%90%Return on Assets80%99%Delivery

7 Performance to Customer Request Date50%75%Capacity Utilization88%95%Cumulative Source/Make Cycle Times108 Intra-mfg Replan Cycle Time80%75%SourceSource Flexibility15%25%On Time Delivery Performance85%95%Cumulative Source Cycle Times3030 MakeCumulative Make Cycle Time1210 Production Plan Adherence85%100%Slide-22 Critical Questions Why is SCM Performance Measurement important? What general approaches are available to measure Supply chains? What methods are available for setting Performance targets? How should a company get started?Slide-23 Developing SCM PM -StepsStep 1: Formulate Strategy and Build ConsensusStep 2: Select Metrics in Alignment with the Supply ChainStep 3: Integrate and Communicate MetricsStep 4: Drive the Organization to Maintain and Optimize the Desired ResultsSlide-24 Enabling the Supply Chain UniverseThanks for Attending!


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