Strategic Supply Chain Management - Supply Chain Online

82 Strategic Supply Chain Management
needed to support the achievement of mutually agreed TCO
objectives. In addition to reviews, two-way visibility of performance
to the scorecard metrics should support day-to-day performance
management.
For the supply chain to operate effectively, be sure to integrate
source with the plan, deliver, make, and return processes both within the
organization and with suppliers. The integration points with suppliers are
multiple because a company’s source process integrates with a supplier’s
deliver processes for many activities (ordering, goods receipt, and payment).
Working with suppliers to design a seamless, integrated flow of
these inputs and outputs can lower total cost of ownership significantly.
To achieve your company’s business objectives, also integrate sourcing
with other core business processes. For instance, by integrating with
technology, product, and service development processes, you can ensure
that suppliers apply design for manufacturing and design for supply chain
practices. These practices improve quality; optimize production, testing,
and packaging; and get new products to market faster.
Figure 2-10 shows the metrics of top performance in the source
process.
Make
The supply chain make process transforms the resources procured by
source into goods and services according to agreed-on specifications and
any regulatory requirements. To increase flexibility, minimize costs, or
FIGURE 2–10
Metrics of top performance in source.
Source
Materials Availability (days
to increase by 20%)
Raw Materials Inventory
Days of Supply
Materials Acquisition
Costs
Discrete
Process
Discrete
Process
Discrete
Process
Best Performer Advantage
Over Median/Average
6 times faster
18 times faster
1/5 the inventory
1/4 the inventory
Spend 50% less
Spend 20% less
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