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Supply Chain Operations Reference Model SCOR Version 8.

0
Supply-Chain Council, 2006. All rights reserved. The Supply-Chain Council has made every effort to assure the accuracy and usefulness of the information and metrics contained herein and is provided on an "AS IS" basis. The Supply-Chain Council makes no warranty, express or implied, of merchantability, fitness for a particular purpose, or accuracy. The Supply-Chain Council makes no representation as to the results obtained or obtainable and disclaims all liability for direct, indirect, special or consequential damage, including lost profits, lost business or the like, whether based in contract, tort (including negligence), product liability or otherwise.

SCOR is a registered trademark in the United States and Canada.

Copyright 2006 Supply-Chain Council, Inc.

Acknowledgements
The following members (alphabetical by company) of the Supply-Chain Council Technical Development Steering Committee and Project Teams devoted extensive time and/or effort to the development of this Model SCOR Version 8.0.
Name Company

Kevin Mansfield Cheryl Harrity Joe Faccenda Steve Hensley Bill Garrison Jrg Nienhaus Paul Schiller Paul Tilsley Sergio Vacca Steven Vanne Eric Cosman Russ Dickinson Stephen Graham Ray Walker Lars Magnusson Charles-Eric Roussel Alex Van Breedam Charlie Gifford Georgeann Fears Chang-rui Ren Jin Dong Luc Kremers Rob Hagan Jrgen Richert Taylor H. Wilkerson Shruti Mandana Dan Swartwood Monty Boyle Gary Cokins Keith Unger Melinda Spring Scott Stephens Arne Ziegenbein Scott Sealing John Nyere Peter Baker Nancy Craft Nishioka-san

Air Products & Chemicals, Inc APQC Aspentech Blue Sky Logistics Boeing Bosch, BP Chemicals BP Bulgari Caterpillar Logistics The Dow Chemical Company The Dow Chemical Company The Dow Chemical Company DuPont Ericsson Essilor France Flanders Institute for Logistics GE/Fanuc IBM Benchmarking IBM China IBM China iCognitive International Paper J&M Management Consulting AG LMI The Performance Measurement Group Pragmatek PriceWaterhouseCoopers SAS Stone Technologies, Inc. Supply-Chain Council Supply-Chain Council ETH Zurich United Space Alliance United States Department of Defense UTi Volvo Accenture

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Supply Chain Operations Reference-model (SCOR) 8.0


Contents Introduction PLAN SOURCE MAKE DELIVER RETURN Workflow Graphics Glossary Process Terms Metrics Best Practices Inputs and Outputs Appendices Appendix A: Metrics
Background Development Information

1 12 68 115 168 252 306

354 368 386 419

434 511

Appendix B: Best Practices


Background Development Information

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June 2006

Supply Chain Operations Reference-model (SCOR) 8.0 Introduction


The Supply Chain Operations Reference-model (SCOR) is the product of the Supply-Chain Council (SCC), an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing the state-of-the-art in supply-chain management systems and practices. The SCOR-model captures the Councils consensus view of supply chain management. While much of the underlying content of the Model has been used by practitioners for many years, the SCOR-model provides a unique framework that links business process, metrics, best practices and technology features into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities. The SCC was organized in 1996 and initially included 69 practitioner companies meeting in an informal consortium. Subsequently, the companies of the Council elected to form an independent not for profit trade association. The majority of the SCCs members are practitioners and represent a broad cross-section of industries, including manufacturers, distributors, and retailers. Equally important to the Council and the advancement of the SCOR-model are the technology suppliers and implementers, the academicians, and the government organizations that participate in Council activities and the development and maintenance of the Model. At the time of this release, the Council has approximately 800 members worldwide and has established international chapters in Australia/New Zealand, Brazil, Greater China, Europe, Japan, Southeast Asia, and Southern Africa with additional requests for regional chapters pending. The Supply-Chain Council is interested in providing the widest possible dissemination of the SCOR-model. The wide-spread use of the Model results in better customer-supplier relationships, software systems that can better support members through the use of common measurements and terms, and the ability to rapidly recognize and adopt best practice no matter where it originates. SCC requests that all who use the SCOR-model provide attribution to the Supply-Chain Council. Additionally, members are encouraged to monitor the members section of the SCC website (www.supply-chain.org) to ensure that they are using the latest version of SCOR. This introduction is provided to assist new users of the SCOR-model to begin analytic and implementation projects. It is intended to remind experienced users of the framework and structure of the Model to assist in more complex applications and operationalizing the Model for their businesses. Finally, it is provided to orient members to the changes between Version 8.0 and Version 7.0. Version 8.0 of the SCOR-model is the tenth revision since the Models introduction in 1996. Revisions of the Model are made when it is determined by Council members that changes should be made to facilitate the use of the Model in practice. Specific changes in Version 8.0 are outlined later in this Introduction.

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Scope
The SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customers demand. The Model itself contains several sections and is organized around the five primary management processes of Plan, Source, Make, Deliver, and Return (shown in Figure 1). By describing supply chains using these process building blocks, the Model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. The Model has been able to successfully describe and provide a basis for supply chain improvement for global projects as well as site-specific projects.

Plan

Plan

Plan

Plan

Plan

Deliver Return

Source Return

Make

Deliver Return

Source Return

Make

Deliver Return

Source Return

Make

Deliver Return

Source Return

Suppliers Supplier

Supplier Internal or External Your Company

Customer

Customers Customer

Internal or External

Figure 1 - SCOR is organized around five major management processes. It spans: all customer interactions (order entry through paid invoice), all physical material transactions (suppliers supplier to customers customer, including equipment, supplies, spare parts, bulk product, software, etc.) and all market interactions (from the understanding of aggregate demand to the fulfillment of each order). It does not attempt to describe every business process or activity. Specifically, the Model does not address: sales and marketing (demand generation), product development, research and development, and some elements of post-delivery customer support. It should be noted that the scope of the Model has changed and is anticipated to change based on Council member requirements. With the introduction of Return, the Model has been extended into the area of post-delivery customer support (although it does not include all activities in that area). As shown in Figure 2, the Model is designed and maintained to support supply chains of various complexities and across multiple industries. The Council has focused on three process levels and does not attempt to prescribe how a particular organization should conduct its business or tailor its systems / information flow. Every organization that implements supply chain improvements using the SCOR-model will need to extend the Model, at least to Level 4, using organization-specific processes, systems, and practice.

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The Model is silent in the areas of human resources, training, and quality assurance among others. Currently, it is the position of the Council that these horizontal activities are implicit in the Model and there are other highly qualified organizations that are chiefly concerned with how an organization should train, retain, organize, and conduct their quality programs. Just as the Council recognized the requirements for marketing and sales in commercial organizations, the Council is not minimizing the importance of these other activities.

SCOR Contains Three Levels of Process Detail


Level
# Description

Schematic

Comments
Level 1 defines the scope and content for the Supply chain Operations Reference-model. Here basis of competition performance targets are set.

1 Top Level (Process Types) Source

Plan Make Deliver Return

Supply-Chain Operations Reference-model

Return

2
Configuration Level (Process Categories)

A companys supply chain can be configured-to-order at Level 2 from core process categories. Companies implement their operations strategy through the configuration they choose for their supply chain.

Process Element Level (Decompose Processes)


P1.1
Identify, Prioritize, and Aggregate Supply-Chain Requirements

P1.3
Balance Production Resources with Supply-Chain Requirements

P1.4
Establish and Communicate Supply-Chain Plans

P1.2
Identify, Assess, and Aggregate Supply-Chain Requirements

Level 3 defines a companys ability to compete successfully in its chosen markets, and consists of: Process element definitions Process element information inputs, and outputs Process performance metrics Best practices, where applicable System capabilities required to support best practices Systems/tools Companies fine tune their Operations Strategy at Level 3.

4
Not in Scope

Implementation Level (Decompose Process Elements)

Companies implement specific supplychain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions.

Figure 2 - SCOR is a hierarchical model with specific boundaries in regard to scope.

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The SCOR-model is a business process reference model as illustrated in Figure 3. That is, it is a Model that links process elements, metrics, best practice and the features associated with the execution of a supply chain in a unique format. The uniqueness and power of the Model and its successful implementation is chiefly derived from using these four elements together. It is important to note that this Model describes processes not functions. In other words, the Model focuses on the activity involved, not the person or organizational element that performs the activity.

Business Process Reengineering

Benchmarking

Best Practices Analysis

Process Reference Model

Capture the as-is state of a process and derive the desired to-be future state

Quantify the operational performance of similar companies and establish internal targets based on best-inclass results

Capture the as-is state of a process and derive the desired to-be future state Quantify the operational performance of similar companies and establish internal targets based on best-in-class results Characterize the management practices and software solutions that result in best-in-class performance Characterize the management practices and software solutions that result in best-inclass performance

Figure 3 - SCOR is a business process reference model.

SCOR-model Structure
Besides the five basic management processes (Plan, Source, Make, Deliver, Return) that provide the organizational structure of the SCOR-model, it is useful to distinguish between the three process types in the Model: planning, execution, and enable (formerly infrastructure). A planning element is a process that aligns expected resources to meet expected demand requirements. Planning processes balance aggregated demand across a consistent planning horizon. Planning processes generally occur at regular intervals and can contribute to supply chain response time. Execution processes are triggered by planned or actual demand that changes the state of products. They include scheduling and sequencing, transforming materials and services, and moving product. Enable processes prepare, maintain, and manage information or relationships upon which planning and execution processes rely. A set of standard notation is used throughout the Model. P depicts Plan elements, S depicts Source elements, M depicts Make elements, D depicts Deliver elements, and R depicts Return elements. SR = Source Return and DR = Deliver Return. An E preceding any of the others (e.g., EP) indicates that the process element is an Enable element associated with the Planning or Execution element (in this case, EP would be an Enable Planning element). As indicated in Figure 2, the Model is hierarchical with three levels. P1.1 is a notation that indicates a third level process element. In this case, it is a Plan (P Level 1) element that is concerned with supply chain planning (1 Level 2) and is specific to identifying, prioritizing, and aggregating supply chain requirements (.1 Level 3).

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The SCOR-model contains 8 basic sections: Introduction, Plan, Source, Make, Deliver, Return, Glossary and Appendices. For modeling purposes, Return is documented in two locations Source and Deliver. Those Return processes that connect an organization with its supplier (i.e., the return of raw material) are documented as Source Return activities. Those processes that connect an organization with its customer (i.e. the receipt of returned finished goods) are documented as Deliver Return activities. This preserves the concept that Source connects an organization with its suppliers and Deliver connects an organization with its customers. The Plan and Execution (Source, Make, Deliver, Return) sections are the heart of the Model while the Glossary provides a listing of the standard process and metrics terms that are used within the Model. The Appendices provide detailed information on metrics and best practices. Plan, Source, Make, Deliver, and Return sections are organized with a standard structure. At the beginning of each section, there are graphics that provide a visual representation of the process elements, their relationships to each other, and the inputs and outputs that are germane to each process element. Following the graphics are text tables that identify: 1) the standard name for the process element, 2) the notation for the process element, 3) SCCs standard definition for the process element, 4) performance attributes that are associated with the process element, 5) metrics that are associated with the performance attributes, 6) best practices that are associated with the process (candidates, not necessarily an exhaustive list), and features (generally technologically related) that can contribute to heightened performance of the process. Within the Source, Make and Deliver process elements, a common internal structure has been agreed upon. The Model focuses on three environments, Make-to-Stock, Make-to-Order, and Engineerto-Order. As a result, S1 becomes Source Make-to-Stock Product, S2 becomes Source Make-to-Order Product and S3 becomes Source Engineer-to-Order Product. This same convention is used for Make, i.e. M1 Make-to-Stock, and Deliver, i.e. D2 Deliver Make-to-Order Product. This convention was extended to Return in Version 5.0. R1 is the Return of Defective Product, R2 is the Return of Maintenance, Repair or Overhaul (MRO) Product, and R3 is the Return of Excess Product. Within each of the planning and execution sections and following the graphic and text descriptions, the associated Enable elements are described using the same graphic and text formats. It is important to note, that like the process elements themselves, the metrics are intended to be hierarchical. Although not explicit in the Model, Level 1 metrics, as shown in Figure 4 are typically assigned to P1 (Plan Supply Chain) and are decomposed (Level 2 and diagnostic metrics) to the respective planning, execution and enable elements.

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Performance Attributes and Level 1 Metrics


Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN).

Performance Attributes Level 1 Metrics


Reliability Perfect Order Fulfillment Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-To-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital Figure 4 - SCOR Performance Attributes and Level 1 Metrics The metrics are used in conjunction with performance attributes. In Version 4.0 of the Model, the Performance Attributes were expanded from four (Supply Chain Reliability, Supply Chain Flexibility and Responsiveness, Supply Chain Costs, and Supply Chain Asset Management) to five (Supply Chain Reliability, Supply Chain Responsiveness, Supply Chain Flexibility, Supply Chain Costs, and Supply Chain Asset Management). Generally, the impact of this exercise was to associate cycle time measures with Responsiveness and to identify needed metrics in the area of Flexibility. The table in Figure 5 defines the performance attributes and indicates which Level 1 metrics are associated with each attribute. The Performance Attributes are characteristics of the supply chain that permit it to be analyzed and evaluated against other supply chains with competing strategies. Just as you would describe a physical object like a piece of lumber using standard characteristics (e.g., height, width, depth), a supply chain requires standard characteristics to be described. Without these characteristics it is extremely difficult to compare an organization that chooses to be the low-cost provider against an organization that chooses to compete on reliability and performance. Customer-Facing Responsiveness Flexibility Internal-Facing Costs Assets

x x x x x x x x x x

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Performance Attributes and Associated Level 1 Metrics


Performance Attribute Supply Chain Reliability Performance Attribute Definition The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. The speed at which a supply chain provides products to the customer. The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. Level 1 Metric Perfect Order Fulfillment

Supply Chain Responsiveness Supply Chain Flexibility

Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital

Supply Chain Costs Supply Chain Asset Management

The costs associated with operating the supply chain. The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.

Figure 5 Definitions for SCOR Performance Attributes and which Level 1 metrics are associated with each attribute. Associated with the Performance Attributes are the Level 1 Metrics. These Level 1 Metrics are the calculations by which an implementing organization can measure how successful they are in achieving their desired positioning within the competitive market space. While these Performance Attributes are critical in implementing the Model, formal definitions were not previously included in the Model. In Version 4.0, standard Performance Attribute definitions were provided. In Version 5.0, the process tables associated with Level 2 and 3 activities were reconciled to reflect the separation of the flexibility and responsiveness attributes and to ensure that the metrics measured what they were intended to measure. First time users of the Model should be aware that the metrics in the Model are hierarchical just as the process elements are hierarchical. Level 1 Metrics are created from lower level calculations. (Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN). Lower level calculations (Level 2 metrics) are generally associated with a narrower subset of processes. For example, Delivery Performance is calculated as the total number of products delivered on time and in full based on a commit date. Additionally, even lower level metrics (diagnostics) are used to diagnose variations in performance against plan. For example, an organization may wish to examine the correlation between the request date and commit date.

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SCOR Version 8.0 Changes


No Process Changes In Version 8.0, there are no changes to the Level 1, 2, or 3 Processes. Metrics There is an additional Level 1 metric Return on Working Capital in the Assets Attribute category. The definition and other detailed information regarding this metric are included in the Metrics Appendix A in this publication. It is also listed in the appropriate processes under Metrics. The Metrics in SCOR 8.0 have been significantly streamlined. Level 2 processes now only include Level 1 metrics and a Cost metric has been added for every single process in the model. Version 7.0 similarly saw the addition of a Cycle Time metric for every process. This allows the easy roll up of cost and cycle time metrics to the Level 1 metrics. Metrics that are considered to be diagnostic are not included in the Appendix A Metrics Hierarchy. These measures are important measures, but do not roll up to Level 1 Metrics. There are a few new hierarchical Level 3 metrics that are not yet defined and listed in the tables this will be included in the next SCOR update likely to be a minor update 8.1. SCOR 7.0 Metrics that were categorized as lower level or no longer relevant have been archived. An archived list of SCOR metrics is available upon request. Best Practices The Best Practices Appendix has also been reworked to make it a more clean and consistent reference. Changes to some of the definitions throughout the Model have been updated and some process affiliations are changed. Best Practices no longer contain the Feature column, as this was a hangover from when the Model used to list affiliated software features, now not maintained by the Council. This column has been replaced by a definition where it has been identified. The team surveyed SCC members on Best Practices that they want to see included in the future and this work is ongoing. Changed definitions in Version 8.0 include: Barcoding Design/upgrade production equipment to maximize flexibility and avoid line stoppages Assessing export/import requirements during time of product development/manufacture Bar coding is used to minimize handling time and maximize data accuracy Cellular manufacturing Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Replanning Business Rules Plan Changes Design/upgrade production equipment to maximize flexibility and avoid line stoppages Electronic material move transactions ATP and Product Reservation add RFID old: None Identified new: Machine productivity and downtime monitoring. (consistent to the other occurrences of the best practice process characteristic) old: None Identified new: Multi-country Export/Import documentation compliance old: Product serial number used as identifier new: Bar code interface for data collection devices Generate bar coded receiving documents old: None Identified new: Manufacturing is broken into work cells old: None Identified new: Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain Advanced Planning and ERP execution systems Supply Chain Capacity Planning Systems old: None Identified new: Machine productivity and downtime monitoring old: Bar code data collection new: Automated process control and/or barcode data collection old: ATP and Product Reservation, Integration with scheduling and inventory management new: Available-to-Promise (ATP), See Glossary

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Supplier (Carrier) Agreements CPFR, Collaborative Planning, Forecasting, Replenishment Postponement

S&OP, Sales and Operations Planning Inventory Cycle Counting Assess Supplier Performance

old: Supplier (Carrier) Agreements new: Carrier Agreements old: CPFR, Collaborative Planning, Forecasting, Replenishment new: Collaborative Planning, Forecasting, Replenishment (CPFR) New: Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. old: S&OP, Sales and Operations Planning new: Sales and Operations Planning (S&OP) old: Inventory Cycle Counting new: Statistical Test Count old: Assess Supplier Performance new: Supplier Performance Assessment System

Inputs and Outputs New in the Glossary are the Inputs/Outputs and their definitions. These were not defined or listed for reference in any previous versions of SCOR. This piece of the SCOR 8.0 development was facilitated by a team working to use the ISA 95 standard in conjunction with SCOR. The definitions they added were included to also satisfy their use of both SCOR and ISA 95. Workflow Graphics Prompted by the first time re-hosting of the SCOR model into a BPM native format, the workflow diagrams are very different than the previously published Microsoft Word graphics. They now also include deliverables what is moving from one process to another, or into and out of the process. As a result of these complex workflows and the rehosting in software rather than maintenance in Microsoft Word, the type is very small in the workflow graphics. The TDSC has agreed to post them as is for this printing until a more legible print version can be developed. They are included behind the process tables. They are also available as HTML files on the www.supply-chain.org members website with a zoom feature so that they can be enlarged for easy reading. SCOR database For the next version of SCOR (most likely 8.1), the database output from this BPM will be released as a vendor-neutral format. The suppliers working with SCC on this project will help determine how this will be released and made available. A software licensing program is also being developed for future releases of SCOR in electronic format.

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SCOR Toolkit

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The Technical Change Process


The SCOR-model is developed and maintained by the voluntary efforts of the Supply Chain Council members. Unlike other organizations with large technical staffs, the Council depends on the contributions of its members to actively advance the state of knowledge in supply chain by identifying required Model changes, researching and validating those changes, and developing the consensus regarding the proposed changes. SCOR-model versions prior to Version 6.0 were developed in a Committee structure that was focused on developing a stable, usable Model that could be used by experienced Council members as well as organizations newly introduced to the SCOR concept. In 2002, confident that the Models stability had been demonstrated with over 5 years of application experience by Council members, the Supply Chain Council shifted its technical development focus to specific implementation issues. The current technical development process relies on project teams composed of volunteers from Supply Chain Council member organizations. These project teams are short-lived groups that focus on specific Model challenges. It is expected that the normal term of a project team will be between 3-6 months. The change process and the coordination of the project team activities is led by the Technical Development Steering Committee (TDSC), a standing body elected by their peers in the Council. Changes to the Model are normally initiated by a Council member or members (but may be initiated by a Special Industry Group, an implementation project team, or the Chief Technical Officer). The primary mechanism for changing the Model is the Project Team. These self-organizing and self-directed teams propose areas of investigation, pursue and develop proposals for Model development and publish research results on the Council website. These activities are coordinated by the Supply Chain Councils Technical Development Steering Committee, which is comprised of elected representatives from the Councils membership. The Model change process is documented on the SCCs website. Essentially, the process consists of: 1) The Council issues a call for volunteers to work on an identified need for revision or change, 2) volunteers submit a Charter Proposal to the TDSC outlining the concept, scope of work, schedules and milestones, and identifying the volunteer resources, 3) the TDSC reviews the proposed Charter and provides feedback on the proposed changes to the initiating group, 4) upon approval, the Project Team crafts the details of their scope of work and determines whether it is likely their efforts will lead to a Model change (which generally includes the modification of SCOR processes, metrics, best practice, features and inputs and outputs) or a research report (white paper), 5) the Project Team proposes how to integrate proposed changes into the overall Model, 6) after final technical review the TDSC forwards the technical community recommendations for proposed changes/additions to the SCC Board of Directors, and 7) following the approval of the Board, the new Model is published for the SCC membership.

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P1 Plan Supply Chain


The development and establishment of courses of action over specified time periods that represent a projected appropriation of supply chain resources to meet supply chain requirements for the longest time fence constraints of supply resources. The Category P1 includes four Level 3 Elements:
P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.

The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. P1.2 Identify, Assess, and Aggregate Supply The process of identifying, prioritizing, and aggregating, as a whole with Chain Resources constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. P1.3 Balance Supply Chain Resources with The process of identifying and measuring the gaps and imbalances between Supply Chain Requirements demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment. The process of developing a time-phased course of action that commits supply-chain resources to meet supply-chain requirements. The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements.

P1.4 Establish Supply Chain Plans

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. The sum of the costs associated with planning supply chain activities. The average actual cycle time consistently achieved to fulfill customer orders. The average time associated with planning source activities Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset.

Cost to Plan Supply Chain Order Fulfillment Cycle Time Plan Cycle Time Return on Supply Chain Fixed Assets

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Return on Working Capital

Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Best Practices:
All Functions and Organizations Understand Their Impact on Supply/Demand Balancing, Including Sales, Marketing, Product Management, Manufacturing, Customer, Suppliers, Materials Management, and Product Development Capability to Run Simulated Full-Stream Supply/Demand Balancing for What-If Scenarios Change in the Demand Signal Instantaneously Reconfigures the Production and Supply Plans Collaborative Planning, Forecasting, Replenishment (CPFR) None identified

Supply chain modeling and visualization system Event-driven supply chain re-planning

Collaborative Planning, Forecasting and Replenishment is a concept that allows collaborative processes across the supply chain, using a set of process and technology models.... (From www.cpfr.org/intro.html) Enterprise resource planning system Customer relationship management On-Line Visibility of All Supply-Chain Demand Requirements and Resources, both system Currently Available and Committed (Pegged) Enterprise-wide planning system customer Relationship Systems Re-Balancing of Full-Stream Supply/Demand on a Daily Basis, Including Source-Make-Deliver Resources and Requirements from Customers Customer to Suppliers Supplier Integrated process modeling and software reconfiguration tools Responsiveness and Flexibility Are Emphasized By Developing Expertise in Making Business Processes ReProgrammable, Re-Configurable and Continuously Changeable Sales and Operations Planning (S&OP) A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the companys plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. (From APICS online dictionary.) Supply Chain is Designed to Have Supply None identified Flexibility Equal to Demand Volatility Supply/Demand Process is Highly Integrated Integrated supply chain planning system with interfaces to all supply/demand data sources through public and private digitally enabled from Customer Data Gathering to Order supply networks. Receipt, through Production to Supplier Request Supply chain planning optimization system Tools Support Balanced Decision Making (e.g., Trade-Off between Service Level and Inventory Investment)

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Vendor Managed Inventory

VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

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P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements


The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Prioritize, and Aggregate Supply Chain Requirements The sum of the costs associated with identifying, assessing and aggregating supply chain requirements. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. The average time associated with the identifying, prioritizing, and aggregating supply chain requirements

Forecast Accuracy Identify, Prioritize, and Aggregate Supply Chain Requirements Cycle Time

Best Practices:
Collaboration among Operations Strategy Team Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems Supply Chain Capacity Planning Systems Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Push-Based Forecasts Are Replaced with Standards Based (RosettaNet, eBXML, OAGI, etc) B2B integration tools Customer Replenishment Pull-Based and systems Signals Supply Chain Advance Planning System Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Re-planning Business Rules Plan Changes Systems Support Accurate On-Line Visibility Advance Planning and Scheduling System of Full-Stream Demand Requirements and Supply Chain Event Management Software Priorities

Inputs:
Customer Requirements from Source: Customer Order Backlog from D1.3 Reserve Inventory & Determine Delivery Date Order Backlog from D1.11 Load Vehicle & Generate Shipping Documentation The part of the supply chain requirements related to the customers needs, including sales forecasts and actual orders and backorders Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped.

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Planning Data from EP.3 Manage PLAN Data Collection

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by from EP.9 Align Supply Chain Unit Plan with Product Family supporting the Market/Channel Plans. Corresponding Financial Plan Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions from EP.5 An update to the expected cause and effect statements that are the base Manage Integrated Supply Chain Capital for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and Assets effect. Revised Business Assumptions from EP.9 An update to the expected cause and effect statements that are the base Align Supply Chain Unit Plan with Financial for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and Plan effect. Shipments from D1.11 Load Vehicle & Transactions related to sending the product to the customer. Generate Shipping Documentation Shipments from D1.3 Reserve Inventory & Transactions related to sending the product to the customer. Determine Delivery Date

Outputs:
Supply Chain Requirements to P1.3 Balance Sources of demand for the integrated supply chain of a product or service Supply Chain Resources with Supply Chain at the appropriate level, horizon and interval. Requirements

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P1.2 Identify, Assess, and Aggregate Supply Chain Resources


The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Assess, and Aggregate Supply Chain Resources Identify, Assess, and Aggregate Supply Chain Resources Cycle Time Inventory Days of Supply The sum of the costs associated with identifying, assessing and aggregating supply chain resources. The average time associated with the identifying, assessing, and aggregating supply chain resource availability Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices:
Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Lead Times Updated Monthly None identified Review Product Profitability ABC and cost modeling.

Inputs:
Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Inventory from Source: Customer In business management, inventory consists of a list of goods and materials held available in stock. Also, those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts) Make/Buy Decision from EP.5 Manage Integrated Supply Chain Capital Assets Outsource Plan from EP.5 Manage Integrated Supply Chain Capital Assets The output of the process used to determine whether a demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outsource Plan from EP.6 Manage Integrated Supply Chain Transportation

Planning Data from EP.3 Manage PLAN Data Collection Production Plans from P3.4 Establish Production Plans

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Regulatory Requirements from EP.8 Manage Requirements dictated by process standards set by external entities (i.e. PLAN Regulatory Requirements and government, trade officials, etc.). Compliance Revised Capital Plan from EP.6 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Transportation in specific business plans or factors and assumptions affecting a business plan. Revised Capital Plan from EP.5 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Capital Assets in specific business plans or factors and assumptions affecting a business plan. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs:
Supply Chain Resources to P1.3 Balance As a whole with constituent parts, all sources of supply that are required Supply Chain Resources with Supply Chain to add value in the supply chain of a product or service at the appropriate Requirements level, horizon and interval.

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P1.3 Balance Supply Chain Resources with Supply Chain Requirements


The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment. The process of developing a time-phased course of action that commits supply-chain resources to meet supply-chain requirements. Metrics (see Appendix A for metrics attributes):
Balance Supply Chain Resources with Supply Chain Requirements Cycle Time Cost to Balance Supply Chain Resources with Supply Chain Requirements Fill Rate Inventory Days of Supply The average time associated with balancing supply chain resources with supply chain requirements. The sum of the costs associated with balance of supply chain resources with supply chain requirements. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices:
A data warehouse / data mart is the source of all planning (master) data, business rules and transaction data. Analytical tools enable the ongoing maintenance and improvement of the business rules based on actual data. Customer Relationship Management (CRM) Software that provides customer input and keeps the customer informed about the planning of the production and delivery process by managing all contacts and communication with the customer thorough all channels including internet and traditional sales and customer service channels. Demand Planning, Demand Flow Software that provides multiple data models including the business rules Leadership and metrics for the entire supply chain planning process. Algorithms use the business rules and metrics as the drivers for the planning engine. Business Intelligence (BI)

Inputs:
Supply Chain Resources from P1.2 Identify, Assess, and Aggregate Supply Chain Resources Supply Chain Requirements from P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements Inventory Strategy from EP.4 Manage Integrated Supply Chain Inventory As a whole with constituent parts, all sources of supply that are required to add value in the supply chain of a product or service at the appropriate level, horizon and interval. Sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.

The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed. Supply Chain Performance Improvement A plan that describes goals and objectives for a supply chain and the Plan from EP.2 Manage Performance of steps that will be taken to reach those goals and objectives from the Supply Chain current performance levels.

Outputs:
Workflow to P1.4 Establish Supply Chain Plans
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P1.4 Establish Supply Chain Plans


The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements. Metrics (see Appendix A for metrics attributes):
Cost to Establish and Communicate Supply The sum of the costs associated with establishing and communicating Chain Plans supply chain plans. Establish Supply Chain Plans Cycle Time The average time associated with establishing and communicating supply chain plans Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices:
Collaboration among Operations Strategy Team Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems Supply Chain Capacity Planning Systems Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Supply Chain Advance Planning System Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Replanning Business Rules Plan Changes Systems Support Accurate On-Line Visibility Advance Planning and Scheduling System of Full-Stream Demand Requirements and Priorities as Well as Resource Utilization and Availability

Inputs:
Workflow from P1.3 Balance Supply Chain Resources with Supply Chain Requirements

Outputs:
Supply Chain Plans to P5.1 Assess, and Aggregate Return Requirements Supply Chain Plans to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Supply Chain Plans to Customer Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Supply Chain Plans to P2.1 Identify, Prioritize, and Aggregate Product Requirements

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Supply Chain Plans to P3.1 Identify, Prioritize, and Aggregate Production Requirements

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

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P2 Plan Source
The development and establishment of courses of action over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements. The Category P2 includes four Level 3 Elements:
P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources P2.3 Balance Product Resources with Product Requirements P2.4 Establish Sourcing Plans The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The process of developing a time-phased course of action that commits resources to meet requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements.

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Cost to Plan Source Order Fulfillment Cycle Time Plan Source Cycle Time Return on Supply Chain Fixed Assets The sum of the costs associated with planning source activities. The average actual cycle time consistently achieved to fulfill customer orders. The average time associated with planning source activities Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Return on Working Capital

Best Practices:
All Key Participants in the Supply Chain, Including Strategic Partners, Have Full Visibility of the Demand/Supply Plan Distinct and Consistent Linkages Exist to Ensure Disruptions and Opportunities in Material Resources Are Quickly and Accurately Communicated and Acted Upon EDI Links Integrate Supplier Resource Information (Inventory, Capacity Availability, Etc.) with Own Resources Joint Service Agreements with Suppliers Define the Levels of Flexibility or Resource Upside Available Within Stated Lead Times and Agreed Upon Conditions Supply Chain Event Management Systems Bi-directional Digital Links (XML, EDI, etc) or Internet procurement networks to customer service linkage Inter-company resource planning with EDI/Internet communication None identified

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P2.1 Identify, Prioritize, and Aggregate Product Requirements


The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Prioritize, and Aggregate Product Requirements Forecast Accuracy The sum of the costs associated with identifying, assessing and aggregating deliver requirements. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Identify, Prioritize, and Aggregate Product Requirements Cycle Time The average time associated with the identifying, prioritizing, and aggregating product requirements

Best Practices:
Capacity and Supply Constraints Are Balanced Against Demand during the Planning Cycle Categorize 100% of Total Inventory (Active, Usable, Excess, Obsolete) for Appropriate Action Master Production Scheduling Reflects Management of Capacity and/or Supply Constraints Sales and Operations Agree to Limits of Short Term Flexibility The Demand Plan is Updated Frequently to Reflect Actual Consumption or Customer Forecast Information None identified None identified None identified None identified None identified

Inputs:
Bill of Materials from EP.7 Manage Planning The Bill of Materials is a structured list of all the materials or parts needed Configuration to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Item Master from EP.7 Manage Planning A record of specific information for each product, which defines the Configuration system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Order Signal from D3.3 Enter Order, Commit Reserved inventory and/or planned capacity and delivery date for a Resources & Launch Program specific order. Order Signal from D2.3 Reserve Resources Reserved inventory and/or planned capacity and delivery date for a & Determine Delivery Date specific order. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product Routings from EP.7 Manage Product routings represent the way products are made and are integrated Planning Configuration with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. All sources of demand in the Source Return of a product or service. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Source Return Requirements from P5.4 Establish and Communicate Return Plans Supply Chain Plans from P1.4 Establish Supply Chain Plans

Outputs:
Product Requirements to P2.3 Balance Product Resources with Product Requirements As a whole with constituent parts, all sources of demand for a product or service in the supply chain.

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P2.2 Identify, Assess, And Aggregate Product Resources


The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Assess, and Aggregate Product Resources Identify, Assess, and Aggregate Product Resources Cycle Time The sum of the costs associated with identifying, assessing and aggregating product resources. The average time associated with the identifying, assessing, and aggregating product resource availability

Best Practices:
Capacity and Supply Constraints Identified None identified During MPS Schedule Process Are Balanced Against Demand during the Planning Cycle Categorize 100% of Total Inventory (Active, None identified Usable, Excess, Obsolete) for Appropriate Action Inventory is Planned at the Part Level, None identified Based on Supply and Demand Variability Inventory Performance is Measured at the None identified Dollar and Unit Levels Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to Inventory Targets Are Reviewed and Adjusted Frequently automatically query inventory levels. Obsolete Inventory is Reviewed at the Part None identified Number Level

Inputs:
Inventory Availability from S3.6 Transfer Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Availability of a product by location that is reserved, scheduled or available for sale, or the number of products ready to be or planned to be shipped to the specific customer or market at the specific time. The target for the total product inventory, including e.g. raw material, work in progress and finished goods. Product on order with a selected source. Product on order with a selected source. Product on order with a selected source.

Inventory Availability from S1.4 Transfer Product

Inventory Availability from S2.4 Transfer Product

Planning Data from EP.3 Manage PLAN Data Collection Product Availability from Source:

Product Inventory Target Levels from ES.4 Manage Product Inventory Product On Order from S1.1 Schedule Product Deliveries Product On Order from S3.3 Schedule Product Deliveries Product On Order from S2.1 Schedule Product Deliveries
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Outputs:
Product Sources to P2.3 Balance Product Resources with Product Requirements As a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services.

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P2.3 Balance Product Resources with Product Requirements


The process of developing a time-phased course of action that commits resources to meet requirements. Metrics (see Appendix A for metrics attributes):
Balance Product Resources with Product Requirements Cycle Time Cost to Balance Product Resources with Product Requirements The average time associated with balancing product resources and product requirements. The sum of the costs associated with balance of product resources with product requirements.

Best Practices:
Suppliers Share Responsibility for Balancing None identified Supply and Demand through Joint Service Agreements

Inputs:
Product Sources from P2.2 Identify, Assess, As a whole with constituent parts, all material and other resources used to And Aggregate Product Resources add value in the supply chain for a product or services. Product Requirements from P2.1 Identify, As a whole with constituent parts, all sources of demand for a product or Prioritize, and Aggregate Product service in the supply chain. Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs:
Workflow to P2.4 Establish Sourcing Plans

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P2.4 Establish Sourcing Plans


The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements. Metrics (see Appendix A for metrics attributes):
Cost to Establish Sourcing Plans Establish Sourcing Plans Cycle Time The sum of the costs associated with establishing and communicating source plans. The average time associated with establishing and communicating source plans

Best Practices:
Blanket Purchase Orders Cover Period None identified Requirements Digital Linkage (EDI, XML, Etc.) is Used to None identified Provide Real-Time Demand Information and Handle Routine Transactions

Inputs:
Workflow from P2.3 Balance Product Resources with Product Requirements

Outputs:
Sourcing Plans to DR1.4 Transfer Defective Product Sourcing Plans to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Sourcing Plans to D1.3 Reserve Inventory & Determine Delivery Date Sourcing Plans to ES.4 Manage Product Inventory Sourcing Plans to D2.3 Reserve Resources & Determine Delivery Date Sourcing Plans to ES.3 Maintain Source Data Sourcing Plans to S1.1 Schedule Product Deliveries Sourcing Plans to P1.2 Identify, Assess, and Aggregate Supply Chain Resources Sourcing Plans to P3.2 Identify, Assess, and Aggregate Production Resources Sourcing Plans to S3.3 Schedule Product Deliveries Sourcing Plans to P5.2 Identify, Assess, and Aggregate Return Resources Sourcing Plans to S3.1 Identify Sources of Supply Sourcing Plans to P5.1 Assess, and Aggregate Return Requirements Sourcing Plans to DR2.4 Transfer MRO Product Sourcing Plans to DR3.4 Transfer Excess Product Sourcing Plans to S2.1 Schedule Product Deliveries Sourcing Plans to D3.3 Enter Order, Commit Resources & Launch Program An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

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P3 Plan Make
The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements. The Category P3 includes four Level 3 Elements:
P3.1 Identify, Prioritize, and Aggregate Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P3.3 Balance Production Resources with Production Requirements P3.4 Establish Production Plans The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements.

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Return on Working Capital

Best Practices:
Multi-plant supply/demand planning and execution Distinct and Consistent Linkages Exist to Ensure that Disruptions and Opportunities in Production Are Quickly and Accurately Communicated and Responses Made

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P3.1 Identify, Prioritize, and Aggregate Production Requirements


The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Prioritize, and Aggregate Production Requirements Forecast Accuracy The sum of the costs associated with identifying, assessing and aggregating production requirements Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Identify, Prioritize, and Aggregate Production Requirements Cycle Time The average time associated with the identifying, prioritizing, and aggregating production requirements

Best Practices:
Digital linkage to supplier quoting, planning, configuration and customer Consideration of Suppliers Material Availability in Companys Supply Resources service applications (Including Suppliers Production Plans & Capability, Inventory, and Delivery Plans)

Inputs:
Bill of Materials from EP.7 Manage Planning The Bill of Materials is a structured list of all the materials or parts needed Configuration to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Item Master from EP.7 Manage Planning A record of specific information for each product, which defines the system Configuration parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Order Signal from D3.3 Enter Order, Commit Reserved inventory and/or planned capacity and delivery date for a specific Resources & Launch Program order. Order Signal from D2.3 Reserve Resources Reserved inventory and/or planned capacity and delivery date for a specific & Determine Delivery Date order. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product Routings from EP.7 Manage Product routings represent the way products are made and are integrated Planning Configuration with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Return Production Requirements from P5.4 As a whole with constituent parts, all sources of demand in the creation of Establish and Communicate Return Plans a product or service. Supply Chain Plans from P1.4 Establish Courses of action over specified time periods that represent a projected Supply Chain Plans appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Outputs:
Return Production Requirements to P3.3 Balance Production Resources with Production Requirements As a whole with constituent parts, all sources of demand in the creation of a product or service.

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P3.2 Identify, Assess, and Aggregate Production Resources


The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Assess, and Aggregate Production Resources Identify, Assess, and Aggregate Production Resources Cycle Time The sum of the costs associated with identifying, assessing and aggregating production resources. The average time associated with the identifying, assessing, and aggregating production resource availability

Best Practices:
Inventory Targets Are Reviewed and Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to Adjusted Frequently automatically query inventory levels. Obsolete Inventory is Reviewed at the Part None identified Number Level

Inputs:
Equipment and Facilities Replacement and Disposition Plans from EM.5 Manage Equipment and Facilities Inventory Availability from M3.3 Issue Sourced/In-Process Product Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Inventory Availability from M1.2 Issue Material

Inventory Availability from M2.2 Issue Sourced/In-Process Product

Planning Data from EP.3 Manage PLAN Data Collection Production Schedule from M3.2 Schedule Production Activities Production Schedule from M1.1 Schedule Production Activities Production Schedule from M2.1 Schedule Production Activities

Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs:
Production Resources to P3.3 Balance Production Resources with Production Requirements As a whole with constituent parts, all things that add value in the creation of a product or performance of a service.

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P3.3 Balance Production Resources with Production Requirements


The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. Metrics (see Appendix A for metrics attributes):
Balance Production Resources with Product Creation Requirements Cycle Time Cost to Balance Production Resources with Product Creation Requirements The average time associated with balancing production resources with production creation requirements. The sum of the costs associated with balance of production resources with product creation requirements.

Best Practices:
Inventory Targets Are Reviewed and Adjusted Frequently Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query inventory levels.

Inputs:
Return Production Requirements from P3.1 As a whole with constituent parts, all sources of demand in the creation of Identify, Prioritize, and Aggregate Production a product or service. Requirements Production Resources from P3.2 Identify, As a whole with constituent parts, all things that add value in the creation of a product or performance of a service. Assess, and Aggregate Production Resources Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs:
Workflow to P3.4 Establish Production Plans

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P3.4 Establish Production Plans


The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements. Metrics (see Appendix A for metrics attributes):
Cost to Establish Production Plans Establish Production Plans Cycle Time The sum of the costs associated with establishing and communicating production plans. The average time associated with establishing and communicating production plans

Best Practices:
Unplanned Orders Are Accepted and Scheduled Only When There is No Detrimental Impact on Overall Product Delivery Plan Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query production capacity and ATP and schedule unplanned orders.

Inputs:
Workflow from P3.3 Balance Production Resources with Production Requirements

Outputs:
Production Plans to EM.5 Manage Equipment and Facilities A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to EM.1 Manage Production Rules

Production Plans to M3.2 Schedule Production Activities

Production Plan includes production capability. Production Plans to P2.1 Identify, Prioritize, A master production plan used to allocate capacity among manufacturing and Aggregate Product Requirements resources and schedule finite manufacturing activities or executing the performance of a service. Production Plans to D2.3 Reserve Resources & Determine Delivery Date Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Production Plans to D3.3 Enter Order, Commit Resources & Launch Program

Production Plans to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

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Production Plans to D1.3 Reserve Inventory A master production plan used to allocate capacity among manufacturing & Determine Delivery Date resources and schedule finite manufacturing activities or executing the performance of a service. Production Plans to EM.2 Manage Production Performance Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Production Plans to M2.1 Schedule Production Activities

Production Plans to P5.2 Identify, Assess, and Aggregate Return Resources

Production Plans to M2.5 Stage Finished Product

Production Plans to P1.2 Identify, Assess, and Aggregate Supply Chain Resources

Production Plans to M3.6 Stage Finished Product

Production Plans to P5.1 Assess, and Aggregate Return Requirements

Production Plans to M1.1 Schedule Production Activities

Production Plans to M1.5 Stage Product

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P4 Plan Deliver
The development and establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. The Category P4 includes four Level 3 Elements:
P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P4.4 Establish Delivery Plans The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements.

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Cost to Plan Deliver Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The sum of the costs associated with planning the delivery of product. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the Deliver processes.

Return on Working Capital

Total Deliver Costs

Best Practices:
Distinct and Consistent Linkages Exist to Bi-directional Digital Links (XML, EDI, etc) or Internet procurement Ensure Disruptions and Opportunities in networks to customer service linkage Material Resources Are Quickly and Accurately Communicated and Acted Upon Proactive Education of Customers to Set None identified Expectations and Encourage Close Working Relationships (Knowledge of Long-Lead Items, Visibility to Supply Resources, Agreement on Levels of Flexibility)

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P4.1 Identify, Prioritize, and Aggregate Delivery Requirements


The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Prioritize, and Aggregate Delivery Requirements Forecast Accuracy The sum of the costs associated with identifying, assessing and aggregating deliver requirements Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Identify, Prioritize, and Aggregate Delivery Requirements Cycle Time The average time associated with the identifying, prioritizing, and aggregating delivery requirements

Best Practices:
Customer Relationship and Digital Linkages Tightly integrated supply chain or demand planning with point of sale and (XML, EDI, Etc.) Provide Accurate Visibility customer inventory systems into Actual Demand via Customer Forecasts, Product Plans, Production Plans, and Inventory Positions Electronic Matching Between POS Data and Integrated Software Systems Store Inventory (Shelves and Back Room) Eliminate Special Deals Sales to Reduce None identified Returns and Improve Forecast Accuracy (Reduces Uncertainty, Lowers Safety Stock Requirements, Cheaper to Administer) Forecasts Are Replaced with Actual B2B Integration and Application Server Systems Customer Replenishment Signals and Orders Where Possible Ideal Stock Position Based on Days/Weeks Pilot by Wal-Mart. MIT of Supply Matching Shelf Stock to Expectations A software based system that corrects shelf inventory levels based on actual product present (possible RFID solution). Identifies stock-outs from shrinkage or item misplacement. Planogram Flexibility for None identified Seasonal/Promotional changes RFID and Other Tagging POG software/field force Unplanned Orders Are Accepted and Digital Linkages using XML standards (Rosettanet, eBXML, OAGI) to Scheduled Only When There is No automatically query production capacity and ATP and schedule unplanned Detrimental Impact on Overall Product orders. Delivery Plan Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
Actual Shrink from Source: Company Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.

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DC/Vendor Lead Time from Source: Company DC/Vendor Transit Time from Source: Company Deliver Return Requirements from P5.4 Establish and Communicate Return Plans EOQ/ESQs from Source: Company

The amount of time that normally elapses between the time an order is received and the time the order is shipped. A standard allowance that is assumed on any given order for the movement of items from one operation to the next. A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) Economic Order Quantity - Result of a calculation that determines the most cost effective to quantity to order or produce. Economic Shipping Quantity - Result of a calculation that determines the most cost effective quantity to ship. A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Part of the Market Plan, which establishes an allowance or deduction, granted by the seller to the buyer, usually when the buyer meets certain stipulated conditions that reduce the price of the products purchased. For example, based upon paying early, buying in quantity, etc. The categorization of goods based upon the range of specifications met during the manufacturing process. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment. Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. The time from initial research and development to the time at which the sales and support of the product to customers are withdrawn. Promotion activities - other than advertising, publicity, and personal selling - that stimulate, interest, trial or purchase by final customers or others in the marketing channel.

Item Master from EP.7 Manage Planning Configuration Markdown Plans from Source: Company

Merchandise Category/Classification from Source: Company Order Backlog from D1.3 Reserve Inventory & Determine Delivery Date Order Backlog from D2.3 Reserve Resources & Determine Delivery Date Order Backlog from D3.3 Enter Order, Commit Resources & Launch Program Planning Data from EP.3 Manage PLAN Data Collection Point of Sale Data (Daily) from D4.6 Checkout Product Routings from EP.7 Manage Planning Configuration

Product/Category Lifecycle from Source: Company Promotion/Event Plans from Source: Company

Service Levels from EP.1 Manage Business Performance targets in service related measures (i.e. delivery Rules for PLAN Processes performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy. Stock-out History from Source: Company History of a lack of materials, components, or finished goods that are ordered. Store Shelf Inventory Counts from D4.4 Stock Shelf The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis.

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Supply Chain Plans from P1.4 Establish Supply Chain Plans Year-to-Year for Like SKU/Subclass from Source: Company

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. The sales or demand history that is analogous to the present situation for similar products, a SKU / Subclass.

Outputs:
Delivery Requirements to P4.3 Balance As a whole with constituent parts, all sources of demand in Delivery Resources and Capabilities with the delivery of a product or service. Delivery Requirements Item Stocking Requirements to D4.2 Receive The activities and techniques of determining the desired Product at Store levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts.

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P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities


The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Assess, and Aggregate Production Resources Forecast Accuracy The sum of the costs associated with identifying, assessing and aggregating production resources. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Identify, Assess, and Aggregate Delivery Resources Cycle Time The average time associated with the identifying, assessing, and aggregating delivery resource availability

Inputs:
Deliver Return Requirements from P5.4 Establish and Communicate Return Plans Finish Goods Inventory Target Levels from ED.4 Manage Finished Goods Inventories A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.

Inventory Availability/Delivery Date from D1.3 Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and Reserve Inventory & Determine Delivery operating supplies), and customer service (finished goods and spare Date parts). Determination of the time required from the receipt of the order until the item should be delivered. Inventory Availability/Delivery Date from D2.3 Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and Reserve Resources & Determine Delivery operating supplies), and customer service (finished goods and spare Date parts). Determination of the time required from the receipt of the order until the item should be delivered. Load Information from D1.5 Build Loads Planning Data from EP.3 Manage PLAN Data Collection Production Plans from P3.4 Establish Production Plans Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Resource Availability from D3.3 Enter Order, The capability of a system or resource to produce a quantity of output in a Commit Resources & Launch Program particular time period, or the available resources at a point in time able to generate an output. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

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Outputs:
Delivery Resources and Capabilities to P4.3 As a whole with constituent parts, all things that add value in the delivery of Balance Delivery Resources and Capabilities a product. with Delivery Requirements

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P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements


The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. Metrics (see Appendix A for metrics attributes):
Balance Delivery Resources with Delivery Requirements Cycle Time Cost to Balance Delivery Resources with Delivery Requirements The average time associated with balancing deliver resources and deliver requirements. The sum of the costs associated with balance of delivery resources with delivery requirements.

Best Practices:
Rules-based distribution planning system Demand Priorities Reflecting Strategic Customer Relationships as Business Policies Trading partner agreements Are Automatically Followed in Allocating Resources; First-In-First-Out (FIFO) is Utilized as the Default Scheduling Priority

Inputs:
Delivery Resources and Capabilities from As a whole with constituent parts, all things that add value in the delivery of P4.2 Identify, Assess, and Aggregate a product. Delivery Resources and Capabilities Delivery Requirements from P4.1 Identify, As a whole with constituent parts, all sources of demand in the delivery of Prioritize, and Aggregate Delivery a product or service. Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs:
Workflow to P4.4 Establish Delivery Plans

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P4.4 Establish Delivery Plans


The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. Metrics (see Appendix A for metrics attributes):
Cost to Establish Delivery Plans Establish Delivery Plans Cycle Time Fill Rate The sum of the costs associated with establishing and communicating deliver plans. The average time associated with establishing and communicating deliver plans The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours

Best Practices:
Plans that Violate Business Rules (e.g. Joint None identified Service Agreements) Are Addressed CrossFunctionally, Considering Total Business Impacts (Revenue, Cost, Quality, Customer Service, Etc.) Plans Which Do Not Violate Business Rules None identified Are Communicated Openly and CrossFunctionally for Execution Specific Changes to the Plan Are Agreed to None identified Cross-Functionally, According to Defined Business Rules None identified To Address Conditions which Cannot be Adequately Satisfied During the Current Planning Period, Each Functional Area Develops Prioritized Recommendations for the Subsequent Planning Period

Inputs:
Workflow from P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements

Outputs:
Delivery Plans to P1.2 Identify, Assess, and A plan for a course of action over specified time periods that involves a Aggregate Supply Chain Resources projected appropriation of supply resources to meet delivery requirements. Delivery Plans to D1.3 Reserve Inventory & A plan for a course of action over specified time periods that involves a Determine Delivery Date projected appropriation of supply resources to meet delivery requirements. Delivery Plans to P5.1 Assess, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Return Requirements Delivery Plans to P3.1 Identify, Prioritize, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Production Requirements Delivery Plans to P2.1 Identify, Prioritize, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Product Requirements Delivery Plans to D3.3 Enter Order, Commit A plan for a course of action over specified time periods that involves a Resources & Launch Program projected appropriation of supply resources to meet delivery requirements. Delivery Plans to P5.2 Identify, Assess, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Return Resources Delivery Plans to M3.6 Stage Finished A plan for a course of action over specified time periods that involves a Product projected appropriation of supply resources to meet delivery requirements. Delivery Plans to D2.3 Reserve Resources & A plan for a course of action over specified time periods that involves a Determine Delivery Date projected appropriation of supply resources to meet delivery requirements. Delivery Plans to M1.5 Stage Product A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Delivery Plans to M2.5 Stage Finished A plan for a course of action over specified time periods that involves a Product projected appropriation of supply resources to meet delivery requirements.
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Stocking Requirements to D4.1 Generate Stocking Schedule

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts.

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P5 Plan Return
A strategic or tactical process to establish and adjust courses of action or tasks over specified time periods that represent a projected appropriation of return resources and assets to meet anticipated as well as unanticipated return requirements. The scope includes unplanned returns of sold merchandise as well as planned returns of rotable products that are refurbished for reissue to customers. The Category P5 includes four Level 3 Elements:
P5.1 Assess, and Aggregate Return Requirements P5.2 Identify, Assess, and Aggregate Return Resources The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. P5.3 Balance Return Resources with Return The process of developing courses of action that make feasible the Requirements commitment the appropriate return resources and or assets to satisfy return requirements. P5.4 Establish and Communicate Return The establishment and communication of courses of action over specified Plans time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements.

Metrics (see Appendix A for metrics attributes):


Cost to Plan Return Order Fulfillment Cycle Time The sum of the costs associated with planning the returning of product. The average actual cycle time consistently achieved to fulfill customer orders.

Best Practices:
Planning and Forecasting Outsourced Return process Use Demand Planning Collaborative planning and forecasting with RETURN outsourcing partners (3PL, reverse drop shippers, etc.) Demand Planning Systems to forecast returns, predict yield rates for reusable products or components, determine demand in a resale market, and project a revenue stream.

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P5.1 Assess, and Aggregate Return Requirements


The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Prioritize, and Aggregate Return Requirements Identify, Prioritize, and Aggregate Return Requirements Cycle Time The sum of the costs associated with identifying, assessing and aggregating return requirements. The average time associated with the identifying, prioritizing, and aggregating return requirements

Best Practices:
Having real time data on return demand and including it in the plan and forecast. Requires a connection with customers, call centers or CRM system, possibly to the store level with retail returns. The return demand needs to be included in the production plan as soon as possible because upon repair it may be the next piece of serviceable inventory to satisfy demand. Use Historical Based Return Rate Forecasts None identified Real Time Return Anticipation

Inputs:
Actual Sales History from D2.2 Receive, Configure, Enter and Validate Order Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.)

Actual Sales History from D3.3 Enter Order, Amount of past sales spanning any specified period of time (weeks, Commit Resources & Launch Program months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Actual Sales History from D1.2 Receive, Enter & Validate Order Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. A promise in a contract that binds one to a specific course of action. These promises maybe made by either the buyer of seller.

Contractual Obligations from Source: Plan (Marketing, Sales, Legal)

Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Historical Return Rates from SR1.3 Request A judgmental forecasting technique based upon the a return history that is Defective Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR3.1 Authorize Excess Product Return A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

Historical Return Rates from SR3.3 Request A judgmental forecasting technique based upon the a return history that is Excess Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR2.1 Authorize MRO Product Return
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product, and using the past pattern to predict future returns. Historical Return Rates from SR2.3 Request A judgmental forecasting technique based upon the a return history that is MRO Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR1.1 Authorize Defective Product Return Item Master from EP.7 Manage Planning Configuration Planning Data from EP.3 Manage PLAN Data Collection Product Routings from EP.7 Manage Planning Configuration A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans from P3.4 Establish Production Plans

Production Plan includes production capability. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). An update to the aggregate Supply-Chain Forecasts of Demand by Product Family supporting the Market/Channel Plans. Corresponding Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by from Source: Plan (Marketing, Sales, Product Product Family supporting the Market/Channel Plans. Corresponding Management/Engineering) Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions from EP.5 An update to the expected cause and effect statements that are the base Manage Integrated Supply Chain Capital for the Revised Aggregate Forecast and Projections. These are reviewed Assets periodically with actual results to verify the linkage of actual cause and effect. Revised Business Assumptions from EP.9 An update to the expected cause and effect statements that are the base Align Supply Chain Unit Plan with Financial for the Revised Aggregate Forecast and Projections. These are reviewed Plan periodically with actual results to verify the linkage of actual cause and effect. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supply Chain Plans from P1.4 Establish Courses of action over specified time periods that represent a projected Supply Chain Plans appropriation of total supply-chain resources to meet total supply-chain demand requirements. Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Revised Aggregate Forecast and Projections from EP.9 Align Supply Chain Unit Plan with Financial Plan

Outputs:
Return Requirements to P5.3 Balance As a whole with constituent parts, all sources of demand for the return of a Return Resources with Return Requirements product.

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P5.2 Identify, Assess, and Aggregate Return Resources


The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. Metrics (see Appendix A for metrics attributes):
Cost to Identify, Assess, and Aggregate Return Resources Identify, Assess, and Aggregate Return Resources Cycle Time The sum of the costs associated with identifying, assessing and aggregating return resources. The average time associated with the identifying, assessing, and aggregating return resource availability

Best Practices:
Allow Source Suppliers Full Visibility into the Shared supply chain forecasting and event management functionality with Current Return Situations and the Source suppliers Forecasted Return Activity Joint Service Agreements with Source Collaborative planning tools with the Source suppliers Suppliers to Share Responsibilities and Costs of Returns Rapid Reconfiguration of Return Capacity Use of RETURN tracking and projection systems and flexible partner agreements that allow the rapid addition of RETURN capacity to match unexpected demand.

Inputs:
Budget Constraints from EP.9 Align Supply Chain Unit Plan with Financial Plan Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as pattern for and a control over future operations. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Information required in the process of integrating and maintaining the accuracy of return execution.

Data About Return Capabilities from ER.3 Manage Return Data Collection Delivery Plans from P4.4 Establish Delivery Plans Inventory Strategy from EP.4 Manage Integrated Supply Chain Inventory

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Make/Buy Decision from EP.5 Manage The output of the process used to determine whether a demand will be Integrated Supply Chain Capital Assets supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. MRO Product Return Capabilities from ER.2 See Product Return Capabilities Manage Performance of Return Processes MRO Product Return Capabilities from ER.5 See Product Return Capabilities Manage Return Capital Assets Outsource Plan from EP.6 Manage A plan that describes how a company will utilize third party business Integrated Supply Chain Transportation partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels.
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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Projected Internal and External Capacity An estimate of the amount of product or service a particular part of the from EP.6 Manage Integrated Supply Chain business (internal capacity) or a third party business partner (external Transportation capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Regulatory Requirements from EP.8 Manage Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). PLAN Regulatory Requirements and Compliance Return Inventory Targets from ER.4 Manage The goals and approach to the management of return inventories. Return Inventory Return Inventory Transfer Data from DR2.3 The process of receipt and verification of the returned item against the Receive MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.3 The process of receipt and verification of the returned item against the Receive Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.3 The process of receipt and verification of the returned item against the Receive Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Process Capabilities from EP.2 Manage Performance of Supply Chain The capability of a system or resources to produce a quantity output in a particular time period

Return Process Workflow Definition and Definition and maintenance of the information flow about the Returns Policies from ER.7 Manage Return Network supply chain network for a group of similar or complimentary items through Configuration out their life cycle Return Regulatory Requirements from ER.8 Return requirements dictated by process standards set by external entities Manage Return Regulatory Requirements (i.e. government, trade officials, etc.). Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements from ER.6 Manage Return Transportation Revised Capital Plan from EP.5 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Capital Assets in specific business plans or factors and assumptions affecting a business plan. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs:
Return Resources to P5.3 Balance Return Resources with Return Requirements All resources that add value to, execute, or constrain the processes for the return of a product.

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P5.3 Balance Return Resources with Return Requirements


The process of developing courses of action that make feasible the commitment the appropriate return resources and or assets to satisfy return requirements. Metrics (see Appendix A for metrics attributes):
Balance Return Resources with Return Requirements Cycle Time Cost to Balance Return Resources with Return Requirements The average time associated with balancing return resources and return requirements. The sum of the costs associated with balance of return resources with return requirements.

Best Practices:
Advance Planning Engines Applied to Advanced math model solvers that optimize / minimize constraints, Returns routing, restocking priorities and costs. Cost Accounting System to Determine the ABC costing system Best Return Process to Follow from a Cost of Business Perspective Dynamic Return Restocking Management Dynamic prioritization of restocking plans in order to rapidly re-sell products that are in demand thus reducing new inventory demand.

Inputs:
Return Resources from P5.2 Identify, All resources that add value to, execute, or constrain the processes for the return of a product. Assess, and Aggregate Return Resources Return Requirements from P5.1 Assess, and As a whole with constituent parts, all sources of demand for the return of a product. Aggregate Return Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed. Supply Chain Performance Improvement A plan that describes goals and objectives for a supply chain and the steps Plan from EP.2 Manage Performance of that will be taken to reach those goals and objectives from the current Supply Chain performance levels.

Outputs:
Workflow to P5.4 Establish and Communicate Return Plans

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P5.4 Establish and Communicate Return Plans


The establishment and communication of courses of action over specified time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements. Metrics (see Appendix A for metrics attributes):
Cost to Establish and Communicate Return Plans Establish and Communicate Return Plans Cycle Time The sum of the costs associated with establishing and communicating return plans. The average time associated with establishing and communicating return plans

Best Practices:
Full Internal (And External If Source Suppliers Share in the Return Process Responsibilities) Visibility to Return Plans Rapid, Dynamic Reconfiguration of Return Process to Meet Demand Intranet and Extranet communications tools The ability to reset and reconfigure the RETURN process capacity, routings, etc. by transmitting new requirements and directives using mathematical models, the Internet, outsourcing and flexible partnership agreements. Also requires integration with the CRM system for real time redirection of customer returns based upon cost and capacity.

Inputs:
Workflow from P5.3 Balance Return Resources with Return Requirements

Outputs:
Deliver Return Requirements to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Deliver Return Requirements to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Process Procedures to ER.2 Manage Performance of Return Processes A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process.

Process Procedures to ER.8 Manage Return A planned series of actions or operations that advances returns from one Regulatory Requirements stage to another, or established procedures to manage and execute all activities in the process. Process Procedures to ER.1 Manage Business Rules for Return Processes Product Return Capabilities to DR1.1 Authorize Defective Product Return A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process. The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

Product Return Capabilities to DR2.1 Authorize MRO Product Return

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Product Return Capabilities to DR3.1 Authorize Excess Product Return

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to ER.4 Manage Return Inventory Return Plans to SR2.2 Disposition MRO Product

Return Plans to ER.5 Manage Return Capital Courses of action over specified time periods that represent the projected Assets appropriation of required return resources and or assets to meet the return process requirements. Return Plans to ER.6 Manage Return Transportation Return Plans to SR3.2 Disposition Excess Product Return Plans to DR1.1 Authorize Defective Product Return Return Plans to ER.7 Manage Return Network Configuration Return Plans to DR3.1 Authorize Excess Product Return Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to SR1.2 Disposition Defective Courses of action over specified time periods that represent the projected Product appropriation of required return resources and or assets to meet the return process requirements. Return Plans to DR2.1 Authorize MRO Product Return Return Production Requirements to P3.1 Identify, Prioritize, and Aggregate Production Requirements Return Rules and Policies to ER.1 Manage Business Rules for Return Processes Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. As a whole with constituent parts, all sources of demand in the creation of a product or service. Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organizations business strategy, goals and objectives. All sources of demand in the Source Return of a product or service.

Source Return Requirements to P2.1 Identify, Prioritize, and Aggregate Product Requirements

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EP Enable PLAN
A plan for the development and establishment of courses of action over specified time periods to appropriate delivery resources to meet projected delivery requirements. The plan contains necessary business requirements for information and relationships to effectively and efficiently PLAN the Supply Chain. The Category EP includes nine Level 3 Elements:
EP.1 Manage Business Rules for PLAN Processes The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. EP.2 Manage Performance of Supply Chain The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. EP.3 Manage PLAN Data Collection The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. EP.4 Manage Integrated Supply Chain The process of establishing total supply chain inventory strategy and Inventory planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. EP.5 Manage Integrated Supply Chain The process of defining capacity strategy (i.e. internal versus contract Capital Assets manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organizations capital assets to operate the integrated supply chain. EP.6 Manage Integrated Supply Chain The process of defining an integrated supply chain transportation strategy Transportation and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. EP.7 Manage Planning Configuration The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and after-market support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. EP.8 Manage PLAN Regulatory The process of identifying and complying with regulatory documentation Requirements and Compliance and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. EP.9 Align Supply Chain Unit Plan with The process of revising the long-term supply chain capacity and resource Financial Plan plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions.

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EP.1 Manage Business Rules for PLAN Processes


The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. Metrics (see Appendix A for metrics attributes):
Cost to Manage Business Rules for PLAN Processes Manage Business Rules for PLAN Processes Cycle Time The sum of the .Costs to Manage Business Rules for PLAN Processes The average time associated with managing plan business rules

Best Practices:
Integrated Business and Supply-Chain Supply Chain performance dashboard capability. Planning Processes Where Cross-Functional Input is Leveraged to Set Business Rules

Inputs:
Business Plan from Source: Company A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. A set of minimum acceptable values that describe service requirements of a particular industry, channel, and/or customer segment. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance.

Service Requirements from Source: Company Strategic Plan from Source: Company

Outputs:
Planning Decision Policies to P4.3 Balance Any company policies that affect how a planning process is defined, Delivery Resources and Capabilities with approved, and performed. Delivery Requirements Planning Decision Policies to P3.3 Balance Any company policies that affect how a planning process is defined, Production Resources with Production approved, and performed. Requirements Planning Decision Policies to P1.3 Balance Any company policies that affect how a planning process is defined, Supply Chain Resources with Supply Chain approved, and performed. Requirements Planning Decision Policies to P5.3 Balance Any company policies that affect how a planning process is defined, Return Resources with Return Requirements approved, and performed. Planning Decision Policies to P2.3 Balance Any company policies that affect how a planning process is defined, Product Resources with Product approved, and performed. Requirements Service Levels to P4.1 Identify, Prioritize, Performance targets in service related measures (i.e. delivery and Aggregate Delivery Requirements performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy.

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EP.2 Manage Performance of Supply Chain


The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. Metrics (see Appendix A for metrics attributes):
Cost to Manage Performance of Supply The sum of the costs associated with assessing supplier performance. Chain Manage Performance of Supply Chain Cycle The average time associated with managing the performance of return Time activities

Best Practices:
Efficient and Effective Benchmarking None identified Process Leveraging Cross Industry Metrics and Definitions Reliable Continuous Improvement Process None identified and Methodology. Sound Project Management Process and None identified Methodology

Inputs:
Continuous Improvement Process from Source: Company Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance Supply-Chain Performance Metrics from ES.4 Manage Product Inventory Supply-Chain Performance Metrics from ER.2 Manage Performance of Return Processes Supply-Chain Performance Metrics from EM.2 Manage Production Performance A process that identifies opportunities for performance improvement and facilitates their realization through the use of metrics, process development methodologies/approaches, project management principles, and reporting tools that support strategic and business plans. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Outputs:
Return Process Capabilities to P5.2 Identify, The capability of a system or resources to produce a quantity output in a Assess, and Aggregate Return Resources particular time period Supply Chain Performance Improvement Plan to P1.3 Balance Supply Chain Resources with Supply Chain Requirements Supply Chain Performance Improvement Plan to P5.3 Balance Return Resources with Return Requirements A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels. A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels.

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EP.3 Manage PLAN Data Collection


The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
Cost to Manage PLAN Data Collection Manage PLAN Data Collection Cycle Time The sum of the costs to Manage PLAN Data Collection. The average time associated with collecting plan data

Best Practices:
Integrated Demand and Supply Planning Demand Planning, Supply Planning and especially the Supply Plan Execution Are no longer disconnected. All required planning and execution data is integrated and shared in between all functional areas within an organization. Single Data Source for Decision Support and Business Rules Memory based planning systems provide one single data model and data mart (including the business rules) for the entire supply chain planning and execution process. Algorithms use the business rules as the driver for the planning engine.

A data warehouse/data mart is the source of all planning (master) data, business rules and transaction data. Analyzing tools enable the ongoing maintenance and improvement of the business rules based on actual data.

Inputs:
Supply Chain Execution Data from Source: Company Information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

Outputs:
Planning Data to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Planning Data to P5.1 Assess, and Aggregate Return Requirements Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P1.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Supply Chain Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P1.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Supply Chain Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P2.2 Identify, Assess, And Execution information necessary to plan the balance of supply chain Aggregate Product Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P3.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Production Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P5.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Return Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P4.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Delivery Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P2.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Product Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

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Planning Data to P3.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Production Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

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EP.4 Manage Integrated Supply Chain Inventory


The process of establishing total supply chain inventory strategy and planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Metrics (see Appendix A for metrics attributes):
Cost to Manage Integrated Supply Chain Inventory Forecast Accuracy The sum of the costs associated with managing the integrated supply chain inventory. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Manage Integrated Supply Chain Inventory The average time associated with managing integrated supply chain Cycle Time inventory

Best Practices:
Capability to Run Multiple Simulated Full- Supply Chain modeling capabilities, i.e. Advanced Planning Systems. Stream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios

Inputs:
Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information from DR3.1 Authorize Excess on uncertain demand for the finished products Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information from DR1.1 Authorize Defective on uncertain demand for the finished products Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Information from DR2.1 Authorize MRO Product Return Planning Decision Policies from Source: Any company policies that affect how a planning process is defined, Company approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs:
Inventory Capacity to EM.1 Manage Production Rules Inventory Capacity to EM.2 Manage Production Performance Maximum rate of output for the inventory management and warehouse process Maximum rate of output for the inventory management and warehouse process

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Inventory Strategy to P5.2 Identify, Assess, and Aggregate Return Resources

Inventory Strategy to P1.3 Balance Supply Chain Resources with Supply Chain Requirements

Manage Integrated Supply Chain Inventory Information to DR1.1 Authorize Defective Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Information to DR3.1 Authorize Excess Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information to DR2.1 Authorize MRO Product on uncertain demand for the finished products Return

The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

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EP.5 Manage Integrated Supply Chain Capital Assets


The process of defining capacity strategy (i.e. internal versus contract manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organizations capital assets to operate the integrated supply chain. Metrics (see Appendix A for metrics attributes):
Cost to Manage Integrated Supply Chain Capital Assets Forecast Accuracy The sum of the costs associated with managing integrated supply chain assets. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Manage Integrated Supply Chain Capital Assets Cycle Time The average time associated with managing integrated supply chain capital assets

Best Practices:
Alignment of Strategic and Business Plans with Long-Term Capacity and Resource Planning Capability to Run Multiple Simulated FullStream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios Use of Cross Functional Teams to Execute the Process of Developing Long-Term Capacity and Resource Plans None identified Supply Chain modeling capabilities, i.e. Advanced Planning Systems. None identified

Inputs:
Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Planning Decision Policies from Source: Any company policies that affect how a planning process is Company defined, approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs:
Make/Buy Decision to P5.2 Identify, Assess, The output of the process used to determine whether a and Aggregate Return Resources demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. Make/Buy Decision to P1.2 Identify, Assess, The output of the process used to determine whether a and Aggregate Supply Chain Resources demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally.

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Outsource Plan to P1.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Supply Chain Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Production Capacity to EM.2 Manage The highest, sustainable output rate which can be achieved Production Performance with the current product specifications, product mix, worker effort, plant, and equipment. Production Capacity to EM.1 Manage Production Rules Projected Internal and External Capacity The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment. An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan.

Revised Business Assumptions to P5.1 Assess, and Aggregate Return Requirements Revised Business Assumptions to P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements Revised Capital Plan to P5.2 Identify, Assess, and Aggregate Return Resources Revised Capital Plan to P1.2 Identify, Assess, and Aggregate Supply Chain Resources

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EP.6 Manage Integrated Supply Chain Transportation


The process of defining an integrated supply chain transportation strategy and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. Metrics (see Appendix A for metrics attributes):
Cost to Manage Integrated Supply Chain Transportation Forecast Accuracy The sum of the costs associated with managing integrated supply chain transportation. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Manage Integrated Supply Chain Transportation Cycle Time The average time associated with managing integrated supply chain transportation

Best Practices:
Alignment of Strategic and Business Plans None identified with Long-Term Capacity and Resource Planning Capability to Run Simulated Full-Stream Supply chain modeling and visualization system Supply/Demand Balancing for What-If Scenarios Use of Cross Functional Teams to Execute None identified the Process of Developing Long-Term Capacity and Resource Plans

Inputs:
Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Planning Decision Policies from Source: Any company policies that affect how a planning process is Company defined, approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs:
Outsource Plan to P1.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Supply Chain Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations.

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Outsource Plan to P5.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Return Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Projected Internal and External Capacity An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Projected Internal and External Capacity to An estimate of the amount of product or service a particular P5.2 Identify, Assess, and Aggregate Return part of the business (internal capacity) or a third party Resources business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Revised Capital Plan to P1.2 Identify, A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and Assess, and Aggregate Supply Chain assumptions affecting a business plan. Resources Transportation Capacity to EM.2 Manage The capability of a transportation system to perform its Production Performance function. Transportation Capacity to EM.1 Manage Production Rules The capability of a transportation system to perform its function.

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EP.7 Manage Planning Configuration


The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and after-market support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. Metrics (see Appendix A for metrics attributes):
Cost to Manage Planning Configuration Forecast Accuracy The sum of the Cost to Manage Planning Configuration Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. Manage Planning Configuration Cycle Time The average time associated with managing the planning of the supply chain configuration

Best Practices:
ABC Classification Incorporates leading practices such as Efficient Consumer Response, Collaborative Planning, Forecasting, and Replenishment, Vendor Managed Inventory, and real time point of consumption reporting. New Items Introductions Are part of the Sales and Operations Planning Process at the General Management Business Team Level SKU Rationalization Use of Platform Teams in the New Product Development Process None identified None identified

None identified

None identified None identified

Outputs:
Bill of Materials to P3.1 Identify, Prioritize, and Aggregate Production Requirements The Bill of Materials is a structured list of all the materials or parts needed to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Bill of Materials to P2.1 Identify, Prioritize, The Bill of Materials is a structured list of all the materials or parts needed and Aggregate Product Requirements to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Item Master to P5.1 Assess, and Aggregate A record of specific information for each product, which defines the system Return Requirements parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Item Master to P2.1 Identify, Prioritize, and A record of specific information for each product, which defines the system Aggregate Product Requirements parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Item Master to P4.1 Identify, Prioritize, and A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, Aggregate Delivery Requirements etc) systems. Item Master to P3.1 Identify, Prioritize, and A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, Aggregate Production Requirements etc) systems.

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Product Routings to P2.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Product Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P3.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Production Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P5.1 Assess, and Product routings represent the way products are made and are integrated Aggregate Return Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P4.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Delivery Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

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EP.8 Manage PLAN Regulatory Requirements and Compliance


The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. Metrics (see Appendix A for metrics attributes):
Cost to Manage Plan Regulatory Requirements and Compliance Manage Plan Regulatory Requirements and Compliance Cycle Time The sum of the costs to Manage Plan Regulatory Requirements and Compliance. The average time associated with managing the planning of regulatory requirements and compliance

Outputs:
Regulatory Requirements to P5.2 Identify, Assess, and Aggregate Return Resources Regulatory Requirements to P1.2 Identify, Assess, and Aggregate Supply Chain Resources Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.).

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EP.9 Align Supply Chain Unit Plan with Financial Plan


The process of revising the long-term supply chain capacity and resource plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions. Metrics (see Appendix A for metrics attributes):
Align Supply Chain Unit Plan with Financial Plan Cycle Time Cost to Align Supply Chain Unit Plan with Financial Plan The average time associated with aligning the supply chain unit plan with the financial plan The sum of the costs associated with aligning supply chain performance plans with financial plans.

Best Practices:
Re-Planning Process Exists in Multi-Levels Business to business Internet capability to share common data. of the Supply-Chain between Business Enterprises None identified Re-Planning Process Links the Supply Chain Operation with the Business Strategy and the Marketing Strategy Strategic Sales and Operations Planning None identified Process in Place and Managed at the Executive Level

Inputs:
Business Plan from Source: Company A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance.

Strategic Plan from Source: Company

Outputs:
Budget Constraints to P5.2 Identify, Assess, A plan that includes an estimate of future costs and revenues related to and Aggregate Return Resources expected activities. The budget serves as pattern for and a control over future operations. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by Product to P5.1 Assess, and Aggregate Return Family supporting the Market/Channel Plans. Corresponding Projections, Requirements supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by Product to P1.1 Identify, Prioritize, and Aggregate Family supporting the Market/Channel Plans. Corresponding Projections, Supply Chain Requirements supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions to P5.1 An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed Assess, and Aggregate Return periodically with actual results to verify the linkage of actual cause and Requirements effect. Revised Business Assumptions to P1.1 An update to the expected cause and effect statements that are the base Identify, Prioritize, and Aggregate Supply for the Revised Aggregate Forecast and Projections. These are reviewed Chain Requirements periodically with actual results to verify the linkage of actual cause and effect.

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S1 Source Stocked Product


The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services. The Category S1 includes five Level 3 Elements:
S1.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

S1.2 Receive Product S1.3 Verify Product S1.4 Transfer Product

S1.5 Authorize Supplier Payment

Metrics (see Appendix A for metrics attributes):


Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Product Acquisition Costs The sum of the costs associated with Source. Value of raw materials (COGS 365). The average actual cycle time consistently achieved to fulfill customer orders. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

Best Practices:
Alliance and Leverage Agreements Joint Service Agreements (JSA) Postponement None identified Collaborative Planning Systems Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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S1.1 Schedule Product Deliveries


Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
% Schedules Changed within Suppliers Lead Time Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices:
Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs:
Logistics Selection from ES.6 Manage Incoming Product Production Schedule from M2.1 Schedule Production Activities Production Schedule from M3.2 Schedule Production Activities Production Schedule from M1.1 Schedule Production Activities Replenishment Signal from M3.3 Issue Sourced/In-Process Product Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from M1.2 Issue Material
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Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system.
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Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supplier Performance from ES.2 Assess The results of measuring the actual supplier performance on cost, quality, Supplier Performance engineering, purchasing, and so on, based on an agreed set of measurements.

Outputs:
Procurement Signal (Supplier) to Supplier Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

Product On Order to P2.2 Identify, Assess, Product on order with a selected source. And Aggregate Product Resources Product On Order to ES.9 Manage Supplier Product on order with a selected source. Agreements Scheduled Receipts to D1.8 Receive Product Product due to arrive. from Source or Make Scheduled Receipts to M1.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to S1.2 Receive Product Product due to arrive. Scheduled Receipts to D4.2 Receive Product Product due to arrive. at Store Scheduled Receipts to M2.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to M3.2 Schedule Product due to arrive. Production Activities

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S1.2 Receive Product


The process and associated activities of receiving product to contract requirements. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
% Orders/ Lines Processed Complete % Orders/ Lines Received On-Time To Demand Requirement % Orders/ Lines Received with Correct Shipping Documents Cost to Receive Product Receiving Product Cycle Time The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices:
Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Carrier Agreement - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use - Electronic Tag tracking to Point of Use (POU) destination (Dock to Line or End Destination) Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
Defective Products from DR1.4 Transfer Defective Product Excess Products from DR3.4 Transfer Excess Product MRO Products from DR2.4 Transfer MRO Product Product from Source: Supplier Scheduled Receipts from S1.1 Schedule Product Deliveries Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Material in excess of the current requirements. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. The end object of a transformation process that includes physical objects, information or services. Product due to arrive.

Outputs:

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Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria. Receipt Verification to ES.8 Manage Import/Export Requirements Receipt Verification to ES.1 Manage Sourcing Business Rules Receipt Verification to S1.3 Verify Product Receipt Verification to ED.8 Manage Import/Export Requirements Receipt Verification to ES.6 Manage Incoming Product Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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S1.3 Verify Product


The process and actions required determining product conformance to requirements and criteria. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
% Orders/ Lines Received Defect Free Cost to Verify Product Verify Product Cycle Time The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices:
Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Electronic Tag tracking to Point of Use (POU) destination Supplier Replaces Defective Material at Electronic Tag tracking to Point of Use (POU) destination Customers Facility with Good Product as Required

Inputs:
Receipt Verification from S1.2 Receive Product Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs:
Receipt Verification to S1.4 Transfer Product Acknowledgement that the product received conforms to specified requirements and criteria. Receipt Verification to ES.1 Manage Sourcing Business Rules Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria.

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S1.4 Transfer Product


The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. Metrics (see Appendix A for metrics attributes):
% Product Transferred On-Time to Demand The number of product orders / lines that are transferred on-time to Requirement demand requirements divided by the total orders / lines transferred in the measurement period % Product Transferred without Transaction The number of transactions processed without error divided by the total Errors transactions processed in the measurement period Cost to Transfer Product The sum of the costs associated with transferring product to Make or Deliver processes Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Transfer Product Cycle Time The average time associated transfer until product is moved to the next process.

Best Practices:
Capability Transfer to Organization Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs:
Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories Product Inventory Location from ES.4 Manage Product Inventory The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The physical storage location where product inventory is held in stock prior to use or shipment.

Receipt Verification from S1.3 Verify Product Acknowledgement that the product received conforms to specified requirements and criteria. Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from M1.2 Issue Material Replenishment Signal from M3.3 Issue Sourced/In-Process Product Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date WIP Inventory Location from EM.6 Manage Transportation Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

Outputs:
Daily Replenishment Requirements to D4.1 Resources needed to meet Item stocking schedule requirement. Generate Stocking Schedule
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Existing Inventory Data to ES.4 Manage Product Inventory

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

Inventory Availability to P2.2 Identify, Those stocks or items on hand used to support production (raw materials Assess, And Aggregate Product Resources and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to ES.4 Manage Product Inventory Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D4.2 Receive Product at Store

Inventory Availability to D1.8 Receive Product from Source or Make

Inventory Availability to D1.3 Reserve Inventory & Determine Delivery Date

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Inventory Availability to M1.2 Issue Material Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to M2.2 Issue Sourced/In-Process Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Customer selected retail finished goods transferred to the point of sale. Product being transferred to the appropriate stocking location within the supply chain.

Loaded Retail Cart or Pallet to D4.4 Stock Shelf Transferred Product to S1.5 Authorize Supplier Payment

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S1.5 Authorize Supplier Payment


The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices:
Pay on Receipt Electronic Invoice Processing

Inputs:
Payment Terms from ES.9 Manage Supplier The process of authorizing payments and paying suppliers for product or Agreements services. This process includes invoice collection, invoice matching and the issuance of checks. Transferred Product from S1.4 Transfer Product Product being transferred to the appropriate stocking location within the supply chain.

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S2 Source Make-to-Order Product


The procurement and delivery of product that is built to a specific design or configured based on the requirements of a particular customer order. The Category S2 includes five Level 3 Elements:
S2.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product

S2.5 Authorize Supplier Payment

Metrics (see Appendix A for metrics attributes):


Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Perfect Order Fulfillment The sum of the costs associated with Source. Value of raw materials (COGS 365). The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Product Acquisition Costs

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

Best Practices:
Automated Statistical Process Control (SPC)None identified Joint Service Agreements (JSA) Collaborative Planning Systems Postponement Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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S2.1 Schedule Product Deliveries


Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. Metrics (see Appendix A for metrics attributes):
% Schedules Changed within Suppliers Lead Time Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices:
Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs:
Logistics Selection from ES.6 Manage Incoming Product Production Schedule from M3.2 Schedule Production Activities Production Schedule from M2.1 Schedule Production Activities Production Schedule from M1.1 Schedule Production Activities Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from D2.3 Reserve Resources & Determine Delivery Date Replenishment Signal from M3.3 Issue Sourced/In-Process Product Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system.

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Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Source Execution Data from M2.2 Issue Sourced/In-Process Product Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs.

Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supplier Performance from ES.2 Assess The results of measuring the actual supplier performance on cost, quality, Supplier Performance engineering, purchasing, and so on, based on an agreed set of measurements.

Outputs:
Procurement Signal (Supplier) to Supplier Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

Product On Order to P2.2 Identify, Assess, Product on order with a selected source. And Aggregate Product Resources Product On Order to ES.9 Manage Supplier Product on order with a selected source. Agreements Scheduled Receipts to S2.2 Receive Product Product due to arrive. Scheduled Receipts to M1.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to M3.2 Schedule Product due to arrive. Production Activities Scheduled Receipts to M2.1 Schedule Product due to arrive. Production Activities

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S2.2 Receive Product


The process and associated activities of receiving product to contract requirements. Metrics (see Appendix A for metrics attributes):
% Orders/ Lines Processed Complete % Orders/ Lines Received On-Time To Demand Requirement % Orders/ Lines Received with Correct Shipping Documents Cost to Receive Product Receiving Product Cycle Time The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices:
Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Carrier Agreement - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use - Electronic Tag tracking to Point of Use (POU) destination (Dock to Line or End Destination) Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
Defective Products from DR1.4 Transfer Defective Product Excess Products from DR3.4 Transfer Excess Product MRO Products from DR2.4 Transfer MRO Product Product from Source: Supplier Scheduled Receipts from S2.1 Schedule Product Deliveries Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Material in excess of the current requirements. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. The end object of a transformation process that includes physical objects, information or services. Product due to arrive.

Outputs:
Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria.

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Receipt Verification to ES.8 Manage Import/Export Requirements Receipt Verification to ES.6 Manage Incoming Product Receipt Verification to ES.1 Manage Sourcing Business Rules Receipt Verification to ED.8 Manage Import/Export Requirements Receipt Verification to S2.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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S2.3 Verify Product


The process and actions required determining product conformance to requirements and criteria. Metrics (see Appendix A for metrics attributes):
% Orders/ Lines Received Defect Free Cost to Verify Product Verify Product Cycle Time The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices:
Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Electronic Tag tracking to Point of Use (POU) destination Electronic Tag tracking to Point of Use (POU) destination Supplier Replaces Defective Material at Customers Facility with Good Product as Required

Inputs:
Receipt Verification from S2.2 Receive Product Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs:
Receipt Verification to S2.4 Transfer Product Acknowledgement that the product received conforms to specified requirements and criteria. Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria. Receipt Verification to ES.1 Manage Sourcing Business Rules Acknowledgement that the product received conforms to specified requirements and criteria.

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S2.4 Transfer Product


The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. Metrics (see Appendix A for metrics attributes):
% Product Transferred On-Time to Demand The number of product orders / lines that are transferred on-time to Requirement demand requirements divided by the total orders / lines transferred in the measurement period % Product Transferred without Transaction The number of transactions processed without error divided by the total Errors transactions processed in the measurement period Cost to Transfer Product The sum of the costs associated with transferring product to Make or Deliver processes Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Transfer Product Cycle Time The average time associated transfer until product is moved to the next process.

Best Practices:
Capability Transfer to Customer Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs:
Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories Product Inventory Location from ES.4 Manage Product Inventory The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The physical storage location where product inventory is held in stock prior to use or shipment.

Receipt Verification from S2.3 Verify Product Acknowledgement that the product received conforms to specified requirements and criteria. Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date Replenishment Signal from M3.3 Issue Sourced/In-Process Product Replenishment Signal from M1.2 Issue Material WIP Inventory Location from EM.6 Manage Transportation Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

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Outputs:
Existing Inventory Data to ES.4 Manage Product Inventory Inventory Availability to M2.2 Issue Sourced/In-Process Product Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D2.3 Reserve Resources & Determine Delivery Date

Inventory Availability to D2.9 Pick Product

Inventory Availability to M1.2 Issue Material Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to ES.4 Manage Product Inventory Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Inventory Availability to P2.2 Identify, Those stocks or items on hand used to support production (raw materials Assess, And Aggregate Product Resources and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Transferred Product to S2.5 Authorize Supplier Payment Product being tranferred to the appropriate stocking location within the supply chain.

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S2.5 Authorize Supplier Payment


The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Metrics (see Appendix A for metrics attributes):
Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices:
Pay on Receipt Electronic Invoice Processing

Inputs:
Payment Terms from ES.9 Manage Supplier The process of authorizing payments and paying suppliers for product or Agreements services. This process includes invoice collection, invoice matching and the issuance of checks. Transferred Product from S2.4 Transfer Product Product being tranferred to the appropriate stocking location within the supply chain.

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S3 Source Engineer-to-Order Product


The negotiation, procurement and delivery of engineer-to-order assemblies or specialized product or services that are designed and built based on the requirements or specifications of a particular customer order or contract. The Category S3 includes seven Level 3 Elements:
S3.1 Identify Sources of Supply The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. S3.2 Select Final Supplier(s) and Negotiate The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. S3.3 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. S3.4 Receive Product The process and associated activities of receiving product to contract requirements. S3.5 Verify Product The process and actions required determining product conformance to requirements and criteria. S3.6 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. S3.7 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

Metrics (see Appendix A for metrics attributes):


Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Product Acquisition Costs The sum of the costs associated with Source. Value of raw materials (COGS 365). The average actual cycle time consistently achieved to fulfill customer orders. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

Best Practices:
Joint Service Agreements (JSA) Collaborative Planning Systems

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S3.1 Identify Sources of Supply


The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. Metrics (see Appendix A for metrics attributes):
. . Cost to Identify Sources of Supply Identify Sources of Supply Cycle Time The sum of the costs associated with identifying sources of supply. The average time associated with the identification of sources of supply

Best Practices:
. Concurrent Engineering is Used to Tightly Link Sourcing into the Product Development Process Make/Buy Decision Process (Outsourcing vs. In Sourcing) Electronic Data Interchange is Used to Send Technical Information to and from Potential Suppliers On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs Product Data Management & Electronic Document Management Are Used to Manage Technical Documents and Requirements for Engineer to Order Product Supplier Development Programs Are Used to Get Local Suppliers to Invest in Developing New Technologies None identified

. . .

None identified None identified None identified

None identified

Inputs:
. Business Rules for Source Processes from ES.1 Manage Sourcing Business Rules Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. A clear, complete and accurate statement or drawing of the technical requirements of a material, item or service, and of the procedure to determine if the requirements are met. An aggregate material requirements plan used to schedule material deliveries to meet production plan. Data or information about the supplier. This data can be organizational, product, information, financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Current Inventory Source Data from ES.3 Maintain Source Data

ETO Spec or Design from Source: Company

. .

Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Data from ES.7 Manage Supplier Network

Outputs:
. . Workflow to S3.2 Select Final Supplier(s) and Negotiate ETO Request for Proposal to Supplier A document used to solicit vendor responses when the functional requirements and features are known.

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S3.2 Select Final Supplier(s) and Negotiate


The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. Metrics (see Appendix A for metrics attributes):
. . Cost to Select Final Supplier(s) and Negotiate Select Final Supplier(s) and Negotiate Cycle Time The sum of the costs associated with selecting final suppliers and negotiating supplier agreements. The average time associated with scheduling the shipment of the return of MRO product

Best Practices:
. Electronic Data Interchange Can Be Used To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network On Line Document Management and Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs On-Line Availability to Supplier Financials to Determine Potential Supplier Viability to be Added to Supplier Network Supplier Certification Programs Can Reduce the Cycle Time for Certifying Existing Suppliers to Provide New Technologies Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data Electronic Data Interchange

ERP

. . . .

None identified Internet web sites for financial evaluation None identified None identified

Inputs:
. . Workflow from S3.1 Identify Sources of Supply Business Rules for Source Processes from Rules that are translated into guidelines and policies for conducting ES.1 Manage Sourcing Business Rules business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Current Inventory Source Data from ES.3 Data which will provide measurement of actual supplier Maintain Source Data performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. ETO Proposal from Source: Supplier Supplier Data from ES.7 Manage Supplier Network A proposal that may contain final drawings, specifications, formulas, part programs, etc., that describe requirements of a product Data or information about the supplier. This data can be organizational, product, information, financial. Structured supplier data is needed to set up and implement ERP or similar systems.

. .

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Outputs:
. Procurement Signal (Supplier) to Supplier Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

Supplier Agreement to ES.9 Manage Supplier Agreements Supplier Agreement to EM.6 Manage Transportation Supplier Agreement to S3.3 Schedule Product Deliveries

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S3.3 Schedule Product Deliveries


Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. Metrics (see Appendix A for metrics attributes):
. . . . . . % Schedules Changed within Suppliers Lead Time Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices:
. . . . Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs:
. . . . . . . . . Logistics Selection from ES.6 Manage Incoming Product Production Schedule from M2.1 Schedule Production Activities Production Schedule from M1.1 Schedule Production Activities Production Schedule from M3.2 Schedule Production Activities Replenishment Signal from M1.2 Issue Material Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from M3.3 Issue Sourced/In-Process Product Replenishment Signal from D3.3 Enter Order, Commit Resources & Launch Program Return Inventory Transfer Data from DR3.4
90

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. The process of receipt and verification of the returned item against
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Transfer Excess Product . Return Inventory Transfer Data from DR1.4 Transfer Defective Product Return Inventory Transfer Data from DR2.4 Transfer MRO Product Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate Supplier Performance from ES.2 Assess Supplier Performance

the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

. .

Outputs:
. Procurement Signal (Supplier) to Supplier Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier. Product on order with a selected source. Product on order with a selected source. Product due to arrive. Product due to arrive. Product due to arrive. Product due to arrive.

. . . . . .

Product On Order to ES.9 Manage Supplier Agreements Product On Order to P2.2 Identify, Assess, And Aggregate Product Resources Scheduled Receipts to M1.1 Schedule Production Activities Scheduled Receipts to M3.2 Schedule Production Activities Scheduled Receipts to M2.1 Schedule Production Activities Scheduled Receipts to S3.4 Receive Product

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S3.4 Receive Product


The process and associated activities of receiving product to contract requirements. Metrics (see Appendix A for metrics attributes):
. . . . . % Orders/ Lines Processed Complete % Orders/ Lines Received On-Time To Demand Requirement % Orders/ Lines Received with Correct Shipping Documents Cost to Receive Product Receiving Product Cycle Time The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices:
. Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Carrier Agreement - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified Skip lot/sampling inspection logic Electronic Tag tracking to Point of Use (POU) destination VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

. . . .

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use (Dock to Line or End Destination) Vendor Managed Inventory

Inputs:
. . Product from Source: Supplier Scheduled Receipts from S3.3 Schedule Product Deliveries The end object of a transformation process that includes physical objects, information or services. Product due to arrive.

Outputs:
. . . Receipt Verification to ES.2 Assess Supplier Performance Receipt Verification to ES.8 Manage Import/Export Requirements Receipt Verification to ES.1 Manage Sourcing Business Rules Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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. . .

Receipt Verification to S3.5 Verify Product Receipt Verification to ED.8 Manage Import/Export Requirements Receipt Verification to ES.6 Manage Incoming Product

Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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S3.5 Verify Product


The process and actions required determining product conformance to requirements and criteria. Metrics (see Appendix A for metrics attributes):
. . . % Orders/ Lines Received Defect Free Cost to Verify Product Verify Product Cycle Time The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices:
. Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Supplier Replaces Defective Material at Customers Facility with Good Product as Required - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified Skip lot/sampling inspection logic Electronic Tag tracking to Point of Use (POU) destination Electronic Tag tracking to Point of Use (POU) destination

. . . .

Inputs:
. Receipt Verification from S3.4 Receive Product Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs:
. . . Receipt Verification to S3.6 Transfer Product Receipt Verification to ES.2 Assess Supplier Performance Receipt Verification to ES.1 Manage Sourcing Business Rules Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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S3.6 Transfer Product


The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. Metrics (see Appendix A for metrics attributes):
. . . . % Product Transferred On-Time to Demand Requirement % Product Transferred without Transaction Errors Cost to Transfer Product Inventory Days of Supply The number of product orders / lines that are transferred on-time to demand requirements divided by the total orders / lines transferred in the measurement period The number of transactions processed without error divided by the total transactions processed in the measurement period The sum of the costs associated with transferring product to Make or Deliver processes Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated transfer until product is moved to the next process.

Transfer Product Cycle Time

Best Practices:
. . Capability Transfer to Organization Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs:
. . . . . . . . Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories Product Inventory Location from ES.4 Manage Product Inventory Receipt Verification from S3.5 Verify Product Replenishment Signal from M3.3 Issue Sourced/In-Process Product Replenishment Signal from M2.2 Issue Sourced/In-Process Product Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date Replenishment Signal from M1.2 Issue Material WIP Inventory Location from EM.6 Manage Transportation The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The physical storage location where product inventory is held in stock prior to use or shipment. Acknowledgement that the product received conforms to specified requirements and criteria. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

Outputs:

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. .

Existing Inventory Data to ES.4 Manage Product Inventory Inventory Availability to D3.9 Pick Product

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Product being tranferred to the appropriate stocking location within the supply chain.

Inventory Availability to P2.2 Identify, Assess, And Aggregate Product Resources

Inventory Availability to M2.2 Issue Sourced/In-Process Product

Inventory Availability to M1.2 Issue Material

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Transferred Product to S3.7 Authorize Supplier Payment

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S3.7 Authorize Supplier Payment


The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Metrics (see Appendix A for metrics attributes):
. . Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices:
. Pay on Receipt Electronic Invoice Processing

Inputs:
. Payment Terms from ES.9 Manage Supplier Agreements Transferred Product from S3.6 Transfer Product The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Product being tranferred to the appropriate stocking location within the supply chain.

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ES Enable SOURCE
Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ES includes nine Level 3 Elements:
ES.1 Manage Sourcing Business Rules The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time. The process of acquiring, maintaining and dispositioning an organizations <capital assets> located at a suppliers facility and/or outside source, which are used to operate the supply chain. The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers.

ES.2 Assess Supplier Performance

ES.3 Maintain Source Data

ES.4 Manage Product Inventory

ES.5 Manage Capital Assets ES.6 Manage Incoming Product

ES.7 Manage Supplier Network

ES.8 Manage Import/Export Requirements ES.9 Manage Supplier Agreements

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ES.1 Manage Sourcing Business Rules


The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Sourcing Business Rules Manage Sourcing Business Rules Cycle Time The sum of the costs associated with Source business rules. The average time associated with managing source business rules

Best Practices:
. . . . . . Collaborative Review and Agreement of Business Rules Prior to Contract Execution Electronic Sourcing and Negotiation Enterprise Level Policies/Rules with Local Execution Enterprise Level Spend Analysis Long Term Supplier Agreements/Partnerships Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization Web based access to current spend data available from enterprise to part level Business Rules for electronic sourcing process and hierarchy Web based access to enterprise level business rules None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type

Inputs:
. . . . . . . Receipt Verification from S3.5 Verify Product Receipt Verification from S2.2 Receive Product Receipt Verification from S1.3 Verify Product Receipt Verification from S2.3 Verify Product Receipt Verification from S1.2 Receive Product Receipt Verification from S3.4 Receive Product Supplier Data from ES.7 Manage Supplier Network Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

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Outputs:
. Business Rules for Return Processes to ES.7 Manage Supplier Network Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership.

Business Rules for Source Processes to ES.4 Manage Product Inventory

Business Rules for Source Processes to S3.2 Select Final Supplier(s) and Negotiate

Business Rules for Source Processes to S3.1 Identify Sources of Supply

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ES.2 Assess Supplier Performance


The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Metrics (see Appendix A for metrics attributes):
. . Assess Supplier Performance Cycle Time Cost to Assess Supplier Performance The average time associated with assessing the performance of supplier processes. The sum of the costs associated with assessing supplier performance.

Best Practices:
. Carrier Agreement Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Software application with data analysis capability None identified None identified Web based access / availability to business rules and performance criteria Software application to automate data collection and reporting Assess Supplier Performance is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Web based relational database / management application None identified

. . . . . .

Comparative Analysis of Supplier Performance is Used in Sourcing Decisions Continuous Improvement and Development is Driven and Measured through the Performance Review Process Cost Reduction and or Cost Avoidance Are Opportunities Are Identified, Implemented and Measured on a Periodic Basis Performance Expectations and Business Rules Are Clearly Communicated Prior to the Initiation of Business with the Supplier Supplier Cost of Nonconformance Data is Collected, Analyzed and Used in Performance Reporting Supplier Performance Assessment System

. .

Supplier Performance Data is Collected, Analyzed and Reported to Suppliers Online and Real-Time through Extranet Applications Suppliers Are Evaluated, Selected and Qualified with Criteria Matched to Business Requirements and Competitive Needs

Inputs:
. . . . . Receipt Verification from S1.2 Receive Product Receipt Verification from S3.5 Verify Product Receipt Verification from S2.2 Receive Product Receipt Verification from S1.3 Verify Product Receipt Verification from S3.4 Receive Product Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

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. .

Receipt Verification from S2.3 Verify Product Supplier Data from ES.7 Manage Supplier Network

Acknowledgement that the product received conforms to specified requirements and criteria. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Outputs:
. Quality and Delivery Performance to ES.3 Maintain Source Data The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

Supplier Performance to S3.3 Schedule Product Deliveries Supplier Performance to ES.7 Manage Supplier Network Supplier Performance to S1.1 Schedule Product Deliveries Supplier Performance to S2.1 Schedule Product Deliveries

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ES.3 Maintain Source Data


The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. Metrics (see Appendix A for metrics attributes):
. . Cost to Maintain Source Data Maintain Source Data Cycle Time The sum of the costs associated with maintaining supplier data. The average time associated with maintaining source data

Best Practices:
. . . . Automated Update of Supplier Performance Information Data Accessibility across the Enterprise for Visibility by Discrete Business Units On Demand Access of Supplier/Source Data Supplier and Material Rationalization None identified Web based access to various levels of enterprise data Web based access to current supplier/source data Web based access to supplier/source data

Inputs:
. Quality and Delivery Performance from ES.2 Assess Supplier Performance The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one. An aggregate material requirements plan used to schedule material deliveries to meet production plan. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

. .

Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Data from ES.7 Manage Supplier Network

Outputs:
. Current Inventory Source Data to ES.7 Manage Supplier Network Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs.

Current Inventory Source Data to S3.2 Select Final Supplier(s) and Negotiate

Current Inventory Source Data to S3.1 Identify Sources of Supply

Current Inventory Source Data to ED.7 Manage Product Life Cycle

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ES.4 Manage Product Inventory


The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Product Inventory Inventory Days of Supply The sum of the Cost to Manage Product Inventory Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated with managing raw material inventory

Manage Product Inventory Cycle Time

Best Practices:
. . . Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks Real Time Data on Current Status Statistical Test Count Real time view of data. Dynamic calculation of safety stock based on actual sales. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Vendor Managed Inventory

Inputs:
. Business Rules for Source Processes from ES.1 Manage Sourcing Business Rules Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

. . . .

Existing Inventory Data from S2.4 Transfer Product Existing Inventory Data from S3.6 Transfer Product Existing Inventory Data from S1.4 Transfer Product Inventory Availability from S1.4 Transfer Product

Inventory Availability from S2.4 Transfer Product

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. .

Parts and Services Consumed from EM.5 Manage Equipment and Facilities Sourcing Plans from P2.4 Establish Sourcing Plans

The items and services utilized to manufacture a product. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs:
. MRO Parts Availability to EM.5 Manage Equipment and Facilities Product Inventory Location to S2.4 Transfer Product Product Inventory Location to S1.4 Transfer Product Product Inventory Location to S3.6 Transfer Product Product Inventory Target Levels to P2.2 Identify, Assess, And Aggregate Product Resources Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. The physical storage location where product inventory is held in stock prior to use or shipment. The physical storage location where product inventory is held in stock prior to use or shipment. The physical storage location where product inventory is held in stock prior to use or shipment. The target for the total product inventory, including e.g. raw material, work in progress and finished goods. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

. . . . .

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ES.5 Manage Capital Assets


The process of acquiring, maintaining and dispositioning an organizations <capital assets> located at a suppliers facility and/or outside source, which are used to operate the supply chain. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Source Capital Assets Manage Capital Assets Cycle Time The sum of the Costs to Manage Source Capital Assets The average time associated with managing capital assets

Best Practices:
. Changeover Reduction / Continuous Improvement Program Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. System software to list checklist items, report results of audit & forward actions to be taken Automated Calculation of ABC Velocity Movement Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists.

. . .

Facility & Equipment Environmental / Safety Audit System Removal of Obsolete Capital Assets Total Preventative Maintenance Program

Inputs:
. Import/Export Requirements from ES.8 Manage Import/Export Requirements Parts and Services Consumed from EM.5 Manage Equipment and Facilities Supplier Agreement from ES.9 Manage Supplier Agreements Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. The items and services utilized to manufacture a product. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

. .

Outputs:
. Capital Assets to ES.8 Manage Import/Export Requirements Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS)

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ES.6 Manage Incoming Product


The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Incoming Product Manage Incoming Product Cycle Time The sum of the costs associated with managing incoming product. The average time associated with managing inbound raw material

Best Practices:
. . . . . . Appointment Scheduling for Pickup and Delivery of Customer Shipments Automated Documentation for International Shipments Backhaul Trading Exchange Capture and Maintain Mode Specific Data Electronic Manifest and Electronic Billing Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Shipments) Manage Information Across 100% of Shipments Measurement of Carrier Performance for On-time Delivery and Completeness Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet) Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Pooling Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

. . . .

Rating & Routing Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

Inputs:
. Contract Carrier Rates from ES.8 Manage Import/Export Requirements Import/Export Requirements from ES.8 Manage Import/Export Requirements Receipt Verification from S2.2 Receive Product Receipt Verification from S1.2 Receive Product Receipt Verification from S3.4 Receive Product The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

. . .

Outputs:
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. . .

Logistics Selection to S2.1 Schedule Product Deliveries Logistics Selection to S3.3 Schedule Product Deliveries Logistics Selection to S1.1 Schedule Product Deliveries

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

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ES.7 Manage Supplier Network


The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Metrics (see Appendix A for metrics attributes):
Cost to Manage Supplier Network Manage Supplier Network Cycle Time The sum of the costs associated with managing the supplier network. The average time associated with managing the supplier network

Best Practices:
Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Create and Maintain Multiple Suppliers and None Identified Multiple Supplier Sites to Record Information about Individuals and Companies from Whom You Want to Purchase Catalogue Goods and Services Electronic Data Interchange Can Be Used Electronic Data Interchange To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network Establishment of Criteria to Rank Suppliers Utilize supplier delivery, quality, price performance as well as any other criteria such as terms and conditions Evaluate Supplier Network for Duplicates Supplier Merge Programs for duplicates Consignment Inventory Management Identification of Suppliers Who Will Participate in Consignment Inventory Programs Identification of Suppliers Who Will Electronic Kanban Support Participate in Kanban Programs Identification of Suppliers Who Will None identified Participate in Procurement Split (Two or More Suppliers Sharing Purchase Requirements) Programs Supplier managed inventories with scheduling interfaces to external Identification of Suppliers Who Will supplier systems to replenish Participate in Vendor Managed Inventory (VMI) Programs Internet Exchanges Internet Exchanges are a hosted, business-to-business trading network. Exchanges are an open procurement network, accessible to any buyer and focused on new Internet-enabled purchasing models like spot buys or reverse, buyer-driven auctions. Exchanges will also support more traditional catalog-based sales. On Line Document Management and ERP Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster On-Line Availability to Supplier Financials to Internet web sites for financial evaluation Determine Potential Supplier Viability to be Added to Supplier Network Supplier Certification Programs Can Reduce None identified the Cycle Time for Certifying Existing Suppliers to Provide New Technologies Carrier Agreement

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Supplier Certification Programs Can Reduce None identified the Cycle Time for Initial Certification of New Suppliers or Certifying Existing Suppliers that Wish to Provide New Technologies Utilize Concurrent Engineering with Internet, EDI, FAX Suppliers to Allow Them to Provide Engineering and Product Performance Test Data to Qualify as Part of Potential Supplier Network

Inputs:
Business Rules for Return Processes from ES.1 Manage Sourcing Business Rules Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

Current Inventory Source Data from ES.3 Maintain Source Data Supplier Agreement from ES.9 Manage Supplier Agreements Supplier Performance from ES.2 Assess Supplier Performance

Outputs:
Supplier Data to ES.1 Manage Sourcing Business Rules Supplier Data to S3.2 Select Final Supplier(s) and Negotiate Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Supplier Data to ES.3 Maintain Source Data Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. Supplier Data to ES.2 Assess Supplier Performance Supplier Data to ES.9 Manage Supplier Agreements Supplier Data to S3.1 Identify Sources of Supply Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

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ES.8 Manage Import/Export Requirements


The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). Metrics (see Appendix A for metrics attributes):
. . . Cost to Manage Import/Export Requirements Customs Clearance Cycle Time Manage Import/Export Requirements Cycle Time The sum of the costs associated with the management of import/export requirements The average time associated with clearing an order through customs The average time associated with managing import/export requirements

Best Practices:
. . . . . Ability to Track Component/Sub-Component Manufacturing Country of Origin Assessing Export/Import Requirements during Time of Product Development/Manufacture Direct Connection to Customs Clearance Direct Transfer of Documents to Recipient and Forwarder Documents Generated Automatically During Shipment Preparation. Component/lot tracking (lot trace-ability) Multi-country Export/Import documentation compliance Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet.

Inputs:
. . . . . Capital Assets from ES.5 Manage Capital Assets Parts and Services Consumed from EM.5 Manage Equipment and Facilities Receipt Verification from S3.4 Receive Product Receipt Verification from S2.2 Receive Product Receipt Verification from S1.2 Receive Product Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS) The items and services utilized to manufacture a product. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs:
. Contract Carrier Rates to ES.6 Manage Incoming Product Contract Carrier Rates to ED.6 Manage Transportation Import/Export Requirements to ES.5 Manage Capital Assets Import/Export Requirements to ES.9 Manage Supplier Agreements The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

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Import/Export Requirements to ES.6 Manage Incoming Product

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

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ES.9 Manage Supplier Agreements


The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Supplier Agreements Manage Supplier Agreements Cycle Time The sum of the costs associated with managing supplier agreements. The average time associated with managing supplier agreements

Best Practices:
. Carrier Agreement Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Business Rules for electronic sourcing process and hierarchy Web based access to enterprise level business rules None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type

. . . . .

Electronic Sourcing and Negotiation Enterprise Level Policies/Rules with Local Execution Enterprise Level Spend Analysis Long Term Supplier Agreements/Partnerships Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization

Inputs:
. Import/Export Requirements from ES.8 Manage Import/Export Requirements Product On Order from S2.1 Schedule Product Deliveries Product On Order from S3.3 Schedule Product Deliveries Product On Order from S1.1 Schedule Product Deliveries Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate Supplier Data from ES.7 Manage Supplier Network Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. Product on order with a selected source. Product on order with a selected source. Product on order with a selected source. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

. . . .

Outputs:
. Payment Terms to S2.5 Authorize Supplier Payment Payment Terms to S3.7 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

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Payment Terms to S1.5 Authorize Supplier Payment Supplier Agreement to ES.5 Manage Capital Assets Supplier Agreement to ES.7 Manage Supplier Network

The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

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M1 Make-to-Stock
The process of manufacturing in a make to stock environment adds value to products through mixing, separating, forming, machining, and chemical processes. Make to stock products are intended to be shipped from finished goods or off the shelf, are completed prior to receipt of a customer order, and are generally produced in accordance with a sales forecast. The Category M1 includes six Level 3 Elements:
M1.1 Schedule Production Activities Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

M1.2 Issue Material

M1.3 Produce and Test

M1.4 Package M1.5 Stage Product

M1.6 Release Product to Deliver

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Cost of Goods Sold Cost to Make Downside Make Adaptability Make Cycle Time
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The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. The average time associated with Make Processes
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Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices:
Accurate and Approved Work Instructions/Process Plans Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Cellular Manufacturing Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Lean Manufacturing Link Individual Performance to Organizational and Divisional Goals Migrate From Build to Stock to Configure to Order; Build Subassemblies to Forecast at the Highest Generic Level in the Bill of Material/Recipe/Formula Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Paperless Production Order and Inventory Tracking Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch recording/configuration Manufacturing is broken into work cells Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points Use a team based systematic approach to identifying and eliminating wasteful, or non-value adding activities within your manufacturing organization None identified None identified

Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet.

Electronic dispatch and data collection. Allow customer access to production status and inventories using internet technologies and web site features. Performance Results that Are Compared to Data warehouse, report writing, real time database and Executive Benchmarks (ie Capacity, Scheduling) and Information systems that are easily accessible. Use of web-based Readily Available to Employees technologies for dissemination of information. Posted Performance Results Data warehouse, report writing, real time data base and EI systems Postponement Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. Production Level Loading Capacity planning Provide Continuous Formal Training to Examples would be TQM, Six Sigma. Employees

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Vendor Managed Inventory

VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

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M1.1 Schedule Production Activities


Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes):
. Capacity Utilization A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

. .

Cost to Schedule Production Activities Schedule Achievement

Schedule Production Activities Cycle Time

Best Practices:
. . . Additional Capacity for Overflow Demand Cross Training/Certification Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Drum-Buffer-Rope Scheduling Technique Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate Produce Products to Unique Customer Specification Provide Scheduling Output Back to Material and Labor Planning Systems Real Time Feedback from Production, Raw Materials, and Finished Goods Inventory and Test Activities Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. HR/certification support Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. Detailed production model that synchronizes PLAN and MAKE activities in real time. Order entry, engineering, and product specifications linked to production order Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler. Interface between maintenance management system and scheduling system Detailed production scheduling model and simulation capabilities Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

. .

. . . . . . .

Inputs:

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Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities Information Feedback from M1.5 Stage Product Information Feedback from M1.4 Package Information Feedback from M1.3 Produce and Test Information Feedback from M1.2 Issue Material Information Feedback from M1.6 Release Product to Deliver Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

. . . . . .

Production Plans from P3.4 Establish Production Plans

. . .

Scheduled Receipts from S1.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries Scheduled Receipts from S2.1 Schedule Product Deliveries

Outputs:
. . . . . . . Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to S2.1 Schedule Product Deliveries Production Schedule to S3.3 Schedule Product Deliveries Production Schedule to S1.1 Schedule Product Deliveries Production Schedule to D4.2 Receive Product at Store Production Schedule to D1.3 Reserve Inventory & Determine Delivery Date Production Schedule to M1.2 Issue Material A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.
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Production Schedule to D1.8 Receive Product from Source or Make

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M1.2 Issue Material


The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Metrics (see Appendix A for metrics attributes):
. . Cost to Issue Material Issue Material Cycle Time The sum of the costs associated with issuing material. The average time associated with the issuance of material to production

Best Practices:
. . . . . Back Flush Material at Order Completion Complete Lot History Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use Flexible back flush logic Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

EDI link to suppliers sales order and inventory systems

Inputs:
. Inventory Availability from S1.4 Transfer Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

Inventory Availability from S3.6 Transfer Product

Inventory Availability from S2.4 Transfer Product

. .

Production Schedule from M1.1 Schedule Production Activities WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP) WIP Location Rules from EM.6 Manage Transportation

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Outputs:
. . . Workflow to M1.3 Produce and Test Information Feedback to M1.1 Schedule Production Activities Inventory Availability to D1.3 Reserve Inventory & Determine Delivery Date The flow of information back into the control system so that actual performance can be compared with planned performance. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Attributes of the products storage location. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources Product Location Information to EM.6 Manage Transportation Replenishment Signal to S3.3 Schedule Product Deliveries Replenishment Signal to S1.4 Transfer Product Replenishment Signal to S3.6 Transfer Product Replenishment Signal to S2.4 Transfer Product Replenishment Signal to S2.1 Schedule Product Deliveries Replenishment Signal to S1.1 Schedule Product Deliveries

. . . . . . .

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M1.3 Produce and Test


The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with production and test Number of returns within the warranty period. Warranty is a commitment, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

. .

Cost to Produce and Test Fill Rate

. .

Produce and Test Cycle Time Warranty and Returns

. . .

Warranty Costs Yield Yield Variability

Best Practices:
. . . . . . . . . . . . . . . Accurate and Approved Process Plans/Specifications Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Just-In-Time Demand Flow Techniques Maintain Accurate Lot/Batch History Information Measuring Process Metrics and Feedback to Operators Paperless Production Control Provide Continuous Formal Training to Employees Real Time quality control techniques Real Time Statistical Control Techniques Reduce Chances of Operator Error Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications Electronic document management Electronic batch recording/configuration None identified Machine productivity and downtime monitoring Demand-pull mechanisms Electronic data collection of employee actions and sourced/inprocess product lot used Electronic data collection of completion, quality, scrap, labor and equipment data and dissemination of information on factory floor Electronic dispatch of operations Examples would be TQM, Six Sigma. Electronic collection of quality data and on-line SPC. Electronic collection of defect data and on-line SPC. Automatic download of production equipment with batch recipes/part programs Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

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Inputs:
. Workflow from M1.2 Issue Material

Outputs:
. . Workflow to M1.4 Package Information Feedback to M1.1 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M1.4 Package
The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Number of returns within the warranty period. Warranty is a commitment, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects.

. . .

Cost to Package Package Cycle Time Warranty and Returns

Warranty Costs

Best Practices:
. . . . . . . . . . Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand Electronic document management Electronic batch recording/configuration Automatic interface to inspection systems Machine productivity and downtime monitoring Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs:
. Workflow from M1.3 Produce and Test

Outputs:
. . Workflow to M1.5 Stage Product Information Feedback to M1.1 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M1.5 Stage Product


The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes):
. . Cost to Stage Finished Product Stage Finished Product Cycle Time The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices:
. . Direct Ship from Factory to Customer/Channel Electronic Material Move Transactions Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs:
. . . Workflow from M1.4 Package Delivery Plans from P4.4 Establish Delivery Plans Production Plans from P3.4 Establish Production Plans A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs:
. . Workflow to M1.6 Release Product to Deliver Information Feedback to M1.1 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M1.6 Release Product to Deliver


Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes):
. . Cost to Release Finished Product to Deliver Release Finished Product to Deliver Cycle Time The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices:
. . . Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs:
. Workflow from M1.5 Stage Product

Outputs:
. . . Finished Product Release to D4.2 Receive Product at Store Finished Product Release to D1.8 Receive Product from Source or Make Information Feedback to M1.1 Schedule Production Activities The authorization to ship a finished product that has been ordered. The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2 Make-to-Order
The process of manufacturing in a make to order environment adds value to products through mixing, separating, forming, machining, and chemical processes. A make to order environment is one in which products are completed after receipt of a customer order and are built or configured only in response to a customer order. The Category M2 includes six Level 3 Elements:
M2.1 Schedule Production Activities Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

M2.2 Issue Sourced/In-Process Product

M2.3 Produce and Test

M2.4 Package M2.5 Stage Finished Product

M2.6 Release Finished Product to Deliver

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Cost of Goods Sold Cost to Make Downside Make Adaptability Inventory Days of Supply (WIP)
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The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Total value of Work in Process (COGS 365).
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Make Cycle Time Order Fulfillment Cycle Time Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The average time associated with Make Processes The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices:
Accurate and Approved Work Instructions/Process Plans Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Build Subassemblies/Products to Forecast at Highest Generic Level to Minimize Make Cycle Time Cellular and Demand Pull Manufacturing Delivery Schedules Are Collaboratively Developed with Customers Link Individual Performance to Organizational and Divisional Goals Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Posted Performance Results Postponement Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch recording/configuration None identified Support for cellular and demand pull manufacturing execution Web-based access to plant scheduling status, collaborative data-sharing environment. None identified Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet. Data warehouse, report writing, real time data base and EI systems Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. Order entry specifications linked to manufacturing order Capacity planning Examples would be TQM, Six Sigma.

Produce Products to Unique Customer Requirements Production Level Loading Provide Continuous Formal Training to Employees

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M2.1 Schedule Production Activities


Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes):
. Capacity Utilization A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

. .

Cost to Schedule Production Activities Schedule Achievement

Schedule Production Activities Cycle Time

Best Practices:
. . . . Additional Capacity for Overflow Demand Cross Training/Certification Demand Pull Mechanisms Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Drum-Buffer-Rope Scheduling Technique Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate Produce Products to Unique Customer Specification Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. HR/certification support Repetitive scheduling and sequencing Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. Detailed production model that synchronizes PLAN and MAKE activities in real time. Order entry, engineering, and product specifications linked to production order Interface between maintenance management system and scheduling system Detailed production scheduling model and simulation capabilities Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

. .

. . . . .

Inputs:
. Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time.

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. . . . . .

Information Feedback from M2.2 Issue Sourced/In-Process Product Information Feedback from M2.5 Stage Finished Product Information Feedback from M2.4 Package Information Feedback from M2.3 Produce and Test Information Feedback from M2.6 Release Finished Product to Deliver Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

Production Plans from P3.4 Establish Production Plans

. . .

Scheduled Receipts from S1.1 Schedule Product Deliveries Scheduled Receipts from S2.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries

Outputs:
. . . . . . . Production Schedule to D2.9 Pick Product Production Schedule to M2.2 Issue Sourced/In-Process Product Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to S1.1 Schedule Product Deliveries Production Schedule to D2.3 Reserve Resources & Determine Delivery Date Production Schedule to S3.3 Schedule Product Deliveries Production Schedule to S2.1 Schedule Product Deliveries A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M2.2 Issue Sourced/In-Process Product


The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Metrics (see Appendix A for metrics attributes):
. . Cost to Issue Sourced/In-Process Product Issue Sourced/In-Process Product Cycle Time The sum of the costs associated with issuing sourced or in-process material. The average time associated with the issuance of material to production

Best Practices:
. . . . . Back Flush Material at Order Completion Complete Lot History Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use Flexible back flush logic Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

EDI link to suppliers sales order and inventory systems

Inputs:
. Inventory Availability from S1.4 Transfer Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

Inventory Availability from S2.4 Transfer Product

Inventory Availability from S3.6 Transfer Product

. .

Production Schedule from M2.1 Schedule Production Activities WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP) WIP Location Rules from EM.6 Manage Transportation

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Outputs:
. . Information Feedback to M2.1 Schedule Production Activities Inventory Availability to D2.9 Pick Product The flow of information back into the control system so that actual performance can be compared with planned performance. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Attributes of the products storage location. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources Product Location Information to EM.6 Manage Transportation Production Schedule to M2.3 Produce and Test Replenishment Signal to S1.1 Schedule Product Deliveries Replenishment Signal to S2.1 Schedule Product Deliveries Replenishment Signal to S3.6 Transfer Product Replenishment Signal to S3.3 Schedule Product Deliveries Replenishment Signal to S2.4 Transfer Product Replenishment Signal to S1.4 Transfer Product Source Execution Data to S2.1 Schedule Product Deliveries

. . . . . . . . .

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M2.3 Produce and Test


The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The average time associated with production and test Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

. . . . .

Cost to Produce and Test Produce and Test Cycle Time Warranty Costs Yield Yield Variability

Best Practices:
. . . . . . . . . . . . . Accurate and Approved Process Plans/Specifications Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Just-In-Time Demand Flow Techniques Maintain Accurate Lot/Batch History Information Paperless Production Control Real Time quality control techniques Real Time Statistical Control Techniques Reduce Chances of Operator Error Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications Electronic document management Electronic batch recording/configuration None identified Machine productivity and downtime monitoring Demand-pull mechanisms Electronic data collection of employee actions and sourced/inprocess product lot used Electronic dispatch of operations Electronic collection of qualityt data and on-line SPC. Electronic collection of defect data and on-line SPC. Automatic download of production equipment with batch recipes/part programs Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

Outputs:
. . Workflow to M2.4 Package Information Feedback to M2.1 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2.4 Package
The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Warranty costs include materials, labor and problem diagnosis for product defects.

. . .

Cost to Package Package Cycle Time Warranty Costs

Best Practices:
. . . . . . . . . . Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand Electronic document management Electronic batch recording/configuration Automatic interface to inspection systems Machine productivity and downtime monitoring Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs:
. Workflow from M2.3 Produce and Test

Outputs:
. . Workflow to M2.5 Stage Finished Product Information Feedback to M2.1 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2.5 Stage Finished Product


The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes):
. . Cost to Stage Finished Product Stage Finished Product Cycle Time The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices:
. . Direct Ship from Factory to Customer/Channel Electronic Material Move Transactions Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs:
. . . Workflow from M2.4 Package Delivery Plans from P4.4 Establish Delivery Plans Production Plans from P3.4 Establish Production Plans A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs:
. . Workflow to M2.6 Release Finished Product to Deliver Information Feedback to M2.1 Schedule The flow of information back into the control system so that actual Production Activities performance can be compared with planned performance.

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M2.6 Release Finished Product to Deliver


Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes):
. . Cost to Release Finished Product to Deliver Release Finished Product to Deliver Cycle Time The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices:
. . . Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs:
. Workflow from M2.5 Stage Finished Product

Outputs:
. . Finished Product Release to D2.9 Pick Product Information Feedback to M2.1 Schedule Production Activities The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3 Engineer-to-Order
The process of manufacturing distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order. While Make to Order includes standard products built only in response to a customer order or products configured in response to a customer order, Engineer to Order includes custom products that are designed, developed, and manufactured in response to a specific customer request. The Category M3 includes seven Level 3 Elements:
M3.1 Finalize Production Engineering Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

M3.2 Schedule Production Activities

M3.3 Issue Sourced/In-Process Product

M3.4 Produce and Test

M3.5 Package M3.6 Stage Finished Product

M3.7 Release Product to Deliver

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

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Cost of Goods Sold Cost to Make Downside Make Adaptability Inventory Days of Supply (WIP) Make Cycle Time Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Total value of Work in Process (COGS 365). The average time associated with Make Processes The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices:
Cellular Manufacturing Delivery Schedules Are Collaboratively Developed with Customers Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Posted Performance Results Product Design Collaboration with Customers Manufacturing is broken into work cells Web-based access to plant scheduling status, collaborative data-sharing environment. Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet. Data warehouse, report writing, real time data base and EI systems On-line design tools facilitated by internet connections.

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M3.1 Finalize Production Engineering


Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Metrics (see Appendix A for metrics attributes):
. . . Cost to Finalize Production Engineering ECO Cost Finalize Production Engineering Cycle Time The sum of the costs associated with finalizing production engineering. The average time associated with the finalization of production engineering

Best Practices:
. . Automated Configuration Management Automated Conversion of Engineering Drawings into Product Specifications Configuration None identified

Inputs:
. Engineering Design from Source: Company Final drawings, specifications, formulas, part programs, etc.that describe requirements of a product. The design process consists of translating a set of functional requirements into an operational product, process, or service. The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system.

Order Information from D3.3 Enter Order, Commit Resources & Launch Program

Outputs:
. Methods, Procedures, Processes to M3.2 Schedule Production Activities Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request.

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M3.2 Schedule Production Activities


Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes):
. Capacity Utilization A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

. .

Cost to Schedule Production Activities Schedule Achievement

Schedule Production Activities Cycle Time

Best Practices:
. . Additional Capacity for Overflow Demand Build Subassemblies to Forecast at Highest Generic Level in Bill of Material; Maintain Flexibility While Minimizing Cycle Time and Inventory Position Cellular Manufacturing Cross Training/Certification Demand Pull Mechanisms Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Drum-Buffer-Rope Scheduling Technique Maximize Data Integrity and System Accuracy by Ensuring 99%+ Accuracy of BOM Configuration, Inventory Levels, and Schedule Requirements Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs between Products Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. None identified

. . . . . .

Manufacturing is broken into work cells HR/certification support Repetitive scheduling and sequencing Machine productivity and downtime monitoring (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. None identified

. . . .

Interface between maintenance management system and scheduling system Algorithms that manage set up times/costs, cleaning times, and ideal job sequences (eg, color sequencing light to dark) Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

Inputs:

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Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities Information Feedback from M3.5 Package Information Feedback from M3.4 Produce and Test Information Feedback from M3.3 Issue Sourced/In-Process Product Information Feedback from M3.7 Release Product to Deliver Information Feedback from M3.6 Stage Finished Product Methods, Procedures, Processes from M3.1 Finalize Production Engineering

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. The flow of information back into the control system so that actual performance can be compared with planned performance. Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

. . . . . .

Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

Production Plans from P3.4 Establish Production Plans

. . .

Scheduled Receipts from S2.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries Scheduled Receipts from S1.1 Schedule Product Deliveries

Outputs:
. . . . Production Schedule to D3.9 Pick Product Production Schedule to S2.1 Schedule Product Deliveries Production Schedule to S1.1 Schedule Product Deliveries Production Schedule to S3.3 Schedule Product Deliveries A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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. . .

Production Schedule to M3.3 Issue Sourced/In-Process Product Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to D3.3 Enter Order, Commit Resources & Launch Program

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M3.3 Issue Sourced/In-Process Product


The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Activity Usage Type: Metrics (see Appendix A for metrics attributes):
. . Cost to Issue Sourced/In-Process Product Issue Sourced/In-Process Product Cycle Time The sum of the costs associated with issuing sourced or in-process material. The average time associated with the issuance of material to production

Best Practices:
. . . . Back Flush Material at Order Completion Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use Two-Bin Floor Stock Located at Work Center for B And C Components Controlled by Operators and Replenished When One Bin is Empty Flexible back flush logic None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

. .

EDI link to suppliers sales order and inventory systems None identified

Inputs:
. Inventory Availability from S3.6 Transfer Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.
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Inventory Availability from S2.4 Transfer Product

Inventory Availability from S1.4 Transfer Product

. .

Production Schedule from M3.2 Schedule Production Activities WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP) WIP Location Rules from EM.6 Manage Transportation

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Outputs:
. . . Workflow to M3.4 Produce and Test Information Feedback to M3.2 Schedule Production Activities Inventory Availability to D3.9 Pick Product The flow of information back into the control system so that actual performance can be compared with planned performance. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Attributes of the products storage location. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system. Any signal that indicates when to produce or transport Items in a pull replenishment system.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources Product Location Information to EM.6 Manage Transportation Replenishment Signal to S3.6 Transfer Product Replenishment Signal to S1.4 Transfer Product Replenishment Signal to S1.1 Schedule Product Deliveries Replenishment Signal to S2.4 Transfer Product Replenishment Signal to S3.3 Schedule Product Deliveries Replenishment Signal to S2.1 Schedule Product Deliveries

. . . . . . .

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M3.4 Produce and Test


The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The average time associated with production and test Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

. . . . .

Cost to Produce and Test Produce and Test Cycle Time Warranty Costs Yield Yield Variability

Best Practices:
. . . . . . . . . . . . . Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Implement Employee Involvement Programs Just-In-Time Demand Flow Techniques Link Individual Performance to Organizational and Divisional Goals Maintain Accurate Lot/Batch History Information Paperless Production Control Provide Continuous Formal Training to Employees Real Time quality control techniques Real Time Statistical Control Techniques Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications None identified Machine productivity and downtime monitoring

Demand-pull mechanisms None identified Electronic data collection of employee actions and sourced/inprocess product lot used Electronic dispatch of operations Examples would be TQM, Six Sigma. Electronic collection of qualityt data and on-line SPC. Electronic collection of defect data and on-line SPC. Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

Inputs:
. Workflow from M3.3 Issue Sourced/In-Process Product

Outputs:
. . Workflow to M3.5 Package Information Feedback to M3.2 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3.5 Package
The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes):
. . Asset Turns Capacity Utilization Total gross product revenue Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Warranty costs include materials, labor and problem diagnosis for product defects.

. . .

Cost to Package Package Cycle Time Warranty Costs

Best Practices:
. . . . . . . . Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand Automatic interface to inspection systems Machine productivity and downtime monitoring Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs:
. Workflow from M3.4 Produce and Test

Outputs:
. . Workflow to M3.6 Stage Finished Product Information Feedback to M3.2 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3.6 Stage Finished Product


The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes):
. . Cost to Stage Finished Product Stage Finished Product Cycle Time The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices:
. . Direct Ship from Factory to Customer/Channel Electronic Material Move Transactions Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs:
. . . Workflow from M3.5 Package Delivery Plans from P4.4 Establish Delivery Plans Production Plans from P3.4 Establish Production Plans A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs:
. . Workflow to M3.7 Release Product to Deliver Information Feedback to M3.2 Schedule Production Activities The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3.7 Release Product to Deliver


Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes):
. . Cost to Release Finished Product to Deliver Release Finished Product to Deliver Cycle Time The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices:
. . . Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs:
. Workflow from M3.6 Stage Finished Product

Outputs:
. . Finished Product Release to D3.9 Pick Product Information Feedback to M3.2 Schedule Production Activities The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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EM Enable MAKE
Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category EM includes eight Level 3 Elements:
EM.1 Manage Production Rules The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. The process of specifying maintaining and dispositioning MAKEs capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government)

EM.2 Manage Production Performance

EM.3 Manage MAKE Information

EM.4 Manage In-Process Products (WIP)

EM.5 Manage Equipment and Facilities

EM.6 Manage Transportation EM.7 Manage Production Network EM.8 Manage Regulatory Compliance

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EM.1 Manage Production Rules


The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. Metrics (see Appendix A for metrics attributes):
Cost to Manage Production Rules Manage Production Rules Cycle Time The sum of the costs to manage production rules. The average time associated with managing production rules

Best Practices:
Computer aided process planning / recipe management Automated Intelligence (Heuristic) - based engineering specifications system Automated Links To Existing CAD & CAM Electronic hypertext or links to existing database of detail/parts/setup Information sketches/drawings Automatic Generation / Configuration Of Parametric driven (Group Technology - based) manufacturing design Tooling / Set-Up Instructions system Automatic Link to Recipe Management, PLC Seamless application interface to manufacturing planning documentation Program, CNC Program Systems, Etc., to and CAM systems Deliver New Manufacturing Documentation Automatic Notification When to Begin and Workflow/Groupware When to Complete Design For Production Table of manufacturing capacities or design envelops (capacities; envelop sizes; tank, vessel or batch sizes) Document Control Control who can create, revise and access information Electronic Documentation and Imaging Graphical display of drawings, diagrams, recipes/formulas, specifications, instructions, etc., to all users Genealogy Tracking Where-used listing of as-planned vs. as-built documentation On Line Access and Notification of Tooling Delivery of tooling and equipment details drawings and Equipment Information Pre-Defined Manufacturing Design Rules Libraries of manufacturing capabilities or design envelopes Storage and Configuration Management for Product data management (PDM) or Electronic Data Management (EDM) feature set Release and Revision Control of Final Documents Attribute-Based Process Planning Automated Engineering Specifications

Inputs:
Business Plan from Source: Company A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Corporate objectives are the goals and mission of an organization. Maximum rate of output for the inventory management and warehouse process The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment.

Corporate Objectives and Strategies from Source: Company Inventory Capacity from EP.4 Manage Integrated Supply Chain Inventory Product Design from Source: Company

Production Capacity from EP.5 Manage Integrated Supply Chain Capital Assets

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Transportation Capacity from EP.6 Manage The capability of a trasportation system to perform its function. Integrated Supply Chain Transportation

Outputs:
Production Rules to Deliver The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Make

Production Rules to Source

Production Rules to Plan

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EM.2 Manage Production Performance


The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. Metrics (see Appendix A for metrics attributes):
Cost to Manage Production Performance Manage Production Performance Cycle Time The sum of the costs to manage production performance. The average time associated with managing production performance

Best Practices:
Periodic Review of Standards Real Time Performance Measurement Reporting Systems Standards and Measurements Aligned to Maximize Supply Chain Performance Process for establishing and maintaining review schedules Systems to collect production information online generate reports upon request by operators, and track progress against schedule and standards. Internal/external benchmarking, industry standards, customer/supplier alignment agreements, visibility of key performance indicators

Inputs:
Business Plan from Source: Company A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Corporate objectives are the goals and mission of an organization. Maximum rate of output for the inventory management and warehouse process A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost. The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Corporate Objectives and Strategies from Source: Company Inventory Capacity from EP.4 Manage Integrated Supply Chain Inventory Product Design/Quality from Source: Company Production Capacity from EP.5 Manage Integrated Supply Chain Capital Assets Production Plans from P3.4 Establish Production Plans

Production Plan includes production capability. Transportation Capacity from EP.6 Manage The capability of a trasportation system to perform its function. Integrated Supply Chain Transportation

Outputs:
Production Quality and Policies to EM.5 Manage Equipment and Facilities The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Deliver

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Production Rules to Source

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Production Rules to Make

Production Rules to Plan

Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain

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EM.3 Manage MAKE Information


The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. Metrics (see Appendix A for metrics attributes):
Cost to Manage MAKE Information Manage MAKE Information Cycle Time The sum of the Cost to Manage MAKE Information The average time associated with managing production information

Best Practices:
Historical trending, cause and effect analysis, and Key Performance Indicators Scheduling reviews of processes for possible improvements On-Demand Access of Production Data Collection and Display Systems designed for efficient performance of Information value-added operations in production. This could include using PLC, Machine Interface, bar code, Radio Frequency Communication, Radio Frequency Identification, Magnetic Stripe, Smart Cards, etc., to enable data collection On-Demand Access to Available to Promise None identified (ATP), Production Schedules and Inventory Status by Internal Operations and Customers Utilize Enterprise Information Systems Enter, Process, and Deliver information about the manufacturing process to management using information systems that span the enterprise Continuous Improvement

Inputs:
Information from Business Processes from Source: Make Information from Business Processes from Source: Plan Information from Business Processes from Source: Source Information from Business Processes from Source: Deliver Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element. Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element. Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element. Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Information Needed to Create and Maintain Interrelated computer hardware and software along with people and IT from Source: Company processes designed for the collection, processing, and dissemination of information for planning, decision making, and control. Information Needs Analysis from Source: Make Information Needs Analysis from Source: Source Information Needs Analysis from Source: Deliver Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details. Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details. Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details.

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Information Needs Analysis from Source: Plan Systems Capability from Source: Make Systems Capability from Source: Source

Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details. The capability of a system to perform its expected function The capability of a system to perform its expected function

Outputs:
Information Infrastructure Plan to Plan A plan outlining the processes required for managing, collecting, maintaining, and communicating information and master data to support planning and execution processes. A plan outlining the processes required for managing, collecting, maintaining, and communicating information and master data to support planning and execution processes. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.

Information Infrastructure Plan to Source

Reports, Information, and Documents to Make Reports, Information, and Documents to Plan Reports, Information, and Documents to Deliver Reports, Information, and Documents to Source

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EM.4 Manage In-Process Products (WIP)


The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. Metrics (see Appendix A for metrics attributes):
Cost to Manage In-Process Products (WIP) The sum of the costs associated with managing in-process products (WIP). Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Manage In-Process Products (WIP) Cycle The average time associated with managing WIP inventory Time

Best Practices:
Dunnage Control System data field to specify where the part / product shipping container should be removed. Best practice is to remove the dunnage as soon as possible unless part / product damage will result. Reuse of intermediate WIP containers for finished goods. Part / WIP location by date received for those parts that must be stocked or staged in a holding area Tracking, genealogy WIP Storage Management System Efficient Space Utilization Implementing Pull Systems Move high frequency used inventory close to point of use. For example, the system should provide the frequency of picks by part number so that high frequency picks can be moved to convenient locations or part pick quantities increased. No packing and unpacking time required. Recyclable or no containers where appropriate. No discarded material. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

First In - First Out In-Process Product (WIP) Handling Rules Minimizing In-Process Product (WIP) Minimum Product Handling

Optimize Packing Statistical Test Count

Vendor Managed Inventory

Inputs:
Capacity Requirements from Source: Plan The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production. Data concerning product on order and due to be delivered to location agreed in the order.

Incoming Product Information from Source: Source

Production Orders Planned & Actual Reports A statement of the output of a production facility for a specified period, from Source: Plan comparing planned to actual production.

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Returned Product Information from Source: Deliver

Data concerning the return and disposition of defective products, excess inventory and/or serviceable or obsolete products, or MRO product.

Outputs:
WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M1.2 Issue Material These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Deliver These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Source These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M2.2 Issue Sourced/In-Process These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. Product WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M3.3 Issue Sourced/In-Process These rules include the movement and accounting for in-process items Product between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Plan These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to EM.6 Manage Transportation These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory.

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EM.5 Manage Equipment and Facilities


The process of specifying maintaining and dispositioning MAKEs capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. Metrics (see Appendix A for metrics attributes):
Actual Asset Life Maintenance Cost as % of Measure of total lifecycle maintenance cost of an asset compared to its Replacement Value replacement cost. This ratio is based maintenance cost to-date so that that replacement or upgrade cost can be evaluated as the asset ages on an ongoing basis. Cost to Manage MAKE Equipment and The sum of the costs associated with managing Make equipment and Facilities facilities. Manage MAKE Equipment and Facilities The average time associated with managing production equipment and Cycle Time facilities

Best Practices:
Changeover Reduction / Continuous Improvement Program Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. Facility & Equipment Environmental / Safety System software to list checklist items, report results of audit & forward Audit System actions to be taken Factory Floor Electronic Decision Making Software to capture actual performance history / costs of operations with Information System capability of predicting best cost action plans relating to maintaining equipment and facilities. Minimize Capital Assets Required and Outsourcing strategies including the use of Application Service Providers Maintenance Costs (ASPs), web-based maintenance/diagnostic assistance and MRO parts. Predictive Maintenance Monitoring (Heat, Database for equipment to contain expected results of analysis, allow entry Noise, Lubrication Composition & Vibration) of test readings, and have capability of generating desired reports, which could highlight suggested actions based upon readings obtained, track maintenance completed, contain a help-file to be consulted Supplier Managed Inventory of Parts E.D.I. linkage of Inventory Information Systematic Disposition Of Equipment Rules for deciding appropriate disposition. Total Preventative Maintenance Program Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists.

Inputs:
Budgets from Source: Make A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations. Data gathered by measuring, examining, testing, or gauging one or more characteristics of equipment and facilities and comparing it to planned.

Equipment and Facilities Monitoring Information from Source: Company

Manufacturers Recommended Maintenance The scheduled activities, including adjustments, replacements, and basic cleanliness, that are recommended by the manufacturer to forestall Schedules & Specifications from Source: machine breakdowns. Company

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MRO Parts Availability from ES.4 Manage Product Inventory Production Plans from P3.4 Establish Production Plans

The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured.

Production Quality and Policies from EM.2 Manage Production Performance

Outputs:
Equipment and Facilities Maintenance History to Source The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Equipment and Facilities Maintenance History to Make

Equipment and Facilities Replacement and Disposition Plans to P3.2 Identify, Assess, and Aggregate Production Resources Equipment and Facilities Replacement and Disposition Plans to EM.6 Manage Transportation

Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M2.1 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M3.2 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M1.1 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Parts and Services Consumed to ES.4 Manage Product Inventory Parts and Services Consumed to ES.5 Manage Capital Assets Parts and Services Consumed to ES.8 Manage Import/Export Requirements Preventative Maintenance and Calibration Schedule to Source The items and services utilized to manufacture a product. The items and services utilized to manufacture a product. The items and services utilized to manufacture a product. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

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Preventative Maintenance and Calibration Schedule to M3.2 Schedule Production Activities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed

Preventative Maintenance and Calibration Schedule to M1.1 Schedule Production Activities

Preventative Maintenance and Calibration Schedule to Plan

Preventative Maintenance and Calibration Schedule to M2.1 Schedule Production Activities

Production Status to EM.7 Manage Production Network

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EM.6 Manage Transportation


The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
Cost to Manage Transportation (WIP) Manage Transportation (WIP) Cycle Time The sum of the costs associated with managing WIP Transportation The average time associated with managing (WIP) transportation

Best Practices:
Reduce In-Process Product (WIP) Handling Reduction of WIP handling through automation (i.e. AGVs and ASRS) and process improvement (i.e. reduction of handling steps, shorter move paths) Short Move Paths Software that allows for input of the distance that particular parts/WIP need to be moved. This software then needs to provide a report based on the cubic feet of material times distance moved by part number.

Inputs:
Capacity Requirements from Source: Plan The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production. Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities Attributes of the products storage location. Attributes of the products storage location. Attributes of the products storage location. Attributes of the products storage location. A statement of the output of a production facility for a specified period, comparing planned to actual production.

Equipment and Facilities Replacement and Disposition Plans from EM.5 Manage Equipment and Facilities Product Location Information from M2.2 Issue Sourced/In-Process Product Product Location Information from M1.2 Issue Material Product Location Information from M3.3 Issue Sourced/In-Process Product Product Location Information from Source: Deliver Production Orders Planned & Actual Reports from Source: Company

Projected Delivery Requirements from EM.7 The companys goal for the time to ship the product after the receipt of a Manage Production Network customers order. The policy is sometimes stated as our quoted delivery time, or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Source These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Plan These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory.

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WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Deliver These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Make These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for in-process items Methods from EM.4 Manage In-Process between work locations, in inventory, and movement inventory. Products (WIP)

Outputs:
WIP Inventory Location to S2.4 Transfer Product WIP Inventory Location to S1.4 Transfer Product WIP Inventory Location to S3.6 Transfer Product WIP Location Rules to D2.9 Pick Product WIP Location Rules to M3.3 Issue Sourced/In-Process Product WIP Location Rules to M2.2 Issue Sourced/In-Process Product WIP Location Rules to M1.2 Issue Material Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products. Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products. Location of inventory that is specified as work in progress. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

WIP Move Information and Methods to MakeThe process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. WIP Move Information and Methods to Source The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements.

WIP Move Information and Methods to Plan The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. WIP Move Information and Methods to Deliver The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements.

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EM.7 Manage Production Network


The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. Metrics (see Appendix A for metrics attributes):
Cost to Manage Production Network Manage Production Network Cycle Time The sum of the costs to manage the production network The average time associated with managing the production network

Best Practices:
Collaborative Planning/Scheduling JIT Environment Production Reporting/Status Interactive, on-line planning/scheduling systems. Capacity planning systems with accurate production capability data. Schedule visibility, on-line communications between source and demand Real time monitoring of production status and In-Process Product (WIP)

Inputs:
Planning Data from Source: Plan Production Status from EM.5 Manage Equipment and Facilities Supply Chain Plans from Source: Plan Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Outputs:
Cost to Produce to Plan Internal Capacity to Source Internal Capacity to Plan Projected Delivery Requirements to Plan The cost to produce and item during a given period of time. Includes: the amount of direct materials, direct labor, and allocated overhead. The organic capability of an organization to produce output per time period. The organic capability of an organization to produce output per time period. The companys goal for the time to ship the product after the receipt of a customers order. The policy is sometimes stated as our quoted delivery time, or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. The companys goal for the time to ship the product after the receipt of a customers order. The policy is sometimes stated as our quoted delivery time, or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

Projected Delivery Requirements to EM.6 Manage Transportation

Projected Delivery Requirements to Deliver The companys goal for the time to ship the product after the receipt of a customers order. The policy is sometimes stated as our quoted delivery time, or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

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EM.8 Manage Regulatory Compliance


The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government) Metrics (see Appendix A for metrics attributes):
Cost to Manage MAKE Regulatory Compliance Manage MAKE Regulatory Compliance Cycle Time The sum of the Cost to Manage MAKE Regulatory Compliance The average time associated with managing compliance to the make regulatory environment

Best Practices:
Automated Conformance Monitoring And Control Automatic Generation And Submission Of Conformance Documents Maintaining Repository of Current Regulatory Requirements Internal automatic notification of conformance, including holding of product until requirements are met Software specific to industry regulations and standards (e.g. may be software to produce MSDS documents, or FDA requirements, etc.) Electronic subscription and publication of conformance documentation. Electronic Document Management System features.

Inputs:
Corporate Objectives and Strategies from Corporate objectives are the goals and mission of an organization. Source: Company Equipment and Facilities Characteristics from Equipment and facility traits and specifications required to meet external Source: Company entities requirements. External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Source government, trade officials, etc.) External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Plan government, trade officials, etc.) External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Make government, trade officials, etc.) Product Design/Claims from Source: Company The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. Claims are marketing information provided as to performance, etc. Claims from the users of the product indicate a need to change the product design

Outputs:
Conformance Plan to Source Conformance Plan to Make Conformance Rules to Make Courses of action and processes that are established to meet the requirements placed on production by external entities. Courses of action and processes that are established to meet the requirements placed on production by external entities. An affirmative indication or judgment that a product or service has met criteria translated into rules for meeting external regulatory requirements

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D1 Deliver Stocked Product


The process of delivering product that is maintained in a finished goods state prior to the receipt of a firm customer order. The Category D1 includes fifteen Level 3 Elements:
D1.1 Process Inquiry & Quote Receive and respond to general customer inquiries and requests for quotes. D1.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. D1.11 Load Vehicle & Generate Shipping The series of tasks including placing/loading product onto modes of Documentation transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. D1.12 Ship Product The process of shipping the product to the customer site. D1.13 Receive & Verify Product by Customer The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. D1.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. D1.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. D1.2 Receive, Enter & Validate Order Receive orders from the customer and enter them into a companys order processing system. Orders can be received through phone, fax, or electronic media. Technically examine orders to ensure an orderable configuration and provide accurate price. Check the customers credit. Optionally accept payment. D1.3 Reserve Inventory & Determine Inventory and/or planned capacity (both on hand and scheduled) is Delivery Date identified and reserved for specific orders and a delivery date is committed and scheduled. D1.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. D1.5 Build Loads Transportation modes are selected and efficient loads are built. D1.6 Route Shipments Loads are consolidated and routed by mode, lane and location. D1.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. D1.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. D1.9 Pick Product The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order.

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.
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Return on Working Capital

Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Finished Goods Inventory Days of Supply Order Fulfillment Cycle Time Order Management Costs Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Upside Deliver Adaptability Upside Deliver Flexibility

Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The aggregation of the following cost elements (contained in this glossary): The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Best Practices:
Efficient Consumer Response (ECR); Quick Response Electronic Catalogues/Malls Internet Ordering Postponement Demand Planning, Deployment, Scheduling None identified None identified Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. None identified

Rapid Replenishment, VMI, EDI

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D1.1 Process Inquiry & Quote


Receive and respond to general customer inquiries and requests for quotes. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
Cost to Process Inquiry & Quote Process Inquiry & Quote Cycle Time The sum of the costs associated with processing inquiry and quotes. The average time associated with processing inquiries and quotes

It is associated with deliverables:


Deliverable: Customer Inquiry Deliverable: Order Quote (Customer) General customer inquiries for information concerning products, availability, cost, and requests for quotes. A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

Best Practices:
Quote Capability, without Reserving None identified Inventory, Which Can Be Converted into an Order in a Single Step Single Point of Contact for All Order None identified Inquiries (Including Order Entry)

Inputs:
Customer Inquiry from Source: Customer General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Outputs:
Customer Quote to D1.2 Receive, Enter & Validate Order A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

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D1.2 Receive, Enter & Validate Order


Receive orders from the customer and enter them into a companys order processing system. Orders can be received through phone, fax, or electronic media. Technically examine orders to ensure an orderable configuration and provide accurate price. Check the customers credit. Optionally accept payment. Metrics (see Appendix A for metrics attributes):
The sum of the costs associated with receiving, entering and validating a customer order. Order Fulfillment Dwell Time Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. Receive, Enter & Validate Order Cycle Time The average time associated with receiving and verifying an order at the customer site Cost to Receive, Enter & Validate Order

Best Practices:
Automatic Multi-level Credit Checking: Dollar Integrated Order/Financial Management Limits; Days Sales Outstanding; Margin Testing Integrated demand/deployment planning to customer location driven by Continuous Replenishment Programs; POS; Customer movement data Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals Electronic Commerce (Customer Visibility of EDI applications and integrated order management Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory None identified Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions Remote (Sales, Customers) Order Entry None identified Capability Value Pricing Based on Cost to Serve; Activity Based Costing; Integrated Order Management by Customer by EDLP; Cost Plus Pricing Line Item

Inputs:
Customer Order from Source: Customer An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Customer Quote from D1.1 Process Inquiry A statement of price, terms of sale, and description of goods or services & Quote offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. Customer Replenish Signal from Source: A requirement for product from a distribution location to a source location. Customer Deliver Contract Terms from Source: The process of making a delivery commitment. For make-to-order Customer products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise. Order Rules from ED.1 Manage Deliver Business Rules Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Outputs:
Actual Sales History to P5.1 Assess, and Aggregate Return Requirements Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Contract Status to ED.3 Manage Deliver Customer profile, which include address data, credit and purchase Information histories, customer preferences including shipping, status, and delivery requirements, etc. Credit History to ED.3 Manage Deliver Report that portrays a potential customers payment history and debt, Information indicating the ability to pay in a timely manner in the future. Customer Address Data to ED.3 Manage Customer profile, which include address data, credit and purchase Deliver Information histories, customer preferences including shipping, status, and delivery requirements, etc. Customer Order to ED.2 Assess Delivery An order from a customer for a particular product or a number of products. Performance It is often referred to as an actual demand to distinguish it from a forecasted demand. Customer Order Size, Weight, and Freight Coupled with cube and route, these criteria determine type of carrier and Class to ED.6 Manage Transportation cost of shipment Location of Customers to ED.7 Manage Customer profile, which includes address and location data, credit and Product Life Cycle purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Optional Payment to Company Payment at the time of order, maybe partial or in full. Purchase History to ED.3 Manage Deliver The amount of purchased products for a certain time in history per specific Information intervals Shipping Preferences to ED.3 Manage Customer preferences including shipping, status, and delivery Deliver Information requirements, etc., and customer profile, which includes address data, credit and purchase histories, Validated Order to D1.3 Reserve Inventory & An order that has had the instructions / requirements validated i.e. the Determine Delivery Date information that the order contains is accurate , consistent with previous information and does not violate business policies or rules. Note 1 - this does not make the order committed there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal , purchase or production.

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D1.3 Reserve Inventory & Determine Delivery Date


Inventory and/or planned capacity (both on hand and scheduled) is identified and reserved for specific orders and a delivery date is committed and scheduled. Metrics (see Appendix A for metrics attributes):
% of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Reserve Resources & Determine The sum of the costs associated with reserving resources and determining Delivery Date a delivery date. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customers original Date commit date Fill Rate The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours Order Fulfillment Dwell Time Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. Reserve Inventory & Determine Delivery The average time associated with reserving inventory and determining a Date Cycle Time delivery date

Best Practices:
Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer Available-to-Promise (ATP) Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order. None identified

EDI Links between Manufacturing and Distributor to Achieve Visibility of Complete Finished Goods Inventory and Expected Shipments None identified Inventory Allocation Exception Process is Clearly Defined and Jointly Owned by Manufacturing and Sales Priority-Based Inventory Reservations, for None identified Key Customers, with FIFO Allocation for All Others

Inputs:
Delivery Plans from P4.4 Establish Delivery Plans Inventory Availability from M1.2 Issue Material Inventory Availability from S1.4 Transfer Product A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. Production Schedule from M1.1 Schedule A plan that authorizes the factory to manufacture or repair a certain Production Activities quantity of a specific item. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Validated Order from D1.2 Receive, Enter & An order that has had the instructions / requirements validated i.e. the information that the order contains is accurate , consistent with previous Validate Order information and does not violate business policies or rules. Note 1 - this does not make the order committed there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal , purchase or production.

Outputs:
Delivery Date to D1.4 Consolidate Orders Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Inventory Availability/Delivery Date to P4.2 Those stocks or items on hand used to support production (raw materials Identify, Assess, and Aggregate Delivery and work in process items), supporting activities (maintenance, repairs and Resources and Capabilities operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Order Backlog to P1.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Supply Chain Requirements system and are in a queue waiting to be processed and shipped. Order Backlog to P4.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Delivery Requirements system and are in a queue waiting to be processed and shipped. Replenishment Signal to S1.1 Schedule Any signal that indicates when to produce or transport Items in a pull Product Deliveries replenishment system. Replenishment Signal to S2.4 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Replenishment Signal to S3.6 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Replenishment Signal to S1.4 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Shipments to P1.1 Identify, Prioritize, and Transactions related to sending the product to the customer. Aggregate Supply Chain Requirements

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D1.4 Consolidate Orders


The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Metrics (see Appendix A for metrics attributes):
Consolidate Orders Cycle Time Cost to Consolidate Orders The average time required for customer order consolidation. The sum of the costs associated with consolidating customer orders.

Best Practices:
Combine Consolidation Needs with Other Products/Divisions/Companies Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc. None identified Integrated load planning and building with warehouse management

Inputs:
Delivery Date from D1.3 Reserve Inventory & Those stocks or items on hand used to support production (raw materials Determine Delivery Date and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Outputs:
Daily Shipment Volume to Carrier Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc. Daily Shipment Volume to D1.5 Build Loads Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc.

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D1.5 Build Loads


Transportation modes are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes):
Build Loads Cycle Time Cost to Build Loads The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices:
Build Load in Stop Sequence Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization Integration with CRP/VMI vendor systems Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels. Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning

Inputs:
Daily Shipment Volume from D1.4 Consolidate Orders Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc.

Outputs:
Load Information to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Load Information to D1.6 Route Shipments Plan and Build Loads Information to SR2.4 Schedule MRO Shipment Plan and Build Loads Information to SR3.4 Schedule Excess Product Shipment Plan and Build Loads Information to SR1.4 Schedule Defective Product Shipment Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Transportation modes are selected and efficient loads are built. Transportation modes are selected and efficient loads are built. Transportation modes are selected and efficient loads are built.

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D1.6 Route Shipments


Loads are consolidated and routed by mode, lane and location. Metrics (see Appendix A for metrics attributes):
Cost to Route Shipments Route Shipments Cycle Time The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices:
Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI Shipment Tracking and Tracing Vendor Managed Inventory Route scheduling, carrier selection, and rating Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Satellite communications, GPS, RFID VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
Load Information from D1.5 Build Loads Rated Carrier Data from Source: Carrier Routing Guide from Source: Carrier Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Outputs:
Shipment Routes to D1.7 Select Carriers & Rate Shipments Routes for shipping by consolidating loads.

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D1.7 Select Carriers & Rate Shipments


Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes):
Cost to Select Carriers & Rate Shipments Select Carriers & Rate Shipments Cycle Time The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices:
Select Carriers by Least Cost per Shipment Rules based carrier selection and actual rate database and Rate Using Actual Rates Prior to Release to Billing

Inputs:
Shipment Routes from D1.6 Route Shipments Routes for shipping by consolidating loads.

Outputs:
Scheduled Deliveries to Plan Scheduled Deliveries to D1.9 Pick Product The required or agreed time or rate of delivery of goods or services purchased for a future period. The required or agreed time or rate of delivery of goods or services purchased for a future period.

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D1.8 Receive Product from Source or Make


The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes):
Cost to Receive Product from Source or The sum of the costs associated with transferring product from source or Make make activities. Receive Product from Source or Make Cycle The average time associated with receiving a transfer of product to deliver Time processes from source or make

Best Practices:
Automatic Identification Cross-Docking Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

Download P.O. & Advanced Ship Notices for Integration with Procurement Systems & Electronic Commerce with Automated Receiving and Put Away Vendors Dynamic Location Assignment Including Lot Real time inventory control, stock locator, and rules based put away logic Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access Merge-in-Transit Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shippers distribution center (DC) or in a carriers terminal.

Inputs:
Authorization to Return to Service from SR2.2 Disposition MRO Product Authorization to Return to Service from SR1.2 Disposition Defective Product Authorization to Return to Service from SR3.2 Disposition Excess Product Authorization to Scrap from SR3.2 Disposition Excess Product Authorization to Scrap from SR1.2 Disposition Defective Product Authorization to Scrap from SR2.2 Disposition MRO Product Finished Product Release from M1.6 Release Product to Deliver Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. The authorization to ship a finished product that has been ordered.

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Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Product due to arrive.

Production Schedule from M1.1 Schedule Production Activities Scheduled Receipts from S1.1 Schedule Product Deliveries

Outputs:
Existing Inventory Data to ED.4 Manage Finished Goods Inventories Inventory Availability to D1.9 Pick Product Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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D1.9 Pick Product


The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order. Metrics (see Appendix A for metrics attributes):
Cost to Pick Product Fill Rate Pick Product Cycle Time The sum of the costs associated with picking product. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with product pick

Best Practices:
Dynamic Location Assignment Including Lot Real time inventory control, stock locator, and rules based picking logic Control, Zoned Picking, Quality Assurance Rules based picking logic and simulation Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time Merge-in-Transit Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shippers distribution center (DC) or in a carriers terminal. Use of Speed Racks for Automated Material None identified Handling Wave picking A practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DCs, orders are scheduled to be picked when they are received. Wave picking consolidates orders into waves where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation.

Inputs:
Scheduled Deliveries from D1.7 Select Carriers & Rate Shipments Inventory Availability from D1.8 Receive Product from Source or Make The required or agreed time or rate of delivery of goods or services purchased for a future period. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Outputs:
Workflow to D1.10 Pack Product

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D1.10 Pack Product


The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes):
Cost to Pack Product Pack Product Cycle Time The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs:
Workflow from D1.9 Pick Product

Outputs:
Workflow to D1.11 Load Vehicle & Generate Shipping Documentation

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D1.11 Load Vehicle & Generate Shipping Documentation


The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes):
Cost to Load Product & Generate Shipping Documentation Delivery Performance to Customer Commit Date Documentation Accuracy The sum of the costs associated with loading product & generating shipping documentation. The percentage of orders that are fulfilled on the customers original commit date Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Load Product & Generate Shipping Documentation Cycle Time

Best Practices:
Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement Cross-Docking Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to suppliers shipping system to financials None identified

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking Shipment Tracking

Inputs:
Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements Shipping Parameters and Documentation from ED.6 Manage Transportation Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs:
Delivered End Items to Customer Load, Shipping, Verify, and Credit Information to SR1.5 Return Defective Product Products that have been acknowledged as received by the customer. The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information.

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Load, Shipping, Verify, and Credit Information to SR2.5 Return MRO Product

The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information.

Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information to SR3.5 Return Excess Product components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information. Order Backlog to P1.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Supply Chain Requirements system and are in a queue waiting to be processed and shipped. Shipments to P1.1 Identify, Prioritize, and Transactions related to sending the product to the customer. Aggregate Supply Chain Requirements Shipping Documents to Government Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping Documents to Customer Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping Documents to Carrier Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping History to ED.8 Manage The transaction history of the physical shipment of an item to another Import/Export Requirements internal location or to a customer.

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D1.12 Ship Product


The process of shipping the product to the customer site. Metrics (see Appendix A for metrics attributes):
% of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Ship Product The sum of the costs associated with shipping products. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customers original Date commit date Ship Product Cycle Time The average time associated with shipping product

Best Practices:
Cross-Docking Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified

Shipment Tracking

Inputs:
Workflow from D1.11 Load Vehicle & Generate Shipping Documentation

Outputs:
Workflow to D1.13 Receive & Verify Product by Customer

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D1.13 Receive & Verify Product by Customer


The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes):
% of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Receive & Verify Product by The sum of the costs associated with receipt and verification at customer Customer site. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customers original Date commit date Perfect Condition Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% Receive & Verify Product by Customer The average time associated with receiving and verifying an order at the Cycle Time customer site

Best Practices:
Advanced Shipping Notices & UCC128 Container Labeling Bar coding; EDI; integrated transportation/warehouse management

Inputs:
Workflow from D1.12 Ship Product

Outputs:
Product to D1.14 Install Product The end object of a transformation process that includes physical objects, information or services.

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D1.14 Install Product


When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
% of Faultless Installations Cost to Install Product Install Product Cycle Time Perfect Condition Number of Faultless Installations divided by Total Number of Units Installed. The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Best Practices:
Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc. Collaborative planning tools with the Source suppliers (This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management)

Inputs:
Product from D1.13 Receive & Verify Product The end object of a transformation process that includes physical objects, by Customer information or services.

Outputs:
Installed Product to D1.15 Invoice The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

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D1.15 Invoice
A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes):
% of Faultless Invoices The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date The sum of the costs associated with invoicing. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with the the generation and issuance of an invoice

Cost to Invoice Documentation Accuracy

Invoice Cycle Time

Best Practices:
Electronic Transfer of Shipment Information None identified to Finance Provide Visibility to and Quickly Escalate Integrated accounts receivables Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed EDI transaction and network services Closing of Receivables and to Reduce Processing Costs

Inputs:
Installed Product from D1.14 Install Product The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

Outputs:
Payment to Company Receipt of payment for goods and services per contract or purchase order.

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D2 Deliver Make-to-Order Product


The process of delivering product that is manufactured, assembled or configured from standard parts or subassemblies. Manufacture, assembly or configuration will begins only after the receipt and validation of a firm customer order. The Category D2 includes fifteen Level 3 Elements:
D2.1 Process Inquiry & Quote Receive and respond to general customer inquiries and requests for quotes. D2.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. D2.11 Load Product & Generate Shipping The series of tasks including placing/loading product onto modes of Documentation transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. D2.12 Ship Product The process of shipping the product to the customer site. D2.13 Receive & Verify Product by Customer The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. D2.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. D2.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. D2.2 Receive, Configure, Enter and Validate Receive orders from the customer and enter them into a companys order Order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customers specific needs, based on standard available parts or options. Technically examine order to ensure an orderable configuration and provide accurate price. Check the customers credit. Optionally accept payment. D2.3 Reserve Resources & Determine Inventory and/or planned capacity is identified and reserved for specific Delivery Date orders, and a delivery date is committed and scheduled. D2.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. D2.5 Build Loads Transportation modes are selected and efficient loads are built. D2.6 Route Shipments Loads are consolidated and routed by mode, lane and location. D2.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. D2.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. D2.9 Pick Product The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order.

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.
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Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Finished Goods Inventory Days of Supply Order Fulfillment Cycle Time Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Deliver Adaptability Upside Deliver Flexibility

The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Best Practices:
Postponement Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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D2.1 Process Inquiry & Quote


Receive and respond to general customer inquiries and requests for quotes. Metrics (see Appendix A for metrics attributes):
. . Cost to Process Inquiry & Quote Process Inquiry & Quote Cycle Time The sum of the costs associated with processing inquiry and quotes. The average time associated with processing inquiries and quotes

Best Practices:
. . Quote Capability, without Reserving Inventory, Which Can Be Converted into an Order in a Single Step Quote Capability, without Reserving Inventory, Which Can be Converted into an Order, But Does Not Generate Build Signal or Reserve Inventory Capacity Single Point of Contact for All Order Inquiries (Including Order Entry) None identified None identified

None identified

Inputs:
. Customer Inquiry from Source: Customer General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Outputs:
. Order Quote (Customer) to Customer A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

Order Quote (Customer) to D2.2 Receive, Configure, Enter and Validate Order

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D2.2 Receive, Configure, Enter and Validate Order


Receive orders from the customer and enter them into a companys order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customers specific needs, based on standard available parts or options. Technically examine order to ensure an orderable configuration and provide accurate price. Check the customers credit. Optionally accept payment. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive, Enter & Validate Order Order Fulfillment Dwell Time The sum of the costs associated with receiving, entering and validating a customer order. Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The average time associated with receiving and verifying an order at the customer site

Receive, Configure, Enter & Validate Order Cycle Time

Best Practices:
. . . Automated Configuration Management Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals Electronic Commerce (Customer Visibility of Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions Order Entry is Organized by Customer Segment Customers Receive Differentiated Service Based on Volume of Business Customer Team is Empowered to Fully Service Customer Requests, Including Formal Orders and Ad Hoc Requests Customers Have One Point of Contact for All Products Remote (Sales, Customers) Order Entry Capability Value Pricing Based on Cost to Serve; EDLP; Cost Plus Pricing Configuration Integrated Order/Financial Management Integrated demand/deployment planning to customer location driven by POS; Customer movement data EDI applications and integrated order management

None identified

None identified

. .

None identified Activity Based Costing; Integrated Order Management by Customer by Line Item

Inputs:
. Configuration Rules from ED.1 Manage Deliver Business Rules The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials.

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. . .

Contract Terms from Source: Customer Credit History from Source: Customer Order Quote (Customer) from D2.1 Process Inquiry & Quote

All the provisions and agreements of a contract. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future. A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

Order Rules from ED.1 Manage Deliver Business Rules

Outputs:
. Actual Sales History to P5.1 Assess, and Aggregate Return Requirements Booked Order to D2.3 Reserve Resources & Determine Delivery Date Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Coupled with cube and route, these criteria determine type of carrier and cost of shipment Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Payment at the time of order, maybe partial or in full. The amount of purchased products for a certain time in history per specific intervals

Booked Order to ED.3 Manage Deliver Information

Contract Status to ED.3 Manage Deliver Information Credit History to ED.3 Manage Deliver Information Customer Address Data to ED.3 Manage Deliver Information Customer Order Size, Weight, and Freight Class to ED.6 Manage Transportation Location of Customers to ED.7 Manage Product Life Cycle Optional Payment to Company Purchase History to ED.3 Manage Deliver Information

. .

. .

. .

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Shipping Preferences to ED.3 Manage Deliver Information

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

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D2.3 Reserve Resources & Determine Delivery Date


Inventory and/or planned capacity is identified and reserved for specific orders, and a delivery date is committed and scheduled. Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with reserving resources and determining a delivery date. The percentage of orders that are fulfilled on the customers original commit date Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The average time associated with reserving resources and determining a delivery date

. . .

Cost to Reserve Resources & Determine Delivery Date Delivery Performance to Customer Commit Date Order Fulfillment Dwell Time

Reserve Resources & Determine Delivery Date Cycle Time

Best Practices:
. . . Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer Available-to-Promise (ATP) Dynamic Deployment Based on Constraint Based Planning and Optimal Scheduling Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order. Advanced planning and scheduling logic with constraint, cost, and resource optimization

Inputs:
. Booked Order from D2.2 Receive, Configure, Enter and Validate Order The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

. .

Delivery Plans from P4.4 Establish Delivery Plans Inventory Availability from S2.4 Transfer Product

Production Plans from P3.4 Establish Production Plans

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Production Schedule from M2.1 Schedule Production Activities Sourcing Plans from P2.4 Establish Sourcing Plans

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs:
. Available to Promise Date to Make The uncommitted portion of a companys inventory and planned production maintained in the master schedule to support customerorder promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Reserved inventory and/or planned capacity and delivery date for a specific order. Reserved inventory and/or planned capacity and delivery date for a specific order. Any signal that indicates when to produce or transport Items in a pull replenishment system.

Customer Order to ED.2 Assess Delivery Performance Delivery Date to D2.4 Consolidate Orders

Inventory Availability/Delivery Date to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

Inventory Status to Deliver

Inventory Status to Plan

Inventory Status to Make

Inventory Status to Source

. . . .

Order Backlog to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Order Signal to P3.1 Identify, Prioritize, and Aggregate Production Requirements Order Signal to P2.1 Identify, Prioritize, and Aggregate Product Requirements Replenishment Signal to S2.1 Schedule Product Deliveries

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D2.4 Consolidate Orders


The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Metrics (see Appendix A for metrics attributes):
. . Consolidate Orders Cycle Time Cost to Consolidate Orders The average time required for customer order consolidation. The sum of the costs associated with consolidating customer orders.

Best Practices:
. Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc. Integrated load planning and building with warehouse management

Inputs:
. Delivery Date from D2.3 Reserve Resources & Determine Delivery Date Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Outputs:
. Consolidated Orders to D2.5 Build Loads The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation.

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D2.5 Build Loads


Transportation modes are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes):
. . Build Loads Cycle Time Cost to Build Loads The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices:
. . . Build Load in Stop Sequence Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning Integration with CRP/VMI vendor systems

Inputs:
. Consolidated Orders from D2.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation.

Outputs:
. Load Information to D2.6 Route Shipments Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

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D2.6 Route Shipments


Loads are consolidated and routed by mode, lane and location. Metrics (see Appendix A for metrics attributes):
. . Cost to Route Shipments Route Shipments Cycle Time The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices:
. . . . . Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI Shipment Tracking and Tracing Vendor Managed Inventory Route scheduling, carrier selection, and rating Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Satellite communications, GPS, RFID VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
. . . Load Information from D2.5 Build Loads Rated Carrier Data from Source: Company Routing Guide from Source: Company Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Outputs:
. . Scheduled Deliveries to Plan Shipment Routes to D2.7 Select Carriers & Rate Shipments The required or agreed time or rate of delivery of goods or services purchased for a future period. Routes for shipping by consolidating loads.

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D2.7 Select Carriers & Rate Shipments


Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes):
. . Cost to Select Carriers & Rate Shipments Select Carriers & Rate Shipments Cycle Time The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices:
. Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing Rules based carrier selection and actual rate database

Inputs:
. Shipment Routes from D2.6 Route Shipments Routes for shipping by consolidating loads.

Outputs:
. Workflow to D2.9 Pick Product

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D2.8 Receive Product from Source or Make


The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive Product from Source or Make Receive Product from Source or Make Cycle Time The sum of the costs associated with transferring product from source or make activities. The average time associated with receiving a transfer of product to deliver processes from source or make

Best Practices:
. . Automatic Identification Cross-Docking Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. Integration with Procurement Systems & Electronic Commerce with Vendors Real time inventory control, stock locator, and rules based picking logic

. .

Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance

Outputs:
. Workflow to D2.9 Pick Product

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D2.9 Pick Product


The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Metrics (see Appendix A for metrics attributes):
. . Cost to Pick Product Pick Product Cycle Time The sum of the costs associated with picking product. The average time associated with product pick

Best Practices:
. . . Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time Use of Speed Racks for Automated Material Handling Real time inventory control, stock locator, and rules based picking logic Rules based picking logic and simulation None identified

Inputs:
. . . . Workflow from D2.7 Select Carriers & Rate Shipments Workflow from D2.8 Receive Product from Source or Make Finished Product Release from M2.6 The authorization to ship a finished product that has been ordered. Release Finished Product to Deliver Inventory Availability from S2.4 Transfer Those stocks or items on hand used to support production (raw Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability from M2.2 Issue Sourced/In-Process Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

. .

Production Schedule from M2.1 Schedule Production Activities WIP Location Rules from EM.6 Manage Transportation

Outputs:
. Workflow to D2.10 Pack Product

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D2.10 Pack Product


The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes):
. . Cost to Pack Product Pack Product Cycle Time The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs:
. Workflow from D2.9 Pick Product

Outputs:
. Workflow to D2.11 Load Product & Generate Shipping Documentation

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D2.11 Load Product & Generate Shipping Documentation


The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes):
. . . Cost to Load Product & Generate Shipping Documentation Delivery Performance to Customer Commit Date Documentation Accuracy The sum of the costs associated with loading product & generating shipping documentation. The percentage of orders that are fulfilled on the customers original commit date Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Load Product & Generate Shipping Documentation Cycle Time

Best Practices:
. . Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to suppliers shipping system to financials

Cross-Docking

. . .

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking

Inputs:
. . Workflow from D2.10 Pack Product Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements Shipping Parameters and Documentation from ED.6 Manage Transportation Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs:
. . . Workflow to D2.12 Ship Product Advanced Ship Notice to D2.13 Receive & Verify Product by Customer Delivered End Items to Customer An EDI notification of shipment of product. Products that have been acknowledged as received by the customer.

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. .

Shipping Documents to Carrier Shipping History to ED.8 Manage Import/Export Requirements

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). The transaction history of the physical shipment of an item to another internal location or to a customer.

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D2.12 Ship Product


The process of shipping the product to the customer site. Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with shipping products. The percentage of orders that are fulfilled on the customers original commit date The average time associated with shipping product

. . .

Cost to Ship Product Delivery Performance to Customer Commit Date Ship Product Cycle Time

Best Practices:
. Cross-Docking Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified

Shipment Tracking

Inputs:
. Workflow from D2.11 Load Product & Generate Shipping Documentation

Outputs:
. Workflow to D2.13 Receive & Verify Product by Customer

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D2.13 Receive & Verify Product by Customer


The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes):
. . . Cost to Receive & Verify Product by Customer Delivery Performance to Customer Commit Date Perfect Condition The sum of the costs associated with receipt and verification at customer site. The percentage of orders that are fulfilled on the customers original commit date Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The average time associated with receiving and verifying an order at the customer site

Receive & Verify Product by Customer Cycle Time

Best Practices:
. . Advanced Shipping Notices & UCC128 Container Labeling Shipment Tracking Bar coding; EDI; integrated transportation/warehouse management None identified

Inputs:
. . Workflow from D2.12 Ship Product Advanced Ship Notice from D2.11 Load Product & Generate Shipping Documentation An EDI notification of shipment of product.

Outputs:
. Product to D2.14 Install Product The end object of a transformation process that includes physical objects, information or services.

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D2.14 Install Product


When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes):
. . . . % of Faultless Installations Cost to Install Product Install Product Cycle Time Perfect Condition Number of Faultless Installations divided by Total Number of Units Installed. The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Best Practices:
. Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc. Collaborative planning tools with the Source suppliers (This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management)

Inputs:
. Product from D2.13 Receive & Verify Product by Customer The end object of a transformation process that includes physical objects, information or services.

Outputs:
. Installed Product to D2.15 Invoice The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration. The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

Installed Product to Customer

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D2.15 Invoice
A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes):
. % of Faultless Invoices The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date 5 point annual average of gross accounts receivable (total gross annual sales 365) The average time associated with Deliver Processes Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100%

. . . .

Customer Invoicing/ Accounting Costs Days Sales Outstanding Deliver Cycle Time Documentation Accuracy

Best Practices:
. . . Electronic Transfer of Shipment Information to Finance Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs None identified Integrated accounts receivables EDI transaction and network services

Inputs:
. Installed Product from D2.14 Install Product The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

Outputs:
. Payment to Company Receipt of payment for goods and services per contract or purchase order.

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D3 Deliver Engineer-to-Order Product


The process of delivering a product that is designed, manufactured, and assembled from a bill of materials that includes one or more custom parts. Design will begin only after the receipt and validation of a firm customer order. The Category D3 includes fifteen Level 3 Elements:
. D3.1 Obtain and Respond to RFP/RFQ The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. The process of shipping the product to the customer site The process of receiving the shipment (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Transportation loads are selected and efficient loads are built. The process of consolidating and routing shipments by mode, lane, and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order.

. . . .

D3.10 Pack Product D3.11 Load Product & Generate Ship Documents D3.12 Ship Product D3.13 Receive & Verify Product by Customer

. .

D3.14 Install Product D3.15 Invoice

. . . . . . .

D3.2 Negotiate & Receive Contract D3.3 Enter Order, Commit Resources & Launch Program D3.4 Schedule Installation D3.5 Build Loads D3.6 Route Shipments D3.7 Select Carriers and Rate Shipments D3.8 Receive Product from Source or Make

D3.9 Pick Product

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Metrics (see Appendix A for metrics attributes):


. Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. . . . . . . Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Finished Goods Inventory Days of Supply Order Fulfillment Cycle Time Order Management Costs Perfect Order Fulfillment The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The aggregation of the following cost elements (contained in this glossary): The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Return on Supply Chain Fixed Assets

Return on Working Capital

. .

Upside Deliver Adaptability Upside Deliver Flexibility

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D3.1 Obtain and Respond to RFP/RFQ


The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. Metrics (see Appendix A for metrics attributes):
. . Cost to Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cycle Time The sum of the costs associated with obtaining and responding to Request for Quote (RFQ) / Request for Proposal (RFP). The average time associated with obtaining and responding to RFQs/RFPs

Best Practices:
. . Partnership with Outside Design Firms to Provide Skills and Capacity, as Needed Use of CAD/CAE Applications to Simulate Design, Cost and Manufacturing Process None identified None identified

Inputs:
. RFQ/RFP from Source: Customer Request for Quote - A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors. Request for Proposal - A document used to solicit vendor responses when the functional requirements and features are known but no specific product is in mind.

Outputs:
. Completed Proposal to Customer A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. The amount of purchased products for a certain time in history per specific intervals Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

Completed Proposal to D3.2 Negotiate & Receive Contract Contract Status to ED.3 Manage Deliver Information Credit History to ED.3 Manage Deliver Information Customer Address Data to ED.3 Manage Deliver Information Purchase History to ED.3 Manage Deliver Information Shipping Preferences to ED.3 Manage Deliver Information

. .

. .

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D3.2 Negotiate & Receive Contract


The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. Metrics (see Appendix A for metrics attributes):
. . Cost to Negotiate & Receive Contract Negotiate & Receive Contract Cycle Time The sum of the costs associated with negotiating and receiving contracts The average time associated with negotiating and receiving a contract

Inputs:
. Completed Proposal from D3.1 Obtain and Respond to RFP/RFQ Order Rules from ED.1 Manage Deliver Business Rules A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

Outputs:
. Approved Contract to D3.3 Enter Order, Commit Resources & Launch Program Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Coupled with cube and route, these criteria determine type of carrier and cost of shipment Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Payment at the time of order, maybe partial or in full.

Customer Order to ED.2 Assess Delivery Performance Customer Order Size, Weight, and Freight Class to ED.6 Manage Transportation Location of Customers to ED.7 Manage Product Life Cycle Optional Payment to Company

. .

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D3.3 Enter Order, Commit Resources & Launch Program


The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with entering the order, committing resources & launching a program. The percentage of orders that are fulfilled on the customers original commit date The average time associated with entering an order, committing resources and program launch Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time.

. . . .

Cost to Enter Order, Commit Resources & Launch Program Delivery Performance to Customer Commit Date Enter Order, Commit Resources & Launch Program Cycle Time Order Fulfillment Dwell Time

Inputs:
. Approved Contract from D3.2 Negotiate & Receive Contract Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

. .

Delivery Plans from P4.4 Establish Delivery Plans Production Plans from P3.4 Establish Production Plans

. .

Production Schedule from M3.2 Schedule Production Activities Sourcing Plans from P2.4 Establish Sourcing Plans

Outputs:
. Actual Sales History to P5.1 Assess, and Aggregate Return Requirements Customer Order to D3.4 Schedule Installation Order Backlog to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped.

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Order Information to M3.1 Finalize Production Engineering Order Signal to P2.1 Identify, Prioritize, and Aggregate Product Requirements Order Signal to P3.1 Identify, Prioritize, and Aggregate Production Requirements Replenishment Signal to S3.3 Schedule Product Deliveries Resource Availability to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system. Reserved inventory and/or planned capacity and delivery date for a specific order. Reserved inventory and/or planned capacity and delivery date for a specific order. Any signal that indicates when to produce or transport Items in a pull replenishment system. The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output.

. . . .

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D3.4 Schedule Installation


The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Metrics (see Appendix A for metrics attributes):
. . Cost to Schedule Installation Schedule Installation Cycle Time The sum of the costs associated with scheduling product installation. The average time associated with scheduling the installation of product

Inputs:
. Customer Order from D3.3 Enter Order, Commit Resources & Launch Program An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

Outputs:
. Scheduled Installation to Customer The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule.

Scheduled Installation to D3.5 Build Loads

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D3.5 Build Loads


Transportation loads are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes):
. . Build Loads Cycle Time Cost to Build Loads The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices:
. . . . Build Load in Stop Sequence Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization Vendor Managed Inventory Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning Integration with CRP/VMI vendor systems VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs:
. Scheduled Installation from D3.4 Schedule Installation The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule.

Outputs:
. . Load Information to D3.6 Route Shipments Scheduled Deliveries to Plan Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc The required or agreed time or rate of delivery of goods or services purchased for a future period.

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D3.6 Route Shipments


The process of consolidating and routing shipments by mode, lane, and location. Metrics (see Appendix A for metrics attributes):
. . Cost to Route Shipments Route Shipments Cycle Time The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices:
. . . . . Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing Shipment Tracking and Tracing Route scheduling, carrier selection, and rating Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Rules based carrier selection and actual rate database Satellite communications, GPS, RFID

Inputs:
. . . Load Information from D3.5 Build Loads Rated Carrier Data from Source: Company Routing Guide from Source: Company Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Outputs:
. Workflow to D3.7 Select Carriers and Rate Shipments

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D3.7 Select Carriers and Rate Shipments


Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes):
. . Cost to Select Carriers & Rate Shipments Select Carriers & Rate Shipments Cycle Time The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices:
. Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing Rules based carrier selection and actual rate database

Inputs:
. Workflow from D3.6 Route Shipments

Outputs:
. Workflow to D3.9 Pick Product

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D3.8 Receive Product from Source or Make


The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive Product from Source or Make Receive Product from Source or Make Cycle Time The sum of the costs associated with transferring product from source or make activities. The average time associated with receiving a transfer of product to deliver processes from source or make

Best Practices:
. . Automatic Identification Cross-Docking Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. Integration with Procurement Systems & Electronic Commerce with Vendors Real time inventory control, stock locator, and rules based put away logic

. .

Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away Dynamic Location Assignment Including Lot Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access

Outputs:
. Workflow to D3.9 Pick Product

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D3.9 Pick Product


The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Metrics (see Appendix A for metrics attributes):
. . Cost to Pick Product Pick Product Cycle Time The sum of the costs associated with picking product. The average time associated with product pick

Best Practices:
. . Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time Real time inventory control, stock locator, and rules based picking logic Rules based picking logic and simulation

Inputs:
. . . . Workflow from D3.7 Select Carriers and Rate Shipments Workflow from D3.8 Receive Product from Source or Make Finished Product Release from M3.7 The authorization to ship a finished product that has been ordered. Release Product to Deliver Inventory Availability from M3.3 Issue Those stocks or items on hand used to support production (raw Sourced/In-Process Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability from S3.6 Transfer Product Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M3.2 Schedule Production Activities

Outputs:
. Workflow to D3.10 Pack Product

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D3.10 Pack Product


The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes):
. . Cost to Pack Product Pack Product Cycle Time The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs:
. Workflow from D3.9 Pick Product

Outputs:
. Workflow to D3.11 Load Product & Generate Ship Documents

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D3.11 Load Product & Generate Ship Documents


The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes):
. . Cost to Load Product & Generate Shipping Documentation Documentation Accuracy The sum of the costs associated with loading product & generating shipping documentation. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Load Product & Generate Shipping Documentation Cycle Time

Best Practices:
. . Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to suppliers shipping system to financials

Cross-Docking

. . .

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking

Inputs:
. . Workflow from D3.10 Pack Product Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements Shipping Parameters and Documentation from ED.6 Manage Transportation Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs:
. . . Workflow to D3.12 Ship Product Shipping Documents to Carrier Shipping History to ED.8 Manage Import/Export Requirements Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). The transaction history of the physical shipment of an item to another internal location or to a customer.

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D3.12 Ship Product


The process of shipping the product to the customer site Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with shipping products. The percentage of orders that are fulfilled on the customers original commit date The average time associated with shipping product

. . .

Cost to Ship Product Delivery Performance to Customer Commit Date Ship Product Cycle Time

Best Practices:
. Cross-Docking Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified

Shipment Tracking

Inputs:
. Workflow from D3.11 Load Product & Generate Ship Documents

Outputs:
. Workflow to D3.13 Receive & Verify Product by Customer

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D3.13 Receive & Verify Product by Customer


The process of receiving the shipment (either at customer site or at shipping area in case of selfcollection) and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with receipt and verification at customer site. The percentage of orders that are fulfilled on the customers original commit date Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The average time associated with receiving and verifying an order at the customer site

. . .

Cost to Receive & Verify Product by Customer Delivery Performance to Customer Commit Date Perfect Condition

Receive & Verify Product by Customer Cycle Time

Best Practices:
. . Advanced Shipping Notices & UCC128 Container Labeling Shipment Tracking Bar coding; EDI; integrated transportation/warehouse management None identified

Inputs:
. Workflow from D3.12 Ship Product

Outputs:
. Product to D3.14 Install Product The end object of a transformation process that includes physical objects, information or services.

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D3.14 Install Product


When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes):
. . . Cost to Install Product Install Product Cycle Time Perfect Condition The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

It initiates event:
. Product Installed for D3.15 Invoice

Inputs:
. Product from D3.13 Receive & Verify Product by Customer The end object of a transformation process that includes physical objects, information or services.

Outputs:
. . Workflow to D3.15 Invoice Installed Product to Customer The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

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D3.15 Invoice
A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes):
. % of Faultless Invoices The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date The sum of the costs associated with invoicing. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with the the generation and issuance of an invoice

. .

Cost to Invoice Documentation Accuracy

Invoice Cycle Time

Best Practices:
. . . Electronic Transfer of Shipment Information to Finance Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs None identified Integrated accounts receivables EDI transaction and network services

It is initiated by event:
. Product Installed from D3.14 Install Product

Inputs:
. Workflow from D3.14 Install Product

Outputs:
. Payment to Company Receipt of payment for goods and services per contract or purchase order.

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D4 Deliver Retail Product


Deliver Retail Products are the processes used to acquire, merchandise, and sell finished goods at a retail store. A retail store is a physical location that sells products (and services) direct to the consumer using a point of sale process (manual or automated) to collect payment. Merchandising at a store level is the stocking and restocking of products in designated storage locations to generate sales in a retail store. The Category D4 includes seven Level 3 Elements:
D4.1 Generate Stocking Schedule D4.2 Receive Product at Store D4.3 Pick Product from Backroom The process of scheduling resources to support item-stocking requirements. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Typical set of tasks associated with product selection, storage and movement through to checkout. The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. The process of preparing and installing the product at the customer site. The product is fully functional upon completion.

D4.4 Stock Shelf

D4.5 Fill Shopping Cart D4.6 Checkout D4.7 Deliver and/or Install

Metrics (see Appendix A for metrics attributes):


Cash-To-Cash Cycle Time [Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Return on Working Capital

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Upside Deliver Adaptability Upside Deliver Flexibility

The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

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D4.1 Generate Stocking Schedule


The process of scheduling resources to support item-stocking requirements. Metrics (see Appendix A for metrics attributes):
Cost to Generate Stocking Schedule Generate Stocking Schedule Cycle Time The sum of the costs associated with generating a stocking schedule. The average time associated with the generating a stocking schedule

Best Practices:
. . . Automated Pick List Labor Scheduling that Matches Product Flow Push Product on Trailer Arrival System generated pick-lists based on picking / batching rules. Workforce management solution with flexible rules. System prioritization of items coming off trucks vs. picked from back room.

It initiates event:
. Item Stocking Resources Scheduled for D4.2 Receive Product at Store

Inputs:
. . . Daily Replenishment Requirements from S1.4 Transfer Product On-demand Replenishment Requirements from Source: Company Resource Availability from Source: Company Resources needed to meet Item stocking schedule requirement. Requirements for the triggering of material movement to a work center only when that work center is ready to begin the next job. The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output. Scheduling of direct deliveries of material to a specified location on a plant floor near the operation where it is to be used. The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts.

. .

Shipping Schedules (internal or 3PL) from Source: Company Stocking Requirements from P4.4 Establish Delivery Plans

. .

Store Allocation Instructions from P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Vendor/DC inventory availability from Vendor/DC inventory available to a customer to supply demands. Source: Company (Where the customer has access to the suppliers inventory and the supplier has access to the customers requirements and inventory or vendor managed inventory).

Outputs:
. . Workflow to D4.2 Receive Product at Store Stocking Schedule to D4.4 Stock Shelf A timetable for the planned movement of material from a bulk storage area to an order pick storage area.

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D4.2 Receive Product at Store


The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive Product at Store Receive Product at Store Cycle Time The sum of the costs associated with receiving product at the store. The average time associated with receiving product at the customer store

Best Practices:
. . . Automated Pick List Labor Scheduling that Matches Product Flow Push Product on Trailer Arrival System generated pick-lists based on picking / batching rules. Workforce management solution with flexible rules. System prioritization of items coming off trucks vs. picked from back room.

It is initiated by event:
. Item Stocking Resources Scheduled from D4.1 Generate Stocking Schedule

Inputs:
. . . Workflow from D4.1 Generate Stocking Schedule Finished Product Release from M1.6 The authorization to ship a finished product that has been ordered. Release Product to Deliver Inventory Availability from S1.4 Transfer Those stocks or items on hand used to support production (raw Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Item Stocking Requirements from P4.1 Identify, Prioritize, and Aggregate Delivery Requirements The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Product due to arrive.

. .

Production Schedule from M1.1 Schedule Production Activities Scheduled Receipts from S1.1 Schedule Product Deliveries

Outputs:
. Inventory Availability to D4.3 Pick Product from Backroom Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area.

Item Pick Sheet for Stocking Schedule to D4.3 Pick Product from Backroom

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D4.3 Pick Product from Backroom


The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock Metrics (see Appendix A for metrics attributes):
. . Cost to Pick Product from Backroom Pick Product from Backroom Cycle Time The sum of the costs associated with picking product from backroom. The average time associated with product pick from backroom

Best Practices:
. . . . Automated Directed Picking Automated Replenishment of Back Stock Based on Minimum Stocking Levels Defined Stocking Levels and Criteria Staging Based on In-store Zones A pick list displayed on a handheld device that directs picks and relieves inventory from backroom locations None identified None identified Items are staged for re-stocking based on zones within the store. This minimizes restocking effort.

Inputs:
. . Workflow from Source: Company Inventory Availability from D4.2 Receive Product at Store Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Stored products or service parts ready for sale, as distinguished from stores, which are usually components or raw materials. A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area. An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (onhand plus on-order) falls to or below the reorder point.

. .

Inventory in Stock from Source: Company Item Pick Sheet for Stocking Schedule from D4.2 Receive Product at Store On-Order/Backorder from Source: Company

Replenishment Quantities from Source: Company

Outputs:
. . Assorted by Shelf Order to Company Loaded Retail Cart or Pallet to D4.4 Stock Shelf The function of physically separating a homogeneous subgroup from a heterogeneous population of items Customer selected retail finished goods transferred to the point of sale.

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D4.4 Stock Shelf


For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Metrics (see Appendix A for metrics attributes):
. . . Cost to Stock Shelf In-Stock % Stock Shelf Cycle Time The sum of the costs associated with stocking shelves. Percentage of materials, components, or finished goods that are there when needed. The average time associate with stocking shelves

Best Practices:
. . . . . Item/Shelf Scanning Upon Put-A-Way Off Peak Stocking Proof of Performance (Promotion Management) Scan Displays for Promotion Conformance Stocking is Completed in Zones Scan store shelves / bar codes to confirm put-a-way. The majority of stocking is completed with minimal impact to or visibility from the customer. Scan store shelves / bar codes to confirm put-a-way. Scan using handheld and match with ad. None identified Each area of the store has its own stocking plan and items are routed specifically to that area.

Inputs:
. . . Loaded Retail Cart or Pallet from D4.3 Pick Product from Backroom Loaded Retail Cart or Pallet from S1.4 Transfer Product Plan-o-gram Data from Source: Company Customer selected retail finished goods transferred to the point of sale. Customer selected retail finished goods transferred to the point of sale. Data required to develop and build a Plan-O-Gram display to help minimize setup time by showing specific placement of all items, by product number, on the display. A timetable for the planned movement of material from a bulk storage area to an order pick storage area. The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering.

. .

Stocking Schedule from D4.1 Generate Stocking Schedule Vendor Merchandising / Co-op advertising agreements from Source: Company

Outputs:
. . Full Shelf Locations to D4.5 Fill Shopping Cart Store Shelf Inventory Counts to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Determination of the best retail locations for implementation of full shelf equipment. The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis.

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D4.5 Fill Shopping Cart


Typical set of tasks associated with product selection, storage and movement through to checkout. Metrics (see Appendix A for metrics attributes):
. . . % Item Location Accuracy Cost to Fill Shopping Cart Fill Shopping Cart Cycle Time The sum of the costs associated with filling a shopping cart. The average time associated with filling the shopping cart

Best Practices:
. . . . . Items Are Relieved from Inventory When Item is Removed from Shelf Loyalty Card Data Measured and Compared with Same Activity Previous Period Multiple Locations Throughout Store Substitution RFID, smart cart or customer self-service reduces system inventory upon item pick. Use for comparison to previous sales activity/track new consumers, etc. DSS or portal tool that shows previous period performance and comparison for store management (whether it is a year ago, period ago, etc.). Planned and tracked via a plan-o-gram system; Location specific product labeling. Trained staff or automated systems (Internet) that recommend upsell, cross-sell, and/or substitution See Up and cross selling Trained staff or automated systems (Internet) that recommend upsell, cross-sell, and/or substitution.

Up and Cross Selling and/or Substitution

Inputs:
. . . . Customer Data (preference) from Source: Company Full Shelf Locations from D4.4 Stock Shelf Lost or Dropped Shopping Carts from Source: Company Merchandising Plan (Supplier) from Source: Company Customer profile, which includes history, customer preferences, status, and delivery requirements, etc. Determination of the best retail locations for implementation of full shelf equipment. On-line orders that are missing due to internet, software, or hardware malfunctions. The merchandising plan includes the current market position, opportunity and issue analysis, merchandising objectives and strategies, action plans, programs, projects, budgets, and pro forma profit and loss statement and management controls. The properties and characteristics of a product (e.g. the part number and a text description of the product) and the relationships to other items in the product family and linked / related SKUs. The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering

Product Data (linked/related SKUs) from Source: Company Promotional Plan from Source: Company

Outputs:
. Full Cart Ready for Checkout to D4.6 Checkout Customer selected goods transferred to the point of sale.

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D4.6 Checkout
The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. Metrics (see Appendix A for metrics attributes):
. . Checkout Cycle Time Cost to Checkout The average time required for customer checkout. The sum of the costs associated with product checkout.

Best Practices:
. . . Automatic Customer Payment Customer Profile Drive Recognition Upon Checkout Notification of Existing/Future Event or Promotions RFID, smart cart or customer self-service charges goods to card upon store departure. None identified None identified

It initiates event:
. Checkout Completed for D4.7 Deliver and/or Install

Inputs:
. . . Customer Profile/Data from Source: Company Full Cart Ready for Checkout from D4.5 Fill Shopping Cart Promotion Event Calendar from Source: Company Customer profile, which includes history, customer preferences, status, and delivery requirements, etc. Customer selected goods transferred to the point of sale. Time phased promotion / event tasks where the product offering is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering during the year.

Outputs:
. . Workflow to D4.7 Deliver and/or Install Customer Loyalty / Recurring Visits to Company Full Cart (Empty Cart) to Company Loyalty Customer Profile Changes to Company Point of Sale Data (Daily) to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Satisfied Customer to Company Input to customer profile, frequency of visits, recurring, time frame, what purchased, numbers and rings. Measure of customer satisfaction with products and service. Completion of customer checkout, sale of the selected goods, cart transitions from full to empty. More units, higher average ring, etc. The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment. Customers who are satisfied with the product or service delivered by the suppliers, including the aspects such as time, quality, cost, etc.

. . .

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D4.7 Deliver and/or Install


The process of preparing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes):
. . Cost to Deliver and/or Install Deliver and/or Install Cycle Time The sum of the costs associated with deliver and/or install The average time required to deliver and install product.

Best Practices:
. . . . Goals / Performance Plans Measurement, Monitoring and Adjustment of Service or Product Installation Provide Product or Service Training to Employees or FAQs Online Stage Product or Service Adoption None identified None identified None identified None identified

It is initiated by event:
. Checkout Completed from D4.6 Checkout

Inputs:
. Workflow from D4.6 Checkout

Outputs:
. . . . Consistently High Adoption Rates to Company High Customer Services Satisfaction Levels to Company Low Rates of Failure to Company Successful Installation / Live System to Company Indication of product and service quality, i.e. customer satisfaction. Indication of product and service quality. Indication of quality in workmanship and design. The installation of product is completed at the customer site, and the product is fully functional.

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ED Enable DELIVER
Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ED includes eight Level 3 Elements:
ED.1 Manage Deliver Business Rules ED.2 Assess Delivery Performance The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is outsourced the performance is passed on to source for contract administration. The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment - CAPITAL ASSETS) and 2) the management of transporters. The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc.

ED.3 Manage Deliver Information

ED.4 Manage Finished Goods Inventories ED.5 Manage Deliver Capital Assets ED.6 Manage Transportation

ED.7 Manage Product Life Cycle ED.8 Manage Import/Export Requirements

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ED.1 Manage Deliver Business Rules


The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Deliver Business Rules Manage Deliver Business Rules Cycle Time The sum of the Costs to Manage Deliver Business Rules The average time associated with managing deliver business rules

Best Practices:
. . Integrated Edit at Order Entry Time On-Line Rule Base Customer Master Record None identified

Inputs:
. Configuration Rules from Source: Company The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials. Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. Any company policies that affect how a planning process is defined, approved, and performed. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Management Process Reports from ED.2 Assess Delivery Performance Planning Decision Policies from Source: Plan Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance

. .

Outputs:
. Configuration Rules to D2.2 Receive, Configure, Enter and Validate Order The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

Order Rules to ED.5 Manage Deliver Capital Assets Order Rules to ED.4 Manage Finished Goods Inventories Order Rules to D2.2 Receive, Configure, Enter and Validate Order Order Rules to D1.2 Receive, Enter & Validate Order Order Rules to D3.2 Negotiate & Receive Contract

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ED.2 Assess Delivery Performance


The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is out-sourced the performance is passed on to source for contract administration. Metrics (see Appendix A for metrics attributes):
. . . Assess Delivery Performance Cycle Time Cost to Assess Delivery Performance Documentation Accuracy The average time associated with assessing the performance of deliver processes. The sum of the costs associated with assessing delivery performance. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Perfect Condition

Best Practices:
. . Customer Initiated Package Tracking Real Time Package Tracking WEB based Shared systems Tracking and tracing

Inputs:
. Benchmark Data from Source: Company A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on Benchmark measures are often derived from other firms that display best in class achievement Contracts that customers have with specific freight carriers through which suppliers have to work for the delivery of products. Customer manages carrier selection, shipment of purchased product, and payment of carrier. An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs.

Carrier Contracts (Customer) from Source: Source

Customer Order from D1.2 Receive, Enter & Validate Order Customer Order from D2.3 Reserve Resources & Determine Delivery Date Customer Order from D3.2 Negotiate & Receive Contract Delivery Performance from ED.5 Manage Deliver Capital Assets

Delivery Performance from ED.6 Manage Transportation

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Delivery Performance from ED.4 Manage Finished Goods Inventories

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs.

Outputs:
. Customer Service Requirements to ED.6 Manage Transportation Customer Service Requirements to Plan Supply chain requirements related to the customers needs, including service requirements, sales forecasts and actual orders/backorders. Supply chain requirements related to the customers needs, including service requirements, sales forecasts and actual orders/backorders. Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Management Process Reports to ED.1 Manage Deliver Business Rules Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain Supply-Chain Performance Metrics to ED.1 Manage Deliver Business Rules Supply-Chain Performance Metrics to ED.5 Manage Deliver Capital Assets

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ED.3 Manage Deliver Information


The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Deliver Information Manage Deliver Information Cycle Time The sum of the Cost to Manage Deliver Information The average time associated with managing deliver information

Best Practices:
. . . . Comprehensive History of Customer Interactions Including Order History, Claims, Problems, Etc. Customer Access to Online Tracking of Order Status and Shipping Information Customer Service Data Validation Including Geo-Coding Online Real-Time Customer Entry and Edit None identified Internet-enabled package/shipment tracking None identified On-line Customer Service Module CRM (Customer resource Management) software is getting a big push in the E-Commerce/EBusiness areas and generally provides a means to fulfill this requirement Secure E-Commerce Server and integrated Order Management System (OMS) Warehouse Management System (WMS) and Transportation Management System (TMS)

Provide Single Source of Information on the Customer (Single Group / Owner Responsible for Accuracy / Quality of Customer Data)

Inputs:
. Booked Order from D2.2 Receive, Configure, Enter and Validate Order The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future. Report that portrays a potential customers payment history and debt, indicating the ability to pay in a timely manner in the future.

Contract Status from D3.1 Obtain and Respond to RFP/RFQ Contract Status from D2.2 Receive, Configure, Enter and Validate Order Contract Status from D1.2 Receive, Enter & Validate Order Credit History from D3.1 Obtain and Respond to RFP/RFQ Credit History from D2.2 Receive, Configure, Enter and Validate Order Credit History from D1.2 Receive, Enter & Validate Order

. . .

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Customer Address Data from D1.2 Receive, Enter & Validate Order Customer Address Data from D3.1 Obtain and Respond to RFP/RFQ Customer Address Data from D2.2 Receive, Configure, Enter and Validate Order Purchase History from D1.2 Receive, Enter & Validate Order Purchase History from D3.1 Obtain and Respond to RFP/RFQ Purchase History from D2.2 Receive, Configure, Enter and Validate Order Shipping Preferences from D3.1 Obtain and Respond to RFP/RFQ Shipping Preferences from D2.2 Receive, Configure, Enter and Validate Order Shipping Preferences from D1.2 Receive, Enter & Validate Order

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. The amount of purchased products for a certain time in history per specific intervals The amount of purchased products for a certain time in history per specific intervals The amount of purchased products for a certain time in history per specific intervals Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories, Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories, Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

. . . .

Outputs:
. Customer Master Database/Up to Date to ED.4 Manage Finished Goods Inventories This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles.

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ED.4 Manage Finished Goods Inventories


The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Metrics (see Appendix A for metrics attributes):
. % of Orders Delivered in Full Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the Costs to Manage Finished Good Inventory Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory (value of transfers/365 days). Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) (COGS 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated with managing finished good inventory

. . .

Cost to Manage Finished Goods Inventories Finished Goods Inventory Days of Supply Inventory Days of Supply

Manage Finished Goods Inventories Cycle Time

Best Practices:
. . . Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks Real Time Data on Current Status Statistical Test Count Real time view of data. Dynamic calculation of safety stock based on actual sales. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined.

Inputs:
. Customer Master Database/Up to Date from ED.3 Manage Deliver Information Existing Inventory Data from D1.8 Receive Product from Source or Make Integrated Supply Chain Plan from Source: Plan This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles. Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Communication of courses of action over the appropriate timedefined planning horizon and interval, representing a projected appropriation of supply chain resource to meet supply-chain requirements as they affect the customer. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

. .

Inventory Rules from Source: Plan

Order Rules from ED.1 Manage Deliver Business Rules

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Product Mix and Plans from Source: Plan

The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio. The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

. .

Returns Data from ED.8 Manage Import/Export Requirements Scrap Authorization from ED.8 Manage Import/Export Requirements

Outputs:
. Delivery Performance to ED.2 Assess Delivery Performance The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity. The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

Finish Goods Inventory Target Levels to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Finished Goods Inventory Location to S3.6 Transfer Product Finished Goods Inventory Location to S2.4 Transfer Product Finished Goods Inventory Location to S1.4 Transfer Product Inventory Rules to ED.5 Manage Deliver Capital Assets

. . . .

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ED.5 Manage Deliver Capital Assets


Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Deliver Capital Assets Manage Deliver Capital Assets Cycle Time The sum of the Costs to Manage Deliver Capital Assets The average time associated with managing deliver capital assets

Best Practices:
. . . . . . Automated Data Entry Facility Master Plan Measure Customer Service Removal of Obsolete Stock Standard Operating Procedures and Methodology Storage Location Zoning Scanning with RFID/Bar-codes systems Automated Item Cubing and Weighting systems Advanced Shipping Notices (ASN)Parcel and Container Routing and Rating Compliance Labeling Real time shipment tracking Automated Calculation of ABC Velocity Movement None identified Automated or Optimized Slotting (Storage Location) Systems

Inputs:
. Approved Item Master from Source: Plan The master record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.) and may contain data on inventory status, requirements, planned orders, and costs. Item records are linked by bill of material records (or product structure records), thus defining the bill of material. A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Budgets from Source: Plan

Inventory Rules from ED.4 Manage Finished Goods Inventories Inventory Rules from Source: Plan

Order Rules from ED.1 Manage Deliver Business Rules Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance

Outputs:
. Delivery Performance to ED.2 Assess Delivery Performance The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Warehouse constraints are those storage items that impact on the supply chain efficiency, including material handling equipment and personnel, equipment maintenance, building maintenance, and security personnel.
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Warehouse Operating Constraints to Plan

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ED.6 Manage Transportation


The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment - CAPITAL ASSETS) and 2) the management of transporters. Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Transportation Manage Transportation Cycle Time The sum of the costs associated with managing Finished Good Transportation The average time associated with managing transportation

Best Practices:
. . . . . . Appointment Scheduling for Pickup and Delivery of Customer Shipments Automated Documentation for International Shipments Backhaul Trading Exchange Capture and Maintain Mode Specific Data Electronic Manifest and Electronic Billing Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Shipments) Manage Information Across 100% of Shipments Measurement of Carrier Performance for On-time Delivery and Completeness Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet) View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Pooling Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

. . . .

Rating & Routing Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

. .

Inputs:
. . Air, Ground....Carrier Rate Tables from Source: Company Contract Carrier Rates from ES.8 Manage Import/Export Requirements Customer Order Size, Weight, and Freight Class from D3.2 Negotiate & Receive Contract Customer Order Size, Weight, and Freight Class from D1.2 Receive, Enter & Validate Order Customer Order Size, Weight, and Freight Class from D2.2 Receive, Configure, Enter
247

Rates charged by common carriers to move goods, or freight. The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. Coupled with cube and route, these criteria determine type of carrier and cost of shipment Coupled with cube and route, these criteria determine type of carrier and cost of shipment Coupled with cube and route, these criteria determine type of carrier and cost of shipment
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. . .

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and Validate Order Customer Service Requirements from ED.2 Assess Delivery Performance Projected Delivery Requirements from Source: Make

Supply chain requirements related to the customers needs, including service requirements, sales forecasts and actual orders/backorders. The companys goal for the time to ship the product after the receipt of a customers order. The policy is sometimes stated as our quoted delivery time, or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. Industry established common practices, rules, and methods of doing business.

Standard Practices/Rules from Source: Plan

Outputs:
. Delivery Performance to ED.2 Assess Delivery Performance The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Shipping Parameters and Documentation to D2.11 Load Product & Generate Shipping Documentation Shipping Parameters and Documentation to D1.11 Load Vehicle & Generate Shipping Documentation Shipping Parameters and Documentation to D3.11 Load Product & Generate Ship Documents

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ED.7 Manage Product Life Cycle


The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). Metrics (see Appendix A for metrics attributes):
. . Cost to Manage Product Life Cycle Manage Product Life Cycle Time The sum of the Cost to Manage Product Life Cycle The average time associated with managing the product life cycle

Best Practices:
. . . Integrated Facility Management Operations and Network Analysis Standard Operating Procedures and Methodology None identified None identified None identified

Inputs:
. Budgets from Source: Plan A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customers needs. Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item. Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio. An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect.

Current Inventory Source Data from ES.3 Maintain Source Data

Government Constraints from ED.8 Manage Import/Export Requirements Location of Customers from D2.2 Receive, Configure, Enter and Validate Order Location of Customers from D3.2 Negotiate & Receive Contract Location of Customers from D1.2 Receive, Enter & Validate Order Product Mix and Plans from Source: Plan

Revised Business Assumptions from Source: Plan

Outputs:
. Enterprise Distribution Model to Plan Model of the distribution enterprise including the flows, processes, inputs, outputs, metrics, and best business practices.

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ED.8 Manage Import/Export Requirements


The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc. Metrics (see Appendix A for metrics attributes):
. . . Cost to Manage Import/Export Requirements Customs Clearance Cycle Time Manage Import/Export Requirements Cycle Time The sum of the costs associated with the management of import/export requirements The average time associated with clearing an order through customs The average time associated with managing import/export requirements

Best Practices:
. . . . . . Ability to Track Component/Sub-Component Manufacturing Country of Origin Assessing Export/Import Requirements during Time of Product Development/Manufacture Direct Connection to Customs Clearance Direct Transfer of Documents to Recipient and Forwarder Documents Generated Automatically During Shipment Preparation. Multi-country Export/Import documentation compliance Component/lot tracking (lot trace-ability) Multi-country Export/Import documentation compliance Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. None identified

Inputs:
. . . . . . . . Government Regulations from Source: Government Receipt Verification from S1.2 Receive Product Receipt Verification from S2.2 Receive Product Receipt Verification from S3.4 Receive Product Shipping History from D1.11 Load Vehicle & Generate Shipping Documentation Shipping History from D3.11 Load Product & Generate Ship Documents Shipping History from D2.11 Load Product & Generate Shipping Documentation Tariffs and Duties from Source: Company Documents the implement law and requirements concerning the import and export of items and the manufacture of item. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. Acknowledgement that the product received conforms to specified requirements and criteria. The transaction history of the physical shipment of an item to another internal location or to a customer. The transaction history of the physical shipment of an item to another internal location or to a customer. The transaction history of the physical shipment of an item to another internal location or to a customer. Charges established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

Outputs:

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. .

Duty Drawback Claims to Company Government Constraints to Plan

Claims for the refund of duties as a result of a ruling by a government agency. Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item. Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item. The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

Government Constraints to ED.7 Manage Product Life Cycle Returns Data to ED.4 Manage Finished Goods Inventories Scrap Authorization to ED.4 Manage Finished Goods Inventories Shipping Export Parameters and Documentation to D2.11 Load Product & Generate Shipping Documentation Shipping Export Parameters and Documentation to D1.11 Load Vehicle & Generate Shipping Documentation Shipping Export Parameters and Documentation to D3.11 Load Product & Generate Ship Documents

. . .

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SR1 Source Return Defective Product


The process, initiated by the customer, of returning material deemed defective by to the last known holder or designated return center. Process includes: customer identification that an action is required and determining what that action should be, communicating with the last known holder, generating return documentation, and physically returning of the excess product. The Category SR1 includes five Level 3 Elements:
SR1.1 Identify Defective Product Condition The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. SR1.2 Disposition Defective Product The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. SR1.3 Request Defective Return The process of a customer requesting and obtaining authorization, from Authorization last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. SR1.4 Schedule Defective Product Shipment The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. SR1.5 Return Defective Product The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

Metrics (see Appendix A for metrics attributes):


Cost to Source Return Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The sum of the costs associated with Source Return. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Return Processes

Return on Working Capital

Source Return Cycle Time

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SR1.1 Identify Defective Product Condition


The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. Metrics (see Appendix A for metrics attributes):
. . Cost of Identifying the Defective Condition as a % of Total Source Return Cost Value of Defective Inventory in Identification Stage/ Total Inventory Value

Best Practices:
. Enterprise Level Policies/Rules with Local Execution Web based access to enterprise level business rules

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

Warranty Data from ER.8 Manage Return Regulatory Requirements

Outputs:
. Returned Defective Product to SR1.2 Disposition Defective Product Product being returned that is in a defective condition.

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SR1.2 Disposition Defective Product


The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. Metrics (see Appendix A for metrics attributes):
. . Defective Product Disposition Costs as % Total Source Return Cost Value of Defective Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value

Best Practices:
. Confirm Asset Return Condition Codes Are Clearly Understood by All Employees, Especially Those Who Are New to the Process Confirm Changes in Condition Code Policies Are Promptly Communicated to All Employees and Supply-Chain Partners. Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time None identified

. .

None identified Specify return disposition location and time.

Inputs:
. Return Plans from P5.4 Establish and Communicate Return Plans Returned Defective Product from SR1.1 Identify Defective Product Condition Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Product being returned that is in a defective condition.

Outputs:
. . . . . Authorization to Return to Service to D1.8 Receive Product from Source or Make Authorization to Scrap to D1.8 Receive Product from Source or Make Return Inventory Availability to ER.4 Manage Return Inventory Return Product Location to ER.4 Manage Return Inventory Returned Defective Product to SR1.3 Request Defective Return Authorization Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Inventory relative to return process available for use. The physical location where the returned product inventory is held prior to disposition Product being returned that is in a defective condition.

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SR1.3 Request Defective Return Authorization


The process of a customer requesting and obtaining authorization, from last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. Metrics (see Appendix A for metrics attributes):
. . . Cost per Request Authorization Ratio of Authorization Cost to Total Source Return cost Value of Defective Product Inventory in Inventory awaiting return authorization. Request Return Authorization Stage/ Total Defective Product Inventory Value

Best Practices:
. . . Clarify Point of Contact and Return Location Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Long-Term Return Agreements / Partnerships Electronic rules for business relationships and transactions. Clarification as to who will pay in-bound and out-bound freight cost. Clarification of policy if authorizations are not processed within the expected cycle time.

None identified

Inputs:
. Defective Product Return Authorization Response from DR1.1 Authorize Defective Product Return Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR1.2 Schedule Defective Return Receipt Returned Defective Product from SR1.2 Disposition Defective Product The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract. Inventory relative to return process available for use. A list of operations and procedures for scheduling the return of product. Product being returned that is in a defective condition.

. . .

Outputs:
. Credit/ Exchange Options to SR1.4 Schedule Defective Product Shipment Defective Product Disposition Request to DR1.1 Authorize Defective Product Return Defective Product Return Authorization Request to DR1.1 Authorize Defective Product Return Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. The customer request for disposition instructions for a defective product from the appropriate source. The customer request for disposition instructions for a defective product from the appropriate source. A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

. . .

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. . .

Returned Defective Product to SR1.4 Schedule Defective Product Shipment Ship-to Data to SR1.4 Schedule Defective Product Shipment Validated Return Material Authorization to SR1.4 Schedule Defective Product Shipment

Product being returned that is in a defective condition. Data about the destination of a retun delivery. A validated and approved Return Product Authorization (RPA).

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SR1.4 Schedule Defective Product Shipment


The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes):
. . . % Defective Product Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Defective Product Inventory in Scheduling Stage/ Total Defective Product Inventory Value

Best Practices:
. . . Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs:
. . . . . . . Validated Return Material Authorization from SR1.3 Request Defective Return Authorization Credit/ Exchange Options from SR1.3 Request Defective Return Authorization Returned Defective Product from SR1.3 Request Defective Return Authorization Ship-to Data from SR1.3 Request Defective Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR1.1 Authorize Defective Data about the destination of a retun delivery. Product Return

Outputs:
. . Returned Defective Product to SR1.5 Return Defective Product Scheduled Defective Product Return to SR1.5 Return Defective Product Product being returned that is in a defective condition. Planned or scheduled returning of material deemed defective for some certain time or times

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SR1.5 Return Defective Product


The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. Metrics (see Appendix A for metrics attributes):
. . . . . % Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Defective Product Inventory in Physical Return and Transportation Stage/ Total Defective Inventory Value

Best Practices:
. . Advanced Shipping Notice Shipment Tracking and Tracing Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs:
. . . Scheduled Defective Product Return from SR1.4 Schedule Defective Product Shipment Returned Defective Product from SR1.4 Schedule Defective Product Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information. Return Inventory Availability from ER.4 Manage Return Inventory Inventory relative to return process available for use.

Outputs:
. . . . Returned Defective Product to DR1.3 Receive Defective Product Shipment Documents to Government Shipment Documents to Customer Shipment Documents to Carrier Product being returned that is in a defective condition. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

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DR1 Deliver Return Defective Product


The processes of the last known holder or designated return center authorizing and scheduling the defective product return and the physical receipt of the item by the last known holder or known return center and their transfer of the item for final disposition determination. The process includes communication between the customer and last known holder or known return center and the generation of associated documentation. The Category DR1 includes four Level 3 Elements:
. DR1.1 Authorize Defective Product Return The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer. The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision.

DR1.2 Schedule Defective Return Receipt

DR1.3 Receive Defective Product

DR1.4 Transfer Defective Product

Metrics (see Appendix A for metrics attributes):


. . . . Cost to Deliver Return Deliver Return Cycle Time Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The average time associated with returns. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Return on Working Capital

Value of Defective Product Inventory in Deliver Return Process/ Total Defective Product Inventory Value

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DR1.1 Authorize Defective Product Return


The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes):
. . . Authorize Defective Product Return Cycle Time Cost to Authorize Defective Product Return The average time associated with authorizing the return of defective product. The sum of the costs associated with authorizing the return of defective product. Value of Defective Product Inventory in Authorization Stage/ Total Defective Product Inventory Value

Best Practices:
. . . Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item None identified None identified None identified

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. The customer request for disposition instructions for a defective product from the appropriate source. The customer request for disposition instructions for a defective product from the appropriate source. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

. . . .

Defective Product Disposition Request from SR1.3 Request Defective Return Authorization Defective Product Return Authorization Request from SR1.3 Request Defective Return Authorization Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory Product Return Capabilities from P5.4 Establish and Communicate Return Plans

Return Plans from P5.4 Establish and Communicate Return Plans

Outputs:
. Defective Product Return Authorization Response to SR1.3 Request Defective Return Authorization The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract.

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Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Data about the destination of a retun delivery. Requests for returns that are valid.

. . .

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory Ship-to Data to SR1.4 Schedule Defective Product Shipment Valid Returns Request to DR1.2 Schedule Defective Return Receipt

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DR1.2 Schedule Defective Return Receipt


The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. Metrics (see Appendix A for metrics attributes):
. . Cost to Schedule Defective Product Receipt Schedule Defective Return Receipt Cycle Time The sum of the costs associated with scheduling defective product receipt. The average time associated with scheduling the receipt of the return of defective product

Best Practices:
. Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System Both customer and Service Provider departments are alerted at the same time and viewing the same information.

It is initiated by event:
. Fault Found from DR1.1 Authorize Defective Product Return

Inputs:
. Valid Returns Request from DR1.1 Authorize Defective Product Return Requests for returns that are valid.

Outputs:
. . Return Schedule Instructions to SR1.3 Request Defective Return Authorization Return Schedule Instructions to DR1.3 Receive Defective Product A list of operations and procedures for scheduling the return of product. A list of operations and procedures for scheduling the return of product.

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DR1.3 Receive Defective Product


The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive Defective Product Receive Defective Product Cycle Time The sum of the costs associated with receiving defective product returns. The average time associated with receiving defective product returns from the customer

Best Practices:
. Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyers name for every receipt is clearly visible on Receiver.

. . . . .

Inputs:
. . . . . . Receipt Data from ER.4 Manage Return Inventory Receipt Data from ER.3 Manage Return Data Collection Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR1.2 Schedule Defective Return Receipt Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned Defective Product from SR1.5 Return Defective Product A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product. Guidelines, policies and agreements for the transportation activities around return process. Product being returned that is in a defective condition.

Outputs:
. . . Receipt Discrepancy Notification to Enable Return Receipt Discrepancy Notification to Plan Receipt Discrepancy Notification to Source Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

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Return Inventory Transfer Data to ER.4 Manage Return Inventory Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Returned Defective Product to DR1.4 Transfer Defective Product

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. Product being returned that is in a defective condition.

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DR1.4 Transfer Defective Product


The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes):
. . Cost to Transfer Defective Product Transfer Defective Product Cycle Time The sum of the costs associated transferring defective product for disposition The average time associated transfer until product is moved to the next process.

Best Practices:
. . Defective Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

. .

Inputs:
. . . Return Inventory for Transfer from ER.4 Manage Return Inventory Returned Defective Product from DR1.3 Receive Defective Product Sourcing Plans from P2.4 Establish Sourcing Plans Inventory relative to return process available for transfer to other destination. Product being returned that is in a defective condition. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs:
. . . Defective Products to S1.2 Receive Product Defective Products to S2.2 Receive Product Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Return Inventory Transfer Data to S1.1 Schedule Product Deliveries Return Inventory Transfer Data to S3.3 Schedule Product Deliveries Return Inventory Transfer Data to ER.4 Manage Return Inventory Return Inventory Transfer Data to S2.1 Schedule Product Deliveries Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.
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SR2 Source Return MRO Product


The process, initiated by the customer, of returning maintenance, repair, and overhaul items to a service provider. Process includes: customer identification that an action is required and determining what that action should be, communicating with the service provider, generating return documentation, and physically returning or disposing of the product. The Category SR2 includes five Level 3 Elements:
SR2.1 Identify MRO Product Condition The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider.

SR2.2 Disposition MRO Product

SR2.3 Request MRO Return Authorization

SR2.4 Schedule MRO Shipment

SR2.5 Return MRO Product

Metrics (see Appendix A for metrics attributes):


Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the return of raw materials to the supplier.

Return on Working Capital

Total Source Return Costs

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SR2.1 Identify MRO Product Condition


The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. Metrics (see Appendix A for metrics attributes):
. . . Cost of Identifying the MRO Condition as a % of Total Source Return Cost Total Number of Confirmed MRO Conditions / Total Number of MRO Service Requests Initiated Value of Unserviceable MRO Inventory In Identification Stage/Total MRO Inventory Value

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

Warranty Data from ER.8 Manage Return Regulatory Requirements

Outputs:
. Returned MRO Product to SR2.2 Disposition MRO Product Product being returned for maintenance, repair, or overhaul.

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SR2.2 Disposition MRO Product


The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. Metrics (see Appendix A for metrics attributes):
. . . . % Identified MRO Products Returned to Service MRO Disposition Costs as % Total Source Return Cost Value of Defective Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value Inventory awaiting disposition Value of Unserviceable MRO Inventory In Disposition Stage/ Total MRO Inventory Value

Inputs:
. Return Plans from P5.4 Establish and Communicate Return Plans Returned MRO Product from SR2.1 Identify MRO Product Condition Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Product being returned for maintenance, repair, or overhaul.

Outputs:
. . . . . Authorization to Return to Service to D1.8 Receive Product from Source or Make Authorization to Scrap to D1.8 Receive Product from Source or Make Return Inventory Availability to ER.4 Manage Return Inventory Returned MRO Product to SR2.3 Request MRO Return Authorization Returned Product Location to ER.4 Manage Return Inventory Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Inventory relative to return process available for use. Product being returned for maintenance, repair, or overhaul. The storage location of those items being returned.

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SR2.3 Request MRO Return Authorization


The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. Metrics (see Appendix A for metrics attributes):
. . . . % Authorization Requests Transmitted Error-Free / Total Authorizations Requested Cost per Request Authorization Ratio of Authorization Cost To Total Source Return Cost Inventory awaiting return authorization Value of Unserviceable MRO Inventory in Request Return Authorization Stage/ Total MRO Inventory Value

Inputs:
. . . . MRO Return Authorization Response from DR2.1 Authorize MRO Product Return Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR2.2 Schedule MRO Return Receipt Returned MRO Product from SR2.2 Disposition MRO Product The process of a customer obtaining authorization, from a service provider, for the return of an MRO product Inventory relative to return process available for use. A list of operations and procedures for scheduling the return of product. Product being returned for maintenance, repair, or overhaul.

Outputs:
. . Workflow to SR2.4 Schedule MRO Shipment Credit Exchange Options to SR2.4 Schedule MRO Shipment Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Request disposition instructions for an MRO item from the Supplier. The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. Product being returned for maintenance, repair, or overhaul. Data about the destination of a return delivery.

. .

MRO Disposition Request to DR2.1 Authorize MRO Product Return MRO Return Authorization Request to DR2.1 Authorize MRO Product Return

. .

Returned MRO Product to SR2.4 Schedule MRO Shipment Ship-to Data to SR2.4 Schedule MRO Shipment

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SR2.4 Schedule MRO Shipment


The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes):
. . . % MRO Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Unserviceable MRO inventory in Scheduling Stage/ Total MRO Inventory Value

Best Practices:
. . . Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs:
. . . . . . . Workflow from SR2.3 Request MRO Return Authorization Returned MRO Product from SR2.3 Request MRO Return Authorization Ship-to Data from SR2.3 Request MRO Return Authorization Credit Exchange Options from SR2.3 Request MRO Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR2.1 Authorize MRO Data about the destination of a return delivery. Product Return

Outputs:
. . Returned MRO Product to SR2.5 Return MRO Product Scheduled MRO Return to SR2.5 Return MRO Product Product being returned for maintenance, repair, or overhaul. Planned or scheduled act of installing something for some certain time or times.

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SR2.5 Return MRO Product


The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider. Metrics (see Appendix A for metrics attributes):
. . . . . % Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Unserviceable MRO Inventory in Physical Return and Transportation Stage/ Total MRO Inventory Value

Best Practices:
. . Advanced Shipping Notice Shipment Tracking and Tracing Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs:
. . . Returned MRO Product from SR2.4 Schedule MRO Shipment Scheduled MRO Return from SR2.4 Schedule MRO Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information. Return Inventory Availability from ER.4 Manage Return Inventory Inventory relative to return process available for use.

Outputs:
. . . . Returned MRO Product to DR2.3 Receive MRO Product Shipment Documents to Government Shipment Documents to Carrier Shipment Documents to Customer Product being returned for maintenance, repair, or overhaul. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

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DR2 Deliver Return MRO Product


The processes of the service provider authorizing and scheduling the MRO return product and the physical receipt of the item by the service provider and their transfer of the item for final disposition determination. The process includes communication between the customer and service provider and the generation of associated documentation. The Category DR2 includes four Level 3 Elements:
DR2.1 Authorize MRO Product Return The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision.

DR2.2 Schedule MRO Return Receipt

DR2.3 Receive MRO Product DR2.4 Transfer MRO Product

Metrics (see Appendix A for metrics attributes):


% of MRO Returns Delivered to the Correct Service Provider Location, within Schedule, with the Correct Part and Documentation Cost to Deliver Return Deliver Return Cycle Time The average time associated with returns. Order Fulfillment Cycle Time The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on Working Capital Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. Upside Deliver Return Adaptability The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days. Upside Deliver Return Flexibility The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers. Value of Unserviceable MRO Inventory in Deliver Return Process/ Total MRO Inventory Value

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DR2.1 Authorize MRO Product Return


The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes):
. . Authorize MRO Product Return Cycle Time Cost to Authorize MRO Product Return The average time associated with authorizing the return of MRO product. The sum of the costs associated with authorizing the return of product to be maintained, repaired, or overhauled.

Best Practices:
. . . Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item None identified None identified None identified

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Request disposition instructions for an MRO item from the Supplier. The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

. . .

Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory MRO Disposition Request from SR2.3 Request MRO Return Authorization MRO Return Authorization Request from SR2.3 Request MRO Return Authorization

Product Return Capabilities from P5.4 Establish and Communicate Return Plans

Return Plans from P5.4 Establish and Communicate Return Plans

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Outputs:
. Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The process of a customer obtaining authorization, from a service provider, for the return of an MRO product Data about the destination of a retun delivery. Requests for returns that are valid.

. . . .

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory MRO Return Authorization Response to SR2.3 Request MRO Return Authorization Ship-to Data to SR2.4 Schedule MRO Shipment Valid Returns Request to DR2.2 Schedule MRO Return Receipt

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DR2.2 Schedule MRO Return Receipt


The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. Metrics (see Appendix A for metrics attributes):
. . Cost to Schedule MRO Product Receipt Schedule MRO Return Receipt Cycle Time The sum of the costs associated with scheduling MRO product receipt. The average time associated with scheduling the receipt of the return of MRO product

Best Practices:
. Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System Both customer and Service Provider departments are alerted at the same time and viewing the same information.

Inputs:
. Valid Returns Request from DR2.1 Authorize MRO Product Return Requests for returns that are valid.

Outputs:
. . Return Schedule Instructions to SR2.3 Request MRO Return Authorization Return Schedule Instructions to DR2.3 Receive MRO Product A list of operations and procedures for scheduling the return of product. A list of operations and procedures for scheduling the return of product.

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DR2.3 Receive MRO Product


The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). Metrics (see Appendix A for metrics attributes):
. . Cost to Receive MRO Product Receive MRO Product Cycle Time The sum of the costs associated with receiving MRO product returns. The average time associated with receiving MRO product returns from the customer

Best Practices:
. Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyers name for every receipt is clearly visible on Receiver.

. . . . .

Inputs:
. . . . . . Receipt Data from ER.4 Manage Return Inventory Receipt Data from ER.3 Manage Return Data Collection Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR2.2 Schedule MRO Return Receipt Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned MRO Product from SR2.5 Return MRO Product A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product. Guidelines, policies and agreements for the transportation activities around return process. Product being returned for maintenance, repair, or overhaul.

Outputs:
. . . Receipt Discrepancy Notification to Enable Return Receipt Discrepancy Notification to Plan Receipt Discrepancy Notification to Source Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

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Return Inventory Transfer Data to ER.4 Manage Return Inventory Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Returned MRO Product to DR2.4 Transfer MRO Product

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. Product being returned for maintenance, repair, or overhaul.

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DR2.4 Transfer MRO Product


The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes):
. . Cost to Transfer MRO Product Transfer MRO Product Cycle Time The sum of the costs associated transferring MRO product for disposition The average time associated transfer until product is moved to the next process.

Best Practices:
. . MRO Scheduling Identifies Next Destination (Stores or Repair Station) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

. .

Inputs:
. . . Return Inventory for Transfer from ER.4 Manage Return Inventory Returned MRO Product from DR2.3 Receive MRO Product Sourcing Plans from P2.4 Establish Sourcing Plans Inventory relative to return process available for transfer to other destination. Product being returned for maintenance, repair, or overhaul. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs:
. . . MRO Products to S2.2 Receive Product MRO Products to S1.2 Receive Product Return Inventory Transfer Data to S2.1 Schedule Product Deliveries Return Inventory Transfer Data to S1.1 Schedule Product Deliveries Return Inventory Transfer Data to ER.4 Manage Return Inventory Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to S3.3 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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SR3 Source Return Excess Product


The process, initiated by the customer, of returning material deemed in excess of current requirements to the designated return center. Process includes: customer identification that an action is required, determining what that action should be, requesting authorization from the designated return center, generating return documentation, and physically returning the excess product. The Category SR3 includes five Level 3 Elements:
SR3.1 Identify Excess Product Condition The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. SR3.2 Disposition Excess Product The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. SR3.3 Request Excess Return Authorization The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. SR3.4 Schedule Excess Product Shipment The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. SR3.5 Return Excess Product The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

Metrics (see Appendix A for metrics attributes):


% of Excess Product Returns Delivered Complete to the Designated Return Center Average Age of Excess Inventory Cost to Source Return Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets Correct destination, according to the schedule, with the correct part and documentation The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the receipt of returned excess products from the customer

Return on Working Capital

Source Return Cycle Time Total Excess Material Return Costs Value of Excess Inventory/ Total Inventory Value

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SR3.1 Identify Excess Product Condition


The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. Metrics (see Appendix A for metrics attributes):
. . . Cost of Identifying the Excess Condition as a % of Total Source Return Cost Number of Occurrences Where Excess Inventory is Returned and Subsequently Followed by an Expedite Request Return on Working Capital Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. Value of Excess Inventory in Identification Stage/ Total Inventory Value

Best Practices:
. . Automated Inventory Visibility and Planning System to Highlight Inventory in Excess of Requirements Enterprise Level Policies/Rules with Local Execution Automated inventory planning package linked to real time demand data and inventory business rules. Web based access to enterprise level business rules

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

Outputs:
. Returned Excess Product to SR3.2 Disposition Excess Product Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

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SR3.2 Disposition Excess Product


The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. Metrics (see Appendix A for metrics attributes):
. . . Excess Product Disposition Costs as % Total Source Return Cost Number of Occurrences of Incorrect Designated Return Center Value of Excess Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value

Best Practices:
. . Automated Registry of Inventory Return Locations by Item to Speed Identification of Proper Return Location Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time None identified Specify return disposition location and time.

Inputs:
. Return Plans from P5.4 Establish and Communicate Return Plans Returned Excess Product from SR3.1 Identify Excess Product Condition Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Outputs:
. . . . . Authorization to Return to Service to D1.8 Receive Product from Source or Make Authorization to Scrap to D1.8 Receive Product from Source or Make Return Inventory Availability to ER.4 Manage Return Inventory Return Product Location to ER.4 Manage Return Inventory Returned Excess Product to SR3.3 Request Excess Return Authorization Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Inventory relative to return process available for use. The physical location where the returned product inventory is held prior to disposition Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

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SR3.3 Request Excess Return Authorization


The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. Metrics (see Appendix A for metrics attributes):
. . . . % Authorization Requests Transmitted Error-Free / Total Authorizations Requested Cost per Request Authorization Ratio of Authorization Cost to Total Source Return cost Value of Excess Product Inventory in Inventory Awaiting Return Authorization Request Return Authorization Stage/ Total Excess Product Inventory Value

Best Practices:
. . . Clarify Point of Contact and Return Location Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Long-Term Return Agreements / Partnerships Electronic rules for business relationships and transactions. Clarification as to who will pay in-bound and out-bound freight cost. Clarification of policy if authorizations are not processed within the expected cycle time.

None identified

Inputs:
. . . . Excess Product Return Authorization Response from DR3.1 Authorize Excess Product Return Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR3.2 Schedule Excess Return Receipt Returned Excess Product from SR3.2 Disposition Excess Product The process of a customer obtaining authorization, from a service provider, for the return of excess product Inventory relative to return process available for use. A list of operations and procedures for scheduling the return of product. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Outputs:
. Credit/ Exchange Options to SR3.4 Schedule Excess Product Shipment Excess Product Disposition Request to DR3.1 Authorize Excess Product Return The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. Request disposition instructions for an excess item from the Supplier.

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Excess Product Return Authorization Request to DR3.1 Authorize Excess Product Return

The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. Data about the destination of a return delivery. A validated and approved Return Product Authorization (RPA).

Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

Returned Excess Product to SR3.4 Schedule Excess Product Shipment Ship-to Data to SR3.4 Schedule Excess Product Shipment Validated Return Material Authorization to SR3.4 Schedule Excess Product Shipment

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SR3.4 Schedule Excess Product Shipment


The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes):
. . . % Excess Product Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Excess Product Inventory in Scheduling Stage/ Total Excess Product Inventory Value

Best Practices:
. . . . Arrange for Shipping Insurance in Case Of In-Transit Loss or Damage Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis Preventative management Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs:
. . . . . . . Validated Return Material Authorization from SR3.3 Request Excess Return Authorization Returned Excess Product from SR3.3 Request Excess Return Authorization Credit/ Exchange Options from SR3.3 Request Excess Return Authorization Ship-to Data from SR3.3 Request Excess Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR3.1 Authorize Excess Data about the destination of a retun delivery. Product Return

Outputs:
. Returned Excess Product to SR3.5 Return Excess Product Scheduled Excess Product Return to SR3.5 Return Excess Product Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. Planned or scheduled returning of material deemed in excess of current requirements for some certain time or times.

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SR3.5 Return Excess Product


The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. Metrics (see Appendix A for metrics attributes):
. . . . . % Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Excess Product Inventory in Physical Return and Transportation Stage/ Total Excess Inventory Value

Best Practices:
. . Advanced Shipping Notice Shipment Tracking and Tracing Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs:
. . . Scheduled Excess Product Return from SR3.4 Schedule Excess Product Shipment Returned Excess Product from SR3.4 Schedule Excess Product Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information. Return Inventory Availability from ER.4 Manage Return Inventory Inventory relative to return process available for use.

Outputs:
. Returned Excess Product to DR3.3 Receive Excess Product Shipment Documents to Government Shipment Documents to Carrier Shipment Documents to Customer Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

. . .

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DR3 Deliver Return Excess Product


The processes of the designated return center authorizing and scheduling the excess product return, the physical receipt of the item by the designated return center and transfer of the item for final disposition The process includes communication between the customer and designated return center and the generation of associated documentation. The Category DR3 includes four Level 3 Elements:
DR3.1 Authorize Excess Product Return The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Centers Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision.

DR3.2 Schedule Excess Return Receipt

DR3.3 Receive Excess Product

DR3.4 Transfer Excess Product

Metrics (see Appendix A for metrics attributes):


% of Excess Product Returns Delivered Complete to the Designated Return Center Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets Correct destination, according to the schedule, with the correct part and documentation The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days. The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.

Return on Working Capital

Upside Deliver Return Adaptability Upside Deliver Return Flexibility

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DR3.1 Authorize Excess Product Return


The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes):
. . Authorize Excess Product Return Cycle Time Cost to Authorize Excess Product Return The average time associated with authorizing the return of excess product. The sum of the costs associated with authorizing the return of excess product.

Best Practices:
. . Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns None identified None identified

Inputs:
. Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Request disposition instructions for an excess item from the Supplier. The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

. .

Excess Product Disposition Request from SR3.3 Request Excess Return Authorization Excess Product Return Authorization Request from SR3.3 Request Excess Return Authorization

. .

Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory Product Return Capabilities from P5.4 Establish and Communicate Return Plans

Return Plans from P5.4 Establish and Communicate Return Plans

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Outputs:
. . Excess Product Return Authorization Response to SR3.3 Request Excess Return Authorization Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements The process of a customer obtaining authorization, from a service provider, for the return of excess product A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Permission to accept an excess product return for the designated return center, after communicating with the customer. Data about the destination of a retun delivery.

. . .

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory Return Product Authorization to DR3.2 Schedule Excess Return Receipt Ship-to Data to SR3.4 Schedule Excess Product Shipment

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DR3.2 Schedule Excess Return Receipt


The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Centers Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. Metrics (see Appendix A for metrics attributes):
. . Cost to Schedule Excess Product Receipt Schedule Excess Return Receipt Cycle Time The sum of the costs associated with scheduling excess product receipt. The average time associated with scheduling the receipt of the return of excess product

Best Practices:
. Establish Designated Processes for Scheduling and Receiving Excess Inventory None Identified

Inputs:
. Return Product Authorization from DR3.1 Authorize Excess Product Return Permission to accept an excess product return for the designated return center, after communicating with the customer.

Outputs:
. . Return Schedule Instructions to SR3.3 Request Excess Return Authorization Return Schedule Instructions to DR3.3 Receive Excess Product A list of operations and procedures for scheduling the return of product. A list of operations and procedures for scheduling the return of product.

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DR3.3 Receive Excess Product


The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. Metrics (see Appendix A for metrics attributes):
. . Cost to Receive Excess Product Receive Excess Product Cycle Time The sum of the costs associated with receiving excess returns. The average time associated with receiving excess product returns from the customer

Best Practices:
. Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyers name for every receipt is clearly visible on Receiver.

. . . . .

Inputs:
. . . . . . Receipt Data from ER.3 Manage Return Data Collection Receipt Data from ER.4 Manage Return Inventory Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR3.2 Schedule Excess Return Receipt Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned Excess Product from SR3.5 Return Excess Product A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product. Guidelines, policies and agreements for the transportation activities around return process. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Outputs:
. . Receipt Discrepancy Notification to Plan Receipt Discrepancy Notification to Source Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

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. .

Receipt Discrepancy Notification to Enable Return Return Inventory Transfer Data to ER.4 Manage Return Inventory Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Returned Excess Product to DR3.4 Transfer Excess Product

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

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DR3.4 Transfer Excess Product


The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes):
. . Cost to Transfer Excess Product Transfer Excess Product Cycle Time The sum of the costs associated transferring excess product for disposition The average time associated transfer until product is moved to the next process.

Best Practices:
. . Excess Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

. .

Inputs:
. . Return Inventory for Transfer from ER.4 Manage Return Inventory Returned Excess Product from DR3.3 Receive Excess Product Sourcing Plans from P2.4 Establish Sourcing Plans Inventory relative to return process available for transfer to other destination. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs:
. . . Excess Products to S2.2 Receive Product Excess Products to S1.2 Receive Product Return Inventory Transfer Data to S2.1 Schedule Product Deliveries Return Inventory Transfer Data to S3.3 Schedule Product Deliveries Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources Return Inventory Transfer Data to S1.1 Schedule Product Deliveries Material in excess of the current requirements. Material in excess of the current requirements. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to ER.4 Manage Return Inventory

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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ER Enable RETURN
Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ER includes eight Level 3 Elements:
ER.1 Manage Business Rules for Return Processes The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations. ER.2 Manage Performance of Return The process of measuring actual Return Process performance against Processes internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. ER.3 Manage Return Data Collection The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. ER.4 Manage Return Inventory The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. ER.5 Manage Return Capital Assets The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. ER.6 Manage Return Transportation The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. ER.7 Manage Return Network Configuration The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chains business rules. (See ER1) ER.8 Manage Return Regulatory The process of identifying and complying with regulatory documentation Requirements and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls.

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ER.1 Manage Business Rules for Return Processes


The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations. Metrics (see Appendix A for metrics attributes):
Cost to Manage Business Rules for Return The sum of the Cost to Manage Business Rules for Return Processes Processes Manage Business Rules for Return The average time associated with managing rules for returns Processes Cycle Time

Best Practices:
Electronic Reminders of Possible Scheduled Pull signals. Maintenance Evaluate the Benefits of Out-Sourcing the Enables customer to focus on core competencies. Excess Material Return Process Publish Return Policy Easy access to return business rules. Standard Inventory Policy to Determine None Identified Excess Utilize Real-World Cases in Employee None Identified Training

Inputs:
Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Return Rules and Policies from P5.4 Establish and Communicate Return Plans Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organizations business strategy, goals and objectives.

Outputs:
Business Rules for Return Processes to DR3.1 Authorize Excess Product Return Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to ER.4 Manage Return Inventory

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Business Rules for Return Processes to ER.5 Manage Return Capital Assets

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to P5.2 Rules for conducting business, i.e. developing and maintaining customer Identify, Assess, and Aggregate Return and channel performance standards of an return processes such as Resources service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to DR1.1 Authorize Defective Product Return Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to SR2.1 Identify MRO Product Condition

Business Rules for Return Processes to Rules for conducting business, i.e. developing and maintaining customer ER.7 Manage Return Network Configuration and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to DR2.1 Authorize MRO Product Return Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to ER.8 Manage Return Regulatory Requirements

Business Rules for Return Processes to SR1.1 Identify Defective Product Condition

Business Rules for Return Processes to P5.1 Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as Assess, and Aggregate Return service levels, given service requirements by supply chain Requirements stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to SR3.1 Identify Excess Product Condition Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

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ER.2 Manage Performance of Return Processes


The process of measuring actual Return Process performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes):
Cost to Manage Performance of Return The sum of the costs to Manage Performance of Return Processes. Processes Manage Performance of Return Processes The average time associated with managing the performance of supply Cycle Time chain activities

Best Practices:
Business Rules Are Clearly Communicated Convenient availability to business rules and return criteria. with the Customer Continuous Improvement is Planned through Avenue to receive customer comments. Process Reviews and Customer Feedback

Inputs:
MRO Product Return Capabilities from ER.5 See Product Return Capabilities Manage Return Capital Assets Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Receipt Data from ER.3 Manage Return Data Collection Receipt Data from ER.4 Manage Return Inventory Return Benchmark Data from Source: Company A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Data relative to the return process utilized to compare the companys actual results to selected values identified as reference.

Outputs:
See Product Return Capabilities MRO Product Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources Return Performance to ER.5 Manage Return Performance measurement information for the Return Process (the actual Capital Assets value of measured for the criterion). Return Performance to ER.6 Manage Return Performance measurement information for the Return Process (the actual Transportation value of measured for the criterion). Return Product History to ER.3 Manage Return Data Collection Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain The return history of product including failure rates, failure causes, etc. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

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ER.3 Manage Return Data Collection


The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Data Collection The sum of the costs to manage the capital assets associated with returns data collection. Manage Return Data Collection Cycle Time The average time associated with managing return data collection

Best Practices:
Automated Update of Customer Excess Material Return Transaction History - Use trend analysis to influence inventory level decisions. - Web-based alerts to identify update occurred and when pre-determined thresholds are exceeded. Data Accessibility across the Enterprise for Web based access to various levels of enterprise data Visibility by Discrete Business Units

Inputs:
Data Cleansing Procedure from Source: Company Data System Requirements from Source: Company Return Product History from ER.2 Manage Performance of Return Processes The procedure that outlines the cleansing of return data to insure its validity and accuracy during the return process. List of requirements of the data system that insure cleansed data is compatible and usable, or the data system requirements to fully automate the return process. The return history of product including failure rates, failure causes, etc.

Outputs:
Data About Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources Receipt Data to DR1.3 Receive Defective Product Receipt Data to ER.2 Manage Performance of Return Processes Receipt Data to DR2.3 Receive MRO Product Receipt Data to DR3.3 Receive Excess Product Information required in the process of integrating and maintaining the accuracy of return execution. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner.

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ER.4 Manage Return Inventory


The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Inventory Manage Return Inventory Cycle Time The sum of the costs to manage the capital assets associated with return inventory. The average time associated with managing return inventory

Best Practices:
Periodic Review of Metrics and Strategy with Real time view of data. Comparisons to Industry Benchmarks Real Time Data on Current Status Dynamic calculation of safety stock based on actual sales. Statistical Test Count The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. Unique Identifier Tag for Each Repairable Asset management software using bar code, RFI tag, etc. Asset

Inputs:
Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

Return Inventory Availability from SR1.2 Disposition Defective Product Return Inventory Availability from SR3.2 Disposition Excess Product Return Inventory Availability from SR2.2 Disposition MRO Product Return Inventory Transfer Data from DR3.3 Receive Excess Product

Return Inventory Transfer Data from DR2.3 The process of receipt and verification of the returned item against the Receive MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data from DR1.3 The process of receipt and verification of the returned item against the Receive Defective Product return authorization and other documentation and prepares the item for transfer. Return Plans from P5.4 Establish and Communicate Return Plans Return Product Location from SR3.2 Disposition Excess Product Return Product Location from SR1.2 Disposition Defective Product Returned Product Location from SR2.2 Disposition MRO Product Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. The physical location where the returned product inventory is held prior to disposition The physical location where the returned product inventory is held prior to disposition The storage location of those items being returned.

Outputs:
Receipt Data to DR1.3 Receive Defective Product Receipt Data to DR2.3 Receive MRO Product Receipt Data to ER.2 Manage Performance of Return Processes Receipt Data to DR3.3 Receive Excess Product Return Inventory Availability to SR2.3 Request MRO Return Authorization Return Inventory Availability to SR3.3 Request Excess Return Authorization Return Inventory Availability to SR3.5 Return Excess Product Return Inventory Availability to SR1.4 Schedule Defective Product Shipment Return Inventory Availability to SR3.4 Schedule Excess Product Shipment Return Inventory Availability to SR1.5 Return Defective Product Return Inventory Availability to SR2.5 Return MRO Product Return Inventory Availability to SR1.3 Request Defective Return Authorization Return Inventory Availability to SR2.4 Schedule MRO Shipment Return Inventory for Transfer to DR2.4 Transfer MRO Product Return Inventory for Transfer to DR3.4 Transfer Excess Product Return Inventory for Transfer to DR1.4 Transfer Defective Product Return Inventory Targets to P5.2 Identify, Assess, and Aggregate Return Resources A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for transfer to other destination. Inventory relative to return process available for transfer to other destination. Inventory relative to return process available for transfer to other destination. The goals and approach to the management of return inventories.

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ER.5 Manage Return Capital Assets


The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Capital Assets Manage Return Capital Assets Cycle Time The sum of the costs to manage the capital assets associated with returns. The average time associated with managing return capital assets

Best Practices:
Automated Data Entry Automated Disposition Instructions for Returns Based on Data Interchange with Strategic Providers Integrated Transportation Visibility Outsource If Not a Core Competency Scanning with RFID/Bar-codes systems Advanced planning and scheduling capability coupled with decision support logic. - Advanced shipping notices - Real time shipping tracking Use 4PL to manage and move.

Inputs:
Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Performance measurement information for the Return Process (the actual value of measured for the criterion). Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Performance from ER.2 Manage Performance of Return Processes Return Plans from P5.4 Establish and Communicate Return Plans

Outputs:
MRO Product Return Capabilities to ER.2 Manage Performance of Return Processes MRO Product Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources See Product Return Capabilities See Product Return Capabilities

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ER.6 Manage Return Transportation


The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Transportation The sum of the costs associated with managing return transportation. Manage Return Transportation Cycle Time The average time associated with managing return transportation

Best Practices:
Appointment Scheduling for Pickup and Transportation Management System (TMS) Maintenance Management Delivery of Customer Shipments Automated Documentation for International Transportation Management System (TMS) Maintenance Management Shipments Backhaul Trading Exchange Pooling Capture and Maintain Mode Specific Data Transportation Management System (TMS) Maintenance Management Consolidate Shipments Through Cross None Identified Docking - Coordinate with Other Shipments Develop Proactive Transit Damage None Identified Programs Electronic Manifest and Electronic Billing Transportation Management System (TMS) Maintenance Management Integrated Order Management, Warehouse Transportation Management System (TMS) Maintenance Management Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Rating & Routing Shipments) Involve Your Other Supply-Chain Partners If Utilization of transportation management system (TMS) to manage returns. Possible to Leverage Transportation Maximization of TMS use, both intra and inter-company within the supply throughout the Chain chain. Limit the Number of Carriers, Treat Them as Utilization of transportation management system (TMS) to manage returns. Partners and Build a Strong Relationship Maximization of TMS use, both intra and inter-company within the supply with Each One Geared Toward Continually chain. Improving Service and Lowering Cost Manage Information Across 100% of Transportation Management System (TMS) Maintenance Management Shipments Measurement of Carrier Performance for Transportation Management System (TMS) Maintenance Management On-time Delivery and Completeness Transportation Management System (TMS) Maintenance Management Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet) Transportation Management System (TMS) Maintenance Management Segregate In-Bound Carcass Return Cost None Identified from Other Transportation Costs Utilize Internet-Based Freight Bidding Built None Identified Around Shared Shipping Volume Projections Utilize Invoice-less Freight Payment None Identified Transportation Management System (TMS) Maintenance Management View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging

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Inputs:
Return Performance from ER.2 Manage Performance of Return Processes Return Plans from P5.4 Establish and Communicate Return Plans Performance measurement information for the Return Process (the actual value of measured for the criterion). Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Outputs:
Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to DR3.3 Receive Excess Product Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to DR1.3 Receive Defective Product Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to P5.2 Identify, Assess, and Aggregate Return Resources Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around Agreements to DR2.3 Receive MRO Product return process.

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ER.7 Manage Return Network Configuration


The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chains business rules. (See ER1) Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Network Configuration Manage Return Network Configuration Cycle Time The sum of the costs to manage the capital assets associated with configuring the return network. The average time associated with managing the return network configuration

Best Practices:
Service Provider Utilizes Web-Based Communicate to Identify New and Discontinued Repair Sites to Customers Utilize Web-Based Collaboration between Asset Manager and Repair Sites Regarding Capacity and Scheduling Utilize Web-Based Collaboration between Customer and Service Provider on In-Bound Return Forecasts and Asset Tracking Utilize Web-Based Collaboration to Identify Potential New Repair Sites Prior to Their Selection Continuously updated authorized repair sites Total return asset visibility throughout the network Shared return forecasts Shared knowledge of resource availability and bottlenecks

Inputs:
Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans from P5.4 Establish and Communicate Return Plans

Outputs:
Return Network Configuration to ER.8 Manage Return Regulatory Requirements Return Process Workflow Definition and Policies to P5.2 Identify, Assess, and Aggregate Return Resources The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration. Definition and maintenance of the information flow about the Returns supply chain network for a group of similar or complimentary items through out their life cycle

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ER.8 Manage Return Regulatory Requirements


The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls. Metrics (see Appendix A for metrics attributes):
Cost to Manage Return Regulatory Requirements and Compliance Manage Return Regulatory Requirements and Compliance Cycle Time The sum of the costs associated with managing compliance to return regulatory requirements. The average time associated with compliance and regulatory requirements for return products

Best Practices:
Clarify in Advance Hazardous Material Packaging, Labeling and Shipping Requirements Clarify in Advance If the Product to be Returned Requires Specific, Formal Authorization from the Service Provider per Federal, State or Local Regulation, Prior to Returning Compare Local Customs Requirements to Your Process Procedures to Ensure All Requirements Are Accounted for Before Shipping Confirm All Documentation and Inspection Requirements Before Shipping Note and Communicate Shelf Life Requirements Carefully Before Shipping Overseas packaging, labeling and shipping regulatory requirements are given specific attention. Participants at all customer and service provider locations involved clearly understand all regulatory requirements at each step in the return process .

None Identified

None Identified Hazardous material regulations are given specific attention.

Inputs:
Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Return Network Configuration from ER.7 Manage Return Network Configuration The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration.

Outputs:
Manage Regulatory Return Policy to SR2.1 Identify MRO Product Condition Manage Regulatory Return Policy to SR1.1 Identify Defective Product Condition Manage Regulatory Return Policy to SR3.1 Identify Excess Product Condition The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

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Return Regulatory Requirements to DR3.3 Receive Excess Product Return Regulatory Requirements to DR1.3 Receive Defective Product Return Regulatory Requirements to P5.1 Assess, and Aggregate Return Requirements Return Regulatory Requirements to P5.2 Identify, Assess, and Aggregate Return Resources Return Regulatory Requirements to DR2.3 Receive MRO Product Warranty Data to SR2.1 Identify MRO Product Condition

Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

Warranty Data to SR1.1 Identify Defective Product Condition

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GLOSSARY PROCESS TERMS


PROCESS TERM NAME D Deliver D1 Deliver Stocked Product D1.1 Process Inquiry & Quote D1.10 Pack Product D1.11 Load Vehicle & Generate Shipping Documentation D1.12 Ship Product D1.13 Receive & Verify Product by Customer D1.14 Install Product DEFINITION Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management. The process of delivering product that is maintained in a finished goods state prior to the receipt of a firm customer order. Receive and respond to general customer inquiries and requests for quotes. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. The process of shipping the product to the customer site. The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Receive orders from the customer and enter them into a company's order processing system. Orders can be received through phone, fax, or electronic media. "Technically" examine orders to ensure an orderable configuration and provide accurate price. Check the customer's credit. Optionally accept payment. Inventory and/or planned capacity (both on hand and scheduled) is identified and reserved for specific orders and a delivery date is committed and scheduled. The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Transportation modes are selected and efficient loads are built. Loads are consolidated and routed by mode, lane and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order. The process of delivering product that is manufactured, assembled or configured from standard parts or subassemblies. Manufacture, assembly or configuration will begins only after the receipt and validation of a firm customer order. Receive and respond to general customer inquiries and requests for quotes. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. The process of shipping the product to the customer site.

D1.15 Invoice

D1.2 Receive, Enter & Validate Order D1.3 Reserve Inventory & Determine Delivery Date D1.4 Consolidate Orders D1.5 Build Loads D1.6 Route Shipments D1.7 Select Carriers & Rate Shipments D1.8 Receive Product from Source or Make D1.9 Pick Product

D2 Deliver Make-to-Order Product D2.1 Process Inquiry & Quote D2.10 Pack Product D2.11 Load Product & Generate Shipping Documentation D2.12 Ship Product

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PROCESS TERM NAME D2.13 Receive & Verify Product by Customer D2.14 Install Product

D2.15 Invoice

D2.2 Receive, Configure, Enter and Validate Order D2.3 Reserve Resources & Determine Delivery Date D2.4 Consolidate Orders D2.5 Build Loads D2.6 Route Shipments D2.7 Select Carriers & Rate Shipments D2.8 Receive Product from Source or Make D2.9 Pick Product D3 Deliver Engineer-to-Order Product D3.1 Obtain and Respond to RFP/RFQ D3.10 Pack Product D3.11 Load Product & Generate Ship Documents D3.12 Ship Product D3.13 Receive & Verify Product by Customer D3.14 Install Product

DEFINITION The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Receive orders from the customer and enter them into a company's order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customer's specific needs, based on standard available parts or options. "Technically" examine order to ensure an orderable configuration and provide accurate price. Check the customer's credit. Optionally accept payment. Inventory and/or planned capacity is identified and reserved for specific orders, and a delivery date is committed and scheduled. The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Transportation modes are selected and efficient loads are built. Loads are consolidated and routed by mode, lane and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. The process of delivering a product that is designed, manufactured, and assembled from a bill of materials that includes one or more custom parts. Design will begin only after the receipt and validation of a firm customer order. The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. The process of shipping the product to the customer site The process of receiving the shipment (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Transportation loads are selected and efficient loads are built.
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D3.15 Invoice D3.2 Negotiate & Receive Contract D3.3 Enter Order, Commit Resources & Launch Program D3.4 Schedule Installation D3.5 Build Loads

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PROCESS TERM NAME D3.6 Route Shipments D3.7 Select Carriers and Rate Shipments D3.8 Receive Product from Source or Make D3.9 Pick Product

D4 Deliver Retail Product D4.1 Generate Stocking Schedule D4.2 Receive Product at Store

D4.3 Pick Product from Backroom

D4.4 Stock Shelf D4.5 Fill Shopping Cart D4.6 Checkout D4.7 Deliver and/or Install DR Deliver Return

DR1 Deliver Return Defective Product

DR1.1 Authorize Defective Product Return

DR1.2 Schedule Defective Return Receipt DR1.3 Receive Defective Product

DEFINITION The process of consolidating and routing shipments by mode, lane, and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Deliver Retail Products are the processes used to acquire, merchandise, and sell finished goods at a retail store. A retail store is a physical location that sells products (and services) direct to the consumer using a point of sale process (manual or automated) to collect payment. Merchandising at a store level is the stocking and restocking of products in designated storage locations to generate sales in a retail store. The process of scheduling resources to support item-stocking requirements. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Typical set of tasks associated with product selection, storage and movement through to checkout. The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. The process of preparing and installing the product at the customer site. The product is fully functional upon completion. Processes associated with receiving returned products for any reason. These processes extend into post-delivery customer support. The processes of the last known holder or designated return center authorizing and scheduling the defective product return and the physical receipt of the item by the last known holder or known return center and their transfer of the item for final disposition determination. The process includes communication between the customer and last known holder or known return center and the generation of associated documentation. The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer.

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PROCESS TERM NAME DR1.4 Transfer Defective Product

DR2 Deliver Return MRO Product

DR2.1 Authorize MRO Product Return

DR2.2 Schedule MRO Return Receipt DR2.3 Receive MRO Product DR2.4 Transfer MRO Product

DR3 Deliver Return Excess Product

DR3.1 Authorize Excess Product Return

DR3.2 Schedule Excess Return Receipt

DR3.3 Receive Excess Product DR3.4 Transfer Excess Product ED Enable Deliver ED.1 Manage Deliver Business Rules ED.2 Assess Delivery Performance

DEFINITION The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision. The processes of the service provider authorizing and scheduling the MRO return product and the physical receipt of the item by the service provider and their transfer of the item for final disposition determination. The process includes communication between the customer and service provider and the generation of associated documentation. The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision. The processes of the designated return center authorizing and scheduling the excess product return, the physical receipt of the item by the designated return center and transfer of the item for final disposition The process includes communication between the customer and designated return center and the generation of associated documentation. The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Center's Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is out-sourced the performance is passed on to source for contract administration.

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PROCESS TERM NAME

ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.5 Manage Deliver Capital Assets

ED.6 Manage Transportation ED.7 Manage Product Life Cycle ED.8 Manage Import/Export Requirements EM Enable Make

EM.1 Manage Production Rules EM.2 Manage Production Performance EM.3 Manage MAKE Information

EM.4 Manage In-Process Products (WIP)

EM.5 Manage Equipment and Facilities EM.6 Manage Transportation EM.7 Manage Production Network EM.8 Manage Regulatory Compliance

EP Enable PLAN

DEFINITION The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment CAPITAL ASSETS) and 2) the management of transporters. The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. The process of specifying maintaining and dispositioning MAKE's capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government) A plan for the development and establishment of courses of action over specified time periods to appropriate delivery resources to meet projected delivery requirements. The plan contains necessary business requirements for information and relationships to effectively and efficiently PLAN the Supply Chain.

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PROCESS TERM NAME

EP.1 Manage Business Rules for PLAN Processes

EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.4 Manage Integrated Supply Chain Inventory EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation

EP.7 Manage Planning Configuration EP.8 Manage PLAN Regulatory Requirements and Compliance EP.9 Align Supply Chain Unit Plan with Financial Plan ER Enable Return

ER.1 Manage Business Rules for Return Processes

DEFINITION The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. The process of establishing total supply chain inventory strategy and planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The process of defining capacity strategy (i.e. internal versus contract manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organization's capital assets to operate the integrated supply chain. The process of defining an integrated supply chain transportation strategy and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and aftermarket support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. The process of revising the long-term supply chain capacity and resource plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations.

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PROCESS TERM NAME ER.2 Manage Performance of Return Processes ER.3 Manage Return Data Collection

ER.4 Manage Return Inventory

ER.5 Manage Return Capital Assets

ER.6 Manage Return Transportation

ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ES Enable Source

ES.1 Manage Sourcing Business Rules

ES.2 Assess Supplier Performance

ES.3 Maintain Source Data

ES.4 Manage Product Inventory

DEFINITION The process of measuring actual Return Process performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chain's business rules. (See ER1) The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs. The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time.

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PROCESS TERM NAME ES.5 Manage Capital Assets

ES.6 Manage Incoming Product

ES.7 Manage Supplier Network ES.8 Manage Import/Export Requirements

ES.9 Manage Supplier Agreements M Make

M1 Make-to-Stock

M1.1 Schedule Production Activities

M1.2 Issue Material

M1.3 Produce and Test M1.4 Package

M1.5 Stage Product

M1.6 Release Product to Deliver

DEFINITION The process of acquiring, maintaining and dispositioning an organization's <capital assets> located at a supplier's facility and/or outside source, which are used to operate the supply chain. The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Processes that transform product to a finished state to meet planned or actual demand. The process of manufacturing in a make to stock environment adds value to products through mixing, separating, forming, machining, and chemical processes. Make to stock products are intended to be shipped from finished goods or "off the shelf," are completed prior to receipt of a customer order, and are generally produced in accordance with a sales forecast. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization.
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PROCESS TERM NAME

M2 Make-to-Order

M2.1 Schedule Production Activities

M2.2 Issue Sourced/In-Process Product

M2.3 Produce and Test M2.4 Package

M2.5 Stage Finished Product

M2.6 Release Finished Product to Deliver

M3 Engineer-to-Order

M3.1 Finalize Production Engineering

M3.2 Schedule Production Activities

DEFINITION The process of manufacturing in a make to order environment adds value to products through mixing, separating, forming, machining, and chemical processes. A make to order environment is one in which products are completed after receipt of a customer order and are built or configured only in response to a customer order. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. The process of manufacturing distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order. While Make to Order includes standard products built only in response to a customer order or products configured in response to a customer order, Engineer to Order includes custom products that are designed, developed, and manufactured in response to a specific customer request. Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product.

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PROCESS TERM NAME

M3.3 Issue Sourced/In-Process Product

M3.4 Produce and Test M3.5 Package

M3.6 Stage Finished Product

M3.7 Release Product to Deliver P Plan

P1 Plan Supply Chain

DEFINITION The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of supply chain resources to meet supply chain requirements for the longest time fence constraints of supply resources. The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment. The process of developing a time-phased course of action that commits supplychain resources to meet supply-chain requirements.

P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P1.2 Identify, Assess, and Aggregate Supply Chain Resources P1.2 Identify, Assess, And Aggregate Supply Chain Resources

P1.3 Balance Supply Chain Resources with Supply Chain Requirements

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PROCESS TERM NAME

P1.4 Establish Supply Chain Plans P2 Plan Source P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources P2.3 Balance Product Resources with Product Requirements P2.4 Establish Sourcing Plans P3 Plan Make P3.1 Identify, Prioritize, and Aggregate Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P3.3 Balance Production Resources with Production Requirements P3.4 Establish Production Plans P4 Plan Deliver P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P4.4 Establish Delivery Plans

DEFINITION The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements. The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The process of developing a time-phased course of action that commits resources to meet requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements. The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. A strategic or tactical process to establish and adjust courses of action or tasks over specified time periods that represent a projected appropriation of return resources and assets to meet anticipated as well as unanticipated return requirements. The scope includes unplanned returns of sold merchandise as well as planned returns of "rotable" products that are refurbished for reissue to customers. The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. The process of developing courses of action that make feasible the commitment the appropriate return resources and or assets to satisfy return requirements.
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P5 Plan Return P5.1 Assess, and Aggregate Return Requirements P5.2 Identify, Assess, and Aggregate Return Resources P5.3 Balance Return Resources with Return Requirements

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PROCESS TERM NAME P5.4 Establish and Communicate Return Plans R1 Return Defective Product R2 Return MRO Product R3 Return Excess Product S Source S1 Source Stocked Product

S1.1 Schedule Product Deliveries S1.2 Receive Product S1.3 Verify Product

S1.4 Transfer Product S1.5 Authorize Supplier Payment S2 Source Make-to-Order Product

S2.1 Schedule Product Deliveries S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product S2.5 Authorize Supplier Payment S3 Source Engineer-to-Order Product S3.1 Identify Sources of Supply S3.2 Select Final Supplier(s) and Negotiate

S3.3 Schedule Product Deliveries S3.4 Receive Product S3.5 Verify Product

DEFINITION The establishment and communication of courses of action over specified time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements. The return and disposition of defective products as defined by the warranty claims, product recall, non-conforming product and/or other similar policies including appropriate replacement. The return of MRO products as defined by the planned and unplanned Capital Maintenance Plan. The return of excess inventory and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract. Processes that procure goods and services to meet planned or actual demand. The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services. Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. The procurement and delivery of product that is built to a specific design or configured based on the requirements of a particular customer order. Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. The negotiation, procurement and delivery of engineer-to-order assemblies or specialized product or services that are designed and built based on the requirements or specifications of a particular customer order or contract. The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria.
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PROCESS TERM NAME S3.6 Transfer Product S3.7 Authorize Supplier Payment SR Source Return

SR1 Source Return Defective Product SR1.1 Identify Defective Product Condition SR1.2 Disposition Defective Product

SR1.3 Request Defective Return Authorization SR1.4 Schedule Defective Product Shipment

SR1.5 Return Defective Product

SR2 Source Return MRO Product SR2.1 Identify MRO Product Condition

SR2.2 Disposition MRO Product

SR2.3 Request MRO Return Authorization

SR2.4 Schedule MRO Shipment

DEFINITION The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Processes associated with returning products for any reason. These processes extend into post-delivery customer support. The process, initiated by the customer, of returning material deemed defective by to the last known holder or designated return center. Process includes: customer identification that an action is required and determining what that action should be, communicating with the last known holder, generating return documentation, and physically returning of the excess product. The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. The process of a customer requesting and obtaining authorization, from last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. The process, initiated by the customer, of returning maintenance, repair, and overhaul items to a service provider. Process includes: customer identification that an action is required and determining what that action should be, communicating with the service provider, generating return documentation, and physically returning or disposing of the product. The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration.

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PROCESS TERM NAME

SR2.5 Return MRO Product

SR3 Source Return Excess Product SR3.1 Identify Excess Product Condition SR3.2 Disposition Excess Product

SR3.3 Request Excess Return Authorization SR3.4 Schedule Excess Product Shipment

SR3.5 Return Excess Product

DEFINITION The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider. The process, initiated by the customer, of returning material deemed in excess of current requirements to the designated return center. Process includes: customer identification that an action is required, determining what that action should be, requesting authorization from the designated return center, generating return documentation, and physically returning the excess product. The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

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METRICS
METRIC % In-Stock % of Excess Product Returns Delivered Complete to the Designated Return Center % of Faultless Invoices DEFINITION Percentage of materials, components, or finished goods that are there when needed. Correct destination, according to the schedule, with the correct part and documentation The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period Percentage of orders which all of the items are received by customer in the quantities committed The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The number of product orders / lines that are transferred on-time to demand requirements divided by the total orders / lines transferred in the measurement period The number of transactions processed without error divided by the total transactions processed in the measurement period. % Return to sales at any level of merchandise hierarchy The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period
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PROCESS D4.4 Stock Shelf DR3 Deliver Return Excess Product SR3 Source Return Excess Product D2.14 Install Product D1.14 Install Product D3.15 Invoice D2.15 Invoice D1.15 Invoice

% Orders/ Lines Processed Complete

S1.2, S2.2, S3.4

% Orders/ Lines Received Defect Free % Orders/ Lines Received On-Time To Demand Requirement

S1.3, S2.3, S3.5

S1.2, S2.2, S3.4

% Orders/ Lines Received with Correct Shipping Documents % of Orders Delivered In Full

S1.2, S2.2, S3.4

M1.1, M2.1, M3.1, D1.3, D1.12, D1.13, D2.3, D2.12, D2.13, D3.3, D3.12, D3.13, ED

% Product Transferred On-Time to Demand Requirement % Product Transferred without Transaction Errors % Return % Schedules Changed within Supplier's Lead Time

S1.4, S2.4, S3.6 S1.4, S2.4, S3.6 R1 Return Defective Product R2 Return MRO Product S1.1, S2.1, S3.3

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June 2006

METRIC Actual Asset Life Maintenance Cost as % of Replacement Value

Align Supply Chain Unit Plan with Financial Plan Cycle Time Assess Delivery Performance Cycle Time Assess Supplier Performance Cycle Time Asset Turns Authorize Defective Product Return Cycle Time Authorize Excess Product Return Cycle Time Authorize MRO Product Return Cycle Time Authorize Supplier Payment Cycle Time

DEFINITION Measure of total lifecycle maintenance cost of an asset compared to its replacement cost. This ratio is based maintenance cost to-date so that that replacement or upgrade cost can be evaluated as the asset ages on an on-going basis. The average time associated with aligning the supply chain unit plan with the financial plan The average time associated with assessing the performance of deliver processes. The average time associated with assessing the performance of supplier processes. Total gross product revenue Total net assets The average time associated with authorizing the return of defective product. The average time associated with authorizing the return of excess product. The average time associated with authorizing the return of MRO product. The average time associated with authorizing payment to suppliers.

PROCESS EM.5

EP.9 Align Supply Chain Unit Plan with Financial Plan ED.2 Assess Delivery Performance ES.2 Assess Supplier Performance M1.3, M1.4, M2.3, M2.4, M3.4, M3.5 DR1.1 Authorize Defective Product Return DR3.1 Authorize Excess Product Return DR2.1 Authorize MRO Product Return S3.7 Authorize Supplier Payment S2.5 Authorize Supplier Payment S1.5 Authorize Supplier Payment S1.1, S2.1, S3.3 S1.1, S2.1, S3.3 S1.1, S2.1, S3.3 P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P2.3 Balance Product Resources with Product Requirements P3.3 Balance Production Resources with Production Requirements P5.3 Balance Return Resources with Return Requirements P1.3 Balance Supply Chain Resources with Supply Chain Requirements D1.5 Build Loads D2.5 Build Loads D3.5 Build Loads

Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Balance Delivery Resources with Delivery Requirements Cycle Time Balance Product Resources with Product Requirements Cycle Time Balance Production Resources with Product Creation Requirements Cycle Time Balance Return Resources with Return Requirements Cycle Time Balance Supply Chain Resources with Supply Chain Requirements Cycle Time Build Loads Cycle Time

# of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The average time associated with balancing deliver resources and deliver requirements. The average time associated with balancing product resources and product requirements. The average time associated with balancing production resources with production creation requirements. The average time associated with balancing return resources and return requirements. The average time associated with balancing supply chain resources and supply chain requirements. The average time associated with building shipment loads.

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METRIC Capacity Utilization

Cash-To-Cash Cycle Time

DEFINITION A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. [Inventory Days of Supply + Days Sales Outstanding Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. The average time required for customer checkout. The average time required for customer order consolidation. Total MAKE cost to comply with regulatory requirements. The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with aligning supply chain performance plans with financial plans. The sum of the costs associated with assessing delivery performance. The sum of the costs associated with assessing supplier performance. The sum of the costs associated with authorizing the return of defective product. The sum of the costs associated with authorizing the return of excess product. The sum of the costs associated with authorizing the return of product to be maintained, repaired, or overhauled. The sum of the costs associated with authorizing supplier payment.

PROCESS M1.1, M1.3, M1.4, M2.1, M2.3, M2.4, M3.2, M3.4, M3.5

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4

Checkout Cycle Time Consolidate Orders Cycle Time Cost of Compliance Including Administrative Costs Cost of Goods Sold

D4.6 Checkout D1.4 Consolidate Orders D2.4 Consolidate Orders EM.8 M2 Make-to-Order M1 Make-to-Stock M3 Engineer-to-Order EP.9 Align Supply Chain Unit Plan with Financial Plan ED.2 Assess Delivery Performance ES.2 Assess Supplier Performance DR1.1 Authorize Defective Product Return DR3.1 Authorize Excess Product Return DR2.1 Authorize MRO Product Return S3.7 Authorize Supplier Payment S2.5 Authorize Supplier Payment S1.5 Authorize Supplier Payment P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P2.3 Balance Product Resources with Product Requirements P3.3 Balance Production Resources with Production Requirements P5.3 Balance Return Resources with Return Requirements
June 2006

Cost to Align Supply Chain Unit Plan with Financial Plan Cost to Assess Delivery Performance Cost to Assess Supplier Performance Cost to Authorize Defective Product Return Cost to Authorize Excess Product Return Cost to Authorize MRO Product Return Cost to Authorize Supplier Payment

Cost to Balance Delivery Resources with Delivery Requirements Cost to Balance Product Resources with Product Requirements Cost to Balance Production Resources with Product Creation Requirements Cost to Balance Return Resources with Return Requirements

The sum of the costs associated with balance of delivery resources with delivery requirements. The sum of the costs associated with balance of product resources with product requirements. The sum of the costs associated with balance of production resources with product creation requirements. The sum of the costs associated with balance of return resources with return requirements.
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METRIC Cost to Balance Supply Chain Resources with Supply Chain Requirements Cost to Build Loads Cost to Checkout Cost to Consolidate Orders Cost to Deliver

DEFINITION The sum of the costs associated with balance of supply chain resources with supply chain requirements. The sum of the costs associated with building transportation loads. The sum of the costs associated with product checkout. The sum of the costs associated with consolidating customer orders. The sum of the costs associated with deliver

PROCESS P1.3 Balance Supply Chain Resources with Supply Chain Requirements D1.5 Build Loads D2.5 Build Loads D3.5 Build Loads D4.6 Checkout D1.4 Consolidate Orders D2.4 Consolidate Orders D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4.7 Deliver and/or Install D3.3 Enter Order, Commit Resources & Launch Program P5.4 Establish and Communicate Return Plans P1.4 Establish Supply Chain Plans P4.4 Establish Delivery Plans P3.4 Establish Production Plans P2.4 Establish Sourcing Plans D4.5 Fill Shopping Cart M3.1 Finalize Production Engineering D4.1 Generate Stocking Schedule S3.1 Identify Sources of Supply P2.2 Identify, Assess, And Aggregate Product Resources P3.2 Identify, Assess, and Aggregate Production Resources P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P5.2 Identify, Assess, and Aggregate Return Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources

Cost to Deliver and/or Install Cost to Enter Order, Commit Resources & Launch Program Cost to Establish and Communicate Return Plans Cost to Establish and Communicate Supply Chain Plans Cost to Establish Delivery Plans Cost to Establish Production Plans Cost to Establish Sourcing Plans Cost to Fill Shopping Cart Cost to Finalize Production Engineering Cost to Generate Stocking Schedule Cost to Identify Sources of Supply Cost to Identify, Assess, and Aggregate Product Resources Cost to Identify, Assess, and Aggregate Production Resources

The sum of the costs associated with deliver and/or install The sum of the costs associated with entering the order, committing resources & launching a program. The sum of the costs associated with establishing and communicating return plans. The sum of the costs associated with establishing and communicating supply chain plans. The sum of the costs associated with establishing and communicating deliver plans. The sum of the costs associated with establishing and communicating production plans. The sum of the costs associated with establishing and communicating source plans. The sum of the costs associated with filling a shopping cart. The sum of the costs associated with finalizing production engineering. The sum of the costs associated with generating a stocking schedule. The sum of the costs associated with identifying sources of supply. The sum of the costs associated with identifying, assessing and aggregating product resources. The sum of the costs associated with identifying, assessing and aggregating production resources.

Cost to Identify, Assess, and Aggregate Return Resources Cost to Identify, Assess, and Aggregate Supply Chain Resources

The sum of the costs associated with identifying, assessing and aggregating return resources. The sum of the costs associated with identifying, assessing and aggregating supply chain resources.

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METRIC Cost to Identify, Prioritize, and Aggregate Delivery Requirements Cost to Identify, Prioritize, and Aggregate Product Requirements Cost to Identify, Prioritize, and Aggregate Production Requirements Cost to Identify, Prioritize, and Aggregate Return Requirements Cost to Identify, Prioritize, and Aggregate Supply Chain Requirements Cost to Install Product Cost to Invoice Cost to Issue Material Cost to Issue Sourced/In-Process Product Cost to Load Product & Generate Shipping Documentation

DEFINITION The sum of the costs associated with identifying, assessing and aggregating deliver requirements The sum of the costs associated with identifying, assessing and aggregating deliver requirements. The sum of the costs associated with identifying, assessing and aggregating production requirements The sum of the costs associated with identifying, assessing and aggregating return requirements. The sum of the costs associated with identifying, assessing and aggregating supply chain requirements. The sum of the costs associated with product installation. The sum of the costs associated with invoicing. The sum of the costs associated with issuing material. The sum of the costs associated with issuing sourced or in-process material. The sum of the costs associated with loading product & generating shipping documentation.

PROCESS P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements P3.1 Identify, Prioritize, and Aggregate Production Requirements P5.1 Assess, and Aggregate Return Requirements P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D1.14 Install Product D2.14 Install Product D3.14 Install Product D1.15 Invoice D3.15 Invoice M1.2 Issue Material M3.3 Issue Sourced/InProcess Product M2.2 Issue Sourced/InProcess Product D1.11 Load Vehicle & Generate Shipping Documentation D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents ES.3 Maintain Source Data M1, M2, M3 EP.1 Manage Business Rules for PLAN Processes ER.1 Manage Business Rules for Return Processes ED.1 Manage Deliver Business Rules ED.5 Manage Deliver Capital Assets ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements ES.6 Manage Incoming Product EM.4 Manage In-Process Products (WIP) EP.5 Manage Integrated Supply Chain Capital Assets

Cost to Maintain Source Data Cost to Make Cost to Manage Business Rules for PLAN Processes Cost to Manage Business Rules for Return Processes Cost to Manage Deliver Business Rules Cost to Manage Deliver Capital Assets Cost to Manage Deliver Information Cost to Manage Finished Goods Inventories Cost to Manage Import/Export Requirements Cost to Manage Incoming Product Cost to Manage In-Process Products (WIP) Cost to Manage Integrated Supply Chain Capital Assets

The sum of the costs associated with maintaining supplier data. The sum of the costs associated with make. The sum of the .Costs to Manage Business Rules for PLAN Processes The sum of the Cost to Manage Business Rules for Return Processes The sum of the Costs to Manage Deliver Business Rules The sum of the Costs to Manage Deliver Capital Assets The sum of the Cost to Manage Deliver Information The sum of the Costs to Manage Finished Good Inventory The sum of the costs associated with the management of import/export requirements The sum of the costs associated with managing incoming product. The sum of the costs associated with managing in-process products (WIP). The sum of the costs associated with managing integrated supply chain assets.

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METRIC Cost to Manage Integrated Supply Chain Inventory Cost to Manage Integrated Supply Chain Transportation Cost to Manage MAKE Equipment and Facilities Cost to Manage MAKE Information Cost to Manage MAKE Regulatory Compliance Cost to Manage Performance of Return Processes Cost to Manage Performance of Supply Chain Cost to Manage PLAN Data Collection Cost to Manage Plan Regulatory Requirements and Compliance Cost to Manage Planning Configuration Cost to Manage Product Inventory Cost to Manage Product Life Cycle Cost to Manage Production Network Cost to Manage Production Performance Cost to Manage Production Rules Cost to Manage Return Capital Assets Cost to Manage Return Data Collection Cost to Manage Return Inventory Cost to Manage Return Network Configuration Cost to Manage Return Regulatory Requirements and Compliance Cost to Manage Return Transportation Cost to Manage Source Capital Assets Cost to Manage Sourcing Business Rules Cost to Manage Supplier Agreements Cost to Manage Supplier Network Cost to Manage Transportation

DEFINITION The sum of the costs associated with managing the integrated supply chain inventory. The sum of the costs associated with managing integrated supply chain transportation. The sum of the costs associated with managing Make equipment and facilities. The sum of the Cost to Manage MAKE Information The sum of the Cost to Manage MAKE Regulatory Compliance The sum of the costs to Manage Performance of Return Processes. The sum of the costs associated with assessing supplier performance. The sum of the costs to Manage PLAN Data Collection. The sum of the costs to Manage Plan Regulatory Requirements and Compliance. The sum of the Cost to Manage Planning Configuration The sum of the Cost to Manage Product Inventory The sum of the Cost to Manage Product Life Cycle The sum of the costs to manage the production network The sum of the costs to manage production performance. The sum of the costs to manage production rules. The sum of the costs to manage the capital assets associated with returns. The sum of the costs to manage the capital assets associated with returns data collection. The sum of the costs to manage the capital assets associated with return inventory. The sum of the costs to manage the capital assets associated with configuring the return network. The sum of the costs associated with managing compliance to return regulatory requirements. The sum of the costs associated with managing return transportation. The sum of the Costs to Manage Source Capital Assets The sum of the costs associated with Source business rules. The sum of the costs associated with managing supplier agreements. The sum of the costs associated with managing the supplier network. The sum of the costs associated with managing Finished Good Transportation

PROCESS EP.4 Manage Integrated Supply Chain Inventory EP.6 Manage Integrated Supply Chain Transportation EM.5 Manage Equipment and Facilities EM.3 Manage MAKE Information EM.8 Manage Regulatory Compliance ER.2 Manage Performance of Return Processes EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.8 Manage PLAN Regulatory Requirements and Compliance EP.7 Manage Planning Configuration ES.4 Manage Product Inventory ED.7 Manage Product Life Cycle EM.7 Manage Production Network EM.2 Manage Production Performance EM.1 Manage Production Rules ER.5 Manage Return Capital Assets ER.3 Manage Return Data Collection ER.4 Manage Return Inventory ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ER.6 Manage Return Transportation ES.5 Manage Capital Assets ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network ED.6 Manage Transportation

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METRIC Cost to Manage Transportation (WIP) Cost to Negotiate & Receive Contract Cost to Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cost to Pack Product Cost to Package Cost to Pick Product Cost to Pick Product from Backroom Cost to Plan Deliver Cost to Plan Make Cost to Plan Return Cost to Plan Source Cost to Plan Supply Chain Cost to Process Inquiry & Quote Cost to Produce and Test Cost to Receive & Verify Product by Customer

DEFINITION The sum of the costs associated with managing WIP Transportation The sum of the costs associated with negotiating and receiving contracts The sum of the costs associated with obtaining and responding to Request for Quote (RFQ) / Request for Proposal (RFP). The sum of the costs associated with product packaging. The sum of the costs associated with product packaging. The sum of the costs associated with picking product. The sum of the costs associated with picking product from backroom. The sum of the costs associated with planning the delivery of product. The sum of the costs associated with planning the making of product. The sum of the costs associated with planning the returning of product. The sum of the costs associated with planning source activities. The sum of the costs associated with planning supply chain activities. The sum of the costs associated with processing inquiry and quotes. The sum of the costs associated with production and test. The sum of the costs associated with receipt and verification at customer site.

PROCESS EM.6 Manage Transportation D3.2 Negotiate & Receive Contract D3.1 Obtain and Respond to RFP/RFQ D1.10 Pack Product D2.10 Pack Product D3.10 Pack Product M3.5 Package M2.4 Package M1.4 Package D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product D4.3 Pick Product from Backroom P4 P3 P5 P2 Plan Source P1 Plan Supply Chain D1.1 Process Inquiry & Quote D2.1 Process Inquiry & Quote M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test D1.13 Receive & Verify Product by Customer D2.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer DR1.3 Receive Defective Product DR3.3 Receive Excess Product DR2.3 Receive MRO Product S3.4 Receive Product S2.2 Receive Product S1.2 Receive Product D4.2 Receive Product at Store D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product from Source or Make D1.2 Receive, Enter & Validate Order D2.2 Receive, Configure, Enter and Validate Order
June 2006

Cost to Receive Defective Product Cost to Receive Excess Product Cost to Receive MRO Product Cost to Receive Product Cost to Receive Product at Store Cost to Receive Product from Source or Make

The sum of the costs associated with receiving defective product returns. The sum of the costs associated with receiving excess returns. The sum of the costs associated with receiving MRO product returns. The sum of the costs associated with receiving product. The sum of the costs associated with receiving product at the store. The sum of the costs associated with transferring product from source or make activities.

Cost to Receive, Enter & Validate Order

The sum of the costs associated with receiving, entering and validating a customer order.

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METRIC Cost to Release Finished Product to Deliver

DEFINITION The sum of the costs associated with releasing finished goods to deliver processes.

Cost to Reserve Resources & Determine Delivery Date Cost to Route Shipments Cost to Schedule Excess Product Receipt Cost to Schedule Installation Cost to Schedule MRO Product Receipt Cost to Schedule Product Deliveries

The sum of the costs associated with reserving resources and determining a delivery date. The sum of the costs associated with routing shipments. The sum of the costs associated with scheduling excess product receipt. The sum of the costs associated with scheduling product installation. The sum of the costs associated with scheduling MRO product receipt. The sum of the costs associated with scheduling product deliveries.

PROCESS M3.7 Release Product to Deliver M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments DR3.2 Schedule Excess Return Receipt D3.4 Schedule Installation DR2.2 Schedule MRO Return Receipt S3.3 Schedule Product Deliveries S2.1 Schedule Product Deliveries S1.1 Schedule Product Deliveries M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities D2.7 Select Carriers & Rate Shipments D1.7 Select Carriers & Rate Shipments D3.7 Select Carriers and Rate Shipments S3.2 Select Final Supplier(s) and Negotiate D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product S1 Source Stocked Product S2 Source Make-to-Order Product S3 Source Engineer-to-Order Product SR3 Source Return Excess Product SR2 Source Return MRO Product SR1 Source Return Defective Product M3.6 Stage Finished Product M2.5 Stage Finished Product M1.5 Stage Product D4.4 Stock Shelf

Cost to Schedule Production Activities

The sum of the costs associated with scheduling production activities.

Cost to Select Carriers & Rate Shipments

The sum of the costs associated with selecting carriers and rating shipments.

Cost to Select Final Supplier(s) and Negotiate Cost to Ship Product Cost to Source

The sum of the costs associated with selecting final suppliers and negotiating supplier agreements. The sum of the costs associated with shipping products. The sum of the costs associated with Source.

Cost to Source Return

The sum of the costs associated with Source Return

Cost to Stage Finished Product Cost to Stock Shelf

The sum of the costs associated with staging finished goods. The sum of the costs associated with stocking shelves.

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METRIC Cost to Transfer Defective Product Cost to Transfer Excess Product Cost to Transfer MRO Product Cost to Transfer Product Cost to Verify Product Costs Associated with Managing Production Performance as a % Manufacturing Controllable Cost Customs Clearance Cycle Time

DEFINITION The sum of the costs associated transferring defective product for disposition The sum of the costs associated transferring excess product for disposition The sum of the costs associated transferring MRO product for disposition The sum of the costs associated with transferring product to Make or Deliver processes The sum of the costs associated with raw material verification. Ratio of Cost for Managing Production Performance to Manufacturing Controllable Cost. The average time associated with clearing an order through customs

PROCESS DR1.4 Transfer Defective Product DR3.4 Transfer Excess Product DR2.4 Transfer MRO Product S3.6 Transfer Product S2.4 Transfer Product S1.4 Transfer Product S2.3 Verify Product S1.3 Verify Product S3.5 Verify Product EM.2 ES.8 Manage Import/Export Requirements ED.8 Manage Import/Export Requirements D1.15, D2.15 Invoice, D3.15

Days of Supply (See Inventory Days of Supply) Days Payable Outstanding

[Sum of the 4 previous quarters + projection for next quarter) / 5] The length of time from purchasing materials, labor and/or conversion resources until cash payments must be made expressed in days. The [5 point rolling average of gross accounts payable (AP)] / [total gross annual material purchases / 365]. (Other names: Average payment period for materials, Days purchases in accounts payable, Days outstanding in accounts payable) The 5 point rolling average calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. 5 point annual average of gross accounts receivable (total gross annual sales 365) The length of time from when a sale is made until cash for it is received from customers. The amount of sales outstanding expressed in days. The average time required to deliver and install product. The average time associated with Deliver Processes

Days Sales Outstanding

D1.15, D2.15 Invoice, D3.15

Deliver and/or Install Cycle Time Deliver Cycle Time

D4.7 Deliver and/or Install D3 Deliver Engineer-to-Order Product D2.15 Invoice D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D4 Deliver Retail Product

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METRIC Deliver Return Cycle Time

DEFINITION The average time associated with returns.

Delivery Performance to Customer Commit Date Documentation Accuracy

The percentage of orders that are fulfilled on the customer's original commit date Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

PROCESS DR1 Deliver Return Defective Product DR Deliver Return DR2 Deliver Return MRO Product D1.3, D1.12, D1.13, D2.3, D2.12, D2.13, D3.3, D3.12, D3.13 D1.11, D1.15, D2.11, D2.15, D3.11, D3.15, ED.2

Downside Deliver Adaptability

Downside Make Adaptability Enter Order, Commit Resources & Launch Program Cycle Time Establish and Communicate Return Plans Cycle Time Establish and Communicate Supply Chain Plans Cycle Time Establish Delivery Plans Cycle Time Establish Production Plans Cycle Time Establish Sourcing Plans Cycle Time Fill Rate

Fill Shopping Cart Cycle Time Finalize Production Engineering Cycle Time

The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. The average time associated with entering an order, committing resources and program launch The average time associated with establishing and communicating return plans The average time associated with establishing and communicating supply chain plans The average time associated with establishing and communicating deliver plans The average time associated with establishing and communicating production plans The average time associated with establishing and communicating source plans The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with "filling the shopping cart" The average time associated with the finalization of production engineering

D2 Deliver Make-to-Order Product D1 Deliver Stocked Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order D3.3 Enter Order, Commit Resources & Launch Program P5.4 Establish and Communicate Return Plans P1.4 Establish Supply Chain Plans P4.4 Establish Delivery Plans P3.4 Establish Production Plans P2.4 Establish Sourcing Plans P1.3, P4.4, M1.3, D1.3, D1.9

D4.5 Fill Shopping Cart M3.1 Finalize Production Engineering

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METRIC Forecast Accuracy

DEFINITION Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation (Sum Actuals - Sum of Variance) / Sum Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. The average time associated with the generating a stocking schedule The average time associated with the identification of sources of supply The average time associated with the identifying, assessing, and aggregating delivery resource availability The average time associated with the identifying, assessing, and aggregating product resource availability The average time associated with the identifying, assessing, and aggregating production resource availability The average time associated with the identifying, assessing, and aggregating return resource availability The average time associated with the identifying, assessing, and aggregating supply chain resource availability The average time associated with the identifying, prioritizing, and aggregating delivery requirements The average time associated with the identifying, prioritizing, and aggregating product requirements The average time associated with the identifying, prioritizing, and aggregating production requirements The average time associated with the identifying, prioritizing, and aggregating return requirements The average time associated with the identifying, prioritizing, and aggregating supply chain requirements The average time associated with product installation The amount of inventory (stock) expressed in days of sales. The [5 point rolling average of gross value of inventory at standard cost] / [annual cost of goods sold (COGS) / 365]. Example: If 2 items a day are sold and 20 items are held in inventory, this represents 10 days (20/2) sales in inventory. (Other names: Days cost-of-sales in inventory, Days sales in inventory). Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory (value of transfers/365 days).
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PROCESS EP.4, EP.5, EP.6, EP.7, P1, P1.1, P2.1, P3.1, P4, P4.1, P4.2

Generate Stocking Schedule Cycle Time Identify Sources of Supply Cycle Time Identify, Assess, and Aggregate Delivery Resources Cycle Time Identify, Assess, and Aggregate Product Resources Cycle Time Identify, Assess, and Aggregate Production Resources Cycle Time Identify, Assess, and Aggregate Return Resources Cycle Time Identify, Assess, and Aggregate Supply Chain Resources Cycle Time Identify, Prioritize, and Aggregate Delivery Requirements Cycle Time Identify, Prioritize, and Aggregate Product Requirements Cycle Time Identify, Prioritize, and Aggregate Production Requirements Cycle Time Identify, Prioritize, and Aggregate Return Requirements Cycle Time Identify, Prioritize, and Aggregate Supply Chain Requirements Cycle Time Install Product Cycle Time Inventory Days of Supply

D4.1 Generate Stocking Schedule S3.1 Identify Sources of Supply P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P2.2 Identify, Assess, And Aggregate Product Resources P3.2 Identify, Assess, and Aggregate Production Resources P5.2 Identify, Assess, and Aggregate Return Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements P3.1 Identify, Prioritize, and Aggregate Production Requirements P5.1 Assess, and Aggregate Return Requirements P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D1.14 Install Product D2.14 Install Product D3.14 Install Product P1.2, P1.3, P1.4, S1.4, S2.4, S3.6, ES.4, EM.4, ED.4

Inventory Days of Supply (Finished Goods)

D1.3, D1.8, D1.11, D1.14, D2.3, D2.8, D2.11, D2.14, D3.3, D3.8, D3.11, D3.14

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June 2006

METRIC Inventory Days of Supply (Raw Material)

DEFINITION Value of raw materials (COGS 365).

Inventory Days of Supply (WIP) Invoice Cycle Time Issue Material Cycle Time Issue Sourced/In-Process Product Cycle Time Load Product & Generate Shipping Documentation Cycle Time

Total value of Work in Process (COGS 365). The average time associated with the generation and issuance of an invoice The average time associated with the issuance of material to production The average time associated with the issuance of material to production The average time associated with product loading and the generation of shipping documentation

PROCESS S2 Source Make-to-Order Product S1 Source Stocked Product S3 Source Engineer-to-Order Product P3.3, P3.4, M1.1, M1.5, M2.1, M2.5, M3.2, M3.6 D1.15 Invoice D3.15 Invoice M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product D1.11 Load Vehicle & Generate Shipping Documentation D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents ES.3 Maintain Source Data M1 Make-to-Stock M3 Engineer-to-Order M2 Make-to-Order EP.1 Manage Business Rules for PLAN Processes ER.1 Manage Business Rules for Return Processes ES.5 Manage Capital Assets ED.1 Manage Deliver Business Rules ED.5 Manage Deliver Capital Assets ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements ES.6 Manage Incoming Product EM.4 Manage In-Process Products (WIP) EP.5 Manage Integrated Supply Chain Capital Assets EP.4 Manage Integrated Supply Chain Inventory EP.6 Manage Integrated Supply Chain Transportation EM.5 Manage Equipment and Facilities EM.3 Manage MAKE Information
June 2006

Maintain Source Data Cycle Time Make Cycle Time Manage Business Rules for PLAN Processes Cycle Time Manage Business Rules for Return Processes Cycle Time Manage Capital Assets Cycle Time Manage Deliver Business Rules Cycle Time Manage Deliver Capital Assets Cycle Time Manage Deliver Information Cycle Time Manage Finished Goods Inventories Cycle Time Manage Import/Export Requirements Cycle Time Manage Incoming Product Cycle Time Manage In-Process Products (WIP) Cycle Time Manage Integrated Supply Chain Capital Assets Cycle Time Manage Integrated Supply Chain Inventory Cycle Time Manage Integrated Supply Chain Transportation Cycle Time Manage MAKE Equipment and Facilities Cycle Time Manage MAKE Information Cycle Time
Copyright 2006 Supply-Chain Council, Inc.

The average time associated with maintaining source data The average time associated with Make Processes The average time associated with managing plan business rules The average time associated with managing rules for returns The average time associated with managing capital assets The average time associated with managing deliver business rules The average time associated with managing deliver capital assets The average time associated with managing deliver information The average time associated with managing finished good inventory The average time associated with managing import/export requirements The average time associated with managing inbound raw material The average time associated with managing WIP inventory The average time associated with managing integrated supply chain capital assets The average time associated with managing integrated supply chain inventory The average time associated with managing integrated supply chain transportation The average time associated with managing production equipment and facilities The average time associated with managing production information
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METRIC Manage MAKE Regulatory Compliance Cycle Time Manage Performance of Return Processes Cycle Time Manage Performance of Supply Chain Cycle Time Manage PLAN Data Collection Cycle Time Manage Plan Regulatory Requirements and Compliance Cycle Time Manage Planning Configuration Cycle Time Manage Product Inventory Cycle Time Manage Product Life Cycle Time Manage Production Network Cycle Time Manage Production Performance Cycle Time Manage Production Rules Cycle Time Manage Return Capital Assets Cycle Time Manage Return Data Collection Cycle Time Manage Return Inventory Cycle Time Manage Return Network Configuration Cycle Time Manage Return Regulatory Requirements and Compliance Cycle Time Manage Return Transportation Cycle Time Manage Sourcing Business Rules Cycle Time Manage Supplier Agreements Cycle Time Manage Supplier Network Cycle Time Manage Transportation (WIP) Cycle Time Manage Transportation Cycle Time Negotiate & Receive Contract Cycle Time Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cycle Time Order Entry and Maintenance Costs

DEFINITION The average time associated with managing compliance to the make regulatory environment The average time associated with managing the performance of supply chain activities The average time associated with managing the performance of return activities The average time associated with collecting plan data The average time associated with managing the planning of regulatory requirements and compliance The average time associated with managing the planning of the supply chain configuration The average time associated with managing raw material inventory The average time associated with managing the product life cycle The average time associated with managing the production network The average time associated with managing production performance The average time associated with managing production rules The average time associated with managing return capital assets The average time associated with managing return data collection The average time associated with managing return inventory The average time associated with managing the return network configuration The average time associated with compliance and regulatory requirements for return products The average time associated with managing return transportation The average time associated with managing source business rules The average time associated with managing supplier agreements The average time associated with managing the supplier network The average time associated with managing (WIP) transportation The average time associated with managing transportation The average time associated with negotiating and receiving a contract The average time associated with obtaining and responding to RFQs/RFPs Includes costs for maintaining the customer database, credit check, accepting new orders and adding them to the order system as well as later order modifications.

PROCESS EM.8 Manage Regulatory Compliance ER.2 Manage Performance of Return Processes EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.8 Manage PLAN Regulatory Requirements and Compliance EP.7 Manage Planning Configuration ES.4 Manage Product Inventory ED.7 Manage Product Life Cycle EM.7 Manage Production Network EM.2 Manage Production Performance EM.1 Manage Production Rules ER.5 Manage Return Capital Assets ER.3 Manage Return Data Collection ER.4 Manage Return Inventory ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ER.6 Manage Return Transportation ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network EM.6 Manage Transportation ED.6 Manage Transportation D3.2 Negotiate & Receive Contract D3.1 Obtain and Respond to RFP/RFQ D1.2, D2.2

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METRIC Order Fulfillment Costs

Order Fulfillment Cycle Time

DEFINITION Includes costs for processing the order, allocating inventory, ordering from the internal or external supplier, scheduling the shipment, reporting order status and initiating shipment. The average actual cycle time consistently achieved to fulfill customer orders. Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The aggregation of the following cost elements (contained in this glossary): The average time associated with packing a product for shipment. Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer's definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. The average time associated with product pick The average time associated with product pick from backroom The average time associated with Plan Processes The average time associated with planning source activities The average time associated with processing inquiries and quotes The average time associated with production and test

PROCESS D1.3, D2.3, D3.3, D3.4

Order Fulfillment Dwell Time

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3 D1.2, D1.3, D2.2, D2.3, D3.3

Order Management Costs Pack Product Cycle Times Perfect Condition

D3 Deliver Engineer-to-Order Product D1 Deliver Stocked Product D1.10 Pack Product D2.10 Pack Product D3.10 Pack Product D1.13, D1.14, D2.13, D2.14, D3.13, D3.14, ED.2

Perfect Order Fulfillment

S2, M2 D3 Deliver Engineer-to-Order Product D2 Deliver Make-to-Order Product D1 Deliver Stocked Product D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product D4.3 Pick Product from Backroom P1 Plan Supply Chain P2 Plan Source D1.1 Process Inquiry & Quote D2.1 Process Inquiry & Quote M1.3 Produce and Test M3.4 Produce and Test M2.3 Produce and Test

Pick Product Cycle Time Pick Product from Backroom Cycle Time Plan Cycle Time Plan Source Cycle Time Process Inquiry & Quote Cycle Time Produce and Test Cycle Time

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METRIC Product Acquisition Costs

Receive & Verify Product by Customer Cycle Time

DEFINITION Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. The average time associated with receiving and verifying an order at the customer site

PROCESS S3 Source Engineer-to-Order Product S2 Source Make-to-Order Product S1 Source Stocked Product D1.13 Receive & Verify Product by Customer D2.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer DR1.3 Receive Defective Product DR3.3 Receive Excess Product DR2.3 Receive MRO Product D4.2 Receive Product at Store D1.8 Receive Product from Source or Make D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order S3.4 Receive Product S2.2 Receive Product S1.2 Receive Product M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver M3.7 Release Product to Deliver D1.3 Reserve Inventory & Determine Delivery Date P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3 P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3

Receive Defective Product Cycle Time Receive Excess Product Cycle Time Receive MRO Product Cycle Time Receive Product at Store Cycle Time Receive Product from Source or Make Cycle Time

The average time associated with receiving defective product returns from the customer The average time associated with receiving excess product returns from the customer The average time associated with receiving MRO product returns from the customer The average time associated with receiving product at the customer store The average time associated with receiving a transfer of product to deliver processes from source or make

Receive, Configure, Enter & Validate Order Cycle Time Receive, Enter & Validate Order Cycle Time Receiving Product Cycle Time Release Finished Product to Deliver Cycle Time

The average time associated with receiving and verifying an order at the customer site The average time associated with receiving and verifying an order at the customer site Total elapsed time from time product is received to time it is passed to next process The average time associated with releasing finished product to deliver

Reserve Inventory & Determine Delivery Date Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Route Shipments Cycle Time

The average time associated with reserving inventory and determining a delivery date Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with routing shipments

D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments


June 2006

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382

METRIC Schedule Achievement

Schedule Defective Return Receipt Cycle Time Schedule Excess Return Receipt Cycle Time Schedule Installation Cycle Time Schedule MRO Return Receipt Cycle Time Schedule Product Deliveries Cycle Time

DEFINITION The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: over-shipments do not make up for under-shipments. The average time associated with scheduling the receipt of the return of defective product The average time associated with scheduling the receipt of the return of excess product The average time associated with scheduling the installation of product The average time associated with scheduling the receipt of the return of MRO product The average time associated with scheduling the shipment of the return of MRO product

PROCESS M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities DR1.2 Schedule Defective Return Receipt DR3.2 Schedule Excess Return Receipt D3.4 Schedule Installation DR2.2 Schedule MRO Return Receipt S3.3 Schedule Product Deliveries S2.1 Schedule Product Deliveries S1.1 Schedule Product Deliveries M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities D1.7 Select Carriers & Rate Shipments D2.7 Select Carriers & Rate Shipments D3.7 Select Carriers and Rate Shipments S3.2 Select Final Supplier(s) and Negotiate D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product S1 Source Stocked Product S2 Source Make-to-Order Product S3 Source Engineer-to-Order Product M1.5 Stage Product M2.5 Stage Finished Product M3.6 Stage Finished Product D4.4 Stock Shelf P4 Plan Deliver SR3 Source Return Excess Product SR2 Source Return MRO Product DR1.4 Transfer Defective Product
June 2006

Schedule Production Activities Cycle Time

The average time associated with scheduling production activities

Select Carriers & Rate Shipments Cycle Time

The average time associated with selecting carriers and rating shipments

Select Final Supplier(s) and Negotiate Cycle Time Ship Product Cycle Time Source Cycle Time

The average time associated with scheduling the shipment of the return of MRO product The average time associated with shipping product The average time associated with Source Processes

Stage Finished Product Cycle Time Stock Shelf Cycle Time Total Deliver Costs Total Excess Material Return Costs Total Source Return Costs Transfer Defective Product Cycle Time
Copyright 2006 Supply-Chain Council, Inc.

The average time associated with staging finished product The average time associate with stocking shelves The sum of the costs associated with the Deliver processes. The sum of the costs associated with the receipt of returned excess products from the customer The sum of the costs associated with the return of raw materials to the supplier. The average time associated transfer until product is moved to the next process.
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METRIC Transfer Excess Product Cycle Time Transfer MRO Product Cycle Time Transfer Product Cycle Time Upside Deliver Adaptability

DEFINITION The average time associated transfer until product is moved to the next process. The average time associated transfer until product is moved to the next process. The average time associated transfer until product is moved to the next process. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints. The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days. The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. Inventory Awaiting Return

PROCESS DR3.4 Transfer Excess Product DR2.4 Transfer MRO Product S1.4 Transfer Product S3.6 Transfer Product S2.4 Transfer Product D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product DR Deliver Return DR2 Deliver Return MRO Product DR3 Deliver Return Excess Product DR Deliver Return DR2 Deliver Return MRO Product DR3 Deliver Return Excess Product M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order SR1.2 Disposition Defective Product SR2.2 Disposition MRO Product SR1.3 Request Defective Return Authorization SR3.2 Disposition Excess Product SR3.3 Request Excess Return Authorization SR2.2 Disposition MRO Product SR2.3 Request MRO Return Authorization

Upside Deliver Flexibility

Upside Deliver Return Adaptability

Upside Deliver Return Flexibility

Upside Make Adaptability

Upside Make Flexibility

Value of Defective Inventory in Disposition Stage/ Total Inventory Value Value of Defective Product Inventory in Request Return Authorization Stage/ Total Defective Product Inventory Value Value of Excess Inventory in Disposition Stage/ Total Inventory Value Value of Excess Product Inventory in Request Return Authorization Stage/ Total Excess Product Inventory Value Value of Unserviceable MRO Inventory In Disposition Stage/ Total MRO Inventory Value Value of Unserviceable MRO Inventory in Request Return Authorization Stage/ Total MRO Inventory Value

Inventory awaiting return authorization.

Inventory Awaiting Return Inventory Awaiting Return Authorization Inventory awaiting disposition Inventory awaiting return authorization

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June 2006

METRIC Verify Product Cycle Time Warranty and Returns

DEFINITION The average time associated with verifying raw material product Number of returns within the warranty period. Warranty is a commitment, either expressed or implied that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input.

PROCESS S3.5 Verify Product S2.3 Verify Product S1.3 Verify Product M1.3, M1.4

Warranty Costs Yield

Yield Variability

The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

M1, M1.3, M1.4, M2, M2.3, M2.4, M3, M3.4, M3.5 M2 Make-to-Order M2.3 Produce and Test M1.3 Produce and Test M3.4 Produce and Test M1 Make-to-Stock M3 Engineer-to-Order M1.3 Produce and Test M3.4 Produce and Test M2.3 Produce and Test

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BEST PRACTICES
BEST PRACTICE ABC Classification Ability to Track Component/SubComponent Manufacturing Country of Origin Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Approved Process Plans/Specifications Accurate and Approved Work Instructions/Process Plans Accurate and Low Cost Batch Records for Regulatory Compliance DEFINITION None identified Component/lot tracking (lot trace-ability) PROCESS EP.7 Manage Planning Configuration ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements M1.4 Package M2.4 Package M1.3 Produce and Test M2.3 Produce and Test M2 Make-to-Order M1 Make-to-Stock M2.6 Release Product to Deliver M3.7 Release Product to Deliver M1.6 Release Product to Deliver M2.6 Release Finished Product to Deliver M2 Make-to-Order M1 Make-to-Stock M2.3 Produce and Test M1.3 Produce and Test M1.4 Package M2.4 Package M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities P5.3 Balance Return Resources with Return Requirements S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries SR2.5 Return MRO Product SR1.5 Return Defective Product SR3.5 Return Excess Product

Electronic document management Electronic document management Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch records

Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking

Electronic batch recording/configuration

Additional Capacity for Overflow Demand

Outsource manufacturing and work force augmentation providers connected to production schedules via the internet.

Advance Planning Engines Applied to Returns Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes

Advanced math model "solvers" that optimize / minimize constraints, routing, restocking priorities and costs. Blanket order support with scheduling interfaces to external supplier systems

Advanced Shipping Notice

Integrated data sharing with repair facility.

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BEST PRACTICE Advanced Shipping Notices & UCC128 Container Labeling

DEFINITION Bar coding; EDI; integrated transportation/warehouse management

Alignment of Strategic and Business Plans with Long-Term Capacity and Resource Planning All Functions and Organizations Understand Their Impact on Supply/Demand Balancing, Including Sales, Marketing, Product Management, Manufacturing, Customer, Suppliers, Materials Management, and Product Development All Key Participants in the Supply Chain, Including Strategic Partners, Have Full Visibility of the Demand/Supply Plan Alliance and Leverage Agreements Allow Source Suppliers Full Visibility into the Current Return Situations and the Forecasted Return Activity Appointment Scheduling for Pickup and Delivery of Customer Shipments

None identified

None identified

PROCESS D2.10 Receive & Verify Product at Customer Site D1.11 Receive & Verify Product at Customer Site D3.9 Receive & Verify Product at Customer Site D2.11 Load Product & Generate Shipping Documentation D2.13 Receive & Verify Product by Customer D1.11 Load Vehicle & Generate Shipping Documentation D1.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer D3.11 Load Product & Generate Ship Documents EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation P1 Plan Supply Chain

Supply Chain Event Management Systems

P2 Plan Source

None identified Shared supply chain forecasting and event management functionality with Source suppliers Transportation Management System (TMS) Maintenance Management

S1 Source Stocked Product P5.2 Identify, Assess, and Aggregate Return Resources ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation SR3.4 Schedule Excess Product Shipment ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements EM.1 Manage Production Rules M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test

Arrange for Shipping Insurance in Case Of In-Transit Loss or Damage Assessing Export/Import Requirements during Time of Product Development/Manufacture Attribute-Based Process Planning Authorize Each Operation to Assess the Quality of the Previous Operations

Preventative management Multi-country Export/Import documentation compliance Computer aided process planning / recipe management None identified

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June 2006

BEST PRACTICE Automated Configuration Management

DEFINITION Configuration

Automated Conformance Monitoring And Control Automated Conversion of Engineering Drawings into Product Specifications Automated Data Entry

Internal automatic notification of conformance, including holding of product until requirements are met None identified Scanning with RFID/Bar-codes systems

PROCESS M3.1 Finalize Engineering D2.2 Receive, Configure, Enter and Validate Order M3.1 Finalize Production Engineering EM.8 Manage Regulatory Compliance M3.1 Finalize Engineering M3.1 Finalize Production Engineering ED.5 Manage Deliver Capital Assets ER.5 Manage Return Capital Assets D4.3 Pick Product from Backroom ER.5 Manage Return Capital Assets ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation EM.1 Manage Production Rules SR3.1 Identify Excess Product Condition EM.1 Manage Production Rules M2.6 Release Product to Deliver M3.7 Release Product to Deliver M1.6 Release Product to Deliver M2.6 Release Finished Product to Deliver D4.2 Receive Product at Store D4.1 Generate Stocking Schedule SR3.2 Disposition Excess Product D4.3 Pick Product from Backroom S2 Source Make-to-Order Product

Automated Directed Picking Automated Disposition Instructions for Returns Based on Data Interchange with Strategic Providers Automated Documentation for International Shipments

A pick list displayed on a handheld device that directs picks and relieves inventory from backroom locations Advanced planning and scheduling capability coupled with decision support logic. Transportation Management System (TMS) Maintenance Management

Automated Engineering Specifications Automated Inventory Visibility and Planning System to Highlight Inventory in Excess of Requirements Automated Links To Existing CAD & CAM Information Automated Notification of Laboratory Regarding Sample Availability

Automated Intelligence (Heuristic) - based engineering specifications system Automated inventory planning package linked to real time demand data and inventory business rules. Electronic hypertext or links to existing database of detail/parts/setup sketches/drawings Interface between production system and LIMS

Automated Pick List

System generated pick-lists based on picking / batching rules. None identified

Automated Registry of Inventory Return Locations by Item to Speed Identification of Proper Return Location Automated Replenishment of Back Stock Based on Minimum Stocking Levels Automated Statistical Process Control (SPC)

None identified None identified

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BEST PRACTICE Automated Update of Customer Excess Material Return Transaction History

DEFINITION - Use trend analysis to influence inventory level decisions. - Web-based alerts to identify update occurred and when pre-determined thresholds are exceeded. None identified RFID, smart cart or customer self-service charges goods to card upon store departure. Parametric driven (Group Technology based) manufacturing design system Software specific to industry regulations and standards (e.g. may be software to produce MSDS documents, or FDA requirements, etc.) Bar Coding & Radio Frequency Communications

PROCESS ER.3 Manage Return Data Collection

Automated Update of Supplier Performance Information Automatic Customer Payment Automatic Generation / Configuration Of Tooling / Set-Up Instructions Automatic Generation And Submission Of Conformance Documents Automatic Identification

ES.3 Maintain Source Data D4.6 Checkout EM.1 Manage Production Rules EM.8 Manage Regulatory Compliance D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make M3.5 Package M2.4 Package M1.4 Package EM.1 Manage Production Rules D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order EM.1 Manage Production Rules D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation

Automatic Label and Seal Verification Automatic Link to Recipe Management, PLC Program, CNC Program Systems, Etc., to Deliver New Manufacturing Documentation Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing Automatic Notification When to Begin and When to Complete Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer Available-to-Promise (ATP)

Automatic interface to inspection systems Seamless application interface to manufacturing planning documentation and CAM systems Integrated Order/Financial Management

Workflow/Groupware Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order. Flexible back flush logic

Back Flush Material at Order Completion

Backhaul Trading Exchange

Pooling

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June 2006

BEST PRACTICE Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

DEFINITION - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID

Blanket Purchase Orders Cover Period Requirements Build Load in Stop Sequence

None identified Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). None identified

Build Subassemblies to Forecast at Highest Generic Level in Bill of Material; Maintain Flexibility While Minimizing Cycle Time and Inventory Position Build Subassemblies/Products to Forecast at Highest Generic Level to Minimize Make Cycle Time Business Intelligence (BI)

PROCESS S3.4 Receive Product S3.5 Verify Product S2.3 Verify Product DR1.3 Receive Defective Product S2.2 Receive Product S1.2 Receive Product S1.3 Verify Product DR2.3 Receive MRO Product DR3.3 Receive Excess Product P2.4 Establish Sourcing Plans D3.5 Build Loads D1.5 Plan & Build Loads D2.5 Plan & Build Loads D1.5 Build Loads D2.5 Build Loads M3.2 Schedule Production Activities

None identified A data warehouse / data mart is the source of all planning (master) data, business rules and transaction data. Analytical tools enable the ongoing maintenance and improvement of the business rules based on actual data. Convenient availability to business rules and return criteria. Supply chain modeling and visualization system Supply Chain modeling capabilities, i.e. Advanced Planning Systems. None identified None identified None identified None identified

M2 Make-to-Order P1.3 Balance Supply Chain Resources with Supply Chain Requirements

Business Rules Are Clearly Communicated with the Customer Capability to Run "Simulated" FullStream Supply/Demand Balancing for "What-If" Scenarios Capability to Run Multiple "Simulated" Full-Stream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios Capability Transfer to Customer Capability Transfer to Organization Capacity and Supply Constraints Are Balanced Against Demand during the Planning Cycle Capacity and Supply Constraints Identified During MPS Schedule Process Are Balanced Against Demand during the Planning Cycle Capture and Maintain Mode Specific Data

ER.2 Manage Performance of Return Processes P1 Plan Supply Chain EP.6 Manage Integrated Supply Chain Transportation EP.5 Manage Integrated Supply Chain Capital Assets EP.4 Manage Integrated Supply Chain Inventory S2.4 Transfer Product S1.4 Transfer Product S3.6 Transfer Product P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation

Transportation Management System (TMS) Maintenance Management

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BEST PRACTICE Carrier Agreement

DEFINITION Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions.

Carrier Selection Based on Performance Criteria at Least Cost

Scheduling, carrier selection, and rating

Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Categorize 100% of Total Inventory (Active, Usable, Excess, Obsolete) for Appropriate Action

Route scheduling, carrier selection, and rating

None identified

Cellular and Demand Pull Manufacturing Cellular Manufacturing

Support for cellular and demand pull manufacturing execution Manufacturing is broken into work cells

PROCESS D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents S3.4 Receive Product S2.2 Receive Product ES.2 Assess Supplier Performance ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network S1.2 Receive Product D1.11 Load Vehicle & Generate Shipping Documentation SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments P2.2 Identify, Assess, And Aggregate Product Resources P2.1 Identify, Prioritize, and Aggregate Product Requirements M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock M3.2 Schedule Production Activities P1 Plan Supply Chain EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets

Change in the Demand Signal Instantaneously "Reconfigures" the Production and Supply Plans Changeover Reduction / Continuous Improvement Program

Event-driven supply chain re-planning Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. Overseas packaging, labeling and shipping regulatory requirements are given specific attention. Participants at all customer and service provider locations involved clearly understand all regulatory requirements at each step in the return process .

Clarify in Advance Hazardous Material Packaging, Labeling and Shipping Requirements Clarify in Advance If the Product to be Returned Requires Specific, Formal Authorization from the Service Provider per Federal, State or Local Regulation, Prior to Returning
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ER.8 Manage Return Regulatory Requirements ER.8 Manage Return Regulatory Requirements

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June 2006

BEST PRACTICE Clarify Point of Contact and Return Location Collaboration among Operations Strategy Team

DEFINITION Electronic rules for business relationships and transactions. Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems

PROCESS SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements

Collaborative Planning, Forecasting, Replenishment (CPFR)

Collaborative Planning/Scheduling Collaborative Review and Agreement of Business Rules Prior to Contract Execution Combine Consolidation Needs with Other Products/Divisions/Companies Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable

Supply Chain Capacity Planning Systems Collaborative Planning, Forecasting and Replenishment is a concept that allows collaborative processes across the supply chain, using a set of process and technology models.... (From www.cpfr.org/intro.html) Interactive, on-line planning/scheduling systems. Capacity planning systems with accurate production capability data. Web based access to current spend data available from enterprise to part level None identified None identified

P1 Plan Supply Chain

EM.7 Manage Production Network ES.1 Manage Sourcing Business Rules D1.4 Consolidate Orders DR3.1 Authorize Excess Product Return DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return ES.2 Assess Supplier Performance ER.8 Manage Return Regulatory Requirements

Comparative Analysis of Supplier Performance is Used in Sourcing Decisions Compare Local Customs Requirements to Your Process Procedures to Ensure All Requirements Are Accounted for Before Shipping Complete Lot History

Software application with data analysis capability None Identified

Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order None identified None identified

Comprehensive History of Customer Interactions Including Order History, Claims, Problems, Etc. Concurrent Engineering is Used to Tightly Link Sourcing into the Product Development Process Make/Buy Decision Process (Outsourcing vs. In Sourcing) Confirm All Documentation and Inspection Requirements Before Shipping

M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product ED.3 Manage Deliver Information S3.1 Identify Sources of Supply

None Identified

ER.8 Manage Return Regulatory Requirements

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BEST PRACTICE Confirm Asset Return Condition Codes Are Clearly Understood by All Employees, Especially Those Who Are New to the Process Confirm Changes in Condition Code Policies Are Promptly Communicated to All Employees and Supply-Chain Partners. Consideration of Supplier's Material Availability in Company's Supply Resources (Including Supplier's Production Plans & Capability, Inventory, and Delivery Plans) Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc. Consolidate Shipments Through Cross Docking - Coordinate with Other Shipments Consolidation of Carriers

DEFINITION None identified

PROCESS SR1.2 Disposition Defective Product SR1.2 Disposition Defective Product P3.1 Identify, Prioritize, and Aggregate Production Requirements S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries D2.4 Consolidate Orders D1.4 Consolidate Orders ER.6 Manage Return Transportation D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments D1.5 Plan & Build Loads D3.5 Plan & Build Loads and Shipments D2.5 Plan & Build Loads D1.5 Build Loads D3.5 Build Loads D2.5 Build Loads SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment EM.3 Manage MAKE Information ES.2 Assess Supplier Performance ER.2 Manage Performance of Return Processes D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order

None identified

Digital linkage to supplier quoting, planning, configuration and customer service applications Consignment inventory management

Integrated load planning and building with warehouse management None Identified Transportation modeling and rate analysis

Consolidation of Inbound and Outbound Requirements

Integrated inbound/outbound transportation planning

Consolidation of Return Carriers

Outbound logistics software to assist with route.

Continuous Improvement

Continuous Improvement and Development is Driven and Measured through the Performance Review Process Continuous Improvement is Planned through Process Reviews and Customer Feedback Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals

Historical trending, cause and effect analysis, and Key Performance Indicators Scheduling reviews of processes for possible improvements None identified

Avenue to receive customer comments. Integrated demand/deployment planning to customer location driven by POS; Customer movement data

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BEST PRACTICE Cost Accounting System to Determine the Best Return Process to Follow from a Cost of Business Perspective Cost Reduction and or Cost Avoidance Are Opportunities Are Identified, Implemented and Measured on a Periodic Basis Create and Maintain Multiple Suppliers and Multiple Supplier Sites to Record Information about Individuals and Companies from Whom You Want to Purchase Catalogue Goods and Services Cross Training/Certification

DEFINITION ABC costing system None identified

PROCESS P5.3 Balance Return Resources with Return Requirements ES.2 Assess Supplier Performance ES.7 Manage Supplier Network

None Identified

HR/certification support

Cross-Docking

Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

CRP & VMI Loads Optimized for Utilization

Integration with CRP/VMI vendor systems

CRP/VMI

Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Internet-enabled package/shipment tracking WEB based Shared systems

Customer Access to Online Tracking of Order Status and Shipping Information Customer Initiated Package Tracking

M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities D1.8 Receive Product from Source or Make D1.11 Load Vehicle & Generate Shipping Documentation D1.12 Ship Product D2.8 Receive Product from Source or Make D2.12 Ship Product D2.11 Load Product & Generate Shipping Documentation D3.8 Receive Product from Source or Make D3.12 Ship Product D3.11 Load Product & Generate Ship Documents D3.5 Build Loads D1.5 Plan & Build Loads D2.5 Plan & Build Loads D1.5 Build Loads D2.5 Build Loads D3.6 Route Shipments & Select Carriers D2.6 Route Shipments D3.6 Route Shipments D1.6 Route Shipments ED.3 Manage Deliver Information ED.2 Access Delivery Performance ED.2 Assess Delivery Performance D4.6 Checkout

Customer Profile Drive Recognition Upon Checkout

None identified

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BEST PRACTICE Customer Relationship and Digital Linkages (XML, EDI, Etc.) Provide Accurate Visibility into Actual Demand via Customer Forecasts, Product Plans, Production Plans, and Inventory Positions Customer Relationship Management (CRM)

DEFINITION Tightly integrated supply chain or demand planning with point of sale and customer inventory systems

PROCESS P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Customer Service Data Validation Including Geo-Coding Data Accessibility across the Enterprise for Visibility by Discrete Business Units Defective Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Defined Stocking Levels and Criteria Deliveries Are Balanced Throughout Each Working Day and Throughout the Week

Software that provides customer input and keeps the customer informed about the planning of the production and delivery process by managing all contacts and communication with the customer thorough all channels including internet and traditional sales and customer service channels. Electronically link Return authorization, Return schedule and shipping documents. .

P1.3 Balance Supply Chain Resources with Supply Chain Requirements

None identified Web based access to various levels of enterprise data Utilize electronic links

DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product ED.3 Manage Deliver Information ES.3 Maintain Source Data ER.3 Manage Return Data Collection DR1.4 Transfer Defective Product D4.3 Pick Product from Backroom S3.5 Verify Product S3.4 Receive Product S2.3 Verify Product S1.2 Receive Product S2.2 Receive Product S1.3 Verify Product M2 Make-to-Order M3 Engineer-to-Order P1.3 Balance Supply Chain Resources with Supply Chain Requirements

None identified None identified

Delivery Schedules Are Collaboratively Developed with Customers Demand Planning, Demand Flow Leadership

Demand Priorities Reflecting Strategic Customer Relationships as Business Policies Are Automatically Followed in Allocating Resources; First-In-FirstOut (FIFO) is Utilized as the Default Scheduling Priority Demand Pull Mechanisms

Web-based access to plant scheduling status, collaborative data-sharing environment. Software that provides multiple data models including the business rules and metrics for the entire supply chain planning process. Algorithms use the business rules and metrics as the drivers for the planning engine. Rules-based distribution planning system Trading partner agreements

P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements

Repetitive scheduling and sequencing

M2.1 Schedule Production Activities M3.2 Schedule Production Activities

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June 2006

BEST PRACTICE Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of Demand-Pull Mechanisms and Visual Controls Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Design For Production Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations Develop Local Receiving Process Close to Repair

DEFINITION Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points None identified

Table of manufacturing capacities or design envelops (capacities; envelop sizes; tank, vessel or batch sizes) Machine productivity and downtime monitoring Clarification as to who will pay in-bound and out-bound freight cost. Minimize time spent in product movement.

PROCESS M1.1 Schedule Production Activities M3 Engineer-to-Order M1 Make-to-Stock M2.1 Schedule Production Activities M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product EM.1 Manage Production Rules M3.4 Produce and Test SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product ER.6 Manage Return Transportation P2.4 Establish Sourcing Plans P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P1.2 Identify, Assess, and Aggregate Supply Chain Resources ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements M3.6 Stage Product M2.5 Stage Product M3.6 Stage Finished Product M1.5 Stage Product M2.5 Stage Finished Product ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements

Develop Proactive Transit Damage Programs Digital Linkage (EDI, XML, Etc.) is Used to Provide Real-Time Demand Information and Handle Routine Transactions Digital Links (XML Based, EDI. Etc.) Among Supply Chain Members

None Identified None identified

Real-time exchange of supply chain information between supply chain members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems

Direct Connection to Customs Clearance Direct Ship from Factory to Customer/Channel

Electronic documentation submission via EDI and/or internet. Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Electronic documentation submission via EDI and/or internet.

Direct Transfer of Documents to Recipient and Forwarder Direct Transfer of Documents to Recipient and Forwarder

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June 2006

BEST PRACTICE Distinct and Consistent Linkages Exist to Ensure Disruptions and Opportunities in Material Resources Are Quickly and Accurately Communicated and Acted Upon Distinct and Consistent Linkages Exist to Ensure that Disruptions and Opportunities in Production Are Quickly and Accurately Communicated and Responses Made Document Control Documents Generated Automatically During Shipment Preparation. Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away

DEFINITION Bi-directional Digital Links (XML, EDI, etc) or Internet procurement networks to customer service linkage Multi-plant supply/demand planning and execution

PROCESS P2 Plan Source P4 Plan Deliver

P3 Plan Make

Control who can create, revise and access information Electronic documentation submission via EDI and/or internet. Integration with Procurement Systems & Electronic Commerce with Vendors

Drive Deliveries Directly to Stock or Point-Of-Use in Manufacturing to Reduce Costs and Cycle Time

Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence Specify return disposition location and time.

EM.1 Manage Production Rules ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make S2.4 Transfer Product S1.4 Transfer Product S3.6 Transfer Product

Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time Drum-Buffer-Rope Scheduling Technique

(DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. System data field to specify where the part / product shipping container should be removed. Best practice is to remove the dunnage as soon as possible unless part / product damage will result. Reuse of intermediate WIP containers for finished goods. Advanced planning and scheduling logic with constraint, cost, and resource optimization Real time inventory control, stock locator, and rules based picking logic

Dunnage Control

SR1.2 Disposition Defective Product SR3.2 Disposition Excess Product M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities EM.4 Manage In-Process Products (WIP)

Dynamic Deployment Based on Constraint Based Planning and Optimal Scheduling Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance

D2.3 Reserve Resources & Determine Delivery Date D2.8 Receive Product from Source or Make D2.8 Pick Staged Product D3.7 Pick Staged Product D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product

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June 2006

BEST PRACTICE Dynamic Location Assignment Including Lot Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access Dynamic Return Restocking Management Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time EDI Links between Manufacturing and Distributor to Achieve Visibility of Complete Finished Goods Inventory and Expected Shipments EDI Links Integrate Supplier Resource Information (Inventory, Capacity Availability, Etc.) with Own Resources Efficient and Effective Benchmarking Process Leveraging Cross Industry Metrics and Definitions Efficient Consumer Response (ECR); Quick Response Electronic Catalogues/Malls Electronic Commerce (Customer Visibility of Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory Electronic Data Interchange Can Be Used To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network Electronic Data Interchange is Used to Send Technical Information to and from Potential Suppliers Electronic Documentation and Imaging Electronic Generation and Download of Shipping Documents

DEFINITION Real time inventory control, stock locator, and rules based put away logic

Dynamic prioritization of restocking plans in order to rapidly re-sell products that are in demand thus reducing new inventory demand. Rules based picking logic and simulation

PROCESS D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make P5.3 Balance Return Resources with Return Requirements D3.7 Pick Staged Product D2.8 Pick Staged Product D1.9 Pick Product D3.9 Pick Product D2.9 Pick Product D1.3 Reserve Inventory & Determine Delivery Date P2 Plan Source

None identified

Inter-company resource planning with EDI/Internet communication None identified Demand Planning, Deployment, Scheduling None identified EDI applications and integrated order management

EP.2 Manage Performance of Supply Chain D1 Deliver Stocked Product D1 Deliver Stocked Product D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate

Electronic Data Interchange

None identified Graphical display of drawings, diagrams, recipes/formulas, specifications, instructions, etc., to all users None identified

S3.1 Identify Sources of Supply EM.1 Manage Production Rules D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents D1.11 Load Vehicle & Generate Shipping Documentation

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June 2006

BEST PRACTICE Electronic Manifest and Electronic Billing

DEFINITION Transportation Management System (TMS) Maintenance Management

Electronic Matching Between POS Data and Store Inventory (Shelves and Back Room) Electronic Material Move Transactions

Integrated Software Systems Automated process control and/or barcode data collection

Electronic Reminders of Possible Scheduled Maintenance Electronic Sourcing and Negotiation

Pull signals. Business Rules for electronic sourcing process and hierarchy None identified

Electronic Transfer of Shipment Information to Finance

Electronically Track Shipment from Customer to Service Provider

None Identified

Eliminate "Special Deals" Sales to Reduce Returns and Improve Forecast Accuracy (Reduces Uncertainty, Lowers Safety Stock Requirements, Cheaper to Administer) Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions

None identified

PROCESS ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P4.1 Identify, Prioritize, and Aggregate Delivery Requirements M1.2 Issue Product M3.6 Stage Product M2.5 Stage Product M1.2 Issue Material M3.6 Stage Finished Product M2.5 Stage Finished Product M3.3 Issue Sourced/InProcess Product M2.2 Issue Sourced/InProcess Product M1.5 Stage Product ER.1 Manage Business Rules for Return Processes ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements D3.11 Invoice & Receive Payment D1.13, Invoice & Receive Payment D2.12 Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Clarification of policy if authorizations are not processed within the expected cycle time.

SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order

None identified

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June 2006

BEST PRACTICE Enterprise Level Policies/Rules with Local Execution

DEFINITION Web based access to enterprise level business rules

Enterprise Level Spend Analysis

None identified

Establish Designated Processes for Scheduling and Receiving Excess Inventory Establishment of Criteria to Rank Suppliers Evaluate Supplier Network for Duplicates Evaluate the Benefits of Out-Sourcing the Excess Material Return Process Excess Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Facility & Equipment Environmental / Safety Audit System Facility Master Plan Factory Floor Electronic Decision Making Information System

None Identified Utilize supplier delivery, quality, price performance as well as any other criteria such as terms and conditions Supplier Merge Programs for duplicates Enables customer to focus on core competencies. Utilize electronic links

PROCESS ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements SR1.1 Identify Defective Product Condition SR3.1 Identify Excess Product Condition ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements DR3.2 Schedule Excess Return Receipt ES.7 Manage Supplier Network ES.7 Manage Supplier Network ER.1 Manage Business Rules for Return Processes DR3.4 Transfer Excess Product EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets ED.5 Manage Deliver Capital Assets EM.5 Manage Equipment and Facilities

First In - First Out Forecasts Are Replaced with Actual Customer Replenishment Signals and Orders Where Possible Full Internal (And External If Source Suppliers Share in the Return Process Responsibilities) Visibility to Return Plans Full Visibility of Credit History by Shipping Personnel

System software to list checklist items, report results of audit & forward actions to be taken Automated Item Cubing and Weighting systems Software to capture actual performance history / costs of operations with capability of predicting "best cost action plans" relating to maintaining equipment and facilities. Part / WIP location by date received for those parts that must be stocked or staged in a holding area B2B Integration and Application Server Systems Intranet and Extranet communications tools

EM.4 Manage In-Process Products (WIP) P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P5.4 Establish and Communicate Return Plans D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents D1.11 Load Vehicle & Generate Shipping Documentation EM.1 Manage Production Rules D4.7 Deliver and/or Install P4.1 Identify, Prioritize, and Aggregate Delivery Requirements
June 2006

None identified

Genealogy Tracking Goals / Performance Plans Ideal Stock Position Based on Days/Weeks of Supply

Where-used listing of as-planned vs. asbuilt documentation None identified Pilot by Wal-Mart. IT

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BEST PRACTICE Identification of Suppliers Who Will Participate in Consignment Inventory Programs Identification of Suppliers Who Will Participate in Kanban Programs Identification of Suppliers Who Will Participate in Procurement Split (Two or More Suppliers Sharing Purchase Requirements) Programs Identification of Suppliers Who Will Participate in Vendor Managed Inventory (VMI) Programs Implement Employee Involvement Programs Incorporates leading practices such as Efficient Consumer Response, Collaborative Planning, Forecasting, and Replenishment, Vendor Managed Inventory, and real time point of consumption reporting. In-Process Product (WIP) Handling Rules Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System Integrated Business and SupplyChain Planning Processes Where Cross-Functional Input is Leveraged to Set Business Rules Integrated Credit Checking

DEFINITION Consignment Inventory Management Electronic Kanban Support None identified

PROCESS ES.7 Manage Supplier Network ES.7 Manage Supplier Network ES.7 Manage Supplier Network ES.7 Manage Supplier Network M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test EP.7 Manage Planning Configuration

Supplier managed inventories with scheduling interfaces to external supplier systems to replenish None Identified None Identified

Tracking, genealogy Both customer and Service Provider departments are alerted at the same time and viewing the same information. Supply Chain performance dashboard capability. Interface to supplier's shipping system to financials

EM.4 Manage In-Process Products (WIP) DR1.2 Schedule Defective Return Receipt DR2.2 Schedule MRO Return Receipt EP.1 Manage Business Rules for PLAN Processes D2.11 Load Product & Generate Shipping Documentation D1.11 Load Vehicle & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents EP.3 Manage PLAN Data Collection

Integrated Demand and Supply Planning - Demand Planning, Supply Planning and especially the Supply Plan Execution Are no longer disconnected. All required planning and execution data is integrated and shared in between all functional areas within an organization. Integrated Edit at Order Entry Time Integrated Facility Management Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Integrated Transportation Visibility

Memory based planning systems provide one single data model and data mart (including the business rules) for the entire supply chain planning and execution process. Algorithms use the business rules as the driver for the planning engine. Customer Master Record None identified Transportation Management System (TMS) Maintenance Management

ED.1 Manage Deliver Business Rules ED.7 Manage Product Life Cycle ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation ER.5 Manage Return Capital Assets

- Advanced shipping notices - Real time shipping tracking

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June 2006

BEST PRACTICE Internet Exchanges

Internet Ordering Inventory Allocation Exception Process is Clearly Defined and Jointly Owned by Manufacturing and Sales Inventory is Planned at the Part Level, Based on Supply and Demand Variability Inventory Performance is Measured at the Dollar and Unit Levels Inventory targets Are Reviewed and Adjusted Frequently

DEFINITION Internet Exchanges are a hosted, businessto-business trading network. Exchanges are an open procurement network, accessible to any buyer and focused on new Internet-enabled purchasing models like spot buys or reverse, buyer-driven auctions. Exchanges will also support more traditional catalog-based sales. None identified None identified None identified None identified Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query inventory levels.

PROCESS ES.7 Manage Supplier Network

D1 Deliver Stocked Product D1.3 Reserve Inventory & Determine Delivery Date P2.2 Identify, Assess, And Aggregate Product Resources P2.2 Identify, Assess, And Aggregate Product Resources P3.3 Balance Production Resources with Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P2.2 Identify, Assess, And Aggregate Product Resources ER.6 Manage Return Transportation D4.4 Stock Shelf D4.5 Fill Shopping Cart EM.7 Manage Production Network P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements S3 Source Engineer-to-Order Product S2 Source Make-to-Order Product S1 Source Stocked Product P1.2 Identify, Assess, and Aggregate Supply Chain Resources

Involve Your Other Supply-Chain Partners If Possible to Leverage Transportation throughout the Chain Item/Shelf Scanning Upon Put-A-Way Items Are Relieved from Inventory When Item is Removed from Shelf JIT Environment Joint Service Agreements (JSA)

Utilization of transportation management system (TMS) to manage returns. Maximization of TMS use, both intra and inter-company within the supply chain. Scan store shelves / bar codes to confirm put-a-way. RFID, smart cart or customer self-service reduces system inventory upon item pick. Schedule visibility, on-line communications between source and demand Collaborative Planning Systems

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BEST PRACTICE Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc.

DEFINITION Collaborative planning tools with the Source suppliers

PROCESS D1.14 Install Product D2.11 Test & Install Product D2.14 Install Product

Joint Service Agreements with Source Suppliers to Share Responsibilities and Costs of Returns Joint Service Agreements with Suppliers Define the Levels of "Flexibility" or Resource Upside Available Within Stated Lead Times and Agreed Upon Conditions Just-In-Time Demand Flow Techniques Labor Scheduling that Matches Product Flow Lead Times Updated Monthly

(This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management) Collaborative planning tools with the Source suppliers None identified

P5.2 Identify, Assess, and Aggregate Return Resources P2 Plan Source

Demand-pull mechanisms Workforce management solution with flexible rules. None identified

Lean Manufacturing

Limit the Number of Carriers, Treat Them as Partners and Build a Strong Relationship with Each One Geared Toward Continually Improving Service and Lowering Cost Link Individual Performance to Organizational and Divisional Goals Long Term Supplier Agreements/Partnerships Long-Term Return Agreements / Partnerships Loyalty Card Data Maintain Accurate Lot/Batch History Information Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate
Copyright 2006 Supply-Chain Council, Inc.

Use a team based systematic approach to identifying and eliminating wasteful, or nonvalue adding activities within your manufacturing organization Utilization of transportation management system (TMS) to manage returns. Maximization of TMS use, both intra and inter-company within the supply chain. None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. None identified

M3.4 Produce and Test M1.3 Produce and Test M2.3 Produce and Test D4.2 Receive Product at Store D4.1 Generate Stocking Schedule P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources M1 Make-to-Stock

ER.6 Manage Return Transportation

Use for comparison to previous sales activity/track new consumers, etc. Electronic data collection of employee actions and sourced/in-process product lot used Detailed production model that synchronizes PLAN and MAKE activities in real time.

M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization D4.5 Fill Shopping Cart M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test M1.1 Schedule Production Activities M2.1 Schedule Production Activities
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BEST PRACTICE Maintaining Repository of Current Regulatory Requirements Manage Information Across 100% of Shipments

DEFINITION Electronic subscription and publication of conformance documentation. Electronic Document Management System features. Transportation Management System (TMS) Maintenance Management

PROCESS EM.8 Manage Regulatory Compliance ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P2.1 Identify, Prioritize, and Aggregate Product Requirements P4.1 Identify, Prioritize, and Aggregate Delivery Requirements M3.2 Schedule Production Activities

Master Production Scheduling Reflects Management of Capacity and/or Supply Constraints Matching Shelf Stock to Expectations

None identified A software based system that corrects shelf inventory levels based on actual product present (possible RFID solution). Identifies stock-outs from shrinkage or item misplacement. None identified

Maximize Data Integrity and System Accuracy by Ensuring 99%+ Accuracy of BOM Configuration, Inventory Levels, and Schedule Requirements Measure Customer Service

Measured and Compared with Same Activity Previous Period Measurement of Carrier Performance for On-time Delivery and Completeness Measurement, Monitoring and Adjustment of Service or Product Installation Measuring Process Metrics and Feedback to Operators Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product

Advanced Shipping Notices (ASN)Parcel and Container Routing and Rating Compliance Labeling Real time shipment tracking DSS or portal tool that shows previous period performance and comparison for store management (whether it is a year ago, period ago, etc.). Transportation Management System (TMS) Maintenance Management

ED.5 Manage Deliver Capital Assets D4.5 Fill Shopping Cart

None identified Electronic data collection of completion, quality, scrap, labor and equipment data and dissemination of information on factory floor Electronic Kanban support

ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation D4.7 Deliver and/or Install M1.3 Produce and Test

Merge-in-Transit

Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shipper's distribution center (DC) or in a carrier's terminal.

S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries D1.8 Receive Product from Source or Make D1.9 Pick Product

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BEST PRACTICE Migrate From Build to Stock to Configure to Order; Build Subassemblies to Forecast at the Highest Generic Level in the Bill of Material/Recipe/Formula Minimize Capital Assets Required and Maintenance Costs Minimize Operator Induced Errors Minimizing In-Process Product (WIP) Minimum Product Handling

DEFINITION None identified

PROCESS M1 Make-to-Stock

MRO Scheduling Identifies Next Destination (Stores or Repair Station) on Return Authorization Multi-country Export/Import documentation compliance Multiple Locations Throughout Store

Outsourcing strategies including the use of Application Service Providers (ASPs), webbased maintenance/diagnostic assistance and MRO parts. Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout WIP Storage Management System Efficient Space Utilization Implementing Pull Systems Move high frequency used inventory close to point of use. For example, the system should provide the frequency of picks by part number so that high frequency picks can be moved to convenient locations or part pick quantities increased. Utilize electronic links None identified Planned and tracked via a plan-o-gram system; Location specific product labeling. None identified

EM.5 Manage Equipment and Facilities M3.5 Package M2.4 Package M1.4 Package EM.4 Manage In-Process Products (WIP) EM.4 Manage In-Process Products (WIP)

DR2.4 Transfer MRO Product ED.8 Manage Import/Export Requirements D4.5 Fill Shopping Cart

New Items Introductions Are part of the Sales and Operations Planning Process at the General Management Business Team Level Note and Communicate Shelf Life Requirements Carefully Before Shipping Notification of Existing/Future Event or Promotions Obsolete Inventory is Reviewed at the Part Number Level

EP.7 Manage Planning Configuration ER.8 Manage Return Regulatory Requirements D4.6 Checkout P3.2 Identify, Assess, and Aggregate Production Resources P2.2 Identify, Assess, And Aggregate Product Resources D4.4 Stock Shelf ES.3 Maintain Source Data EM.1 Manage Production Rules ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate

Hazardous material regulations are given specific attention. None identified None identified

Off Peak Stocking On Demand Access of Supplier/Source Data On Line Access and Notification of Tooling and Equipment Information On Line Document Management and Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster

The majority of stocking is completed with minimal impact to or visibility from the customer. Web based access to current supplier/source data Delivery of tooling and equipment details drawings ERP

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BEST PRACTICE On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs On-Demand Access of Production Information

DEFINITION None identified

On-Demand Access to Available to Promise (ATP), Production Schedules and Inventory Status by Internal Operations and Customers On-Line Availability to Supplier Financials to Determine Potential Supplier Viability to be Added to Supplier Network Online Real-Time Customer Entry and Edit

Data Collection and Display Systems designed for efficient performance of valueadded operations in production. This could include using PLC, Machine Interface, bar code, Radio Frequency Communication, Radio Frequency Identification, Magnetic Stripe, Smart Cards, etc., to enable data collection None identified

PROCESS S3.1 Identify Sources of Supply S3.2 Select Final Supplier(s) and Negotiate EM.3 Manage MAKE Information

EM.3 Manage MAKE Information ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate ED.3 Manage Deliver Information

Internet web sites for financial evaluation

On-Line Rule Base On-Line Visibility of All Supply-Chain Demand Requirements and Resources, both Currently Available and Committed (Pegged) Operations and Network Analysis Optimize Packing Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization Order Entry is Organized by Customer Segment Customers Receive Differentiated Service Based on Volume of Business Customer Team is Empowered to Fully Service Customer Requests, Including Formal Orders and Ad Hoc Requests Customers Have One Point of Contact for All Products Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, Cross-Functional Work Teams Outsource If Not a Core Competency Packaging Operation is an Integral Part of the Overall Production Process
Copyright 2006 Supply-Chain Council, Inc.

On-line Customer Service Module CRM (Customer resource Management) software is getting a big push in the E-Commerce/EBusiness areas and generally provides a means to fulfill this requirement None identified Enterprise resource planning system Customer relationship management system None identified No packing and unpacking time required. Recyclable or no containers where appropriate. No discarded material. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type None identified

ED.1 Manage Deliver Business Rules P1 Plan Supply Chain

ED.7 Manage Product Life Cycle EM.4 Manage In-Process Products (WIP) ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements D2.2 Receive, Configure, Enter and Validate Order

Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Use 4PL to manage and move. None identified

M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock ER.5 Manage Return Capital Assets M3.5 Package M1.4 Package M2.4 Package
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BEST PRACTICE Paperless Order Tracking and Customer Visibility of Orders Paperless Production Control

DEFINITION Electronic dispatch and data collection with external interface to internet. Electronic dispatch of operations

Paperless Production Order and Inventory Tracking Partnership with Outside Design Firms to Provide Skills and Capacity, as Needed Pay on Receipt

Electronic dispatch and data collection. Allow customer access to production status and inventories using internet technologies and web site features. None identified Electronic Invoice Processing

PROCESS M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order M3.4 Produce and Test M3.5 Package M1.4 Package M2.4 Package M1.3 Produce and Test M2.3 Produce and Test M1 Make-to-Stock

D3.1 Obtain and Respond to RFP/RFQ S3.7 Authorize Supplier Payment S1.5 Authorize Supplier Payment S2.5 Authorize Supplier Payment ES.2 Assess Supplier Performance M1 Make-to-Stock

Performance Expectations and Business Rules Are Clearly Communicated Prior to the Initiation of Business with the Supplier Performance Results that Are Compared to Benchmarks (i.e. Capacity, Scheduling) and Readily Available to Employees Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks

Web based access / availability to business rules and performance criteria Data warehouse, report writing, real time database and Executive Information systems that are easily accessible. Use of web-based technologies for dissemination of information. Real time view of data.

Periodic Review of Standards Planning and Forecasting Outsourced Return process Planogram Flexibility for Seasonal/Promotional changes Plans that Violate Business Rules (e.g. Joint Service Agreements) Are Addressed Cross-Functionally, Considering Total Business Impacts (Revenue, Cost, Quality, Customer Service, Etc.) Plans Which Do Not Violate Business Rules Are Communicated Openly and Cross-Functionally for Execution Posted Performance Results

Process for establishing and maintaining review schedules Collaborative planning and forecasting with RETURN outsourcing partners (3PL, reverse drop shippers, etc.) None identified None identified

ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory EM.2 Manage Production Performance P5 Plan Return P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.4 Establish Delivery Plans

None identified Data warehouse, report writing, real time data base and EI systems

P4.4 Establish Delivery Plans M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock

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BEST PRACTICE Postponement

Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Pre-Defined Manufacturing Design Rules Predictive Maintenance Monitoring (Heat, Noise, Lubrication Composition & Vibration)

DEFINITION Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. None identified

PROCESS D1 Deliver Stocked Product D2 Deliver Make-to-Order Product M1 Make-to-Stock M2 Make-to-Order S1 Source Stocked Product S2 Source Make-to-Order Product M1.4 Package M3.5 Package M2.4 Package DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product EM.1 Manage Production Rules EM.5 Manage Equipment and Facilities

- Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Libraries of manufacturing capabilities or design envelopes Database for equipment to contain expected results of analysis, allow entry of test readings, and have capability of generating desired reports, which could highlight suggested actions based upon readings obtained, track maintenance completed, contain a help-file to be consulted None identified None identified

Priority-Based Inventory Reservations, for Key Customers, with FIFO Allocation for All Others Proactive Education of Customers to Set Expectations and Encourage Close Working Relationships (Knowledge of Long-Lead Items, Visibility to Supply Resources, Agreement on Levels of Flexibility) Produce Products to Unique Customer Requirements Product Data Management & Electronic Document Management Are Used to Manage Technical Documents and Requirements for Engineer to Order Product Product Design Collaboration with Customers Production Level Loading Production Reporting/Status Proof of Performance (Promotion Management) Provide Continuous Formal Training to Employees Provide Product or Service Training to Employees or FAQ's Online

D1.3 Reserve Inventory & Determine Delivery Date P4 Plan Deliver

Order entry specifications linked to manufacturing order None identified

M2 Make-to-Order S3.1 Identify Sources of Supply

On-line design tools facilitated by internet connections. Capacity planning Real time monitoring of production status and In-Process Product (WIP) Scan store shelves / bar codes to confirm put-a-way. Scan using handheld and match with ad. Examples would be TQM, Six Sigma.

M3 Engineer-to-Order M2 Make-to-Order M1 Make-to-Stock EM.7 Manage Production Network D4.4 Stock Shelf M1.3 Produce and Test M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test D4.7 Deliver and/or Install

None identified

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BEST PRACTICE Provide Scheduling Output Back to Material and Labor Planning Systems Provide Single Source of Information on the Customer (Single Group / Owner Responsible for Accuracy / Quality of Customer Data) Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution

DEFINITION Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler Secure E-Commerce Server and integrated Order Management System (OMS) Warehouse Management System (WMS) and Transportation Management System (TMS) Integrated accounts receivables

PROCESS M1.1 Schedule Production Activities ED.3 Manage Deliver Information

Publish Return Policy Push Product on Trailer Arrival

Easy access to return business rules. System prioritization of items coming off trucks vs. picked from back room. Standards Based (RosettaNet, eBXML, OAGI, etc) B2B integration tools and systems None identified

Push-Based Forecasts Are Replaced with Customer Replenishment "PullBased" Signals Quote Capability, without Reserving Inventory, Which Can be Converted into an Order, But Does Not Generate Build Signal or Reserve Inventory Capacity Quote Capability, without Reserving Inventory, Which Can Be Converted into an Order in a Single Step Rapid Reconfiguration of Return Capacity Rapid Replenishment, VMI, EDI Rapid, Dynamic Reconfiguration of Return Process to Meet Demand

D3.11 Invoice & Receive Payment D2.12 Invoice & Receive Payment D1.13, Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice ER.1 Manage Business Rules for Return Processes D4.1 Generate Stocking Schedule D4.2 Receive Product at Store P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D2.1 Process Inquiry & Quote

None identified Use of RETURN tracking and projection systems and flexible partner agreements that allow the rapid addition of RETURN capacity to match unexpected demand. None identified The ability to reset and reconfigure the RETURN process capacity, routings, etc. by transmitting new requirements and directives using mathematical models, the Internet, outsourcing and flexible partnership agreements. Also requires integration with the CRM system for real time redirection of customer returns based upon cost and capacity. Dynamic calculation of safety stock based on actual sales.

D2.1 Process Inquiry & Quote D1.1 Process Inquiry & Quote P5.2 Identify, Assess, and Aggregate Return Resources D1 Deliver Stocked Product P5.4 Establish and Communicate Return Plans

Real Time Data on Current Status

Real Time Feedback from Production, Raw Materials, and Finished Goods Inventory and Test Activities

Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler.

ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory M1.1 Schedule Production Activities

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BEST PRACTICE Real Time Package Tracking

DEFINITION Tracking and tracing

Real Time Performance Measurement Reporting Systems Real Time quality control techniques Real Time Return Anticipation

Systems to collect production information online generate reports upon request by operators, and track progress against schedule and standards. Electronic collection of quality data and online SPC. Having real time data on return demand and including it in the plan and forecast. Requires a connection with customers, call centers or CRM system, possibly to the store level with retail returns. The return demand needs to be included in the production plan as soon as possible because upon repair it may be the next piece of serviceable inventory to satisfy demand. Electronic collection of defect data and online SPC. Transportation Management System (TMS) Maintenance Management

PROCESS ED.2 Access Delivery Performance ED.2 Assess Delivery Performance EM.2 Manage Production Performance M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test P5.1 Assess, and Aggregate Return Requirements

Real Time Statistical Control Techniques Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet)

Transportation Management System (TMS) Maintenance Management

Re-Balancing of Full-Stream Supply/Demand on a Daily Basis, Including Source-Make-Deliver Resources and Requirements from "Customers' Customer to Suppliers' Supplier" Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Reduce Chances of Operator Error Reduce In-Process Product (WIP) Handling Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times

Enterprise-wide planning system customer Relationship Systems

M3.4 Produce and Test M1.3 Produce and Test M2.3 Produce and Test ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P1 Plan Supply Chain

Buyer's name for every receipt is clearly visible on Receiver.

Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Automatic download of production equipment with batch recipes/part programs Reduction of WIP handling through automation (i.e. AGVs and ASRS) and process improvement (i.e. reduction of handling steps, shorter move paths) Use principals of Lean Manufacturing.

DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product M2.3 Produce and Test M1.3 Produce and Test EM.6 Manage Transportation

M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test

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BEST PRACTICE Reduce Non-Value Added Paperwork While Still Measuring Process Metrics

DEFINITION Electronic data collection of completion, quality, lot tractability, scrap, and labor data

Reliable Continuous Improvement Process and Methodology. Remote (Sales, Customers) Order Entry Capability Removal of Obsolete Capital Assets Removal of Obsolete Stock Re-Planning Process Exists in MultiLevels of the Supply-Chain between Business Enterprises Re-Planning Process Links the Supply Chain Operation with the Business Strategy and the Marketing Strategy Responsiveness and Flexibility Are Emphasized By Developing Expertise in Making Business Processes ReProgrammable, Re-Configurable and Continuously Changeable Return Process Electronically Tracks Transfer from Station to Station

None identified None identified

Automated Calculation of ABC Velocity Movement Automated Calculation of ABC Velocity Movement Business to business Internet capability to share common data. None identified

PROCESS M1.3 Produce and Test M3.4 Produce and Test M3.5 Package M2.4 Package M2.3 Produce and Test M1.4 Package EP.2 Manage Performance of Supply Chain D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order ES.5 Manage Capital Assets ED.5 Manage Deliver Capital Assets EP.9 Align Supply Chain Unit Plan with Financial Plan EP.9 Align Supply Chain Unit Plan with Financial Plan P1 Plan Supply Chain

Integrated process modeling and software reconfiguration tools

Utilize Bar coding

Review Batch Records by Exception

Electronic batch records linked to process plans/recipes and exceptions flagged

Review Product Profitability Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage RFID and Other Tagging Sales and Operations Agree to Limits of Short Term Flexibility

ABC and cost modeling. Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded. POG software/field force None identified

DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product M2.6 Release Product to Deliver M3.7 Release Product to Deliver M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver P1.2 Identify, Assess, And Aggregate Supply Chain Resources DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements

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BEST PRACTICE Sales and Operations Planning (S&OP)

DEFINITION A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. (From APICS online dictionary.) None identified Interface between maintenance management system and scheduling system

PROCESS P1 Plan Supply Chain

Scan Displays for Promotion Conformance Scan Displays for Promotion Conformance Schedule Includes Preventative Maintenance Program

D4.4 Stock Shelf

Schedule Minimizes Changeover Costs between Products Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment

Algorithms that manage set up times/costs, cleaning times, and ideal job sequences (e.g., color sequencing light to dark) Scheduling utilizing optimization techniques Required production resources included in routing/process instructions

M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities M3.2 Schedule Production Activities M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities ER.6 Manage Return Transportation

Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line Segregate In-Bound Carcass Return Cost from Other Transportation Costs

Schedule undated by on line reporting and status systems and re-sequence activities

None Identified

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BEST PRACTICE Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing

DEFINITION Rules based carrier selection and actual rate database

Service Provider Utilizes Web-Based Communicate to Identify New and Discontinued Repair Sites to Customers Set Up Electronic or Pre-authorized Returns

Continuously updated authorized repair sites None identified

PROCESS D3.7 Select Carriers and Rate Shipments D3.6 Route Shipments & Select Carriers D2.7 Select Carriers & Rate Shipments D3.6 Route Shipments D1.7 Select Carriers & Rate Shipments ER.7 Manage Return Network Configuration DR3.1 Authorize Excess Product Return DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product D2.10 Receive & Verify Product at Customer Site D1.11 Receive & Verify Product at Customer Site D3.9 Receive & Verify Product at Customer Site D2.13 Receive & Verify Product by Customer D1.11 Load Vehicle & Generate Shipping Documentation D3.13 Receive & Verify Product by Customer D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D1.6 Route Shipments SR2.5 Return MRO Product SR3.5 Return Excess Product SR1.5 Return Defective Product D2.6 Route Shipments EM.6 Manage Transportation

Shipment Tracking

None identified

Shipment Tracking and Tracing

Satellite communications, GPS, RFID

Short Move Paths

Single Data Source for Decision Support and Business Rules

Single Point of Contact for All Order Inquiries (Including Order Entry) SKU Rationalization

Software that allows for input of the distance that particular parts/WIP need to be moved. This software then need to provide a report based on the cubic feet of material times distance moved by part number. A data warehouse/data mart is the source of all planning (master) data, business rules and transaction data. Analyzing tools enable the ongoing maintenance and improvement of the business rules based on actual data. None identified None identified

EP.3 Manage PLAN Data Collection

D2.1 Process Inquiry & Quote D1.1 Process Inquiry & Quote EP.7 Manage Planning Configuration
June 2006

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BEST PRACTICE Sound Project Management Process and Methodology Specific Changes to the Plan Are Agreed to Cross-Functionally, According to Defined Business Rules Stage Product or Service Adoption Staging Based on In-store Zones Standard Inventory Policy to Determine Excess Standard Operating Procedures and Methodology Standards and Measurements Aligned to Maximize Supply Chain Performance Statistical Test Count

DEFINITION None identified None identified None identified Items are staged for re-stocking based on zones within the store. This minimizes restocking effort. None Identified None identified

PROCESS EP.2 Manage Performance of Supply Chain P4.4 Establish Delivery Plans D4.7 Deliver and/or Install D4.3 Pick Product from Backroom ER.1 Manage Business Rules for Return Processes ED.5 Manage Deliver Capital Assets ED.7 Manage Product Life Cycle EM.2 Manage Production Performance EM.4 Manage In-Process Products (WIP) ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory D4.4 Stock Shelf EM.1 Manage Production Rules ED.5 Manage Deliver Capital Assets M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product EP.9 Align Supply Chain Unit Plan with Financial Plan D4.5 Fill Shopping Cart

Stocking is Completed in Zones Storage and Configuration Management for Release and Revision Control of Final Documents Storage Location Zoning Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Strategic Sales and Operations Planning Process in Place and Managed at the Executive Level Substitution

Internal/external benchmarking, industry standards, customer/supplier alignment agreements, visibility of key performance indicators The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. Each area of the store has its own stocking plan and items are routed specifically to that area. Product data management (PDM) or Electronic Data Management (EDM) feature set Automated or Optimized Slotting (Storage Location) Systems Use of safety stock algorithms to minimize stock levels.

None identified Trained staff or automated systems (Internet) that recommend up-sell, crosssell, and/or substitution

Supplier "Cost of Nonconformance" Data is Collected, Analyzed and Used in Performance Reporting Supplier and Material Rationalization

See Up and cross selling Software application to automate data collection and reporting Web based access to supplier/source data

ES.2 Assess Supplier Performance ES.3 Maintain Source Data

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BEST PRACTICE Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection

DEFINITION Skip lot/sampling inspection logic

Supplier Certification Programs Can Reduce the Cycle Time for Certifying Existing Suppliers to Provide New Technologies Supplier Delivers Directly to Point of Use Supplier Delivers Directly to Point of Use - (Dock to Line or End Destination) Supplier Delivery to Production Process at Point of Use

None identified

Electronic Tag tracking to Point of Use (POU) destination Electronic Tag tracking to Point of Use (POU) destination EDI link to supplier's sales order and inventory systems

Supplier Development Programs Are Used to Get Local Suppliers to Invest in Developing New Technologies Supplier Managed Inventory of Parts Supplier Performance Assessment System

None identified E.D.I. linkage of Inventory Information Assess Supplier Performance is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs. Web based relational database / management application Electronic Tag tracking to Point of Use (POU) destination None identified

PROCESS S3.5 Verify Product S3.4 Receive Product S1.3 Verify Product S2.2 Receive Product S1.2 Receive Product S2.3 Verify Product ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate S3.5 Verify Product S2.3 Verify Product S1.3 Verify Product S3.4 Receive Product S1.2 Receive Product S2.2 Receive Product M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product S3.1 Identify Sources of Supply EM.5 Manage Equipment and Facilities ES.2 Assess Supplier Performance

Supplier Performance Data is Collected, Analyzed and Reported to Suppliers Online and Real-Time through Extranet Applications Supplier Replaces Defective Material at Customer's Facility with Good Product as Required Suppliers Are Evaluated, Selected and Qualified with Criteria Matched to Business Requirements and Competitive Needs Suppliers Share Responsibility for Balancing Supply and Demand through Joint Service Agreements Supply Chain Advance Planning System

ES.2 Assess Supplier Performance S3.5 Verify Product S1.3 Verify Product S2.3 Verify Product ES.2 Assess Supplier Performance P2.3 Balance Product Resources with Product Requirements P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements

None identified Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Re-planning Business Rules Plan Changes

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BEST PRACTICE Supply Chain is Designed to Have Supply Flexibility Equal to Demand Volatility Supply/Demand Process is Highly Integrated from Customer Data Gathering to Order Receipt, through Production to Supplier Request Systematic Disposition Of Equipment Systems Support Accurate On-Line Visibility of Full-Stream Demand Requirements and Priorities as Well as Resource Utilization and Availability Systems Support Accurate On-Line Visibility of Full-Stream Demand Requirements and Priorities The Demand Plan is Updated Frequently to Reflect Actual Consumption or Customer Forecast Information To Address Conditions which Cannot be Adequately Satisfied During the Current Planning Period, Each Functional Area Develops Prioritized Recommendations for the Subsequent Planning Period Tools Support Balanced Decision Making (e.g., Trade-Off between Service Level and Inventory Investment) Total Preventative Maintenance Program

DEFINITION None identified Integrated supply chain planning system with interfaces to all supply/demand data sources through public and private digitally enabled supply networks. Rules for deciding appropriate disposition. Advance Planning and Scheduling System

PROCESS P1 Plan Supply Chain P1 Plan Supply Chain

EM.5 Manage Equipment and Facilities P1.4 Establish Supply Chain Plans

Advance Planning and Scheduling System Supply Chain Event Management Software None identified

P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements P4.4 Establish Delivery Plans

None identified

Supply chain planning optimization system

P1 Plan Supply Chain

Transportation Modeling and Rate Analysis

Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists. None identified

EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets

Two-Bin Floor Stock Located at Work Center for "B" And "C" Components Controlled by Operators and Replenished When One Bin is Empty Unique Identifier Tag for Each Repairable Asset Unplanned Orders Are Accepted and Scheduled Only When There is No Detrimental Impact on Overall Product Delivery Plan Up and Cross Selling and/or Substitution

None identified

SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment M3.3 Issue Sourced/InProcess Product ER.4 Manage Return Inventory P3.4 Establish Production Plans P4.1 Identify, Prioritize, and Aggregate Delivery Requirements D4.5 Fill Shopping Cart

Asset management software using bar code, RFI tag, etc. Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query production capacity and ATP and schedule unplanned orders. Trained staff or automated systems (Internet) that recommend up-sell, crosssell, and/or substitution.
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BEST PRACTICE Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand Up-to-Date Shop Packet/Specifications Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item Use Demand Planning

DEFINITION Electronic Work Instructions Electronic work instructions None identified

Use Historical Based Return Rate Forecasts Use of CAD/CAE Applications to Simulate Design, Cost and Manufacturing Process Use of Cross Functional Teams to Execute the Process of Developing Long-Term Capacity and Resource Plans Use of Platform Teams in the New Product Development Process Use of Speed Racks for Automated Material Handling Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data to Qualify as Part of Potential Supplier Network Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs

Demand Planning Systems to forecast returns, predict yield rates for reusable products or components, determine demand in a resale market, and project a revenue stream. None identified None identified None identified

PROCESS M3.5 Package M1.4 Package M2.4 Package M2.3 Produce and Test M1.3 Produce and Test M3.4 Produce and Test DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return P5 Plan Return

P5.1 Assess, and Aggregate Return Requirements D3.1 Obtain and Respond to RFP/RFQ EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation EP.7 Manage Planning Configuration D2.9 Pick Product D1.9 Pick Product ES.7 Manage Supplier Network

None identified None identified Internet, EDI, FAX

None identified

S3.2 Select Final Supplier(s) and Negotiate D1.13, Invoice & Receive Payment D2.12 Invoice & Receive Payment D3.11 Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries EM.3 Manage MAKE Information ER.6 Manage Return Transportation

EDI transaction and network services

Utilize EDI Transactions to Reduce Cycle Time and Costs

EDI interface for 830, 850, 856 & 862 transactions

Utilize Enterprise Information Systems Utilize Internet-Based Freight Bidding Built Around Shared Shipping Volume Projections

Enter, Process, and Deliver information about the manufacturing process to management using information systems that span the enterprise None Identified

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BEST PRACTICE Utilize Invoice-less Freight Payment Utilize Real-World Cases in Employee Training Utilize Web-Based Collaboration between Asset Manager and Repair Sites Regarding Capacity and Scheduling Utilize Web-Based Collaboration between Customer and Service Provider on In-Bound Return Forecasts and Asset Tracking Utilize Web-Based Collaboration to Identify Potential New Repair Sites Prior to Their Selection Value Pricing Based on "Cost to Serve"; EDLP; Cost Plus Pricing Vendor Managed Inventory

DEFINITION None Identified None Identified Total return asset visibility throughout the network Shared return forecasts

PROCESS ER.6 Manage Return Transportation ER.1 Manage Business Rules for Return Processes ER.7 Manage Return Network Configuration ER.7 Manage Return Network Configuration ER.7 Manage Return Network Configuration D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order D1.5 Build Loads D1.6 Route Shipments D2.6 Route Shipments D3.5 Build Loads P1 Plan Supply Chain S3.4 Receive Product EM.4 Manage In-Process Products (WIP) S2.2 Receive Product S1.2 Receive Product ES.4 Manage Product Inventory M1 Make-to-Stock P4.1 Identify, Prioritize, and Aggregate Delivery Requirements ED.6 Manage Transportation ER.6 Manage Return Transportation D1.9 Pick Product

Shared knowledge of resource availability and bottlenecks Activity Based Costing; Integrated Order Management by Customer by Line Item VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging Wave picking

Transportation Management System (TMS) Maintenance Management A practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DCs, orders are scheduled to be picked when they are received. Wave picking consolidates orders into waves where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation.

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INPUTS AND OUTPUTS


INPUT / OUTPUT Actual Sales History Actual Shrink Advanced Ship Notice Air, Ground....Carrier Rate Tables Approved Contract Approved Item Master DEFINITION Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc. An EDI notification of shipment of product. Rates charged by common carriers to move goods, or freight. Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. The "master" record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.) and may contain data on inventory status, requirements, planned orders, and costs. Item records are linked by bill of material records (or product structure records), thus defining the bill of material. The function of physically separating a homogeneous subgroup from a heterogeneous population of items Permission to return to service an item that has been repaired and found to be within specifications and operable. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on Benchmark measures are often derived from other firms that display "best in class" achievement The Bill of Materials is a structured list of all the materials or parts needed to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-tostock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as pattern for and a control over future operations. A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

Assorted by Shelf Order Authorization to Return to Service Authorization to Scrap Available to Promise Date

Benchmark Data

Bill of Materials Booked Order

Budget Constraints

Budgets

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INPUT / OUTPUT Business Plan

Business Rules for Return Processes

DEFINITION A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production. Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS) A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials. Courses of action and processes that are established to meet the requirements placed on production by external entities. An affirmative indication or judgment that a product or service has met criteria translated into rules for meeting external regulatory requirements Indication of product and service quality, i.e. customer satisfaction. The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Packages and lots that move from suppliers to a carrier terminal and are sorted and then combined with similar shipments from other suppliers for travel to their final destination. A process that identifies opportunities for performance improvement and facilitates their realization through the use of metrics, process development methodologies/approaches, project management principles, and reporting tools that support strategic and business plans. The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

Business Rules for Source Processes

Capacity Constraints Capacity Requirements

Capital Assets Completed Proposal Configuration Rules

Conformance Plan Conformance Rules Consistently High Adoption Rates Consolidated Orders Consolidated Product

Continuous Improvement Process

Contract Carrier Rates

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INPUT / OUTPUT Contract Status

DEFINITION Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. All the provisions and agreements of a contract. A promise in a contract that binds one to a specific course of action. These promises maybe made by either the buyer of seller. Corporate objectives are the goals and mission of an organization. The cost to produce and item during a given period of time. Includes: the amount of direct materials, direct labor, and allocated overhead. The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. Report that portrays a potential customer's payment history and debt, indicating the ability to pay in a timely manner in the future. The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer's needs. Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Contracts that customers have with specific freight carriers through which suppliers have to work for the delivery of products. Customer manages carrier selection, shipment of purchased product, and payment of carrier. Customer profile, which includes history, customer preferences, status, and delivery requirements, etc. General customer inquiries for information concerning products, availability, cost, and requests for quotes. Input to customer profile, frequency of visits, recurring, time frame, what purchased, numbers and rings. Measure of customer satisfaction with products and service. This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles. An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Coupled with cube and route, these criteria determine type of carrier and cost of shipment Customer profile, which includes history, customer preferences, status, and delivery requirements, etc.

Contract Terms Contractual Obligations Corporate Objectives and Strategies Cost to Produce Credit Exchange Options Credit History Credit/ Exchange Options

Current Inventory Source Data

Customer Address Data

Carrier Contracts (Customer) Customer Data (preference) Customer Inquiry Customer Loyalty / Recurring Visits

Customer Master Database/Up to Date Customer Order

Customer Order Size, Weight, and Freight Class Customer Profile/Data

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INPUT / OUTPUT Customer Quote

DEFINITION A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. A requirement for product from a distribution location to a source location. The part of the supply chain requirements related to the customer's needs, including sales forecasts and actual orders and backorders Supply chain requirements related to the customer's needs, including service requirements, sales forecasts and actual orders/backorders. Resources needed to meet Item stocking schedule requirement. Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc. Information required in the process of integrating and maintaining the accuracy of return execution. The procedure that outlines the cleansing of return data to insure its validity and accuracy during the return process. List of requirements of the data system that insure cleansed data is compatible and usable, or the data system requirements to fully automate the return process. The amount of time that normally elapses between the time an order is received and the time the order is shipped. A standard allowance that is assumed on any given order for the movement of items from one operation to the next. The customer request for disposition instructions for a defective product from the appropriate source. The customer request for disposition instructions for a defective product from the appropriate source. The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance. The process of making a delivery commitment. For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise. A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) Products that have been acknowledged as received by the customer. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Customer Replenish Signal Customer Requirements Customer Service Requirements Daily Replenishment Requirements Daily Shipment Volume Data About Return Capabilities Data Cleansing Procedure Data System Requirements DC/Vendor Lead Time DC/Vendor Transit Time Defective Product Disposition Request Defective Product Return Authorization Request Defective Product Return Authorization Response Defective Products Deliver Contract Terms

Deliver Return Requirements Delivered End Items Delivery Date

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INPUT / OUTPUT Delivery Performance

DEFINITION The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs. A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. As a whole with constituent parts, all sources of demand in the delivery of a product or service. As a whole with constituent parts, all things that add value in the delivery of a product. Claims for the refund of duties as a result of a ruling by the a government agency. Final drawings, specifications, formulas, part programs, etc.that describe requirements of a product. The design process consists of translating a set of functional requirements into an operational product, process, or service. Model of the distribution enterprise including the flows, processes, inputs, outputs, metrics, and best business practices. Economic Order Quantity - Result of a calculation that determines the most cost effective to quantity to order or produce. Economic Shipping Quantity Result of a calculation that determines the most cost effective quantity to ship. Equipment and facility traits and specifications required to meet external entities requirements. The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base Data gathered by measuring, examining, testing, or gauging one or more characteristics of equipment and facilities and comparing it to planned. Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. A proposal that may contain final drawings, specifications, formulas, part programs, etc.that describe requirements of a product A document used to solicit vendor responses when the functional requirements and features are known. A clear, complete and accurate statement or drawing of the technical requirements of a material, item or service, and of the procedure to determine if the requirements are met. Request disposition instructions for an excess item from the Supplier.

Delivery Plans Delivery Requirements Delivery Resources and Capabilities Duty Drawback Claims Engineering Design Enterprise Distribution Model EOQ/ESQ's

Equipment and Facilities Characteristics Equipment and Facilities Maintenance History

Equipment and Facilities Monitoring Information Equipment and Facilities Replacement and Disposition Plans Equipment and Facilities Schedules and Plans

ETO Proposal ETO Request for Proposal ETO Spec or Design

Excess Product Disposition Request

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INPUT / OUTPUT Excess Product Return Authorization Request

DEFINITION The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process of a customer obtaining authorization, from a service provider, for the return of excess product Material in excess of the current requirements. Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Documentation and process standards set by external entities (i.e. government, trade officials, etc.) In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity. The physical storage location where Finished Product inventory is held in stock prior to use or shipment. The authorization to ship a finished product that has been ordered. Completion of customer checkout, sale of the selected goods, cart transitions from full to empty. Customer selected goods transferred to the point of sale. Determination of the best retail locations for implementation of full shelf equipment. Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item. Documents the implement law and requirements concerning the import and export of items and the manufacture of item. Indication of product and service quality. A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. Data concerning product on order and due to be delivered to location agreed in the order. The flow of information back into the control system so that actual performance can be compared with planned performance. Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Excess Product Return Authorization Response Excess Products Existing Inventory Data External Regulatory Information Finish Goods Inventory Target Levels Finished Goods Inventory Location Finished Product Release Full Cart (Empty Cart) Full Cart Ready for Checkout Full Shelf Locations Government Constraints Government Regulations High Customer Services Satisfaction Levels Historical Return Rates

Import/Export Requirements Incoming Product Information Information Feedback Information from Business Processes

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INPUT / OUTPUT Information Infrastructure Plan Information Needed to Create and Maintain IT Information Needs Analysis Installed Product

Integrated Supply Chain Plan Internal Capacity

DEFINITION A plan outlining the processes required for managing, collecting, maintaining, and communicating information and masterdata to support planning and execution processes. Interrelated computer hardware and software along with people and processes designed for the collection, processing, and dissemination of information for planning, decision making, and control. Specifying the inputs, files, processing, businesss rules and outputs for a new system, but without expressing computer alternatives and technical details. The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirment for subseqent integration. Communication of courses of action over the appropriate time-defined planning horizon and interval, representing a projected appropriation of supply chain resource and input material to meet supply-chain requirements as they affect the customer. The organic capability of an organization to produce output per time period. In business management, inventory consists of a list of goods and materials held available in stock. Also, those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts) Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Maximum rate of output for the inventory managment and warehouse process Stored products or service parts ready for sale, as distinguished from stores, which are usually components or raw materials. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area. The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts. Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

Inventory Inventory Availability

Inventory Availability/Delivery Date Inventory Capacity Inventory in Stock Inventory Rules Inventory Status

Inventory Strategy Item Master Item Pick Sheet for Stocking Schedule

Item Stocking Requirements Load Information

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INPUT / OUTPUT Load, Shipping, Verify, and Credit Information Loaded Retail Cart or Pallet Location of Customers Logistics Selection Lost or Dropped Shopping Carts Low Rates of Failure Loyalty Customer Profile Changes Make/Buy Decision Manage Integrated Supply Chain Inventory Information Manage Regulatory Return Policy Management Process Reports Manufacturer's Recommended Maintenance Schedules & Specifications Markdown Plans

DEFINITION The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information. Customer selected retail finished goods transferred to the point of sale. Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) On-line orders that are missing due to internet, software, or hardware malfunctions. Indication of quality in workmanship and design. More units, higher average ring, etc. The output of the process used to determine whether a demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. The scheduled activities, including adjustments, replacements, and basic cleanliness, that are recommended by the manufacturer to forestall machine breakdowns. Part of the Market Plan, which establishes an allowance or deduction, granted by the seller to the buyer, usually when the buyer meets certain stipulated conditions that reduce the price of the products purchased. For example, based upon paying early, buying in quantity, etc. The categorization of goods based upon the range of specifications met during the manufacturing process. The merchandising plan includes the current market position, opportunity and issue analysis, merchandising objectives and strategies, action plans, programs, projects, budgets, and pro forma profit and loss statement and management controls. Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request. Request disposition instructions for an MRO item from the Supplier. The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems. See Product Return Capagilities Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Merchandise Category/Classification Merchandising Plan (SUPPLIER)

Methods, Procedures, Processes

MRO Disposition Request MRO Parts Availability MRO Product Return Capabilities MRO Products

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INPUT / OUTPUT MRO Return Authorization Request

DEFINITION The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process of a customer obtaining authorization, from a service provider, for the return of an MRO product Requirements for the triggering of material movement to a work center only when that work center is ready to begin the next job. An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. Payment at the time of order, maybe partial or in full. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system. A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Reserved inventory and/or planned capacity and delivery date for a specific order. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. The items and services utilized to manufacture a product. Receipt of payment for goods and services per contract or purchase order. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Transportation modes are selected and efficient loads are built. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Any company policies that affect how a planning process is defined, approved, and performed. Data required to develop and build a Plan-O-Gram display to help minimize setup time by showing specific placement of all items, by product number, on the display. The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process.
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MRO Return Authorization Response On-demand Replenishment Requirements On-Order/Backorder Optional Payment Order Backlog Order Information Order Quote (CUSTOMER) Order Rules Order Signal Outsource Plan

Parts and Services Consumed Payment Payment Terms Plan and Build Loads Information Planning Data Planning Decision Policies Plan-o-gram Data Point of Sale Data (Daily) Preventative Maintenance and Calibration Schedule

Process Procedures

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INPUT / OUTPUT Procurement Signal (Supplier) Product Product Availability Product Data (linked/related SKU's) Product Design Product Design/Claims

Product Design/Quality Product Inventory Location Product Inventory Target Levels Product Location Information Product Mix and Plans

Product On Order Product Requirements Product Return Capabilities

Product Routings

Product Sources Product/Category Lifecycle Production Capacity (JN list calls Capability) Production Orders Planned Production Plans

DEFINITION Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier. The end object of a transformation process that includes physical objects, information or services. Availability of a product by location that is reserved, scheduled or available for sale, or the number of products ready to be or planned to be shipped to the specific customer or market at the specific time. The properties and characteristics of a product (e.g. the part number and a text description of the product) and the relationships to other items in the product family and linked / related SKU's. The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. Claims are marketing information provided as to performance, etc. Claims from the users of the product indicate a need to change the product design A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost. The physical storage location where product inventory is held in stock prior to use or shipment. The target for the total product inventory, including e.g. raw material, work in progress and finished goods. Attributes of the product's storage location. The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio. Product on order with a selected source. As a whole with constituent parts, all sources of demand for a product or service in the supply chain. The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. As a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The time from initial research and development to the time at which the sales and support of the product to customers are withdrawn. The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment. A statement of the output of a production facility for a specified period, comparing planned to actual production. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

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INPUT / OUTPUT Production Quality and Policies

Production Resources Production Rules Production Schedule Production Status Projected Delivery Requirements

Projected Internal and External Capacity Promotion Event Calendar

Promotion/Event Plans Promotional Plan Purchase History Quality and Delivery Performance

Rated Carrier Data Rated Shipments Receipt Data Receipt Discrepancy Notification Receipt Verification Regulatory Requirements Replenishment Quantities Replenishment Signal Reports, Information, and Documents

DEFINITION The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured. As a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed The company's goal for the time to ship the product after the receipt of a customer's order. The policy is sometimes stated as "our quoted delivery time," or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Time phased promotion / event tasks where the product offering is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering during the year. Promotion activities - other than advertising, publicity, and personal selling that stimulate, interest, trial or purchase by final customers or others in the marketing channel. The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering The amount of purchased products for a certain time in history per specific intervals The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one. Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Shipments subject to defined and established rates A collection of related receipt data records organized in a specific manner. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Acknowledgement that the product received conforms to specified requirements and criteria. Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (on-hand plus on-order) falls to or below the reorder point. Any signal that indicates when to produce or transport Items in a pull replenishment system. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.
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INPUT / OUTPUT Resource Availability Return Benchmark Data Return Inventory Availability Return Inventory for Transfer Return Inventory Targets Return Inventory Transfer Data Return Network Configuration Return Performance Return Plans Return Process Capabilities Return Process Workflow Definition and Policies Return Product Authorization Return Product History Return Product Location Return Production Requirements Return Regulatory Requirements Return Requirements Return Resources Return Rules and Policies

Return Schedule Instructions Return Transportation Guidelines, Policies, & Agreements Returned Defective Product Returned Excess Product Returned MRO Product Returned Product Information Returned Product Location Returns Data Revised Aggregate Forecast and Projections

DEFINITION The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output. Data relative to the return process utilized to compare the company's actual results to selected values identified as reference. Inventory relative to return process available for use. Inventory relative to return process available for transfer to other destination. The goals and approach to the management of return inventories. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration. Performance measurement information for the Return Process (the actual value of measured for the criterion). Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. The capability of a system or resources to produce a quantity output in a particular time period Definition and maintenance of the information flow about the Returns supply chain network for a group of similar or complimentary items through out their life cycle Permission to accept an excess product return for the designated return center, after communicating with the customer. The return history of product including failure rates, failure causes, etc. The physical location where the returned product inventory is held prior to disposition As a whole with constituent parts, all sources of demand in the creation of a product or service. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). As a whole with constituent parts, all sources of demand for the return of a product. All resources that add value to, execute, or constrain the processes for the return of a product. Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organization's business strategy, goals and objectives. A list of operations and procedures for scheduling the return of product. Guidelines, policies and agreements for the transportation activities around return process. Product being returned that is in a defective condition. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. Product being returned for maintenance, repair, or overhaul. Data concerning the return and disposition of defective products, excess inventory and/or serviceable or obsolete products, or MRO product. The storage location of those items being returned. The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc. An update to the aggregate Supply-Chain Forecasts of Demand by Product Family supporting the Market/Channel Plans. Corresponding Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand.

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INPUT / OUTPUT Revised Business Assumptions Revised Capital Plan RFQ/RFP

Routing Guide Satisfied Customer Scheduled Defective Product Return Scheduled Deliveries Scheduled Excess Product Return Scheduled Installation Scheduled MRO Return Scheduled Receipts Scrap Authorization Service Levels

Service Requirements Shipment Documents Shipment Routes Shipments Shipping Documents Shipping Export Parameters and Documentation Shipping History Shipping Parameters and Documentation Shipping Preferences (Customer) Shipping Schedules (internal or 3PL) Ship-to Data Source Execution Data Source Return Requirements Sourcing Plans

DEFINITION An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan. Request for Quote - A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors. Request for Proposal - A document used to solicit vendor responses when the functional requirements and features are known but no specific product is in mind. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates. Customers who are satisfied with the product or service delivered by the suppliers, including the aspects such as time, quality, cost, etc. Planned or scheduled returning of material deemed defective for some certain time or times The required or agreed time or rate of delivery of goods or services purchased for a future period. Planned or scheduled returning of material deemed in excess of current requirements for some certain time or times. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Planned or scheduled act of installing something for some certain time or times. Product due to arrive. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Performance targets in service related measures (i.e. delivery performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy. A set of minimum acceptable values that describe service requirements of a particular industry, channel, and/or customer segment. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Routes for shipping by consolidating loads. Transactions related to sending the product to the customer. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. The transaction history of the physical shipment of an item to another internal location or to a customer. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required. Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories, Scheduling of direct deliveries of material to a specified location on a plant floor near the operation where it is to be used. Data about the destination of a retun delivery. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer's needs. All sources of demand in the Source Return of a product or service. An aggregate material requirements plan used to schedule material deliveries to meet production plan.
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INPUT / OUTPUT Standard Practices/Rules Stocking Requirements

Stocking Schedule Stock-out History Store Allocation Instructions Store Shelf Inventory Counts Strategic Plan Successful Installation / Live System Supplier Agreement Supplier Data Supplier Performance Supply Chain Execution Data Supply Chain Performance Improvement Plan Supply Chain Plans Supply Chain Requirements Supply Chain Resources Supply-Chain Performance Metrics

Systems Capability Tariffs and Duties (External) Transferred Product Transportation Capacity Valid Returns Request Validated Order

DEFINITION Industry established common practices, rules, and methods of doing business. The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts. A timetable for the planned movement of material from a bulk storage area to an order pick storage area. History of a lack of materials, components, or finished goods that are ordered. A list of operations and procedures for allocating storage needs for items in inventory. The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance. The installation of product is completed at the customer site, and the product is fully functional. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements. Information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. Sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. As a whole with constituent parts, all sources of supply that are required to add value in the supply chain of a product or service at the appropriate level, horizon and interval. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. The capability of a system to perform its expected function Charges established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Product being tranferred to the appropriate stocking location within the supply chain. The capability of a trasportation system to perform it's function. Requests for returns that are valid. An order that has had the instructions / requirements validated i.e. the information that the order contains is accurate, consistent with previous information and does not violate business policies or rules. Note 1 - this does not make the order "committed" there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal, purchase or production.
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INPUT / OUTPUT Validated Return Material Authorization Vendor Merchandising / Co-op advertising agreements Vendor/DC inventory availability Warehouse Operating Constraints Warranty Data WIP Handling Rules, Move Information and Methods WIP Inventory Location WIP Location Rules WIP Move Information and Methods Year-to-Year for Like SKU/Subclass

DEFINITION A validated and approved Return Product Authorization (RPA). The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering. Vendor/DC inventory available to a customer to supply demands. (Where the customer has access to the supplier's inventory and the supplier has access to the customer's requirements and inventory or vendor managed inventory). Warehouse constraints are those storage items that impact on the supply chain efficiency, including material handling equipment and personnel, equipment maintenance, building maintenance, and security personnel. All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. Location of inventory that is specified as "work in progress". This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations. The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. The sales or demand history that is analogous to the present situation for similar products, a SKU / Subclass.

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APPENDIX A METRICS
Performance Attributes and Associated Level 1 Metrics
Performance Attribute Supply Chain Reliability Performance Attribute Definition The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. The speed at which a supply chain provides products to the customer. The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. The costs associated with operating the supply chain. The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital. Level 1 Metric Perfect Order Fulfillment

Supply Chain Responsiveness Supply Chain Flexibility Supply Chain Costs Supply Chain Asset Management

Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital

Performance Attributes and Level 1 Metrics


Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN).

Performance Attributes Level 1 Metrics


Perfect Order Fulfillment Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-To-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital Customer-Facing Reliability Responsiveness Flexibility Internal-Facing Costs Assets

x x x x x x x x x x

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Key to Template for Appendix A Specification:


This template was used to develop the hierarchical structure between SCOR level 1, 2, and 3 metrics. Metric Definition Intended to provide clear, concise, benchmarkable, definitions of the metric. Hierarchical Metric Structure These diagrams express the hierarchical structure of metrics from different levels by digraph. A causal link (arrow) from one metric A to another metric B means that metric A could affect metric B. For a level 1 metric, it needs to drill down to level 2 metrics. For a level 2 metric, it needs to drill down to level 3 metrics, and also, should roll up to level 1 metrics (dashed link). * The dashed line boxes represent optional metrics associated with the Level 3 processes. Qualitative Relationship Description If the relationships between metrics cannot clearly quantitatively expressed by mathematical equations, qualitative description of the relationships is required. Quantitative Relationship (optional, if calculable) Lists the quantitative relationships between metrics by mathematical equations, if calculable. Calculation Provides an operable method to calculate the metric, typically a formula. Data Collection Illustrates how to collect data for metric calculation. Discussion Additional descriptions which are necessary.

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Performance Attribute: Supply Chain Reliability Level 1 Metric: Perfect Order Fulfillment Metric Definition
The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customers definition of on-time, and documentation packing slips, bills of lading, invoices, etc.

Hierarchical Metric Structure


Level 1
Perfect Order Fulfillment

% of Orders Delivered in Full Level 2

Perfect Condition Documentation Accuracy

Delivery Performance to Customer Commit Date

Qualitative Relationship Description


An order is considered perfect if the products ordered are the products provided and the quantities ordered match the quantities provided (% In Full). A delivery is considered perfect if the location, specified customer entity and delivery time ordered is met upon receipt (Delivery Performance to Customer Commit Date). Documentation supporting the order line is considered perfect if it is all accurate, complete, and on time (Accurate Documentation). The product condition is considered perfect if the product is delivered / faultlessly installed (as applicable) on specification, with the correct configuration, with no damage, customer ready, and is accepted by the customer (Perfect Condition)

Quantitative Relationship (optional, if calculable) Calculation


[Total Perfect Orders] / [Total Number of Orders] x 100% Note, an Order is Perfect if the individual line items making up that order are all perfect. The Perfect Order Fulfillment calculation is based on the performance of each Level 2 component of the order line to be calculated (product & quantity, date & time & Customer, documentation and condition). For an order line to be perfect, all of the individual components must be perfect. The calculation of line item perfect order line fulfillment is based on the Level 2 components: Each component receives a score of 1 if it is judged to be perfect. It receives a score of 0 if not perfect. If the sum of the scores equal the number of components (in this case, 4) the order line is perfectly fulfilled.

Data Collection
Data for the components that are used to drive the calculation of supply chain performance are primarily taken from Deliver and impact Deliver Enable process elements. These are primarily associated with the original commitment (Customer Order Processing D1.2, D 2.2, D3.3) and the satisfaction of that commitment (Receipt and Installation (as appropriate) D1.11, D1.13, D1.14, D1.15, D2.11, D2.13, D2.14, D2.15, D3.11, D3.13, D3.14, D3.15). In addition, the documents necessary for support of the supply chain process should be scored across the set of Deliver process elements. The Enable Deliver Process Element - Assess Delivery Performance (ED.2) should be updated from metrics derived.

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Discussion
The performance of the supply chain is considered perfect if the original commitment made to a customer is met through the supply chain. An order is defined as a collection of one or more order lines representing a request to deliver specified quantities of goods or to render specific services. The order can further be defined as a request (with a specific identifier as a reference) to deliver specified items or to render specific services with specific prices, dates, and quantities. Commitments are made to a customer at the order line level, where an order line is defined as a line representing a commitment on a sales order. An order line always references a product or service. For an order to be considered perfect the following standards must be met: Delivered complete; all items on the order line are delivered in the quantities specified Delivered on time to the initial commitment date, using the customers definition of on-time delivery Documentation supporting the order including packing slips, bills of lading, invoices, quality certifications, etc., is complete and accurate Faultlessly installed (as applicable), correct configuration, customer-ready and accepted, no damage, on specification Orders canceled by the customer are excluded from the metric. Order changes initiated by the customer and agreed to by the supplier supersede initial commitments and form a new comparative basis for the metric. Often for date and quantity issues (and occasionally product), a range rather than a strict value is used. This is acknowledged as a standard practice; in those situations the standard measured is considered to be met perfectly if the range specified is satisfied. The term customer-ready for the perfect condition standard may imply a subjective component based on the customers satisfaction. Although condition may not be as rigorously measured as time or quantity it should be considered as a component if available, especially since this attribute measures performance of the supply chain which is, of course, ultimately measured by its customers. It should also be noted that a corresponding evaluation of suppliers performances could be determined by extending these standards to each suppliers ability to source products.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: % of Orders In Full Metric Definition
Percentage of orders which all of the items are received by customer in the quantities committed

Hierarchical Metric Structure


Level 1

Perfect Order Fulfillment

Level 2

% of Orders Delivered in Full

Level 3

Delivery Item Accuracy

Delivery Quantity Accuracy

Qualitative Relationship Description


An order is considered delivered in full if: All items ordered are the items actually provided, and no extra items are provided All quantities received by the customer match the order quantities (within mutually agreed tolerances)

Quantitative Relationship (optional, if calculable) Calculation


[Total number of orders delivered in full] / [Total number of orders delivered] x 100%

Data Collection
Data for the components that are used to drive the calculation of % In Full are primarily associated with the original order processing step of Reserve inventory and Determine Delivery Date (D1.3, D2.3 & D3.3), inventory availability (M1.1, M2.1, M3.1) including inventory location accuracy, (ED.4), and the satisfaction of that commitment through the shipment and customer receiving processes (D 1.12, D1.13, D2.12, D.2.13, D3.12, D3.13)

Discussion
Order quantities are based on item / quantity original commitments agreed to by the customer. Orders canceled by the customer are excluded from the metric. Order changes initiated by the customer and agreed to by the supplier supersede original commitments and form a new comparative basis for the metric. This metric has no timing element, such that orders deliberately split by the supplier should still be considered in full so long as all metric criteria are met. In some cases, such as for supplying bulk materials, committed quantities refer to a range that is acceptable to the customer rather than a strict value. Several SCOR diagnostic metrics exist that can be used to focus % In Full improvement efforts. Some of these include: % Orders Scheduled to Requested Quantity Schedule Achievement Yield variability Planned Shipment Fill Rate (not yet defined) % Stock Outs (not yet defined) Inventory Cycle Count Accuracy (not yet defined) Orders may not be filled completely to the customers original request quantity due to the inability to
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schedule to the initial request. Breakdown may also occur from the inventory availability (including stock outs for MTS and schedule achievement for MTO and ETO) and inventory location accuracy. Lastly, a deviation from the shipment plan may lead to inability to fulfill an order completely.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Delivery Performance to Customer Commit Date Metric Definition
The percentage of orders that are fulfilled on the customers originally scheduled or committed date

Hierarchical Metric Structure


Level 1
Perfect Order Fulfillment

Level 2

Delivery Performance to Customer Commit Date

Level 3

Customer Commit Date Achievement Time Customer Receiving

Delivery Location Accuracy

Qualitative Relationship Description


An order is considered delivered to the original Customer commitment date if: The order is received on time as defined by the customer The delivery is made to the correct location and Customer entity

Quantitative Relationship (optional, if calculable) Calculation


[Total number of orders delivered on the original commitment date] / [Total number of orders delivered] x 100%

Data Collection
Data for the components that are used to drive the calculation of Delivery Performance to Customer Commit Date are primarily associated with the original order processing step of Reserve inventory and Determine Delivery date (D1.3, D2.3 & D3.3), and the satisfaction of that commitment through the shipment and customer receiving processes (D 1.12, D1.13, D2.12, D2.13, D3.12, D3.13).

Discussion
Order delivery performance from a timing perspective is based on original commitments agreed to by the customer. The acceptable window for delivering on time should be defined in the customer service level agreement. Orders canceled by the customer are excluded from the metric. Order changes impacting the timing of a delivery that are initiated by the customer and agreed to by the supplier supersede original commitments and form a new comparative basis for the metric. The original commitment date can refer to a range, rather than a strict date and time, that is acceptable to the customer (e.g. advanced shipments). This metric has no In Full element, such that partial deliveries can still be considered as meeting the Customer Commit Date so long as all metric criteria are met. Measuring the frequency of accepting the customers original request date, vs. commit date, can be an important measure of customer satisfaction. Several SCOR diagnostic metrics exist that can be used to focus delivery performance improvement efforts. Some of these include: % Orders Scheduled to Request % Orders Shipped on time (not yet defined) Carrier Performance Reliability (not yet defined) Orders may not be delivered to the Customer Commit Date due to breakdowns in the order fulfillment and shipment process (e.g. Transportation availability). Orders may also be delivered late due to carrier delivery performance / issues.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Perfect Condition Metric Definition
Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer

Hierarchical Metric Structure


Level 1
Perfect Order Fulfillment

Level 2

Perfect Condition

Orders Delivered Damage Free Conformance

Warranty & Returns

Level 3
Orders Delivered Defect Free Conformance

% Orders Received Damage Free

% Faultless Installations

Qualitative Relationship Description


An order is considered to be delivered in perfect condition if all items meet the following criteria: Undamaged Meet specification and has correct configuration (as applicable) Faultlessly installed (as applicable) and accepted by the customer Not returned for repair or replacement (within the warranty period)

Quantitative Relationship (optional, if calculable) Calculation


[ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Data Collection
Data for the components that are used to drive the calculation of Perfect Condition are primarily associated with the receipt, installation (as applicable) and satisfaction of the order commitment (D1.13, D1.14, D2.13, D2.14, D3.13, D3.14). The Enable Deliver Process Element - Assess Delivery Performance (ED.2) should be updated to reflect this metric and its components. This data is typically available from a complaints, claims, or warranty/returns database.

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Discussion
This metric, calculated at the order level, assesses the quality of products delivered through the supply chain from the customers perspective. Justified and non-justified product quality issues, claims and returns within the warranty period are included and count against this metric. Improving this metric lowers the supply chain cost associated with claims and returns. Several SCOR diagnostic metrics exist that can be used to focus Perfect Condition improvement efforts. Some of these include: Cost of Noncompliance Damage and Shrinkage Scrap Expense Warranty Costs Yield Variability

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Documentation Accuracy Metric Definition
Percentage of orders with accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc.

Hierarchical Metric Structure


Level 1

Perfect Order Fulfillment

Level 2

Documentation Accuracy

Shipping Documentation Accuracy

Payment Documentation Accuracy

Level 3
Compliance Documentation Accuracy Other Required Documentation Accuracy

Qualitative Relationship Description


An order is considered to have accurate documentation when the following are accepted by the customer: Shipping documentation Payment documentation Compliance documentation Other required documentation All documentation must be complete, correct, and readily available when and how expected by the customer, Government and other supply chain regulatory entities.

Quantitative Relationship (optional, if calculable) Calculation


[Total number of orders delivered with accurate documentation] / [Total number of orders delivered] x 100% Document supporting the order includes: Shipping documentation: o Packing slips (Customers) o Bill of lading (Carriers) o Government or Customs documentation / forms Payment Documentation: o Invoice o Contractual outline agreement Compliance documentation o Material Safety Data Sheets Other required documentation o Quality certification

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Data Collection
Data for the components that are used to drive the calculation of Accurate Documentation are primarily associated with the Deliver processing step of Load Product & Generate Shipping Documentation (D1.11, D2.11, D3.11), and Invoice (D1.15, D2.15, D3.15). The data collection step is part of Assess Delivery Performance (ED2) and Manage Deliver Information (ED3)

Discussion
This metric is calculated at the order level. The timeliness and quality of the documentation is measured from the perspective of the customer, Government, and other regulatory entities. Documentation may be late or incomplete due to the inability to prepare / process the correct documentation on time. Inaccurate or late shipping documentation may prevent the product to be loaded or shipped, increase the customs delay, and delay the customers acceptance of the order. Inaccurate or late invoices may also lead to the inability to fulfill the customer request. The definition encompasses On time and Accurate documentation. However, on-time documentation implies a scheduled ship date and scheduled invoice date. Accurate documentation metrics are similar to what exists for SOURCE process metrics Possible diagnostic metrics that can be used to focus Accurate Documentation improvement efforts include: % orders documentation (shipping and invoice) processed on time % faultless invoices

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Performance Attribute: Supply Chain Responsiveness Level 1 Metric: Order Fulfillment Cycle Time Metric Definition
The average actual cycle time consistently achieved to fulfill customer orders. For each individual order, this cycle time starts from the order receipt and ends with customer acceptance of the order.

Hierarchical Metric Structure


Level 1

Order Fulfillment Cycle Time

Level 2

Source Cycle Time

Make Cycle Time

Deliver Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Order Fulfillment Cycle Time Source Cycle Time + Make Cycle Time + Deliver Cycle Time

Calculation
[Sum Actual Cycle Times For All Orders Delivered] / [Total Number Of Orders Delivered]

Data Collection
Data for the components that are used to drive the calculation of responsiveness are taken from the Source, Make and Deliver process elements.

Discussion
The order fulfillment cycle time as captured from the moment a customer places the order to the moment the order is fulfilled is considered to be a gross cycle time. It represents all the time passed between these two events, regardless of whether this represented cycle time for the activities performed by the organisation to fulfill the order (both value-add and non-value-add) or dwell time because the order was placed well in advance by the customer. As such, this gross order fulfillment cycle time does not truly reflect the responsiveness of the organisation. Take for example an organisation that needs six days to fulfill a certain customer order. If the customer places the order one day in advance, the gross order fulfillment cycle time will be seven days. If the customer places the order 3 months ahead (pre-ordering), the gross fulfillment cycle time will be 96 days. However, the fact that the customer pre-orders does not reduce the responsiveness of the organisation. On the contrary, one can argue that it may increase the ability of the organisation to meet that order as it allows the organisation to plan ahead and fulfill the order in a more optimal way. The responsiveness of the organisation is determined by the cumulative cycle time for all activities that are required to fulfill the order, but should exclude any dwell time where no activity takes place. Therefore the definition of Order Fulfillment Cycle Time consists of a gross component and a net component named Order Fulfillment Process Time, according to the following formula: Order Fulfillment Cycle Time = Order Fulfillment Process Time + Order Fulfillment Dwell Time. Note that dwell time will equal 0 for companies who do not utilize this metric, so Order Fulfillment Cycle Time will equal Order Fulfillment Process Time. Order fulfillment dwell time is defined as any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from idle time or non-value-add lead time, which is caused by inefficiencies in the organizations processes and therefore ultimately under responsibility of the organisation. This kind of idle time should not be deducted
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from the gross order fulfillment cycle time. Dwell time is mostly associated with the ordering process, where a customer may place an order in advance to reserve capacity/materials etc, but where the actual steps in the order fulfillment process take place later on. It is also common in the delivery process where the organisation may be in principle ready to ship the product/service, but is requested by the customer to wait (for example to follow a certain shipment schedule). Note that for those organisations where dwell time does not play a role, the dwell time can be taken as zero days which results in the net order fulfillment cycle time to be equal to the gross order fulfillment cycle time For benchmarking purposes it is recommended to use the Order Fulfillment Process Time, as this is the cycle time reflecting most accurately the responsiveness of the organisation. It will also ensure that those organisations in industries where dwell time is a factor can be benchmarked against organisations in industries where dwell time does not play a role. The concept of dwell time applies not only to the level 1 metric, but also to all lower level metrics. This means that each lower level metric can have a gross component, consisting of the net component and dwell time. Because the lower level metrics are hierarchical (the cumulative sum of cycle times at level 2 or 3 should be equal to the cycle time at level 1), the cumulative sum of dwell times at level 2 or 3 should total up to the dwell time at level 1.

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June 2006

Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Source Cycle Time Process Numbers: S1, S2, S3 Metric Definition
The average time associated with Source Processes.

Hierarchical Metric Structure


Level 1

Order Fulfillment Cycle Time

Level 2

Source Cycle Time

Identify Sources of Supply Cycle Time

Authorize Supplier Payment Cycle Time

Select Supplier and Negotiate Cycle Time

Transfer Product Cycle Time

Level 3

Schedule Product Deliveries Cycle Time

Verify Product Cycle Time

Receive Product Cycle Time

* The dashed line boxes represent optional metrics associated with the Level 3 processes. (The same hereinafter)

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Source Cycle Time (Identify Sources of Supply Cycle Time + Select Supplier and Negotiate Cycle Time) + Schedule Product Deliveries Cycle Time + Receive Product Cycle Time + Verify Product Cycle Time + Transfer Product Cycle Time + Authorize Supplier Payment Cycle Time

Calculation

Data Collection Discussion


Metrics in Level 3 that are used to drive the calculation of Source Cycle time are taken from the Source process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the dashed optional metrics Identify Sources of Supply Cycle Time and Select Supplier and Negotiate Cycle Time are not used in the calculation.

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June 2006

Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Make Cycle Time Process Numbers: M1, M2, M3 Metric Definition
The average time associated with Make Processes.

Hierarchical Metric Structure


Level 1

Order Fulfillment Cycle Time

Level 2

Make Cycle Time

Schedule Production Activities Cycle Time

Release Finished Product To Deliver Cycle Time

Issue Material/Product Cycle Time

Stage Finished Product Cycle Time

Level 3
Produce and Test Cycle Time Package Cycle Time

Finalize Production Engineering Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Make Cycle Time (Finalize Production Engineering Cycle Time) + Schedule Production Activities Cycle Time + Issue Material/Product Cycle Time + Produce and Test Cycle Time + Package Cycle Time + Stage Finished Product Cycle Time + Release Finished Product To Deliver Cycle Time

Calculation Data Collection Discussion


Metrics in Level 3 that are used to drive the calculation of Make Cycle time are taken from the Make process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the dashed optional metric Finalize Production Engineering Cycle Time is not used in the calculation. And also, the data for the calculation of Level 3 metrics may also depends on different make strategies, e.g., when make-to-stock strategy is deployed, the metric Issue Material/Product Cycle Time means the time for issuing material; while when make-to-order or engineer-to-order is deployed, it will be a measure for calculating the cycle time for issuing sourced or in-process product. In Make Cycle Time, there may be overlaps in the processes, so the least amount of time should be applied rather than the total sum.

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June 2006

Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Delivery Cycle Time Process Numbers: D1, D2, D3 Metric Definition
The average time associated with Deliver Processes.

Hierarchical Metric Structure


Level 1
Order Fulfillment Cycle Time

Level 2

Delivery Cycle Time

Receive, Configure, Enter and Validate Order Cycle Time

Reserve Resources & Determine Delivery Date Cycle Time

Schedule Installation Cycle Time

Consolidate Orders Cycle Time

Pick Product Cycle Time

Level 3

Build Loads Cycle Time

Pack Product Cycle Time

Route Shipments Cycle Time

Load Vehicle & Generate Shipping Documentation Cycle Time

Select Carriers and Rate Shipments Cycle Time

Ship Product Cycle Time

Receive Product from Make/Source Cycle Time

Receive & Verify Product Cycle Time

Install Product Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Delivery Cycle Time MAX {[Receive, Configure, Enter and Validate Order Cycle Time + Reserve Resources & Determine Delivery Date Cycle Time + (Consolidate Orders Cycle Time + Schedule Installation Cycle Time) + Build Loads Cycle Time + Route Shipments Cycle Time + Select Carriers and Rate Shipments Cycle Time], Receive Product from Make/Source Cycle Time} + Pick Product Cycle Time + Pack Product Cycle Time + Load Vehicle & Generate Shipping Documentation Cycle Time + Ship Product Cycle Time + (Receive & Verify Product Cycle Time) + (Install Product Cycle Time) *The MAX function above is to indicate that Dx.3-Dx.7 may be in parallel with Dx.8and whichever takes longer should determine the cycle time.

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Calculation Data Collection Discussion


Metrics in Level 3 that are used to drive the calculation of Deliver Cycle time are taken from the Deliver process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the optional metric Schedule Installation Cycle Time is not used in the calculation, otherwise the metric Consolidate Orders Cycle Time will not be used. And also, the data for the calculation of Level 3 metrics may also depends on different make strategies, e.g., when make-to-stock strategy is deployed, the metric Receive, Configure, Enter and Validate Order Cycle Time may not include the Configure process.

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June 2006

Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Delivery Retail Cycle Time Process Numbers: D4 Metric Definition
The average cycle time of the processes used to acquire, merchandise, and sell finished goods at a retail store.

Hierarchical Metric Structure


Level 1

Level 2

Delivery Retail Cycle Time

Generate Stocking Schedule Cycle Time

Fill Shopping Cart Cycle Time

Receive Product Cycle Time

Checkout Cycle Time

Level 3
Pick Product Cycle Time Install Cycle Time

Stock Shelf Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Delivery Retail Cycle Time Generate Stocking Schedule Cycle Time + Receive Product Cycle Time + Pick Product Cycle Time + Stock Shelf Cycle Time + Fill Shopping Cart Cycle Time + Checkout Cycle Time + Install Cycle Time

Calculation Data Collection Discussion

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June 2006

Performance Attribute: Supply Chain Flexibility Level 1 Metric: Upside Supply Chain Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in quantities delivered. Note - 20% is a number provided for benchmarking purposes. For some industries and some organizations 20% may be in some cases unobtainable or in others too conservative. Note - component metrics (Upside Source Flexibility, Upside Make Flexibility, etc) can be improved in parallel and as a result, this calculation requires the result to be the least amount of time to achieve the desired result).

Hierarchical Metric Structure


Level 1
Upside Supply Chain Flexibility

Level 2

Upside Source Flexibility

Upside Make Flexibility

Upside Deliver Flexibility

Upside Source Return Flexibility

Upside Deliver Return Flexibility

Qualitative Relationship Description


Calculation: Total elapsed days between the occurrence of the unplanned event and the achievement of sustained plan, source, make, deliver and return performance. Note: Elapsed days are not necessarily the sum of days required for all activities as some may occur simultaneously. Upside Source Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in quantity of raw materials. Upside Make Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. Upside Deliver Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints. Upside Source Return Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in the return of raw materials to suppliers. Upside Deliver Return Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.

Quantitative Relationship (optional, if calculable) Calculation


The calculation of supply chain flexibility requires the calculation to be the least time required to achieve the unplanned sustainable increase when considering Source, Make, and Deliver components. For example, if it requires 90 days achieve a 20% increase in raw material volume, 60 days for adding capital to support production, and no time to increase the ability to deliver, upside supply chain flexibility would be 90 days (if production changes can run concurrently with material acquisition activities) or as much as 150 days if production changes and material acquisition changes must run sequentially.

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Data Collection
Data for the components that are used to drive the calculation of supply chain flexibility are taken from the actual planning activities incurred in devising the actions to be taken and the execution activities themselves. Neither the complete set of activities nor any given subset of those activities can be identified except in either contingency plans (in which case they are hypothetical), special analytical simulations conducted for the purpose of predicting total elapsed time, or after the fact (when they have actually occurred and are unlikely to reoccur in the same combination). Flexibility measures are assumption based or based on historic events. Some elements can be measured and taken as a basis for further considerations, e.g.

Discussion
Certainly enterprises deal with change all the time. In most cases, these changes are minor deviations from the norm or fleeting blips in the marketplace. Also, certainly, most supply chains move through these changes almost effortlessly and, in this regard, demonstrate equivalent flexibility. In many extreme cases, however, it is possible that a particular supply chain has reached a condition of relative rigidity (say, at capacity or rigid, constraining agreements with partners) and a seemingly minor increase in production requirement can consume much time and effort as the supply chain struggles to restore its capability to perform. It is evidenced that enterprises engaged in appropriate business risk and competitive contingency planning activities will usually be in a better position to optimize overall supply chain performance and these activities are presented as best practices later in this document. When change is known in advance (such as Wal-Mart requiring RFID devices on all delivered cases, or a major sourcing change is planned to occur), and is incorporated in the enterprises operating plan, then the time incurred to undertake the adaptation isnt necessarily a reflection of the supply chains flexibility. While flexibility is still addressed, it is frequently clouded by other considerations in the operating plan. Unplanned change is the primary consideration in measuring the supply chains flexibility.

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June 2006

Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Source Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in quantity of raw materials.
Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate. Possible constraint factors are included in this section.

Hierarchical Metric Structure


Level 1

Upside Supply Chain Flexibility

Level 2

Upside Source Flexibility

Current source volumes

Additional source volumes

Productivity-purchase orders per FTE

Procurement staff availability

Current capital requirements

Time needed to recruit/hire/train additional staff

Current on-hand inventories (Raw, Purchased FG)

Capital availability

Constraint Factors

Current sourcing/supplier constraints

Time needed to obtain additional capital

Current purchase order cycle times

Additional demand sourcing - supplier constraints.

Time needed to increase inventory for additional order fulfillment (Raw, Purchased FG)

Time to reach and sustain current purchase order cycle time

Qualitative Relationship Description


Least time to pursue all necessary activities.

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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Discussion
Source: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question How long will it take for the company to sustain a 20% increase in quantities sourced?. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Amount of each item purchased Staffing o Staff needed to meet current demand Productivity-purchase orders per FTE Needed, but may be underutilized Capital o Current capital requirements Credit line Cash on hand Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Current contract terms. Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Time to place a purchase order Supplier lead time Source: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question How long will it take for the company to sustain a 20% increase in quantities sourced? Demand: o Additional source volume Staffing o Staff availability in procurement (underutilized FTEs) o Amount of time needed to recruit/hire/train additional staff to fill gap between underutilized FTEs and staff needed to sustain 20% increase in quantities delivered Capital o Current capital availability Credit line Cash on hand Accounting procedures o Amount of time needed to obtain capital to fill gap between current capital availability and capital needed to sustain 20% increase in quantities ordered Materials o Sourcing Constraints Time required in negotiating new source/volume contracts/terms Time required to find/obtain additional sources o All else equal in make, deliver, return, amount of time needed to obtain, deliver and phase in inventory (raw material and purchased finished goods) for order fulfillment, including safety stock to sustain 20% increase in quantities sourced. Cycle Time o Amount of time needed to reach and sustain current procurement cycle time Time to place a purchase order Supplier lead time

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June 2006

Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Make Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints.
Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure


Level 1

Upside Supply Chain Flexibility

Level 2

Upside Make Flexibility

Current make volume

Additional make volume

Productivity-units/orders produced per FTE

Direct labor availability

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Time needed to recruit/hire/train additional labor

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Time needed to obtain additional capital Current inventory on hand (WIP, FG) Time needed to obtain additional equipment Current manufacturing order cycle time Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced or leased resources or facilities

Time needed to increase inventory (WIP, FG) for additional order fulfillment

Time to reach and sustain current manufacturing order cycle time

Qualitative Relationship Description


Least time to pursue all necessary activities.

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June 2006

Quantitative Relationship (optional, if calculable)

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Calculation Data Collection Discussion


Make: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question How long will it take for the company to sustain a 20% increase in quantities produced?. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Amount of each item manufactured Labor o Labor needed to meet current demand Productivity-units/orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question How long will it take for the company to sustain a 20% increase in quantities produced? Demand: o Additional make volume Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTEs) o Amount of time needed to recruit/hire/train additional labor to fill gap between underutilized FTEs and labor needed to sustain 20% increase in quantities manufactured Capital/Assets o Current Internal Capacity utilization Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered
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Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Facilities, lease building, etc. Lease manufacturing equipment, materials handling and packaging equipment, etc. Co-packers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities made Materials o All else equal in source, deliver and return, amount of time needed to receive and phase in raw material inventory for manufacturing and make WIP and FG inventory, including safety stock to sustain 20% increase in quantities manufactured) Cycle Time o Amount of time needed to reach and sustain current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time)

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June 2006

Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Deliver Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.
Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Flexibility

Level 2

Upside Deliver Flexibility

Current delivery volume

Additional delivery volume

Productivity-orders shipped per FTE

Direct labor availability

Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Time needed to recruit/hire/train additional labor

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Current internal storage capacity utilization

Constraint Factors

Capital availability Current capital requirements Time needed to obtain additional capital Current inventory on hand (FG) Time needed to obtain additional equipment Current logistics order cycle time Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities Time needed to increase inventory (FG) for additional order fulfillment

Time to reach and sustain current logistics order cycle time

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Qualitative Relationship Description


Least time to pursue all necessary activities.

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion


Deliver: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question How long will it take for the company to sustain a 20% increase in quantities delivered?. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Number of orders shipped Labor o Labor needed to meet current demand Productivity-orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time Deliver: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question How long will it take for the company to sustain a 20% increase in quantities delivered? Demand: o Additional delivery volume Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTEs) o Amount of time needed to recruit/hire/train additional labor to fill gap between underutilized FTEs and labor needed to sustain 20% increase in quantities delivered Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability
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Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities delivered Materials o All else equal in source, make, return, amount of time needed to increase finished inventory for order fulfillment (time to receive/stock inventory, including safety stock to sustain 20% increase in quantities delivered) Cycle Time o Amount of time needed to reach and sustain current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time

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June 2006

Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Source Return Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in the return of raw materials to suppliers.
Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Flexibility

Level 2

Upside Source Return Flexibility

Current source return volume

Additional source return volume

Productivity-orders returned per FTE

Procurement staff/Logistics labor availability

Time needed to recruit/hire/train additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Current internal storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Time needed to obtain additional capital Current supplier return order cycle time Time needed to obtain additional equipment

Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities

Time to reach and sustain current supplier return order cycle time

Qualitative Relationship Description


Least time to pursue all necessary activities.

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Quantitative Relationship (optional, if calculable)

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Calculation Data Collection Discussion


Source Return: Input Assuming no supplier constraints, current elements needed to fully understand future requirements, to establish 20% gap, based on the question How long will it take for the company to sustain a 20% increase in quantities returned to suppliers? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Number of orders returned Staff / Labor o Procurement Staff / Logistics Labor needed to meet current returned volume Productivity-orders returned per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current supplier return order cycle time Supplier return order processing cycle time (procurement and logistics) Pick-to-ship cycle time Transit time Source Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no supplier constraints, elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question How long will it take for the company to sustain a 20% increase in quantities returned to suppliers? Demand: o Additional supplier return volume Staff / Labor o Procurement staff / Logistics labor availability (underutilized FTEs) o Amount of time needed to recruit/hire/train additional staff / labor to fill gap between underutilized FTEs and staff / labor needed to sustain 20% increase in quantities returned to suppliers Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned to suppliers o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned to suppliers Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital
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Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities returned to suppliers Cycle Time o Amount of time needed to reach and sustain current supplier return order cycle time Supplier return order processing cycle time (procurement and logistics) Pick-to-ship cycle time Transit time

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June 2006

Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Deliver Return Flexibility Metric Definition
The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.
Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Flexibility

Level 2

Upside Deliver Return Flexibility

Current deliver return volume

Additional deliver return volume

Productivity-orders returned per FTE

Customer Service staff/Logistics labor availability

Time needed to recruit/hire/train additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Current internal storage capacity utilization

Constraint Factors

Capital availability Current capital requirements Time needed to obtain additional capital Current customer return order cycle time Time needed to obtain additional equipment

Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities

Time to reach and sustain current customer return order cycle time

Qualitative Relationship Description


Least time to pursue all necessary activities.

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Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion


Deliver Return: Input Assuming no customer constraints, current elements needed to fully understand future requirements, to establish 20% gap, based on the question How long will it take for the company to sustain a 20% increase in quantities returned from customers? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Number of orders returned Staff / Labor o Customer Service Staff / Logistics Labor needed to meet current returned volume Productivity-orders returned per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current customer return order cycle time Customer return order processing cycle time (customer service and logistics) Transit time Return processing and disposition cycle time Deliver Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no customer constraints, elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question How long will it take for the company to sustain a 20% increase in quantities returned to suppliers? Demand: o Additional customer return volume Staff / Labor o Customer Service staff / Logistics labor availability (underutilized FTEs) o Amount of time needed to recruit/hire/train additional staff / labor to fill gap between underutilized FTEs and staff / labor needed to sustain 20% increase in quantities returned from customers Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned from customers o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned from customers Facilities, space Fleet equipment, materials handling equipment, etc.
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Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities returned from customers Cycle Time o Amount of time needed to reach and sustain current customer return order cycle time Customer return order processing cycle time (customer service and logistics) Transit time Return processing and disposition cycle time

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Performance Attribute: Supply Chain Flexibility Level 1 Metric: Upside Supply Chain Adaptability Metric Definition
The maximum sustainable percentage increase in quantity delivered that can be achieved in 30 days. Note: 30 days is an arbitrary number provided for benchmarking purposes. For some industries and some organizations 30 days may be in some cases unobtainable or in others too conservative. Note: Component metrics (Upside Source Adaptability, Upside Make Adaptability, etc) can be improved in parallel and as a result, this calculation requires the result to be the least increase in quantity sustainable in 30 days

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Source Adaptability

Upside Make Adaptability

Upside Deliver Adaptability

Upside Source Return Adaptability

Upside Deliver Return Adaptability

Qualitative Relationship Description


Note: The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. Upside Source Adaptability: The maximum sustainable percentage increase in raw material quantities that can be acquired/received in 30 days. Upside Make Adaptability: The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. Upside Deliver Adaptability: The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. Upside Source Return Adaptability: The maximum sustainable percentage increase in returns of raw materials to suppliers that can be achieved in 30 days with the assumption of unconstrained finished goods availability. Upside Deliver Return Adaptability: The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days.

Quantitative Relationship (optional, if calculable)


Upside Source Adaptability + Upside Make Adaptability + Upside Deliver Adaptability

Calculation Data Collection


Adaptability measures are assumption based or based on historic events. Some elements can be measured and taken as a basis for further considerations. Adaptability measures are based on the actual number of returns compared to the maximum number of returns which can be achieved within 30 days. The weakest component determines the overall volume.

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Discussion
The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. P&L Impact Revenue COGS SGA Balance Sheet Impact Inventory

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Source Adaptability Metric Definition
The maximum sustainable percentage increase in raw material quantities that can be acquired/received in 30 days.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Source Adaptability

Additional source volumes obtained in 30 days Current source volumes Procurement staff availability Productivity-purchase orders per FTE Amount additional staff recruited/hired/trained in 30 days Current capital requirements

Constraint Factors

Capital availability Current on-hand inventories (Raw, Purchased FG) Additional demand sourcing - supplier constraints. Current sourcing/supplier constraints Amount additional capital obtained in 30 days Current purchase order cycle times Amount of inventory (Raw, Purchased FG) obtained in 30 days

Purchase order cycle time reestablished and sustain in 30 days

Qualitative Relationship Description


Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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Discussion
Source: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of an increase in quantities sourced (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Amount of each item purchased Staffing o Staff needed to meet current demand Productivity-purchase orders per FTE Needed, but may be underutilized Capital o Current capital requirements Credit line Cash on hand Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Current contract terms. Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Time to place a purchase order Supplier lead time Source: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question How much of an increase in quantities sourced (expressed as a percentage) can the company sustain, given 30 days Demand: o Additional source volume to be determined given ramped up resources below Staffing o Staff availability in procurement (underutilized FTEs) o How much staff can be recruited/hired and trained fill gap between underutilized FTEs and FTEs needed to increase and sustain quantities sourced given 30 days Capital o Current capital availability Credit line Cash on hand Accounting procedures o How much capital can be obtained to increase quantities sourced given 30 days Materials o Sourcing Constraints Time required in negotiating new source/volume contracts/terms Time required to find/obtain additional sources o All else equal in make, deliver, return, how much inventory (raw material and purchased finished goods) can be obtained, delivered and phased in and sustained for order fulfillment, including safety stock given 30 days. Cycle Time o Procurement order cycle time reestablished and sustained for increased quantities sourced given 30 days. Time to place a purchase order Supplier lead time

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Make Adaptability Metric Definition
The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Make Adaptability

Current make volume

Additional make volume

Productivity-units/orders produced per FTE

Direct labor availability

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Amount additional labor recruited/hired/trained in 30 days

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Amount additional capital obtained in 30 days Current inventory on hand (WIP, FG) Amount additional equipment obtained in 30 days Current manufacturing order cycle time Amount additional internal space obtained in 30 days

Supplemental outsource/lease availability

Amount supplemental outsourced or leased resources or facilities obtained in 30 days

Amount additional inventory (raw) received and made (WIP, FG) in 30 days

Manufacturing cycle time reestablished and sustained in 30 days

Qualitative Relationship Description


Least quantity sustainable when considering all components

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Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion


Make: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of an increase in quantities produced (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Amount of each item manufactured Labor o Labor needed to meet current demand Productivity-units/orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question How much of an increase in quantities produced (expressed as a percentage) can the company sustain, given 30 days Demand: o Additional make volume to be determined given increased resources below Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTEs) o How much labor can be recruited/hired and trained fill gap between underutilized FTEs and FTEs needed to increase and sustain quantities produced given 30 days Capital/Assets o Current Internal Capacity utilization Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities produced given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets
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needed to increase and sustain quantities produced given 30 days Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Facilities, lease building, etc. Lease manufacturing equipment, materials handling and packaging equipment, etc. Co-packers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities produced given 30 days Materials o All else equal in source, deliver and return, how much raw material inventory can be received and phased into manufacturing and produced into WIP and FG inventory, and sustained for order fulfillment, including safety stock given 30 days. Cycle Time o Manufacturing cycle time reestablished and sustained for increased quantities produced given 30 days.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Deliver Adaptability Metric Definition
The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Deliver Adaptability

Current delivery volume

Additional delivery volume

Direct labor availability Productivity-orders shipped per FTE Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Amount labor recruited/hired/trained in 30 days

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Current internal storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Amount additional capital obtained in 30 days Current inventory on hand (FG) Amount of additional equipment obtained in 30 days Current logistics order cycle time Amount of additional internal space obtained in 30 days

Supplemental outsource/lease availability

Amount supplemental outsourced or leased resources or facilities obtained in 30 days

Amount increase in inventory (FG) obtained in 30 days Logistics order cycle time reestablished and sustained in 30 days

Qualitative Relationship Description


Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable)


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Calculation

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Data Collection Discussion


Deliver: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of an increase in quantities delivered (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Number of orders shipped Labor o Labor needed to meet current demand Productivity-orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time Deliver: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question How much of an increase in quantities delivered (expressed as a percentage) can the company sustain, given 30 days Demand: o Additional delivery volume to be determined given increased resources below Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTEs) o How much labor can be recruited/hired and trained fill gap between underutilized FTEs and FTEs needed to increase and sustain quantities delivered given 30 days Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) o How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities delivered given 30 days
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How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities delivered given 30 days Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities delivered given 30 days Materials o All else equal in source, make, return, amount of how much finished goods inventory can be received/stocked, including safety stock to sustain quantities delivered given 30 days Cycle Time o Logistics cycle time reestablished and sustained for increased quantities delivered given 30 days (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Source Return Adaptability Metric Definition
The maximum sustainable percentage increase in returns of raw materials to suppliers that can be achieved in 30 days.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Source Return Adaptability

Current source return volume

Additional source return volume

Productivity-orders returned per FTE

Procurement staff/Logistics labor availability

How much additional staff/labor recruited/hired/trained in 30 days additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume

Current internal equipment capacity utilization

Internal and External (3PL) storage capacity needed for current return volume

Current internal storage capacity utilization

Constraint Factors
Current capital requirements

Capital availability

How much additional capital obtained in 30 days Current supplier return order cycle time How much additional equipment obtained in 30 days

How much additional internal space obtained in 30 days

Supplemental outsource/lease availability

How much supplemental outsourced (3PL) or leased resources or facilities obtained in 30 days

Supplier return order cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description


The component which is the bottleneck determines the least volume for the increase of returns within 30 days. Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion


Source Return: Input Assuming no supplier constraints, current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of an increase in quantities returned to suppliers (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Number of orders returned Staff / Labor o Procurement Staff / Logistics Labor needed to meet current returned volume Productivity-orders returned per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current supplier return order cycle time Supplier return order processing cycle time (procurement and logistics) Pick-to-ship cycle time Transit time Source Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no supplier constraints, elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question How much of an increase in quantities returned to suppliers (expressed as a percentage) can the company sustain, given 30 days Demand: o Additional supplier return volume to be determined given increased resources below Staff / Labor o Procurement staff / Logistics labor availability (underutilized FTEs) o How much procurement staff/logistics labor can be recruited/hired and trained fill gap between underutilized FTEs and FTEs needed to increase and sustain quantities returned to suppliers given 30 days Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures
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Finance Procedures (outsource vs. in-source, lease vs. purchase) How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned to suppliers given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned to suppliers given 30 days Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities returned to suppliers given 30 days Cycle Time o Source return cycle time reestablished and sustained for increased quantities returned to suppliers given 30 days Supplier return order processing cycle time (procurement and logistics) Pick-to-ship cycle time Transit time o

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Deliver Return Adaptability Metric Definition
The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days.

Hierarchical Metric Structure


Level 1
Upside Supply Chain Adaptability

Level 2

Upside Deliver Return Adaptability

Current deliver return volume

Additional deliver return volume

Productivity-orders returned per FTE

Customer Service staff/Logistics labor availability

How much additional staff/labor recruited/hired/trained in 30 days

Internal and External (3PL) equipment capacity needed for current return volume

Current internal equipment capacity utilization

Current internal storage capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Constraint Factors
Current capital requirements

Capital availability

How much additional capital obtained in 30 days

Current customer return order cycle time

How much additional equipment obtained in 30 days

How much additional internal space obtained in 30 days

Supplemental outsource/lease availability

How much supplemental outsourced (3PL) or leased resources or facilities obtained In 30 days

Customer return order cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description


The component which is the bottleneck determines the least volume for the increase of returns within 30 days. Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion


Deliver Return: Input Assuming no customer constraints, current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of an increase in quantities returned from customers (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Number of orders returned Staff / Labor o Customer Service Staff / Logistics Labor needed to meet current returned volume Productivity-orders returned per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Credit line Cash on hand Accounting procedures Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current customer return order cycle time Customer return order processing cycle time (customer service and logistics) Transit time Return processing and disposition cycle time Deliver Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no customer constraints, elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question How much of an increase in quantities returned from customers (expressed as a percentage) can the company sustain, given 30 days Demand: o Additional customer return volume to be determined given increased resources below Staff / Labor o Customer Service staff / Logistics labor availability (underutilized FTEs) o How much customer service staff/logistics labor can be recruited/hired and trained fill gap between underutilized FTEs and FTEs needed to increase and sustain quantities returned from customers given 30 days Capital/Assets o Current Internal Capacity utilization Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital availability Credit line Cash on hand Accounting procedures
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Finance Procedures (outsource vs. in-source, lease vs. purchase) How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned from customers given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned from customers given 30 days Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities returned from customers given 30 days Cycle Time o Deliver return cycle time reestablished and sustained for increased quantities returned to suppliers given 30 days o Customer return order processing cycle time (customer service and logistics) Transit time Return processing and disposition cycle time o

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June 2006

Performance Attribute: Supply Chain Flexibility Level 1 Metric: Downside Supply Chain Adaptability Metric Definition
The reduction in quantities ordered sustainable at 30 days prior to delivery with no inventory or cost penalties. Note: 30 days is an arbitrary number provided for benchmarking purposes. For some industries and some organizations 30 days may be in some cases unobtainable or in others too conservative.

Hierarchical Metric Structure


Level 1

Downside Supply Adaptability

Level 2

Downside Source Adaptability

Downside Make Adaptability

Downside Deliver Adaptability

Qualitative Relationship Description


The calculation of downside supply chain adaptability requires the calculation to be based on the least reduction sustainable when considering Source, Make, and Deliver components. Downside Source Adaptability: The raw material quantity reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Downside Make Adaptability: The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Downside Deliver Adaptability: The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

Quantitative Relationship (optional, if calculable)


Downside Source Adaptability + Downside Make Adaptability + Downside Deliver Adaptability

Calculation Data Collection


Adaptability measures are assumption based on historic events. Some elements can be measured and taken as a basis for further considerations.

Discussion
The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. P&L Impact Revenue COGS SGA Balance Sheet Impact Inventory

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Source Adaptability Metric Definition
The raw material quantity reduction sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure


Level 1

Downside Supply Adaptability

Level 2

Downside Source Adaptability

Current source volumes

Reduced source volumes accomplished in 30 days

Productivity-purchase orders per FTE

Procurement staff availability

Current capital requirements

Amount of staff that can be laid-off in 30 days

Constraint Factors

Current on-hand inventories (Raw, Purchased FG)

Capital availability Current Capital requirements (accounting policy) Demand sourcing - supplier constraints.

Current sourcing/supplier constraints

Current purchase order cycle times

Amount decrease in inventory (Raw, Purchased FG) obtained in 30 days Purchase order cycle time reestablished and sustained in 30 days

Qualitative Relationship Description


Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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Discussion
Source: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of a reduction in quantities sourced (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Amount of each item purchased Staffing o Staff needed to meet current demand Productivity-purchase orders per FTE Needed, but may be underutilized Capital o Current capital requirements Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Current contract terms. Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Time to place a purchase order Supplier lead time Source: Resource Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question How much of a decrease in quantities sourced (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery Demand: o Reduced source volume to be determined given ramped down resources below Staffing o Staff availability in procurement (underutilized FTEs) o How much staff can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital o Current capital requirements Accounting procedures for selling/diverting/recycling assets Materials o Sourcing Constraints Time required in negotiating new source/volume contracts/terms Time required to ramp down supplier inventory o How much inventory (raw material and purchased finished goods) can be returned, sold or diverted without cost penalty to ramp down to decreased quantities delivered given 30 days notice Cycle Time o Procurement order cycle time reestablished and sustained for decreased quantities sourced given 30 days. Time to place a purchase order Supplier lead time

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Make Adaptability Metric Definition
The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure


Level 1
Downside Supply Adaptability

Level 2

Upside Make Adaptability

Current make volume

Reduced make volume

Productivity-units/orders produced per FTE

Direct labor availability

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Amount labor that can be laid off in 30 days

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization Capital Requirements (Acct/Finance Policy)

Constraint Factors

Current capital requirements Amount of equipment recycled, diverted or sold in 30 days Amount internal space subleased or sold in 30 days

Current inventory on hand (WIP, FG)

Supplemental outsource/lease termination ability

Current manufacturing order cycle time

Amount supplemental outsourced or leased resources or facilities terminated in 30 days Amount reduced in inventory made (WIP, FG) in 30 days

Manufacturing cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description


Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation

Data Collection Discussion


Make: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question How much of a reduction in quantities produced (expressed as a percentage) can the company sustain, given 30 days? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Amount of each item manufactured Labor o Labor needed to meet current demand Productivity-units/orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Needed, but may be underutilized o Current capital requirements Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question How much of a decrease in quantities produced (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery Demand: o Reduced make volume to be determined given ramped down resources below Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTEs) o How much labor can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital/Assets o Current Internal Capacity utilization
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Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital requirements Accounting procedures for selling/diverting/recycling assets Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) and their effect upon ability to terminate leases or sell capital equipment assets. o How many capital equipment assets can be recycled, diverted or sold or subleased without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Facilities, space Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Facilities, lease building, etc. Lease manufacturing equipment, materials handling and packaging equipment, etc. Co-packers o How much supplemental outsourced or leased resources or facilities can be terminated to ramp down to decreased quantities delivered given 30 days notice Materials o All else equal in source, deliver and return, how much manufacturing quantities (WIP and FG inventory), including safety stock can be ramped down to decreased order fulfillment quantities given 30 days notice. Cycle Time o Manufacturing cycle time reestablished and sustained for decreased quantities produced given 30 days.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Deliver Adaptability Metric Definition
Downside Deliver Adaptability = The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure


Level 1
Downside Supply Adaptability

Level 2

Downside Deliver Adaptability

Current delivery volume

Reduced delivery volume

Productivity-orders shipped per FTE

Direct labor availability

Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Amount labor that can be laid off in 30 days

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Current internal storage capacity utilization Capital Requirements (Acct/Finance Policy)

Constraint Factors

Current capital requirements Amount of equipment recycled, diverted or sold in 30 days Current inventory on hand (FG) Amount internal space subleased or sold in 30 days Current logistics order cycle time Supplemental outsource/lease termination ability

Amount supplemental outsourced or leased resources or facilities terminated in 30 days

Amount decrease in inventory (FG) obtained in 30 days

Logistics order cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description


Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation

Data Collection Discussion


Deliver: Input Elements Current elements needed to fully understand future requirements, to establish what can be ramped down and sustained at 30 days prior to delivery, based on the question How much of a decrease in quantities delivered (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery? These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Number of orders shipped Labor o Labor needed to meet current demand Productivity-orders per FTE Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Facilities, space Fleet equipment, outside carrier loads, materials handling equipment, etc. Needed, but may be underutilized o Current capital requirements Accounting procedures Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time Deliver: Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question How much of a decrease in quantities delivered (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery Demand: o Reduced delivery volume to be determined given ramped down resources below Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTEs)
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How much labor can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital/Assets o Current Internal Capacity utilization o Facilities, space Fleet equipment, materials handling equipment, etc. o Current capital requirements Accounting procedures for selling/diverting/recycling assets Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) and their effect upon ability to terminate leases or sell capital equipment assets. o How many capital equipment assets can be recycled, diverted or sold without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Facilities, space Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability 3PL facilities, lease building, etc. Full service lease fleet, materials handling, etc. equipment Outside carriers o How much supplemental outsourced or leased resources or facilities agreements can be terminated to ramp down to decreased quantities delivered given 30 days notice Materials o All else equal in source, make, return, how much inventory can be shipped or diverted without cost penalty to ramp down to decreased quantities delivered given 30 days notice (all else equal in source and make, includes safety stock) Cycle Time o Logistics cycle time reestablished and sustained for decreased quantities delivered given 30 days (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Customer order processing cycle time (logistics only) Dock-to-stock cycle time Pick-to-ship cycle time Transit time o

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Performance Attribute: Supply Chain Costs Level 1 Metric: Total Supply Chain Management Cost Metric Definition
The sum of the costs associated with the SCOR Level 2 processes to Plan, Source, Deliver, and Return. Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost

Cost to Plan

Cost to Make Cost to Source

Cost to Return

Level 2
Cost to Deliver

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


TSCMC = Cost to Plan + Source + Make + Deliver + Return

Calculation
TSCMC = Sales Profits Cost to Serve (e.g., marketing, selling, administrative)

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Plan Process Number: P1, P2, P3, P4, P5 Metric Definition
The sum of the costs associated with Plan.

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Plan

Cost to Plan Source

Cost to Plan Make

Level 3

Cost to Plan Deliver

Cost to Plan Return

Cost to Plan Supply Chain

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Cost to Plan = Sum of Cost to Plan (Plan + Source + Make + Deliver + Return)

Calculation

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Source Metric Definition
The sum of the costs associated with Source.

Process Number: S1, S2, S3

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Source

Level 3

Supplier Management (See processes under Source)

Material Acquisition Management (See processes under Source)

Qualitative Relationship Description

Quantitative Relationship (optional, if calculable)


Cost to Source = Sum of Cost for (Supplier Management + Material Acquisition Management)

qualification + etc.

Calculation - Supplier Management = material planning + planning procurement staff + supplier negotiation and

- Material Acquisition Management = bidding and quotations + ordering + receiving + incoming

material inspection + material storage + payment authorization + sourcing business rules and rqmts. + inbound freight and duties + etc.

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Make Process Number: M1, M2, M3 Metric Definition
The sum of the costs associated with Make. Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Make

Level 3

See Cost of Goods Sold

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Calculation

Data Collection

Discussion

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Deliver and/or Install Metric Definition
The sum of the costs associated with Deliver and/or Install

Process Number: D1, D2, D3

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Deliver

Level 3

Sales (order) Management (See processes under Deliver)

Customer Management (See processes under Deliver)

Qualitative Relationship Description

Quantitative Relationship (optional, if calculable)


Cost to Deliver = Sum of Cost of ( Sales order management + Customer Management )

Calculation
Sales order management = inquiry & quotations + order entry & maintenance + channel management + order fulfillment + distribution + transportation + outbound freight and duties + installation + customer invoicing / accounting + new product release / phase-in + etc. Customer Management = financing + post-sales customer service + handling disputes + field repairs + enabling technologies + etc.

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Return Metric Definition

Process Number: SRx, DRx

Cost to Return Defective Product - The sum of the costs associated with returning a defective product to the supplier. Cost to Return Excess Product - The sum of the costs associated with returning excess product to the supplier. Cost to Return MRO Product - The sum of the costs associated with returning MRO product to the supplier.

Hierarchical Metric Structure


Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Return

Cost to Source Return

Cost to Deliver Return

Level 3

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Cost to Return = Sum of Cost to Return ( to Sources + from Customers )

Calculation
Cost to Return to Source (SRx) = Verify Defective Product Costs + Disposition of Defective Product Costs + Identify MRO Condition Costs + Request MRO Return Authorization Costs + Schedule MRO Shipment Costs + Return MRO Product Costs + etc. Cost to Return From Customer (DRx) = Authorization Costs + Schedule Return Costs + Receive Costs + Authorize MRO Return Costs + Schedule MRO Return Costs + Receive MRO Return Costs + Transfer MRO Product Costs + etc.

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 1 Metric: Cost of Goods Sold Metric Definition
The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure


Level 1

Cost of Goods Sold (COGS)

Level 2

Cost to Make

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Cost of Goods Sold (COGS) = Cost to Make

Calculation
COGS = direct material costs + direct labor costs + indirect costs related to making product

Data Collection
Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the horizontal processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Make Process Number: M1, M2, M3 Metric Definition
The sum of the costs associated with Make.

Hierarchical Metric Structure


Level 1

Cost of Goods Sold (COGS)

Level 2

Cost to Make

Direct Material Cost

Direct Labor Cost

Level 3
Indirect Cost Related to Production

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


Cost to Make = Sum of Direct Material, Direct Labor, and Direct non-Material Product-related Cost (equipment) and of Indirect Product-related Cost

Calculation Data Collection


Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organizations general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations horizontal core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems). In some cases, (1) direct material data is maintained at the unit level in bills of material (BOMs) or recipe formulas; and (2) direct labor and direct non-material product (equipment) data is maintained at the unit level in labor/machine routings or process sheets.

Discussion
Collecting transactional information, primarily resource expenses and operational drivers, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of (1) the horizontal processes (referenced in Lean environments as value-stream mapping), and (2) products (or intermediate outputs) with both types of calculations based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Cash-to-Cash Cycle Time Metric Definition
The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Hierarchical Metric Structure


Cash-to-Cash Cycle Time

Level 1

Days Sales Outstanding Level 2 Inventory Days of Supply

Days Payable Outstanding

Qualitative Relationship Description


The longer the cash-to-cash cycle, the more current assets needed (relative to current liabilities) since it takes longer to convert inventories and receivables into cash. In other words, the longer the cash-to-cash cycle, the more net working capital required.

Quantitative Relationship (optional, if calculable)


The Cash-to-Cash Cycle time is measured by converting into days the supply of inventory in stock and the number of days outstanding for accounts receivable and accounts payable. The inventory days of supply is added to the days outstanding for accounts receivable. The accounts payable days outstanding is subtracted from this total to determine the cash-to-cash cycle time.

Calculation
Cash-to-Cash Cycle Time = Inventory Days of Supply + Days Sales Outstanding Days Payable Outstanding Level 2 Metrics: Inventory Days of Supply = the amount of inventory (stock) expressed in days of sales. The [5 point rolling average of gross value of inventory at standard cost] / [annual cost of goods sold (COGS) / 365] Example: If 2 items a day are sold and 20 items are held in inventory, this represents 10 days (20/2) sales in inventory. (Other names: Days cost-of-sales in inventory, Days sales in inventory) Days Sales Outstanding = the length of time from when a sale is made until cash for it is received from customers. The amount of sales outstanding expressed in days. The [5 point rolling average of gross accounts receivable (AR)] / [total gross annual sales / 365]. Example: If $5000 worth of sales were made per day and $50,000 worth of sales were outstanding, this would represent 10 days ($50,000/$5000) of sales outstanding. (Other names: Days sales in Accounts receivables)
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Days Payable Outstanding = the length of time from purchasing materials, labor and/or conversion resources until cash payments must be made expressed in days. The [5 point rolling average of gross accounts payable (AP)] / [total gross annual material purchases / 365]. (Other names: Average payment period for materials, Days purchases in accounts payable, Days outstanding in accounts payable) The 5 point rolling average calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. The 5 point rolling average calculation is: [Sum of the 4 previous quarters + projection for next quarter) / 5]

Data Collection
Unlike the other SCOR attributes, where data requirements are specified, typically all of the cash-to-cash cycle time source data is already captured by business operating systems: - general ledger system - accounts receivable system - accounts payable system - purchasing system - production reporting system - customer relationship management system As a result, information is calculated by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules.

Discussion
Cash-to-cash Cycle Time is a value metric used to measure how efficiently a company manages its working capital assets. This metric is a generally accepted Supply Chain metric within many industries and is used to benchmark supply chain asset management performance. The term 5 point annual average can be confusing in that it can imply a measure over a years period of time when the data points are taken over 5 quarters. The intent of the approach is to smooth the seasonal peaks and valleys over time and to balance projected data with historical data. The measurement can be taken quarterly or at any given consistent time frame.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Return on Supply Chain Fixed Assets Metric Definition
Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return.

Hierarchical Metric Structure


Return on Supply Chain Fixed Assets

Level 1

Level 2

Supply Chain Revenue

Supply Chain Management Costs

Cost of Goods Sold

Supply Chain Fixed Assets

Source Fixed Asset Value

Make Fixed Asset Value

Deliver Fixed Asset Value

Level 3
Return Fixed Asset Value

Plan Fixed Asset Value

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


The return on supply chain fixed assets is measured by monetizing the supply chain revenue, cost of goods sold and supply chain management costs to determine the profit from the respective supply chain. This amount is divided by the supply chain fixed assets to determine the return generated from the respective supply chain.

Calculation
Return on Supply Chain Fixed Assets = (Supply Chain Revenue COGS Supply Chain Management Costs) / Supply-Chain Fixed Assets "Supply Chain Revenue" is used in the metric rather than just Net Revenue. SC Revenue is calculated as: Supply Chain Revenue - COGS - Total Supply Chain Management Costs. This provides the revenue generated through the supply chain less the total costs associated with the supply chain. There is a need for a more specific revenue number than Net Revenue for use in the Supply Chain
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Revenue" level 2 metric. Net Revenue could include revenue from sources other than the supply chain, such as investments, leasing real estate, court settlements, etc... Supply Chain Revenue will be used and will be only the portion of Net Revenue that is generated by the specific supply chain being measured and analyzed. Level 2 Metrics Supply-Chain Revenue Operating revenue generated from a supply chain. This does not include non-operating revenue, such as leasing real estate, investments, court settlements, sale of office buildings, etc... COGS Calculation - Refer to the section for COGS in the Attribute for Costs. Supply Chain Management Costs Calculation - refer to the section for Supply-Chain Management Costs in the Attribute for Costs. Supply Chain Fixed Assets Source Fixed Asset Value + Make Fixed Asset Value + Deliver Fixed Asset Value + Return Fixed Asset Value + Plan Fixed Asset Value Level 3 Metrics Plan Fixed Asset Value- The current value of the supply chain assets used in supply chain integration (See EP.5) Source Fixed Asset Value - The current value of the supply chain assets used in the Source process. (See ES.5) Make Fixed Asset Value- The current value of the supply chain assets used in the Make process. (See EM.5) Deliver Fixed Asset Value - The current value of the supply chain assets used in the Deliver process. (See ED.5) Return Fixed Asset Value - The current value of the supply chain assets used in the Return process. (See ER.5) A Revised Capital Plan is an output of the Manage Integrated Supply Chain Fixed Assets (EP.5) process element and would contain supply chain capital asset information that could be used in measuring the Supply Chain Fixed Assets.

Data Collection
Unlike the other SCOR attributes, where data requirements are specified, typically all of the return on working capitals source data is already captured by business operating systems: - general ledger system - fixed asset system - purchasing system - labor reporting system - production reporting system - customer relationship management system As a result, information is calculated by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules. In order to measure Return on Supply Chain Fixed Assets, the investment in supply chain capital assets needs to be known. This requires a clear understanding of what is a supply chain fixed asset. SCOR Ex.5 process elements were used since these are all focused on managing SC capital assets. It is the assets managed in these Enable processes that comprise Supply Chain Fixed Assets. The value of these assets is the denominator of the metric.

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Discussion
Range of fixed assets used in an organization that have the character of permanency rather than being rapidly replaced (or expensed); examples include land, warehouse, trucks, buildings, investments, and plant and machinery. Fixed assets used to operate the Supply Chain in each of the categories (P, S, M, D, R) are tracked within the Ex.5 process elements. A Revised Capital Plan is an output of the Manage Integrated Supply Chain Fixed Assets (EP.5) process element and would contain supply chain capital asset information that could be used in measuring the Supply Chain Fixed Asset Value.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Return on Working Capital Metric Definition

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4

Return on working capital is a measurement which assesses the magnitude of investment relative to a companys working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Hierarchical Metric Structure


Level 1
Return on Working Capital

Level 2

Supply Chain Revenue Accounts Receivable

(Sales Outstanding)
Inventory

Accounts Payable

Cost of Goods Sold

(Payables Outstanding)
SC Management Costs

Qualitative Relationship Description Quantitative Relationship (optional, if calculable)


The return on working capital is measured by monetizing the supply chain profit and dividing into the calculated amount the supply chain working capital position.

Calculation
Return on Working Capital = (Supply Chain Revenue COGS Supply Chain Management Costs) / (Inventory + Accounts Receivable Accounts Payable) Level 2 Metrics: Supply-Chain Revenue Operating revenue generated from a supply chain. This does not include non-operating revenue, such as leasing real estate, investments, court settlements, sale of office buildings, etc... COGS Calculation - Refer to the section for COGS in the Attribute for Costs. Supply Chain Management Costs Calculation - refer to the section for Supply-Chain Management Costs in the Attribute for Costs. Inventory = the amount of inventory (stock) expressed in dollars. The [5 point rolling average of gross value of inventory at standard cost]
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Sales Outstanding = the amount of accounts receivable outstanding expressed in dollars. The [5 point rolling average of gross accounts receivable (AR)] Payables Outstanding = expressed in dollars, the amount of purchased materials, labor and/or conversion resources that are to be paid (accounts payable). The [5 point rolling average of gross accounts payable (A/P)] The 5 point rolling average calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. The 5 point rolling average calculation is: [Sum of the 4 previous quarters + projection for next quarter) / 5]

Data Collection
Unlike the other SCOR attributes, where data requirements are specified, typically all of the return on working capitals source data is already captured by business operating systems: - general ledger system - accounts receivable system - accounts payable system - purchasing system - labor reporting system - production reporting system - customer relationship management system As a result, information is calculated by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules.

Discussion
"Supply Chain Revenue" is used in the metric rather than just Net Revenue. SC Revenue is calculated as: Supply Chain Revenue - COGS - Total Supply Chain Management Costs. This provides the revenue generated through the supply chain less the total costs associated with the supply chain. There is a need for a more specific revenue number than Net Revenue for use in the Supply Chain Revenue" level 2 metric. Net Revenue could include revenue from sources other than the supply chain, such as investments, leasing real estate, court settlements, etc... Supply Chain Revenue will be used and will be only the portion of Net Revenue that is generated by the specific supply chain being measured and analyzed.

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APPENDIX B Best Practices Definition of a Best Practice


A current, structured, proven and repeatable method for making a positive impact on desired operational results. Current - Must not be emerging (bleeding edge) and must not be antiquated Structured - Has clearly stated Goal, Scope, Process, and Procedure Proven - Success has been demonstrated in a working environment. Repeatable - The practice has been proven in multiple environments. Method Used in a very broad sense to indicate: business process, practice, organizational strategy, enabling technology, business relationship, business model, as well as information or knowledge management. Positive impact on desired operational results The practice shows operational improvement related to the stated goal and could be linked to Key Metric(s). The impact should show ether as gain (increase in speed, revenues, quality) or reduction (resource utilizations, costs, loss, returns, etc.). (Defined by SCC Best Practices Team, 2003)

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Best Practice SCOR Process(es) Best Practice Description

Available-to-Promise (ATP)
D1.3 (Reserve Resources and Determine Delivery Date)

Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order whereas three outputs can be distinguished: 1. the soonest delivery date concerning the customer request, 2. the confirmation of desired delivery date, item quantity, and item configuration 3. the selection of alternative, but deliverable product variants in case the desired delivery parameters can not be fulfilled. ATP is applicable over multiple sites in a global environment. Essentially, it is based on the extrapolation of the available inventory in all relevant locations over time: ATP is the uncommitted portion of a companys inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period, in which an MPS (Master Production Schedule) receipt is scheduled. Best Practice Need and Suitability Indicators ATP is particularly suitable for environments where customers require on-time and fast deliveries. Additional Comments Three methods of ATP calculations are used: discrete ATP, cumulative ATP with look-ahead, and cumulative ATP without look-ahead. Discrete available-to-promise is calculated based on beginning inventory, planned production according to the master production schedule (MPS) and customer commitments. For the first period, the available-to-promise is the sum of the beginning inventory plus the planned production for the first period minus customer commitments for the first period and all periods following the first period up to, but not including, the next period for which production has been scheduled in the MPS. For the following periods, there are two possibilities: If a master production quantity has been scheduled for the period the available-to-promise is the quantity scheduled minus all customer commitments for the period and for all following periods up to but not including, the next period for which a master production quantity has been scheduled. If no master production quantity has been scheduled for the period the available-to-promise is zero, even if deliveries in the period have been promised. The promised shipments often are shown as backlog (customer commitments) in the period with the most recent production (MPS). Cumulative available-to-promise is a calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without lookahead calculation. The cumulative with look-ahead ATP equals the ATP from the previous period plus the MPS of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without look-ahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

improves on-time delivery resulting in a higher service level (to commit date).

Responsiveness

reduces cycle times of certain administrative processes (e.g. definition of delivery date, order placement)

Flexibility

allows to determine whether flexibility is appropriate to cover future demand fluctuations and to prioritize activities accordingly.

Costs

None (except for less contract penalties caused by late deliveries)

Asset Management

Visibility of demand vs. production schedule and available inventory can result in better inventory planning and lower inventory levels.

Key Best Practice Success Factors Technology Features Available-to-promise requires implementation in an ERP-/SCM-/APS-software solution.

Other Success Factors Additional Resources

Appropriate data management guarantees exact ATP quantities.

Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS The Educational Society for Resource Management, Alexandria, VA Schnsleben, P. (2003): Integral Logistics Management Planning & Control of Comprehensive Supply Chains, St. Lucie Press, Boca Raton, FL, p. 233-235

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Best Practice SCOR Process(es) Best Practice Description

Carrier Agreements
S1.2, S2.2, S3.2 (Receive Product), ES.2 (Assess Supplier Performance), ES.7 (Manage Supplier Network ), ES.9 (Manage Supplier Agreements), D1.11, D2.11, D3.11 (Load Vehicle & Generate Shipping Documentation)

Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Such agreements can be established as part of a larger initiative to decrease raw material and finished goods inventory, while improving customer service. Contractual partnership requirements can include: Perfect Order Fulfillment (as a primary goal), equipment condition shipping condition pick-up and delivery times, documentation. Carrier performance in these fields is measured with immediate feedback and monthly formal reports. By measuring all carriers on a regular basis, trends of performance can be seen. This provides the opportunity to replace carriers performing poorly with those performing exceptionally. Furthermore, a transportation service agreement is signed with all domestic and global carriers. Contract line items specify on-time delivery, plus the payment requirements for services rendered. Best Practice Need and Suitability Indicators Any company receiving or shipping materials using common or contract carriers such as trucking, shipping, and airline companies. Also includes internal transportation providers (company owned transportation group). Additional Comments The top performance of carriers is due to a thorough knowledge of the industry and the requirements of a company, as well as the contract that is used with the carriers. Without a competent transportation manager, the contract, alone, would be of little value. The combination of trained, competent personnel and written agreements result in superior performance.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Better partnerships with and management of carriers typically results in improved on time deliveries.

Responsiveness

Carrier agreements often improve the ability to quickly book and execute transportation, reducing lead times.

Flexibility

Partnerships tend to work both ways, leading carriers to make additional capacity available to partners when needed, improving the ability to respond quickly to demand increases.

Costs

Carrier agreements provide a tool for both shipper and carrier to identify and take advantage of mutual cost savings.

Asset Management

More efficient use of transportation assets to move customer orders.

Key Best Practice Success Factors Technology Features From the carrier side, their tracking systems support performance measurement to a different degree (EDI, web-enabled carriers). Continuous on line tracking of shipment would be beneficial. Anyone interfacing with the carrier needs to be familiar with the carrier agreement specifications. Other Success Factors Formal recognition of carriers, for example, they can be certified on basis of six months reliability/compliance to the agreement. Formal feedback on monthly performance and immediate feedback on failures to comply with specifications.

Additional Resources None

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Best Practice Collaborative Planning, Forecasting and Replenishment (CPFR) SCOR Process(es) P1 (Plan Supply Chain) Best Practice Description The CPFR reference model provides a general framework for the collaborative aspects of planning, forecasting and replenishment processes. The model is considered a guideline for trading partner collaboration, which should be tailored specially for the industry and company readiness and maturity. CPFR defines eight collaboration tasks: Collaboration Arrangement is the process of setting the business goals for the relationship, defining the scope of collaboration and assigning roles, responsibilities, checkpoints and escalation procedures. The Joint Business Plan then identifies the significant events that affect supply and demand in the planning period, such as promotions, inventory policy changes, store openings/closings, and product introductions. Sales Forecasting projects consumer demand at the point of sale. Order Planning/Forecasting determines future product ordering and delivery requirements based upon the sales forecast, inventory positions, transit lead times, and other factors. Order Generation transitions forecasts to firm demand. Order Fulfillment is the process of producing, shipping, delivering, and stocking products for consumer purchase. Exception Management is the active monitoring of planning and operations for out-of-bounds conditions. Performance Assessment calculates key metrics to evaluate the achievement of business goals, uncover trends or develop alternative strategies. Based on this general framework, CPFR discusses collaboration scenarios (like replenishment collaboration or collaborative assortment planning), collaboration roles (who of the two partners involved is responsible for collaboration tasks), and organizational implications within partner companies.

The CPFR industry standard is sponsored by VICS, the Voluntary Inter-industry Standards body and the Uniform Code Council, UCC. The standard has also been adopted by the Global Commerce Initiative, GCI. Best Practice Need and Suitability Indicators Companies that heavily rely on demand forecast accuracy and high volume replenishment are primary beneficiaries of the standard. Additional Comments CPFR has primarily been adopted by the retail and consumer package goods industry. Wal-Mart was the founding company of the process and recently announced adoption by 1,200 of its suppliers. The process has also been adopted by the grocery industry as well as the chain drug store industry.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability Better Store in stock Better customer service

Experienced Impact 2% - 8% 2% - 8%

Responsiveness

Faster Replenishment Cycle Times

12% - 30%

Flexibility

Forecast improvement

20% - 40%

Costs

Lower Logistics Cost

3% - 4%

Asset Management

Inventory Reduction

10% - 40% (AMR)

Key Best Practice Success Factors Technology Features VICS CPFR interoperability technology standards documented and published by the CPFR Working Group. Standards support EDI 830, EDI 852, and XML Interoperability. Standards published for data modeling. Careful selection of trading partners. Having a joint front-end agreement to refer back to when the project gets off track.

Other Success Factors Additional Resources

www.cpfr.org is the official website for the VICS CPFR Working group. This site contains multiple publications on CPFR as well as the actual CPFR process mapping guidelines, data model formats, and CPFR presentations. Suleski, Janet (2001): Beyond CPFR: Retail Collaboration Comes of Age, AMR Research, April 1, 2001. www.globalscorecard.net The Global Scorecard. This site provides a Capability Assessment Tool designed to give you a detailed understanding of your ECR (Efficient Consumer Response) capability and highlight specific improvement opportunities for your company. ECR was an early foundation for CPFR. www.drummondgroup.com The Drummond Group on CPFR interoperability has certified technology companies. Test results are available on their web site.

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Best Practice SCOR Process(es) Best Practice Description

Co-Located Procurement Representatives


P1 (Plan Supply Chain)

Regionalized Procurement Representatives are positioned in local markets to support corporate / procurement goals. Companies realize support is needed when cost and delivery objectives are not consistent with organizational goals. This leading practice involves identifying local procurement personnel to assist in creating a supply base to meet internal and external product requirements. These local representatives will perform all procurement related activities for the organization. Co-located procurement personnel bring the knowledge of the local supply base, understand their organizations demand and supply signals, and communication capability to work with company global commodity leadership. For companies expanding their sourcing scope and distance, having personnel local to the market is a crucial element to maintaining supply chain performance. Local personnel are used to support the understanding of the demand and supply signals, production and logistics decisions. Companies that have sourced globally, but have not added local resources find challenges that diminish supply chain response time. Listed are some of the major factors: 1.) Communication (time, language, cultural) 2.) Lead time, 3.) Hidden Costs (taxes, tariffs, etc.), 4.) Quality Returns and Repairs, 5.) Political and Geography Risks, 6.) Units of Measure. Cost is the huge driver in this Best Practice. For example, decisions affecting the supply chain can be made more accurately and in a timelier manner by experts in the field who can experience the day-to-day activities. Best Practice Need and Suitability Indicators The best practice is most of all suitable for companies that source a large portion of their procurement volume in low-wage countries with a different culture. Additional Comments Regular meetings at least once a year among peers should be organized to share priorities and to align processes and reapplication opportunities.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability Increase Order Fill Rates

Experienced Impact

Responsiveness

Reduction in Product Lead-Time Improved Supply Chain Response Time Improved Source/Make Cycle Time Improved Production Plan Achievement Reduced Inventory Obsolescence

Flexibility

Costs

Impacts Purchase Order Costs Reduced Quality Returns

Asset Management

Increase Capacity Utilization Decrease Inventory Obsolescence

Key Best Practice Success Factors Technology Features Accessibility, accuracy, timeliness and visibility of enterprise-wide procurement information. Commercial software (of varying degrees of sophistication) is available to support the procurement and planning processes.

Other Success Factors Additional Resources None

None

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Best Practice SCOR Process(es) Best Practice Description

Convergence of SCOR, Six Sigma and Lean Methodology affects any SCOR process

SCOR, a cross-industry top-down standardized process analysis model, enables the efficient and effective endto-end evaluation of supply chains. By capturing operational baselines and comparing to industry peers and competitors, SCOR level one metrics provide a balanced measure of performance linked to the bottom line. Metrics and Best Practices steer teams to proven solutions, and the building block design provides a common language for both internal and external elements of a supply chain. SCOR therefore serves as a strategic project identification and prioritization engine for Lean and Six Sigma teams and provides the means to measure business impact. The strength of Six Sigma and Lean is producing results. These powerful methodologies can be used to gain efficiency and construct valuable processes because these disciplines, by their nature, look down at finite areas, cells, or processes to improve. They cannot look upward at organizational goals and select the best project on which to work. SCOR also helps introduce the concepts of Six Sigma and Lean to transactional (non manufacturing) areas not normally associated with productivity or quality initiatives. With its cross functional makeup a SCOR project team will focus on reducing variability and eliminate waste in areas such as accounting, customer service, and sales. Best Practice Need and Suitability Indicators Need to prioritize lean and six sigma project according to their effects on organizational goals. Additional Comments This Venn Diagram highlights tools of each methodology:
TOOLS (Examples only) SIX SIGMA
PFMEA ANOVA Gage R&R SPC Process Simulation Multi-Vari Analysis Regression Analysis DOE (Design of Experiments) Control Plans COPQ/Financial Analysis 7 Basic Quality Tools: Program Mgmt Pareto Multi-Level Cause & Effect Pareto Analysis/ SIPOC Histograms Decomposing Project Mgmt Control Charts Metrics Process Mapping/ Scatter Diagrams GAP Analysis Value Stream Mapping/ Graphs Voice of the Geographic Mapping/ Check sheets Customer Thread Diagram PDCA/ QFD (Quality Function SDCA Deployment) Standardized Work/ Best Practices 7 Mgmt Tools: Relations Diagram Affinity Diagram Tree Diagram Matrix Diagram Matrix Data-Analysis Arrow Diagram PDPC Reference Model Organization Map SCORcard Level One Operational Process Metrics Level Two Diagnostic Metrics Level Three

Kaizen Kanban Single Minute Exchange of Die (SMED) Takt Time Poke Yoke

Supplier/Customer Performance Scorecards Inter-Company Kanban CPFR

LEAN

SCOR

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Responsiveness Convergence of SCOR, Six Sigma and Lean Methodology (with SCOR as a strategic project identification and prioritization engine) enables organizations to improve the right performance attributes, which can be any set of SCOR level one metrics. See other SCOR Best Practices and especially the Best Practices Six Sigma and Lean Methodology for possible impacts. Costs

Flexibility

Asset Management Key Best Practice Success Factors Technology Features None

Other Success Factors Additional Resources

None

There is a Supply Chain Council Special Interest Group on this Best Practice. Please contact the group, if you would like to contribute to the convergence of SCOR, Six Sigma and Lean Methodology.

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Best Practice SCOR Process(es) Best Practice Description

Cross Docking
D1.8 (Receive Product from Source or Make), D1.11 (Load Vehicle & Generate Shipping Documentation), D1.12 (Ship Product)

Cross docking is used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. Cross docking minimizes the need to put incoming inventory into storage and the number of touches for each order. To accomplish this, the receiving activity is linked with open order status. Each inbound shipment has a planned outbound already scheduled. When an item is received, the system will look to the open order file to find its outgoing order. The item is moved from receiving directly to the order staging area, order pick area, or into an outbound vehicle. Three common types of cross docking are: 1. Trans-shipment: The order received is already packaged for delivery to the customer
Ship A Receive A B C Move B
Customer B Customer A

C
Customer C

2. Flow-through: Some sortation or break bulk is needed when the order is received
Pick Ship Receive Allocate
Customer A

Customer B

Customer C

3. Merge-in-transit: Current inventory in storage at the DC is added to the incoming order (see separate Best Practice).
Pick Storage Receive Allocate
Customer A

Ship

Customer B

Customer C

(Courtesy: Robert Novack, Penn State University, University Park) Best Practice Need and Suitability Indicators Small shipment sizes (economies of scale through bundling shipments) Constrained distribution center capacity Perishability of products Additional Comments Suppliers usually need to make some type of investment (customized bar codes, special overpacks, or unique pallet patterns) to participate in cross-docking.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability None

Experienced Impact

Responsiveness

None

Flexibility

None

Costs

Reduces transportation costs (compared to transportation without cross-dock), because deconsolidation at cross-dock for multiple receivers allows shippers to deliver larger shipments

Asset Management

Reduces average inventory level and (as a consequence) working capital invested in inventory

Key Best Practice Success Factors

Technology Features

Cross docking requires the use of a Warehouse Management System (WMS), which needs to interface with the order management system. Bar codes and RF scanners will allow the receiving function at the DC to become more productive. The use of EDI messages, especially of ASNs (Advance Ship Notices) is highly beneficial. The shipper sends an ASN to the receiver as a notice that a shipment has been sent, allowing the receiving facility to more productively schedule order picking and outbound deliveries.

Other Success Factors Additional Resources None

None

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Best Practice SCOR Process(es) Best Practice Description

Drum-Buffer-Rope Scheduling Technique


M1.1 (Schedule Production Activities) , M2.1 (Schedule Production Activities), M3.2 (Schedule Production Activities)

Drum-Buffer-Rope (DBR, also referred to as Synchronous Manufacturing, or Constraint Management) is, in the Theory of Constraints (TOC), a technique used to manage resources to maximize throughput.

The Drum is the systems constraint (or bottleneck) that sets the pace for the entire organization. Such a bottleneck determines the final output of the system regardless of the excess capacity that might be available on the other resources. (In DBR terminology, the drum is also the schedule of the constraint.)

The Drum Buffer is a time offset (raw material will be released earlier than expected by the conventional lead time) that helps exploit the drums capacity. Placing the buffer in front of the drum we reduce/absorb the impact of uncertainty along the production chain from the gating operations all the way to the constraint. The drum buffer can be seen as a powerful tool in helping us prevent the drum from starving.

The Rope is the material release schedule tied to the drum. With the rope we make sure that no material is released to the shop floor without the prior approval of the drum. The shop floor has a virtual rope tying the drum to the gating operations, each time the drum finishes a lot it will pull this rope to ask for more material to be released. This powerful concept (global management vs. localized approach) has an immediate impact on both lead time and WIP. Release only what is needed when it is needed! Best Practice Need and Suitability Indicators High Work-in-progress (WIP) with deteriorating throughput Unpredictable manufacturing lead times (e.g. due to many prioritized production orders) Mature serial or mass production running at a fixed rate The technique is mainly suitable for machine-limited capacities.

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Additional Comments In the application of Drum-Buffer-Rope (DBR), the effectiveness of the pace setting operation (drum) is critical for maximizing throughput. The Overall Equipment Effectiveness (OEE) is the single metric that reflects that effectiveness. OEE is the result of multiplying Availability (up-time) Run time divided by scheduled time (also 1 minus downtime) Quality Rate (first pass yield) First-pass good units produced divided by total units produced Performance Efficiency Theoretical cycle time by the actual cycle time. Theoretical cycle time should be that, which was promised by the production equipments manufacturer. (In practice theoretical cycle time often is downgraded by industrial engineers applying factors such as personal fatigue and delay to derive a standard cycle time, which is used to cost the product and provide planning an attainable capacity quantity.) The difference between the OEE value and 1.0 indicates the percentage of production lost to ineffective operations. Examining the components of OEE will enable root cause analysis and direct corrective action.

Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Increases perfect order fulfillment, as manufacturing lead time gets more predictable

Responsiveness

Increases with decreasing manufacturing lead time

Flexibility

None

Costs

Higher equipment effectiveness reduces cost of goods sold

Asset Management

Reduces WIP, leads to a higher equipment effectiveness

Key Best Practice Success Factors Technology Features None

Other Success Factors

None

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Additional Resources Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS The Educational Society for Resource Management, Alexandria, VA, USA Goldratt, E. M., Cox, J. (1992): The Goal A Process of Ongoing Improvement, North River Press, Norwich, CT, USA Spencer, M. S.; Cox, J. F. (1997): The Constraints Management Handbook, The St. Lucie Press/APICS Series on Constraints Management. Umble, M.; Mokshagundam L. S. (1995): Synchronous Manufacturing Principles for World Class Excellence, Spectrum Publishing Company. Hansen, R. C. (2002): Overall Equipment Effectiveness, Industrial Press, New York, NY, USA. Mondher, B.-H.: Synchronous Manufacturing Quick Reference Guide, Supply Chain Strategy and Solutions, BearingPoint, Inc.

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Best Practice Lean Methodology SCOR Process(es) affects any SCOR process Best Practice Description "Lean" is a term coined in 1990 in the book "The Machine that Changed the World" by MIT researchers to describe the effectiveness and efficiency of the Toyota Production System in comparison to the traditional mass production approach to manufacturing. "Lean" practices actually date back to the early 1900's when Sakichi Toyoda introduced jidoka (autonomation) into his loom operations. The modern understanding of "lean" comes from the Toyota Production System developed by Taiichi Ohno, which was inspired by Henry Ford's River Rouge moving assembly line. "Lean" thinking is a focus on creating process "flow" through the reduction of waste. The waste reduction in production environments is typically targeted at the seven wastes: overproduction, waiting, transportation, inappropriate processes, inventory levels, unnecessary motion, and defects. Lean Thinking is applicable to all processes.

The typical enabler for lean improvement is through the use of Value Stream Mapping (VSM). VSM is the process of walking and drawing the process steps (material and information) for one product family from beginning to end, typically within a single facility, to create a current state map. Current state maps are designed to highlight the process flow of an item through the value stream. Following the current state map, a future state map is created. Future state maps are then developed to identify process improvements that eliminate waste. Finally, a detailed implementation plan is developed to transition from the current state to the future state, typically within an 8-12 month period. VSM can also be applied similarly across suppliers to create supply chain value stream maps.

While lean excels at improving process efficiency, there are some limitations to lean application. Lean implementations are typically limited by the inability to systematically identify and prioritize lean projects, measure the effects of changes on the supply chain systems bottom line, and align and communicate activities across organizations. See the Best Practice on Convergence of SCOR, Six Sigma and Lean Methodology to overcome this limitation.

Best Practice Need and Suitability Indicators Need for process cycle efficiency improvements Need to reduce process cycle times Elimination of non-value added process steps Need to build a culture of lean thinking throughout Additional Comments Lean is a methodology and way of thinking to transform organizations into new levels of efficiency, supported by a toolset for executing improvement projects that reduce process cycle time and increase process cycle efficiencies. Execution is enabled through people, and must become the way work is done within the organization. Application of lean tools is based on the effective use of value stream mapping. This methodology relies heavily on the ability to record all steps throughout processes and to determine value added versus non-value added activities. Lean is a methodology supported by a toolset that is generally limited by the inability to strategically select projects that provide the greatest value to the overall organization.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

enables organizations to determine how current process steps and cycle efficiencies affect overall supply chain reliability. Details can be displayed through value stream mapping. Process cycle-time decreases (typically by around 70%) through eliminating non-value added process steps. Lean organizations have the worker flexibility and adaptability to respond to surges and shocks in production. Lean creates process flow and allows for quick changeover between functions, tools, and processes. Lean facilities typically have considerable cross training, which creates highly flexible teams of people and organizational layouts. Cost reduction is a typical impact of lean as non-value added processes are removed and efficiency increases. Response times are also reduced which result in faster cash flow cycles. Lean typically reduces inventory levels and ensures the efficient use of assets with regard to customer demand. Suppliers are likewise encouraged to improve cycle efficiencies to increase their available inventory for customers to pull from.

Responsiveness

Flexibility

Costs

Asset Management

Key Best Practice Success Factors Technology Features Lean is people-oriented and can be successfully employed with minimal technological requirements. Some technology (e.g. a data warehouse with data extracted from an ERP source system) could potentially support an organizations application of lean. The successful transformation to lean is marked by the change in the way people address their work. Lean thinking must become a part of how work is done within an organization to be have sustainable continuous improvement.

Other Success Factors Additional Resources

Womack, J. P., Jones, D. T. (1996): Lean Thinking Banish Waste and Create Wealth in Your Corporation, Simon & Schuster, New York, NY Suzaki, K. (1987): The New Manufacturing Challenge Techniques for Continuous Improvement, Simon & Schuster, New York, NY Keyte, B., Locher, D. (2004): The Complete Lean Enterprise Value Stream Mapping for Administrative and Office Processes, Productivity Press, New York, NY Liker, J. (2004): The Toyota Way 14 Management Principles From The World's Greatest Manufacturer, McGrawHill, New York, NY Marchwinski, C., Shook, J., (2004): Lean Lexicon A Graphical Glossary for Lean Thinkers, Lean Enterprise Institute, Brookline, MA http://www.lean.org (Lean Enterprise Institute), http://www.lean.mit.edu (Lean Aerospace Initiative), http://www.superfactory.com (Superfactory)

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Best Practice Merge-in-Transit SCOR Process(es) D1.8 (Receive Product from Source or Make), D1.9 (Pick Product) Best Practice Description Merge-in-transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping (see Best Practice on CrossDocking, type three). Merging is usually performed in a shippers distribution center (DC) or in a carriers terminal.

Merge-in-transit allows the shipper to reduce its inventory levels on selected items in its DCs while still maintaining complete order integrity and reliable delivery. The practice increases overall delivery times, though. To keep delivery reliability to customers, supply chain information systems are required, which integrate among the shipper, its suppliers, and its carriers.

For make-to-order (MTO) products, the order lead time should be greater than the manufacturing lead time. Otherwise, the products should be manufactured and stocked prior to the shipment. The point is emphasized here to ensure that the proper business policy is adopted around defining MTO versus MTS (make-to-stock) products. Best Practice Need and Suitability Indicators Customer orders require commingling of products from different sources into a single shipment Order lead time is sufficient to allow collect products from their source locations Additional Comments Merge-in-transit is a Place Postponement (see Best Practice on Postponement) for parts of the supply chain.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Delivery reliability is at risk, information technology is required to keep it.

Responsiveness

Delivery time and as a consequence order fulfillment time increases

Flexibility

Allows flexibility in a make-to-order manufacturing environment, if manufacturing lead time is shorter than order lead time. DC flexibility improves because of ability to cross-dock selected inbound items.

Costs

None

Asset Management

Inventory level (and as a consequence working capital) is lower, as products are kept on stock in fewer locations.

Key Best Practice Success Factors This practice will require the use of some type of warehouse management system (WMS), bar code or RF scanner technology, and EDI (or some other technology that would allow the transmission of data between supply chain partners). It might also require the integration of MRP or other scheduling technology with the WMS. All will need to interface with the order management system.

Technology Features

Other Success Factors

Agreements with suppliers and carriers on: Delivery time requirements Inventory policies at the supplier locations and DCs Packaging items to produce the combined shipment, including generation of packing slips and other documentation are required. All involved parties must agree on the types and timing of information exchange. Since DCs will have lower inventory levels as a result of using this practice, extended stock-outs at suppliers or unreliable delivery times by carriers would negatively impact the customer delivery experience.

Additional Resources None

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Best Practice SCOR Process(es) Best Practice Description

Postponement
S1 (Source Stocked Product) , M1 (Make to Stock), D1 (Deliver Stocked Product)

Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location. This allows keeping safety stock of one generic product instead of multiple specific end-products. Especially in cases where the split of demand into specific end-products is uncertain, postponement with its risk pooling effect leads to less safety stock required and to a lower risk of obsolescence of end-products. Furthermore, as less value has been added to the generic product than to the specific end-product, less capital is bound in each stocked unit.

There are three ways to implement postponement: Product postponement A modular structure of the product allows late differentiation, e.g. adding country-specific power plugs shortly before shipment. Place postponement Safety stock is kept in one central warehouse instead of regional warehouses. Time postponement Processes which let the product become differentiated (e.g. coloring, flashing an EPROM with software) take place as late as possible. Best Practice Need and Suitability Indicators Significant number of variants of an end product with an uncertain split of demand on variants. Delivery time requested by customers must allow value-adding steps after receipt of customer orders (or reliable demand forecast). Additional Comments Product postponement leads to economies of scale in procurement and production as well, since the generic product will be produced in larger amounts than its variants.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

With the same safety stock, fill rate will typically increase.

Responsiveness

Order fulfillment cycle time increases, if value-adding steps are carried out after receipt of a customer order (see need indicators)

Flexibility

Increases, because a wide range of specific end-products can be derived from the stocked generic product.

Costs

None (except from economies of scale, see additional comment)

Asset Management

A lower safety stock level (without effect on fill rate) reduces fixed assets.

Key Best Practice Success Factors Technology Features None

Other Success Factors

For product postponement, an intelligent, modular product structure is a pre-requisite, so that logistics and/or supply chain management have to be involved in the product development process. To support the development process, logistics/supply chain management has to provide a clear estimation of the effects of product design (especially the number of variants) on production and logistics costs.

Additional Resources Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS The Educational Society for Resource Management, Alexandria, VA, USA Simchi-Levi, D.; Kaminsky, P.; Simchi-Levi, E. (1999): Designing and Managing the Supply Chain: Concepts, Strategies, and Cases, McGraw-Hill/Irwin, p. 56

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Best Practice Sales and Operations Planning (S&OP) SCOR Process(es) P1 (Plan Supply Chain) Best Practice Description Sales and operations planning (S&OP) is a process to develop tactical plans that provide management the ability to strategically direct its businesses by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, distribution, inventory, production, procurement) into one integrated set of plans. This set of plans typically covers at an aggregate (product family) level a period of 8 to 18 months with monthly periods and further years with half-year periods. S&OP is revised on a regular basis, most commonly monthly, but at least twice a year. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the companys plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Typically, Sales and Operations Planning includes four key monthly meetings: 1. Demand review (to align the sales forecasts for the next months) 2. Rough cut capacity planning review (to determine the available facilities and assess the feasibility of the production plans) 3. Pre-top Management review (to agree upon points to be escalated to top management) 4. Top Management review (to get plans authorized, issues fixed and financial plans committed). Best Practice Need and Suitability Indicators Variability or misbalance in demand and/or supply, need to balance supply and demand across the supply chain. Conflicting measures and behavior in various departments Inventory unbalanced across the supply chain Asset Utilization below industry norms Especially important if operations are to a large extend planned to forecasts Additional Comments None.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Effective S&OP plans will allocate resources such that inventory is in place at the correct locations at the correct time so that when customer orders come in they can be fulfilled within normal procedures/processes S&OP points out where the supply chain has lead-time issues. It raises the visibility of lead-time problems.

Responsiveness

Flexibility

The S&OP process makes potential issues visible early, so that changes can be made to accommodate the dynamics of the supply chain.

Costs

In particular, S&OP helps reduce the number and impact of expedites and rush production orders both of which have a negative impact on supply chain costs.

Asset Management

S&OP allows an enterprise to operate much closer to target production and inventory plans, and thus leads to lower inventory levels and more efficient use of assets.

Key Best Practice Success Factors S&OP is essentially a PEOPLE process that can be achieved with minimal technology support. In some cases, Excel spreadsheets are adequate. Accessibility, accuracy and timeliness of aggregate enterprise-wide data are critical, though. Ideally strategic external data (e.g. customer forecasts, co-packer capacity/costs) would be an important asset to the S&OP process.

Technology Features

Other Success Factors Additional Resources

Managers should have visibility to the plans of all departments. They should also understand the impact of their deviations from plan on the other departments and the enterprise as a whole. Performance to plan should be measured. Top Management sponsorship and involvement is essential for the success of S&OP.

Civerolo, J.; Rice, D.: Sales and Operations Planning Handbook, Gray Research.

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Best Practice Six Sigma SCOR Process(es) affects any SCOR process Best Practice Description Six Sigma is based on a philosophy of driving for near perfect process performance (3.4 defects per million opportunities for a defect) in order to satisfy customer needs and improve financial performance. Individuals can be trained in the various roles of Six Sigma, including Deployment Champions, Black, Green, and Yellow Belts. These practitioners then lead project teams made up of people from the operation through the use of the methodology to define and solve problems.

Six Sigma improvements are enabled through a rigorous methodology referred to as DMAIC (named for the phases of Define, Measure, Analyze, Improve, and Control). The DMAIC methodology for problem solving utilizes both process and statistical analyses to improve product/process quality and drive reduction of defects and variation. The methodology generally provides a systematic way to define the problem being addressed from both a process and financial impact perspective, identify potential factors impacting performance, narrow to the critical few root causes of defects or variation, and then establish procedures to implement sustained performance improvements.

A couple of apparent limitations with Six Sigma are the lack of alignment of priorities, understanding the interdependency between projects, i.e., incremental process improvements versus process redesign, and the lack of methods to develop future projects once the "initial hit lists" (pet-pains) become exhausted. See the Best Practice on Convergence of SCOR, Six Sigma and Lean to overcome this limitation.

Best Practice Need and Suitability Indicators Need for significant improvements for Product Quality or defect reduction Need to reduce process variability Additional Comments Six Sigma provides a standard toolset for executing improvement projects to increase product quality and reduce defects and process variability. Execution is enabled based on the Six Sigma steps of Define, Measure, Analyze, Improve, and Control (DMAIC). Relies heavily on statistical data gathering and root cause analysis. Six Sigma is a toolset and generally lacks an organized method for project identification. Training in this methodology generally requires a costly investment.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Suppliers and customers focusing on defect and variability reductions will increase product quality product and perfect order fulfillment as a consequence. Improve order fulfillment cycle time by reducing number of defective products produced, held in inventory or shipped and returned for warranty. Very important for new Product development deliveries.

Responsiveness

Flexibility

None.

Costs

Reduces cost as process variability is minimized or removed. Reduces product return due to defects.

Asset Management

None.

Key Best Practice Success Factors Technology Features A data warehouse (with data extracted from ERP source system) and electronic exchange of quality data with suppliers is useful. Teams should be set up with strong participation of the people directly working in the examined process. Six Sigma implementation should start with a small, controllable scope. Incremental learning prepares the organization for larger projects.

Other Success Factors Additional Resources

Tennant, Geoff (2000), Six Sigma: SPC and TQM in Manufacturing and Services Pande, Peter S., Neuman, Robert P., Cavanagh, Roland R. (2000), The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance Pande, Peter S., Holpp, Lawrence (2001), What Is Six Sigma? Snee, Ronald D., Hoerl, Roger (2002), Leading Six Sigma: A Step-By-Step Guide Based on Experience with GE and Other Six SIGMA Companies Eckes, George (2003), Six Sigma for Everyone http://www.isssp.com/ International Society of Six Sigma Professionals (ISSSP)

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Best Practice SCOR Process(es) Best Practice Description

Statistical Test Count ES.4 (Manage Product Inventory), ES.5 (Manage Capital Assets), ED.4 (Manage Finished Product Inventories), ED.5 (Manage Deliver Capital Assets)

The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined.

One of the primary benefits of this process is a significant reduction in the time and manpower required to perform an audit control over data gained with STC meets or exceeds all requirements of both internal and external auditors. In contrast to physical inventory and cycle count methods STC creates virtually no disruption to receiving/shipping. Interim reporting allows for monitoring of early results.

STC provides a snapshot of piece count and inventory value accuracy level. Measurable results on both are achieved that can be benchmarked year-to-year, facility-to-facility, and network-to-network. Benchmarking is a proactive driver for inventory accuracy improvement.

Best Practice Need and Suitability Indicators Statistical Test Count is particularly beneficial in high SKU count environments. Additional Comments The Statistical Test Count process is based on validated statistical theorems that meet independent auditor annual inventory validation requirements.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Through constant measurement and root cause analysis, use of the STC process promotes greater inventory accuracy to support perfect order fulfillment.

Responsiveness

Unlike cycle count and physical inventory methods, STC does not impede daily operations and does not require warehouse shut-down.

Flexibility

The STC process requires a low volume of counts that can be executed during off-peak times as resource availability allows. Significant cost avoidance as a result of decreased time and manpower to perform a physical audit implementing STC typically delivers up to a 90% cost reduction over physical inventory/cycle count methods. The diagnostic capabilities of Statistical Test Count identify opportunities to recover against previous inventory shrinkage (balance sheet implications).

Costs

Asset Management

Key Best Practice Success Factors STC uses part cost and other SKU characteristics to select a statistical sample that is indicative of the entire inventory population. STC also uses confidence intervals and other statistical tools to manage application of the program over time. STC does not require high investments in technology. It can be implemented with common spreadsheet software, for example.

Technology Features

Other Success Factors

The STC process delivers the greatest value in an environment of strong process discipline and commitment to continuous improvement. Results of the STC process should embedded in established process disciplines to address any unexpected deficiencies through adjusted sample size and root cause analysis.

Additional Resources Statistical Test Count is currently not well documented in literature. The following books deal with inventory accuracy in general: Wild, T. (2004): Improving Inventory Record Accuracy: Getting your stock information right. Brooks, R.B.; Wilson, L.W. (1995): Inventory Record Accuracy: Unleashing the Power of Cycle Counting

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Best Practice Supplier Performance Assessment System SCOR Process(es) ES2 (Assess Supplier Performance) Best Practice Description Assess Supplier Performance is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers business and/or competitive needs.

The supplier management program at a representative company has six elements: 1. Viability of supplier Financial credit rating via D & B, Risk rating associate with overall financial health. 2. Supplier Capability Quality of supplier deliveries in PPM for Engineering programs and Production parts 3. Dependability On time delivery for Engineering programs and Production deliveries, number of stock outs, average days of stock out 4. Responsiveness Part lead time, inventory turns 5. Competitiveness YTD part cost savings, number of parts on pull processes (JIT), electronic data exchange 6. Technical ability Global reach, Engineering ability, Technology roadmaps Each month, the source data is extracted from an ERP software for each supplier. A report card is created and communicated to suppliers. Performance data is monitored by commodity managers with the expectation that supplier responds to any variance to goals or expected results.

This supplier performance data can be used to select suppliers for a preferred supplier program. Preferred suppliers are given preference for all new business awards and supporting Engineering development programs. Best Practice Need and Suitability Indicators Significant expenses for raw material and semi-finished products (compared to own value-add) Need to reduce number of suppliers Additional Comments Suppliers are an external extension of the manufacturing process. In todays competitive environment, processes rely on dependable supply streams that react quickly to variability in demand.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Source data is from transactions logged in ERP system. No arguments concerning their data vs. our data. Variance to goals is trigger for supplier to present corrective actions. Supplier and customer can focus on performance vs. data integrity. Detail data on delivery and quality are used to identify chronic performance issues for improvement. Improve reaction time for demand inside of lead-time. Mind share is maintained due to monthly performance scorecard. Very important for New Product development deliveries.

Responsiveness

Flexibility

Since new business is awarded to suppliers that perform well, suppliers are in a continuous improvement mode.

Costs

Not an event, but expected throughout the year.

Asset Management

Suppliers are encouraged to improve inventory turns by implementing pull systems for their parts.

Key Best Practice Success Factors Technology Features A data warehouse (with data extracted from ERP source system) and electronic exchange of performance data with suppliers is useful. Supplier Management Process, Supplier Survey and Evaluation process, and Supplier Performance Measurement process have to be defined; Source of data, and performance expectations need to be communicated to suppliers and stakeholders in the company (buyers, engineers). For critical suppliers, a qualification process is recommended to align the operational standards with the companys requirements.

Other Success Factors

Additional Resources None

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Best Practice Vendor Managed Inventory (VMI) SCOR Process(es) P1, P2, P4, S1.1, S2.1, S3.3, ES.7, D1, D1.5, D1.6, D2.5, D2.6, D3.5, D3.6 Best Practice Description VMI is a concept for planning and control of inventory, in which the supplier has access to the customers inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

The supplier takes responsibility for the operational management of the inventory within a mutually agreed framework of performance targets, which are constantly monitored and updated to create an environment of continuous improvement.

Different styles of VMI agreements exist. Re-supply need not be on a scheduled basis. It can be more flexible to occur within defined conditions, e.g. any day normal business hours. The customer can be included in the approval process: The supplier could propose a replenishment (quantity, date) and the customer has to approve the order. Often (but not necessarily) VMI is combined with consignment. The supplier owns items until they are taken from the VMI and used, i.e. items are to be paid when they are used. Best Practice Need and Suitability Indicators Similar to conventional MRP planning of inventory, VMI implies manual planning and control tasks, but shifts these tasks to the supplier. This manual effort should be invested in such items, which are valuable and for which demand is unsteady or sporadic. For less valuable items with a continuous demand order point technique and kanban are more suitable. Additional Comments VMI works well, where demand and inventory data is readily available, systems are integrated, and economies of scale exist with large customers. Jointly Managed Information (JMI) is a derivation of VMI to use when and where VMI is not operationally or commercially practicable. Jointly-Managed Information is the automated collection, management, and integration of POS and inventory data into supplier inventory/materials management algorithms, independent of physical movements into the retail channel. This achieves many of the same benefits as VMI when there exists a free flow of information among retail channel partners, without introducing what can be sensitive financial relations between the parties. Retail partners often cannot or will not allow a vendor to automatically replenish them.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

VMI helps to assure the availability of items thereby helping to ensure better on-time delivery performance as well as greater fill rates. Less time is spent waiting for items, allowing the production to operate more smoothly and quickly. With visibility of the demand cycle, you can agree to an official lead time, which can be reduced, and be predictable. Kraft, for example, realized a 15-20% reduction in lead times. The supplier gains flexibility, when to re-supply, and as a consequence when and how much to manufacture. Inventory level decreases by up to 20% leading to lower inventory costs. The supplier gets a clear view of demand and flexibility (see above), so that he can achieve lower variable manufacturing costs Transfer of ownership of inventory and payment terms vary depending on the VMI agreement. VMI has a focus on working capital, with the goal being both parties experiencing a working capital reduction. The effect will vary depending on the details of the VMI agreement.

Responsiveness

Flexibility

Costs

Asset Management

Key Best Practice Success Factors

Specific capabilities must be in place for VMI to succeed. These include: Forecasting capability Replenishing capability Load building/order creation (at supplier) Reporting capability Electronic commerce infrastructure Technology Features The addition of technology such as ERP and SCM applications will enhance these capabilities and hence the success of the VMI initiative. Depending on the company size, the number of suppliers and the number of items partners, technology may even be a prerequisite. In most VMI programs, technology plays a major role. Adding technology increases the complexity and cost of implementation, though. Access to data such as inventory levels, demand and demand forecasts is essential to a successful VMI program. VMI works very well in conjunction with CPFR Collaborative Planning, Forecasting and Replenishment.

Other Success Factors Additional Resources

None

http://www.cpfr.org/documents/ppt/VMI_vs._CPFR.ppt (VMI vs. CPFR)

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Best Practice Wave Picking SCOR Process(es) D1.9 (Pick Product) Best Practice Description Wave picking is a practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DCs, orders are scheduled to be picked when they are received. In contrast to that, Wave picking consolidates orders into waves where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation. In an operation where freight consolidation for shipping is important, wave picking can help consolidate less-than-truckload (LTL) shipments into truckload (TL) shipments. Many times wave picking is performed in conjunction with batch picking. Batch picking aggregates similar items across orders into a single pick. For example, assume that the DC has 15 orders each containing Item A. In a single order pick environment, the order picker would make 15 separate trips to the location containing Item A. In batch picking, the order picker would make 1 trip to the location of Item A and pick 15 units. Most wave picking attempts begin with small batch picking initiatives. The combination of batch and wave picking provides the most productivity. Wave picking, in conjunction with batch picking, increases the total travel time for each order picker, but the total time per item picked is reduced. This also allows the DC more flexibility when scheduling its order picking crew. If multiple waves are picked during the day, care must be taken to balance the number of orders across each wave as equally as possible. Waves can be planned based upon the estimated time required to complete the wave. For example, if picker productivity is 120 units per hour and the shift consists of 10 pickers, the system can release work in 1 hour blocks to make management more efficient. This makes the operation more predictable and measurable. Wave picking increases DC picking and shipping productivity substantially. If managed appropriately, customers should receive more consistent deliveries. Wave picking Best Practice Need and Suitability Indicators Low distribution center (DC) labor productivity High DC order pick costs High transportation costs Ideally suited for environments where many customers place large numbers of similar orders. Demand is fairly stable throughout the operating period (also be used where seasonality temporarily increases volume in a DC). Not too practical in a pallet pick environment Works best with single line orders with the same SKU going to multiple customers. Frequently seen in the retail sector where a single DC has many shipping locations, each receiving a similar product mix. Automated picking and conveyor systems make this practice more efficient. Additional Comments Waves must match the business environment for which they are being planned. Direct-to-consumer businesses might schedule waves specific to days of delivery or might have a clean-up wave to catch all next day orders not waved throughout the day.

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Impact on Supply Chain Performance Attributes/Metrics Attribute Reliability

Experienced Impact

Wave picking can increase perfect order fulfillment since there are fewer opportunities to mis-pick product.

Responsiveness

Delivery times to customer might increase (consolidation of orders into waves requires holding them for a period of time before they are picked).

Flexibility

Increases, because a wide range of specific end-products can be derived from the stocked generic product.

Costs

None (except from economies of scale, see additional comment)

Asset Management

A lower safety stock level (without effect on fill rate) reduces fixed assets.

Key Best Practice Success Factors

Technology Features

Efficient wave picking requires some type of Warehouse Management System (WMS) software to prioritize orders and allocate them to an appropriate wave. This practice also requires some type of interface with the firms order management system and its Transportation Management System (TMS). Batch picking is best accomplished with an integrated sortation device that takes the results of the batch pick and creates individual orders. This is more costly from a capital investment perspective but greatly reduces operating cost and increases the consistency of throughput.

Acceptable lead times must be defined between the DC and its customers. This will facilitate the allocation of orders into waves. Other Success Factors Training of DC workers is necessary to implement the wave picking process. Also, training will be required for sortation as a result of the batch picking process. Most implementations begin with a small group of customers or geographic locations. Normally, these groups should provide some level of stable demand. Additional Resources None

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