Strategic Supply Chain Management - Supply Chain Online

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266 Strategic Supply Chain Management Within these three groups we evaluated financial measures of overall business success, such as profitability, supply chain practice maturity, and a variety of measures of supply chain performance. Our hypothesis was that companies with better supply chain performance would have more mature practices and better financial results. While we were not surprised to find this correlation—it has been apparent in analyzing various aspects of the database over the years—the magnitude of the discrepancy among these three populations is compelling. The bottom line is that the BICCs have better financial results than their industry peers. (See Figure A-3 for the breakdown of BICC population by industry segment.) Operating with more advanced supply chain practices and lower supply chain management costs, these companies have higher profit margins. BICCs have 40 percent higher profits than the median companies in their industry. The lowest-quartile or WICCs had 60 percent lower profits than the median companies. In a high-margin industry segment, this could be a 14 percent profit for BICCs versus a 4 percent profit for WICCs. In a low-margin industry segment, it could mean the difference between making good margin and losing money. RESULTS FOR SUPPLY CHAIN PRACTICE MATURITY Evaluation of supply chain practices and IT shows that the BICCs are more closely integrated with suppliers and customers. The overwhelming majority (19 of 22) of BICCs were mature stage 2 or higher, whereas 40 percent of the rest of the population was still trying to figure out how to transition away from the more traditional, functionally focused processes. While the BICCs used a variety of more advanced practices, the differences in practices were most pronounced in the plan and source areas and in their strategy practices, including overall supply chain strategy, planning strategy, sourcing strategy, and manufacturing strategy (see Figure A-4). RESULTS FOR SUPPLY CHAIN PERFORMANCE BICCs were about 10 to 20 percent better than the population median on the majority of all metrics, and WICCs were 15 to 50 percent lower than the median (see Figure A-5). BICCs schedule a higher percentage of orders to customer request date and are more likely to deliver the goods on the committed date. They have slightly higher forecast accuracy, in terms of the number of units required and of the sales price for the units sold (see Figure A-6). Because our selection criteria for BICCs included inventory days of supply, it is not surprising that BICCs have lower inventory levels, but it
APPENDIX A Source and Methodology for Benchmarking Data 267 FIGURE A–4 BICCs’ higher levels of external integration. 2.5 Overall Maturity Practice 2.4 2.3 2.2 2.1 Transitional Stage 3 2.0 BICC Median WICC Mature Stage 2: Internal Integration © Copyright 2004 The Performance Measurement Group, LLC FIGURE A–5 BICCs’ performance on customer-facing metrics. 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Scheduled Orders to Customer Request Delivery Performance to Request Date Delivery Performance to Commit Date BICC Median WICC Note: Delivery Performance to Request was 1 of 4 metrics used to determine the BICC Population © Copyright 2004 The Performance Measurement Group, LLC
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Copyright © 2005 by The McGraw-Hil
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viii CONTENTS OWENS CORNING PROFILE
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x FOREWORD now it has to be brought
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xii FOREWORD Another “early adopt
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xiv FOREWORD through research, use,
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xvi FOREWORD on its promise. Is thi
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xviii ACKNOWLEDGMENTS owe thanks to
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316 Index Toys “R” Us, 53 Trace
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