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Supply Chain Performance


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SCM Performance & Balance Score Card

Published in: Business, Technology

Supply Chain Performance

  1. 1. Supply Chain Performance Improve Supply Chain Performance by linking it with Balance Scorecard Anand Subramaniam
  2. 2. <ul><li>“ One of the secrets of life is to make stepping stones out of stumbling blocks.&quot; </li></ul><ul><ul><li>- Jack Penn </li></ul></ul>
  3. 3. Highlights <ul><li>Supply Chain Management </li></ul><ul><li>Current Measures </li></ul><ul><li>Supply Chain (SC) Perspective </li></ul><ul><li>Balance Scorecard (BSC) Perspective </li></ul><ul><li>Link BSC & SC Perspectives </li></ul>
  4. 4. Supply Chain Management
  5. 5. SCM Concept Competitively Advantage New Materials Cooperative Development White-Space Development New Processing Product Adaptation Integrated Solutions Key Process Improvement New Products Supply Chain Responsiveness Alternative Channels Cost to Serve New Sales Sales Leadership Strategies New Business Systems Suppliers Manufacturing Distribution Retailer Consumer Product / Service Flows : Information Systems & Flows : Financial Flows Product Development Distribution Efficiency Product Replenishment Order Fulfillment Marketing Strategy Business Development
  6. 6. Current Measures
  7. 7. Strategy, Initiatives & Criteria Shareholder Benefits Asset Utilisation Plant Specialisation <ul><li>Markets & Customers </li></ul><ul><li>Pricing / Discounts / Commission </li></ul><ul><li>Product Profitability </li></ul><ul><li>Customer Value-based pricing </li></ul><ul><li>Matching strengths with segment </li></ul><ul><li>Product rationalisation </li></ul><ul><li>Customer survey implications </li></ul><ul><li>Shorten concept-to-market </li></ul><ul><li>Link demand chain to supply chain </li></ul><ul><li>Better architecture design </li></ul><ul><li>Capital appropriations </li></ul><ul><li>Selective outsourcing </li></ul><ul><li>Make/buy decisions </li></ul><ul><li>Retire unused assets </li></ul><ul><li>Capacity utilisation </li></ul><ul><li>Non-value adding elimination </li></ul><ul><li>Portfolio Management </li></ul><ul><li>Win/win mergers </li></ul><ul><li>Sales and Operations planning </li></ul><ul><li>Business resource planning </li></ul><ul><li>Best practice documentation </li></ul><ul><li>Safety stock reduction </li></ul><ul><li>Virtual inventory tracking </li></ul><ul><li>Redundant shipping elimination </li></ul><ul><li>Emergency shipping reduction </li></ul><ul><li>Reconciliation costs </li></ul><ul><li>Distribution/logistics improvement </li></ul><ul><li>Service cost analysis </li></ul><ul><li>Transportation routing and scheduling </li></ul><ul><li>Manufacturing flexibility /Plant yields </li></ul>Profit / Revenue Growth Cost/ Productivity Improvement Capital Asset Evaluation Selling/Pricing Selectivity New Product Development Market/ Customer Segmentation Infrastructure Optimisation Acquisition Divestiture Inventory Management Shipping Efficiency Error Elimination Manufacturing Efficiency Strategy Initiatives Criteria
  8. 8. SCM Perspectives
  9. 9. SCM Goals Unit Cost Reduction Time Reduction Waste Reduction Flexible Response SCM Goals
  10. 10. Financial Benefits Improved Working Capital & Margins Improved Cash Flows Revenue Profit Growth Higher Return on Assets Financial Benefits
  11. 11. Customer Benefits Improved Value Improved or New Product / Service Quality Improved Flexibility Improved Timelines Customer Benefits
  12. 12. SCM Improvements Integrate People, Process & Systems Improved Decision Making Strategic Partner Relations Product / Service Innovation SCM Improve-ments
  13. 13. BSC Perspectives
  14. 14. Performance Measures Internal What must we excel at ? Financial How do we add value to shareholders? Innovation How do we improve and create value? Performance Measures Customers How do customers see us?
  15. 15. Linking BSC to SC Performance
  16. 16. Performance Measures <ul><li>Internal </li></ul><ul><ul><li>Waste reduction </li></ul></ul><ul><ul><li>Time compression </li></ul></ul><ul><ul><li>Flexible response </li></ul></ul><ul><ul><li>Unit cost reduced </li></ul></ul><ul><li>Financial </li></ul><ul><ul><li>Improved WC </li></ul></ul><ul><ul><li>Improved margin </li></ul></ul><ul><ul><li>Improved cash flow </li></ul></ul><ul><ul><li>Revenue growth </li></ul></ul><ul><ul><li>Higher ROA </li></ul></ul><ul><li>Innovation </li></ul><ul><ul><li>Product / Service innovation </li></ul></ul><ul><ul><li>Strategic Partnership </li></ul></ul><ul><ul><li>Information flows </li></ul></ul><ul><ul><li>Integration </li></ul></ul>Performance Measures <ul><li>Customers </li></ul><ul><ul><li>Improved quality </li></ul></ul><ul><ul><li>Improved timeline </li></ul></ul><ul><ul><li>Better flexibility </li></ul></ul><ul><ul><li>Improved value </li></ul></ul>
  17. 17. Customer Perspective <ul><li>Number of customer contact points </li></ul><ul><ul><li>One contact eliminates miscommunication </li></ul></ul><ul><li>Relative customer order response time </li></ul><ul><ul><li>Compares the time it takes one supply chain to respond to a customer order compared to another </li></ul></ul><ul><li>Customer perception of flexible response. </li></ul><ul><ul><li>Used to assess how the customer perceives the relationship between customisation and response time </li></ul></ul><ul><li>Customer Value Ratio </li></ul><ul><ul><li>Examines quality, time, and flexibility relative to the cost incurred by the customer </li></ul></ul>
  18. 18. Business Process Perspective <ul><li>Cost of ownership </li></ul><ul><ul><li>Captures the cost across the supply chain associated with purchasing, holding inventory, poor quality, and delivery failure </li></ul></ul><ul><li>SC Cycle Efficiency Ratio </li></ul><ul><ul><li>Each functional department across the SC can pinpoint where problems lie or where functional efficiencies can be gained </li></ul></ul><ul><li>Number of choices </li></ul><ul><ul><li>Shows how effectively the SC is able to offer variety to its customers </li></ul></ul><ul><li>% of SC target costs achieved </li></ul><ul><ul><li>Used to ensure that process improvements in quality, time, and flexibility are eventually translated into targeted cost reductions </li></ul></ul>
  19. 19. Innovation & Learning Perspective <ul><li>Product finalisation </li></ul><ul><ul><li>Addresses the issue of postponement. Reduces unsold goods inventory </li></ul></ul><ul><li>Product Category Commitment Ratio </li></ul><ul><ul><li>Measures extent to which supply chain partnership truly exists </li></ul></ul><ul><li>Number of shared data sets/total data sets </li></ul><ul><ul><li>Used to encourage supply chain partners to create a common language for various processes. </li></ul></ul><ul><li>Performance trajectories of competing technologies </li></ul><ul><ul><li>Designed to help SC assess which emerging technologies may become a threat today </li></ul></ul>
  20. 20. Financial Perspective <ul><li>Profit margin by supply chain partner </li></ul><ul><ul><li>Captures the % of SC profits being earned by each partner </li></ul></ul><ul><li>Cash-to-cash cycle </li></ul><ul><ul><li>The average time it takes to convert $ expended on materials, labor, etc., into $ in hand </li></ul></ul><ul><li>Customer growth and profitability </li></ul><ul><ul><li>Measures the sales and profits generated annually by each major customer </li></ul></ul><ul><li>Return on SC Assets </li></ul><ul><ul><li>Assess how efficiently the SC is coordinating the use of its assets </li></ul></ul>
  21. 21. <ul><li>“ When it comes to the future, there are three kinds of people: those who let it happen, those who make it happen, and those who wonder what happened &quot; </li></ul><ul><ul><li>- John M. Richardson, Jr </li></ul></ul>
  22. 22. <ul><li>Good Luck </li></ul><ul><li> </li></ul>