Strategic Supply Chain Management - Supply Chain Online

More documents

Recommendations

Info

196 Strategic Supply Chain Management view often is needed to justify making major internal changes. To minimize potential skepticism about the relevance of the comparison population, you’ll need to do a thorough analysis to ensure that the external benchmarks are meaningful. Your benchmarking service provider can help you to choose a relevant population, especially if you’re looking beyond your own industry. BASF Corporation used a combination of internal and external benchmarking to drive process improvements throughout its operations. The BASF Group, headquartered in Ludwigshafen, Germany, is one of the world leaders in the chemical industry, with more than 160 subsidiaries and affiliates. In 2003, its North American Free Trade Agreement (NAFTA) operations in the United States, Canada, and Mexico set up a task force to assess the core supply chain operations of its 13 business units, identify any performance gaps, and develop a plan to close those gaps. The task force planned to use both internal and external benchmarks to compare the performance of each business unit against other BASF businesses and a customized external population. At first, the business unit leaders were somewhat skeptical about the proposed approach and expressed concern that the benchmarks wouldn’t provide a meaningful comparison. As Mary Scheibner, the NAFTA director of supply chain consulting, explains, “Each of the business units is unique. Each produces different products through different manufacturing processes and sells to different customers. So we needed each business unit to feel confident that the population to which they were being compared was appropriate.” To address this concern, BASF used a “bundling” approach to create meaningful comparison populations. The 13 business units were grouped into two high-level categories based on their primary manufacturing process—continuous or batch (see Figure 5-2). Then each unit completed a PMG supply chain scorecard (see generic scorecard shown in Figure 5-3). Similar external companies were chosen to create a comparable benchmark population for each of the two bundles. The performance of each business unit was compared against two groups—the BASF units with the same manufacturing process and the population of similar external companies. Each business unit got a report comparing its performance with that of the two different comparison groups. The results were used to set performance-improvement targets. Scheibner worked closely with senior management to establish aggressive but reasonable targets for each unit. “This was a huge effort, so we needed to come up with a fairly simple approach,” she notes. “We looked at each business unit’s percentile-based
CHAPTER 5 Core Discipline 5: Use Metrics to Drive Business Success 197 FIGURE 5–2 BASF benchmarking population. Continuous Manufacturing Bundle Continuous Manufacturing Population BASF Business Unit 1 Comparison Company A Comparison Company D BASF Business Unit 2 BASF Business Unit 4 Comparison Company B Comparison Company E BASF Business Unit 3 BASF Business Unit 5 Comparison Company C Comparison Company F BASF Business Unit 6 BASF Business Unit 9 Comparison Company G Batch Manufacturing Population BASF Business Unit 7 BASF Business Unit 10 BASF Business Unit 12 Comparison Company H Comparison Company J BASF Business Unit 8 BASF Business Unit 11 BASF Business Unit 13 Comparison Company I Batch Manufacturing Bundle performance compared with the benchmarking population and set a target of 25 percent improvement.” For example, if a unit ranked in the 50th percentile for inventory performance, the target was to achieve a performance level consistent with the 75th percentile. Business units that were already at the 75th percentile level or higher for a given metric were off the hook. This top-down approach provided a relatively straightforward way to set stretch targets. Notes Dave McGregor, BASF’s senior vice president of logistics, “Historically, business units have taken a bottom-up approach to incrementally improving productivity. The benchmarking data are allowing us to link theoretical opportunities with proven supply chain practices to achieve breakthrough performance.” 3 Set Aggressive but Achievable Targets—and Tie Them to Actions If you plan to use metrics to determine how your supply chain is performing, you must set a target for each metric. Only a target gives you a basis for tracking whether performance is improving, holding steady, or getting worse. Don’t aim to be best at everything—no company can excel at every key metric. Unattainable goals are more likely to result in behaviors that disrupt rather than enhance a company’s performance. Instead, start by agreeing on your overall strategic objectives, and acknowledge that previous targets may not align with those objectives.
Page 2 and 3:
Want to learn more We hope you enjo
Page 4 and 5:
Cohen and Roussel provide a valuabl
Page 6 and 7:
Copyright © 2005 by The McGraw-Hil
Page 8 and 9:
This page intentionally left blank.
Page 10 and 11:
viii CONTENTS OWENS CORNING PROFILE
Page 12 and 13:
x FOREWORD now it has to be brought
Page 14 and 15:
xii FOREWORD Another “early adopt
Page 16 and 17:
xiv FOREWORD through research, use,
Page 18 and 19:
xvi FOREWORD on its promise. Is thi
Page 20 and 21:
xviii ACKNOWLEDGMENTS owe thanks to
Page 22 and 23:
Page 24 and 25:
2 Strategic Supply Chain Management
Page 26 and 27:
Page 28 and 29:
Page 30 and 31:
Page 32 and 33:
10 Strategic Supply Chain Managemen
Page 34 and 35:
Page 36 and 37:
Page 38 and 39:
Page 40 and 41:
Page 42 and 43:
Page 44 and 45:
Page 46 and 47:
Page 48 and 49:
Page 50 and 51:
Page 52 and 53:
Page 54 and 55:
Page 56 and 57:
Page 58 and 59:
Page 60 and 61:
Page 62 and 63:
Page 64 and 65:
Page 66 and 67:
Page 68 and 69:
Page 70 and 71:
Page 72 and 73:
Page 74 and 75:
Page 76 and 77:
Page 78 and 79:
Page 80 and 81:
Page 82 and 83:
Page 84 and 85:
Page 86 and 87:
Page 88 and 89:
Page 90 and 91:
Page 92 and 93:
Page 94 and 95:
Page 96 and 97:
Page 98 and 99:
Page 100 and 101:
Page 102 and 103:
Page 104 and 105:
Page 106 and 107:
Page 108 and 109:
Page 110 and 111:
Page 112 and 113:
Page 114 and 115:
Page 116 and 117:
Page 118 and 119:
Page 120 and 121:
Page 122 and 123:
100 Strategic Supply Chain Manageme
Page 124 and 125:
Page 126 and 127:
Page 128 and 129:
Page 130 and 131:
Page 132 and 133:
Page 134 and 135:
Page 136 and 137:
Page 138 and 139:
Page 140 and 141:
Page 142 and 143:
Page 144 and 145:
Page 146 and 147:
Page 148 and 149:
Page 150 and 151:
Page 152 and 153:
Page 154 and 155:
Page 156 and 157:
Page 158 and 159:
Page 160 and 161:
Page 162 and 163:
Page 164 and 165:
Page 166 and 167:
Page 168 and 169: 146 Strategic Supply Chain Manageme
Page 190 and 191: This page intentionally left blank.
Page 250 and 251: This page intentionally left blank.
Page 268 and 269:
Page 270 and 271:
Page 272 and 273:
Page 274 and 275:
Page 276 and 277:
Page 278 and 279:
Page 280 and 281:
Page 282 and 283:
Page 284 and 285:
Page 286 and 287:
Page 288 and 289:
Page 290 and 291:
Page 292 and 293:
Page 294 and 295:
Page 296 and 297:
Page 298 and 299:
Stage 4: Cross-Enterprise Collabora
Page 300 and 301:
FIGURE B-3 Summary results of popul
Page 302 and 303:
Page 304 and 305:
Page 306 and 307:
Page 308 and 309:
Page 310 and 311:
Page 312 and 313:
Page 314 and 315:
Page 316 and 317:
Page 318 and 319:
Page 320 and 321:
Page 322 and 323:
Page 324 and 325:
Page 326 and 327:
Page 328 and 329:
Page 330 and 331:
308 Index Business strategy: metric
Page 332 and 333:
310 Index F Faught, Laura, 175-176
Page 334 and 335:
312 Index Mexico, 96, 196 Michelin,
Page 336 and 337:
314 Index Regional planning group,
Page 338:
316 Index Toys “R” Us, 53 Trace
show all

Strategic Supply Chain Management - Supply Chain Online

Create successful ePaper yourself

Delete template?

Save as template?