supply chain planning benchmarking results abc …€¦ · supply chain planning benchmarking...

Supply Chain Planning Benchmarking

Results

SAP Value Engineering

ABC Company

9 septembre 2011

“All benchmarks contained in this report are for illustrative purposes only. The contents of the actual report may vary depending on availability and maturity of benchmarks for the peer group in consideration”.

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indicators and drivers.

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Agenda

1. Executive Summary

2. Detailed Benchmarking Results

3. Case Studies

4. Appendix


SAP Performance Benchmarking –

Designed to Get Actionable Results

Launched end of 2004 as a forum to exchange metrics and best

practices

Program covers 26 processes, with 5000+ participants who leverage

the program to:

Build a business case for change

Compare performance to leading companies, industry peers, and

between regions/ divisions

Assess value realization, year-over year

Prove success

Supply Chain Planning program launched end of 2006

Over 300 participants to date


Participating Company Profile:

Industry and Revenue – Overall Database

65,9%

24,8%

6,5%

2,7%

<1 B >=1 B, <5 B >=5 B, <10 B >=10 B

By Revenue By Industry Sector 300.0M

0,2%

1,1%

1,8%

2,0%

2,2%

2,7%

4,3%

5,4%

5,8%

7,0%

7,6%

10,3%

11,2%

12,1%

26,1%

Healthcare

Oil & Gas

Telecommunications

WSD

Aerospace

Utilities

Retail

Life Sciences

Other

Automotive

IM&C

Chemicals

High Tech

Mill Products

Consumer Products

Number of Companies in the SCP Overall Database: 447

Company Response: Company Response: Consumer Products

Peer Groups Selected N

Primary Peer Group (P1) Peer XX 200

Secondary Peer Group (P2) Peer YY 100

Note: Several miscellaneous industries have been grouped under “Others”


Benchmarking Results and Value Potential:

(MTS) Benefits Range1 of

KPI Benchmark Performance Potential Benefit (in millions)3

On-Time Delivery Performance-To-Customer Request Date (by total

orders delivered) (in %)

Increased customer satisfaction

Total Inventory – Days Of Supply (in days)

Inventory Carrying Cost (% of revenue)

Bottom 25% Average Top 25%


Benefit of Closing Gap to Top 25%

Benefit of Closing Gap to Average


81.0 97.0 89.1 90.0

2.0

141.9

3.0 1.0 2.0

121.1 45.6 81.3

0.0 3.0

29.9 47.5

29.9M 50.5M

3,0

47,5

0,0

29,9

-

1) Benefits totals may not add up exactly from subtotals displayed on this page as they are calculated based on exact, not rounded numbers

2) Full KPI results can be found in the detailed benchmarking assessment

3) All currency in this report is in US Dollar

Performance of Primary KPIs2 and Potential Benefits (in millions of selected currency)


Integrate & Align Upstream and Downstream

Planning Processes

Reduce Variability in Execution

Align Supply to Demand

Integrate Supplier Network

Recommended Improvement Strategies - MTS

Recommended Improvement Strategies and Current Capabilities

On-Time

Delivery

Performance

Inventory

Carrying

Cost

Inventory –

Days Of

Supply

Gain cross-functional, executive alignment on mid and long term operating plans

Ensure supply, distribution and production plans are consistent in short-term

Create a closed loop planning cycle by integrating operational actual

Provide visibility of availability to customers (e.g., order promising)

Identify and reduce sources of variability (e.g., production, supply)

Selectively use buffers to manage remaining variability (i.e., inventory )

Create full visibility into business and operational performance indicators

Leverage analytics and “What-if” modeling to evaluate different problem resolution

approaches

Establish formal supply chain risk management processes

Postpone product differentiation

Transition to pull supply model to align supply plans to actual demand

Drive all activities by a single, comprehensive demand signal

Gain visibility into customer demand and actual sales (e.g. POS, channel)

Build forecast collaboration capabilities with sales & finance (Consensus forecasting)

Incorporate new product introductions, promotions and sales force judgment into

forecast

Manage inventory and replenishments for key customers (e.g., VMI)

Establish global, long term supply plan

Secure supplier commitment in line with shared forecast

Allow supplier management of low value inventory (e.g. SMI)

Monitor production and supply in real-time across supplier network

29.9 47.5

0.0 3.0

Benefit of Closing Gap to Top 25% (in million currency)

Benefit of Closing Gap to Average Top 25% performance for supporting best practices and KPIs

Between average and top 25% performance for supporting best practices and KPIs Strategies to focus: below average performance for supporting best practices, KPIs

Implement a Collaborative Demand

Planning Process


Supporting Best Practices

Best Practices To Help Close the Gap Strategy Your Best Practices with High Importance, Low Adoption Process


Planning Processes

Tool in place supporting tactical and operational deployment of sales and operations plan across all

functional areas Sales And Operations Planning

Transportation planning is integrated with key carriers, freight forwarders, 3PLs, etc Transportation Planning And Vehicle

Scheduling


What-if scenarios used to evaluate different problem resolution approaches Distribution Planning

Safety stock violation triggered workflow with automated escalation process

Inventory Planning

SKU / inventory location safety stock planning

SC performance dashboards with KPIs and exception-based reporting Performance Management

Event triggered and rules-based supply planning reporting and analytics Supply Planning

Exception-based reporting of transportation performance data shared with key suppliers Transportation Planning And Vehicle

Scheduling


Distribution planning triggered by approval of demand plan Distribution Planning

Capable to Promise with dynamic sourcing capability and integration to key trading partners Order Promising

Implement a Collaborative Demand Planning

Process

Automated replenishment planning process with tight integration with VMI customers

Customer (Demand) Collaboration

Customer data captured directly from an external feed e.g. EDI

Consensus based and workflow enabled demand forecasting process

Demand Planning And Forecasting Dynamic and frequently updated forecasts

Forecasting at SKUs / inventory location granularity level


SAP Solutions to Enable High-Impact Value Strategies

Design Source Make Store Move Sell

Collaborative Demand & Supply Planning

Logistics & Fulfillment Management1

Manufacturing Network Planning & Execution1

Supply Network Traceability2

Service

Service Parts Planning & Logistics2


Planning Processes



Implement a Collaborative Demand

Planning Process


Targeted areas for high-impact improvement Only Planning function is under the scope of this document 2 Not Part of Supply Chain Planning survey

Supporting SAP Solutions - MTS


Agenda



3. Case Studies

4. Appendix


Category Metric Company Peer Group P1 Peer Group P2

Average Top 25% Average Top 25%

On-Time Delivery Performance-To-Customer Request Date

(by total orders delivered) (in %) 90.0 89.1 97.0 92.6 97.0

Forecast Accuracy (in %) 93.0 74.7 90.0 71.5 88.0

Revenue Loss Due To Stock-outs (% of revenue) 1.000 0.408 0.111 0.124 0.033

Order Fulfillment Lead Time – Configure-To-Order (in days) NA 17.0 7.0 13.7 3.5

Order Fulfillment Lead Time – Make-To-Order (in days) NA 30.4 13.1 29.5 20.0

Order Fulfillment Lead Time – Engineer-To-Order (in days) NA 117.1 30.0 162.7 21.0

Order Fulfillment Lead Time – Make-To-Stock (in days) 25.0 4.8 2.0 3.9 2.0

Inventory Carrying Cost (% of revenue) 2.0 2.0 1.0 1.3 0.8

Inventory Obsolescence Cost (% of revenue) 1.000 0.626 0.200 0.488 0.100

Inventory Write-offs (% of revenue) 1.333 0.126 0.007 0.068 0.018

Total Inventory – Days Of Supply (in days) 141.9 81.3 45.6 55.9 33.2

Warehouse Management Cost (% of revenue) 3.3 1.4 0.5 1.4 0.6

Transportation Spend (% of revenue) 5.0 2.8 1.1 2.7 1.3

Expedited Transportation Spend (% of revenue) 2.333 0.092 0.050 0.072 0.037

Demurrage/ Penalty/ Fine-Related Charges (% of revenue) 0.333 0.039 0.007 0.021 0.003

SCP: Performance Indicator Summary -

Effectiveness/ Efficiency Balance

Efficiency

Effectiveness

Top 25% Between Average and Top 25% Below Average Outlier Ranking:

Note: Color commentary based on the Peer Group P1 benchmarks unless mentioned otherwise

* Indicates lack of data points in the peer group necessary to determine benchmarks


Category Metric Company

Peer Group P1 Peer Group P2

Average Top 25%

Average Top 25%

Efficiency

FTEs per Billion in Revenue (overall) 166.7 65.0 26.8 74.3 34.7

Percentage of FTEs in Strategic and Expertise based Functions

(in %) 78.0 54.7 78.2 50.8 74.1

Percentage of FTEs in Transactional Functions (in %) 22.0 45.3 21.8 49.2 25.9

Overall Supply Chain Planning Cost (% of revenue) 3.000 0.772 0.349 0.736 0.242

Supply Chain Planning Technology Cost (% of revenue) 2.000 0.059 0.013 0.110 0.009

Other Costs and External Spend (% of revenue) NA 0.076 0.022 0.040 0.021

Headcount Cost – Strategic and Expertise based (% of

revenue) 0.780 0.331 0.085 0.313 0.097

Headcount Cost – Transactional (% of revenue) 0.220 0.269 0.074 0.170 0.051

SCP: Performance Indicator Summary -

Effectiveness/ Efficiency Balance

Top 25% Between Average and Top 25% Below Average Outlier Ranking:

Note: Color commentary based on the Peer Group P1 benchmarks unless mentioned otherwise

* Indicates lack of data points in the peer group necessary to determine benchmarks


KPI: Staffing Levels and Staffing Profile

Supply Chain Planning FTEs per Billion in Revenue

65,0

26,8

74,3

34,7

166,7

Average Top 25% Average Top 25% Company

Peer Group P1 Peer Group P2 Company

54,7 50,8

78,0

45,3 49,2

22,0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Average Peer

Group P1

Average Peer

Group P2

Company

Strategy & Expertise based Transactional

Supply Chain Planning Staffing Mix – (% of SCP FTEs by Type)


0,269

0,074

0,170

0,051

0,220


0,331

0,085

0,313

0,097

0,780


KPI: Supply Chain Planning Process Costs

0,772 0,349

0,736 0,242

3,000


Overall Supply Chain Planning Cost (% of revenue)

Headcount Cost - Transactional Functions (% of revenue)

Headcount Cost - Strategic and Expertise-based Functions (% of revenue)

Peer Group P1 Peer Group P2 Company

64,8%

31,0% 30,0%

17,7%

24,4%

70,0%

5,7%

40,9%

11,8% 3,6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Average Peer

Group P1

Average Peer

Group P2

Company

Personnel Costs Technology Costs External Spend Other

Supply Chain Planning Cost Breakdown – (% of overall supply chain planning cost)


SCP: Improved Best Practices Adoption Drives

Value

0

1

2

3

4

5

6

Sales and Operations

Planning

Demand Planning and

Forecasting

Inventory Planning

Supply Planning Distribution Planning

Customer Collaboration

Supplier Collaboration

Transportation Planning and

Vehicle Scheduling

Production Planning and

Detailed Scheduling

Order Promising SCP Performance

Management

Avg - Coverage Top 25% - Coverage Company Importance Company Coverage

Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses (Peer Group P1)

1 = No Coverage 5 = Full Coverage


Best Practice Listing Company Internal

Gap

1

Sales and Operations Planning – Process:

Monthly, collaborative S&OP process leading to

alignment of the following mid- to long-term plans:

Sales (including customers input), Marketing,

Product Management, Manufacturing (including

external/ outsource manufacturers),

Transportation (including 3PL's), Procurement

(including suppliers)

2

2

Sales and Operations Planning – Tools: Tactical

and operational deployment of strategy across all

internal functional areas, such as finance, sales

and marketing, supply chain, procurement,

product development as well as external supply

chain

2

Sales and Operations Planning

Best Practice Ranking – Peer Group P1 1 = No Coverage 5 = Full Coverage

0

1

2

3

4

5

6

1 2

Average Coverage Top 25% Coverage

Company Importance Company Coverage

Coverage Ranking:

Best Practices for Sales and Operations Planning: Impact on Inventory – Days of Supply

Best Practice Adoption/ Inventory – Days of Supply

Sales and Operations Planning – Process: Monthly, collaborative S&OP process leading to

alignment of the following mid- to long-term plans: Sales (including customers input), Marketing,

Product Management, Manufacturing (including external/ outsource manufacturers),

Transportation (including 3PL's), Procurement (including suppliers)

70.2 77.3

- 9%

Low High

Top 25%

Between Average and Top 25%

Below Average Coverage Ranking:


Demand Planning and Forecasting


Gap

1 Forecasting – Frequency: Forecasts are dynamic

and updated frequently 3

2 Forecasting – Granularity: Forecasting is

performed by SKU, by Location 2

3

Forecasting – System: Robust forecasting system

incorporating all types of demand history and

automatic corrections for bad data on outliers.

System has the capability to auto adjust for

promotions and other events in the past as well

as real time adjustments with notes attached for

clarification

2

4

Consensus Based Demand Forecasting Process:

Each key business owner in the forecasting

process has their own unique view of the forecast

incorporating history, adjustment, methods, alerts

and logic that allows them to optimize their

forecast. All these views are merged into a single

consensus forecasting workbench

2

0

1

2

3

4

5

6

1 2 3 4




Coverage Ranking:

Best Practices for Demand Planning and Forecasting: Impact on Inventory – Days of Supply


Forecasting – Frequency: Forecasts are dynamic and updated frequently 72.2 81.8

- 12%

Low High

Top 25%




Inventory Planning


Gap

1

Safety Stock Calculation Frequency: Safety stock

calculations are dynamic and performed

frequently

2

2 Safety Stock Level – Granularity: SKU by

Location 2

3 Inventory Planning – Process: Formal, globally

applicable process to manage inventory planning 1

4

Inventory Planning – Monitoring/ Reporting

Frequency: Safety stock violation events trigger

workflow messages directed to responsible

personnel with an automated escalation process

2

0

1

2

3

4

5

6

1 2 3 4




Coverage Ranking:

Best Practices for Inventory Planning: Impact on Inventory – Days of Supply


Safety Stock Calculation Frequency: Safety stock calculations are dynamic and performed

frequently 72.5 75.9

- 5%

Low High

Safety Stock Planning – Granularity: Safety stock planning is performed for different

combinations of SKUs and inventory locations 72.5 76.1

- 5%

Best Practice Adoption/ Inventory – Days of Supply Low High

Top 25%




Supply Planning


Gap

1

Globally Integrated Process: Formal, globally

applicable constraint based supply planning

process performed at a regular interval

2

2

What-if Modeling: What-if modeling capability and

ability to evaluate multiple scenarios based on

multiple changing parameters

2

3

Alert Based Exception Messaging: Event

triggered, rules-based supply chain planning

process with workflow and alert messaging to

proactively influence planning events and/ or

approvals

2

0

1

2

3

4

5

6

1 2 3




Coverage Ranking:

Best Practices for Supply Planning: Impact on Order Fulfillment Lead Time

Best Practice Adoption/ Order Fulfillment Lead Time – Make To Order (MTO) (in days)

What-if Modeling: What-if modeling capability and ability to evaluate multiple scenarios based on

multiple changing parameters 36.9 41.7

- 11%

Low High

Alert Based Exception Messaging: Event triggered, rules-based supply chain planning process

with workflow and alert messaging to proactively influence planning events and/ or approvals 7.0 9.9

- 29%

Best Practice Adoption/ Order Fulfillment Lead Time – Make To Stock (MTS) (in days) Low High

Top 25%




Distribution Planning


Gap

1

Distribution Planning – Frequency: Distribution

Planning is triggered by Demand Plan approval

event

2

2

Distribution Planning – Method: What-if scenarios

are used extensively to evaluate different problem

resolution approaches

2

3

Distribution Planning – Supply Allocation:

Allocated or available quantities are calculated for

each location based on the latest master supply

plan and are used to drive distribution planning

2

0

1

2

3

4

5

6

1 2 3




Coverage Ranking:

Best Practices for Distribution Planning: Impact on Order Fulfillment Lead Time and Warehouse Management Cost

Best Practice Adoption/ Order Fulfillment Lead Time – Make To Stock (MTS) (in days)

Distribution Planning - Frequency: Distribution planning is triggered by approval of demand plan

event 8.0 11.8

- 32%

Low High

Distribution Planning – Supply Allocation : Allocated or available quantities are calculated for

each location based on the latest master supply plan and are used to drive distribution planning 1.21% 1.48%

- 18%

Best Practice Adoption/ Warehouse Management Cost (% of revenue) Low High

Top 25%




Customer (demand) Collaboration/ VMI


Gap

1

VMI – Data Integration/Communication:

Customer data captured directly from an external

feed (EDI)

1

2

Collaborative Forecasting Process: The

forecasting process is highly collaborative and is

used by customer teams with all key customers.

Statistical techniques can produce monthly, daily,

sub daily replenishment demands

1

3

Replenishment Planning: VMI customers are

tightly integrated into a highly automated daily/

weekly/monthly set of planning and execution

processes. Sense and respond processes and

tools are in place to react to real time demand

signals allowing for rapid replenishment re-

planning

1

0

1

2

3

4

5

6

1 2 3




Coverage Ranking:

Best Practices for Customer (demand) Collaboration/ VMI: Impact on Forecast Accuracy and Inventory – Days of Supply

Best Practice Adoption/ Forecast Accuracy

Collaborative Forecasting Process: The forecasting process is highly collaborative and is used

by customer teams with all key customers. Statistical techniques can produce monthly, daily, sub

daily replenishment demands

84.6% 78.2%

+ 8%

Low High

Collaborative Forecasting Process: The forecasting process is highly collaborative and is used

by customer teams with all key customers. Statistical techniques can produce monthly, daily, sub

daily replenishment demands

60.9 76.2

- 20%

Best Practice Adoption/ Inventory – Days of Supply Low High

Top 25%




Supplier Collaboration/ SMI


Gap

1

Level of Sophistication: The supplier managed

inventory is managed via automated signals

based on min-max consumption logic, or

schedule release based replenishment or via

KANBAN replenishment signals

1

2

Collaborative Manufacturing Process: The

process involves collaborating with the contract

manufacturer on the PO which includes BOM and

its components. The process may also involve

collaborating with the component suppliers on the

component requirements and providing visibility

to the contract manufacturer on the component

shipments to them

1

0

1

2

3

4

5

6

1 2




Coverage Ranking:

Best Practices for Supplier Collaboration/ SMI: Impact on Inventory – Days of Supply and Revenue Loss Due To Stock-outs


Level of Sophistication: The supplier managed inventory is managed via automated signals

based on min-max consumption logic, or schedule release based replenishment or via KANBAN

replenishment signals 63.9 74.3

- 14%

Low High

Collaborative Manufacturing : The process is based on complete autonomy of the contract

manufacturer with full visibility of components’ supply situation provided to OEM extending to

lower tier suppliers as well

0.25% 0.63%

- 60%

Best Practice Adoption/ Revenue Loss Due To Stock-outs (% of revenue) Low High

Top 25%





Vehicle Scheduling


Gap

1

Transportation Planning – Frequency:

Transportation Planning process can be

performed on a timely basis with consideration of

other supply chain constraints in the network

1

2

Transportation Planning – Integration: All

processes and systems are integrated (demand

and supply planning, order management,

warehouse management, production Planning),

collaborative framework with key carriers, freight

forwarders, 3PL's, etc

1

3

Transportation Planning – Reporting / Analytics:

Exception reporting and analytic framework is in

place and is shared/used across multiple

disciplines within the enterprise. Performance

data is shared with key suppliers on a frequent

basis. Data is also used to influence supply

planning within the S&OP process

1

0

1

2

3

4

5

6

1 2 3




Coverage Ranking:

Best Practices for Transportation Planning and Vehicle Scheduling: Impact on On-Time Delivery Performance

Best Practice Adoption/ On-Time Delivery Performance

Transportation Planning – Integration: All processes and systems are integrated (demand and

supply planning, order management, warehouse management, production planning), and a

collaborative framework is in place with key carriers, freight forwarders, 3PLs, etc 91.1% 87.1%

+ 5%

Low High

Transportation Planning – Reporting/ Analytics: Exception reporting and analytic framework is in

place and shared/ used across multiple disciplines within the enterprise while performance data

is shared with key suppliers on a frequent basis, thereby influencing the supply planning process 94.3% 88.6%

+ 6%

Best Practice Adoption/ On-Time Delivery Performance Low High

Top 25%




Production Planning and Detailed Scheduling


Gap

1

Production Planning (MPS/ MRP) Frequency:

Concurrent material and capacity constraint plan

is generated multiple times on any given day

1

2

Production Planning – Process: Enterprise-wide

planning and collaboration with external business

partners (contract manufacturer, suppliers, etc.)

through two-way data access

1

3

Detailed Scheduling – Planning Frequency:

Detailed scheduling can be performed multiple

times a day

1

4

Production Planning and Detailed Scheduling –

Reporting and Analytics: Role based, exception-

based, and workflow-enabled Master Production

Scheduling (MPS/ MRP) reporting and analytics

using real-time data, including decision support

based on simulations and what if scenarios

1

0

1

2

3

4

5

6

1 2 3 4




Coverage Ranking:

Best Practices for Production Planning and Detailed Scheduling: Impact on Inventory – Days of Supply and On-Time Delivery Performance


Production Planning (MPS/ MRP) Frequency: Concurrent material and capacity constraint plan

is generated multiple times on any given day 7.5 11.5

- 34%

Low High

Detailed Scheduling – Planning Frequency: Detailed scheduling can be performed multiple

times a day 91.8% 87.7%

+ 5%

Best Practice Adoption/ On-Time Delivery Performance Low High

Top 25%




Order Promising


Gap

1

Extended Capable-to-Promise (CTP): Dynamic

sourcing that includes not only inventory and

production locations but also the ability to

integrate key trading partners such as suppliers,

contract manufacturers or assemblers, and

logistics and transportation service providers to

confirm availability, pricing, and delivery

commitment

2

2

Available-to-Promise – Allocations: When product

is in limited quantity, able to prioritize customers,

commit an allocation quantity and then honor that

commitment as the product becomes available

2

0

1

2

3

4

5

6

1 2




Coverage Ranking:

Best Practices for Order Promising: Impact on On-Time Delivery Performance and Order Fulfillment Lead Time

Best Practice Adoption/ Order Fulfillment Lead Time – Make to Order (MTO) (in days)

) Extended Capable-to-Promise (CTP): Dynamic sourcing that includes not only inventory and

production locations but also the ability to integrate key trading partners such as suppliers,

contract manufacturers or assemblers, and logistics and transportation service providers to

confirm availability, pricing, and delivery commitment

31.3 44.1

- 29%

Low High

Available-to-Promise – Allocations: When product is in limited quantity, able to prioritize

customers, commit an allocation quantity and then honor that commitment as the product

becomes available 12.5 16.8

- 25%

Best Practice Adoption/ Order Fulfillment Lead Time – Configure to Order (CTO) (in days) Low High

Best Practice Adoption/ On-Time Delivery Performance

Extended Capable-to-Promise (CTP): Dynamic sourcing that includes not only inventory and

production locations but also the ability to integrate key trading partners such as suppliers,

contract manufacturers or assemblers, and logistics and transportation service providers to

confirm availability, pricing, and delivery commitment 90.2% 87.7%

+ 3%

Low High

Top 25%




SCP Performance Management


Gap

1

Availability of Performance Dashboards: Supply

chain performance dashboard with common KPIs

and exception-based reporting is available for

both enterprise wide supply chain as well as

individual functions (such as demand planning,

supply planning etc.)

2

0

1

2

3

4

5

6

1




Coverage Ranking:

Best Practices for SCP Performance Management: Impact on Expedited Transportation Spend and Demurrage/ Penalty/ Fine-Related Charges

Best Practice Adoption/ Expedited Transportation Spend (% of revenue)

Availability of Performance Dashboards: Supply chain performance dashboard with common

KPIs and exception-based reporting is available for both enterprise wide supply chain as well as

individual functions (such as demand planning, supply planning etc.) 0.15% 0.20%

- 25%

Low High

Availability of Performance Dashboards: Supply chain performance dashboard with common

KPIs and exception-based reporting is available for both enterprise wide supply chain as well as

individual functions (such as demand planning, supply planning etc.) 0.05% 0.10%

- 50%

Best Practice Adoption/ Demurrage/ Penalty/ Fine-Related Charges (% of revenue) Low High

Top 25%




Agenda



3. Case Studies

4. Appendix


SAP Supply Chain Management Solution

Customers

Demand Planning and/ or

Supply Network Planning

Production Planning and Scheduling

Supply Network Collaboration

Lechia


Vehicle Scheduling and/ or gATP


“What SAP Supply Chain Management has enabled us to

do is expand our products and distribution network while

meeting the Sarbanes-Oxley requirements without taking

on additional staff.”

Jim Hutchinson

Senior Vice President of Supply Chain Management

Brown-Forman Corporation

Company Brown-Forman Corporation

Location Louisville, Kentucky

Industry Consumer products – beverage

Products/Services Fine wines and spirits

Revenue US$2.4 billion (2006 gross)

Employees 3,750

Web Site www.brown-forman.com

SAP® Solution and Services SAP Supply Chain Management

application

Partner Accenture

Challenges and Opportunities

Assimilate partners and acquisitions faster

Tap emerging global markets

Reduce inventory levels

Improve customer service

Objectives

Establish global positions for premium brands

Introduce more premium brand beverages

Expand business without significant additional headcount

Implementation Highlights

Minimal customization

Tightly managed project scope

Accelerated implementation within budget

Why SAP

Superior integration of supply chain planning with inventory and order management

Strong investment in research and development for emerging products

Viability of SAP as a company

Benefits

Accelerated on-boarding for global distribution partners

Adopted global sales and operations planning process

Increased number of products while maintaining service levels without adding inventory

Shifted demand planning team’s focus of competence from data management to business analysis

Brown-Forman Expands its Global Presence

with SAP® SCM


“We now have full visibility and predictability in our

supply chain. Prior to deploying the SAP application, we

had very little real-time visibility or ability to predict

where everything was. It was as if you were driving

through your rearview mirror.”

Richard Thompson

Senior Director of Information Technology

DIRECTV Inc.

Company DIRECTV Inc.

Location El Segundo, California

Industry Media

Products/Services High-quality signal and programming

Revenue US$14.7 billion

Employees 9,200

Web Site www.directv.com

SAP® Solution and Services SAP® SCM and SAP CRM

Partner Computer Sciences Corporation


Supply chain management complexity

Scalability of hardware redeployment process

Manual interaction with business partners

Objectives

Improve ability to qualify returns and manage bulk return materials authorizations (RMAs)

Take more ownership of inventory in an evolving business model


Strong governance

Minimal customizations

Business and IT collaboration

Usability enhancements

Why SAP

Real-time integrated applications for reduced data and decision latency

A recognized standard application platform

A robust supply chain solution

Scalable solutions to support growth

Benefits

Reduction in manual effort enabled by process changes and improved data availability

Cost savings also driven by reduction in errors

Increased supply chain velocity and volume

Partner process-driven RMA productivity gains

Reduction in improper deductions and reconciliations of 10%–30%

DIRECTV Enhances Supply Chain Efficiency

with SAP® SCM


“When we started the project, no one in IT had any

experience with SAP software. We were not only able to

learn SAP skills quickly; we can now provide most of the

support internally at a very low cost .”

Dave Marberger

Chief Financial Officer

Tasty Baking Company

Company Tasty Baking Company

Location Philadelphia, PA

Industry Consumer Packaged Goods

Products/Services Bakery items

Revenue $259 million (Gross, in 2004)

Employees 1,100

Web Site www.tastybaking.com

SAP® Solution and Services mySAP™ERP

Partner Deloitte Consulting


Drop in operating margin from 7.9% in 2000 to -4.9% in 2002

Complex existing IT infrastructure insufficient to support the turnaround plan of a new management team

Objectives

Create an enterprise applications backbone that could support the strategic plan


Strong management sponsorship

Tight governance and minimal customization

Low cost infrastructure, consistent with existing in-house skills

Nine-month, on-time, on-budget implementation

Why SAP

Industry standard – most robust for food companies

Low risk – stable company

Industry best practices

Cultural fit

Superior customer service

Benefits

Improvement in key business metrics within one year

Order fill rate improved by 2 % pts

Returns reduced by 4%

Days in Inventory decreased by 10%

Inventory write-downs reduced by 60%

Fixed asset utilization increased by 5%

Thrift product reduced by 40%

Internal rate of return of 43% over 5 years

Net present value of ~5x the initial investment

Achieved 11% increase in sales without new staff

Tasty Baking Gains Rapid Returns mySAP™

ERP


Agenda



3. Case Studies

4. Appendix


Strategic Planning

Expertise Based/ Operational

Planning

Tactical Planning

Supply Chain Planning: Study Scope

The benchmarking study included analysis across 11 key Supply Chain Planning business processes

Sales and Operations Planning

Demand Planning and Forecasting

Inventory Planning

Supply Planning


Customer Collaboration (VMI)

Supplier Collaboration (SMI)

Transportation Planning and Vehicle Scheduling

Production Planning and Detailed Scheduling

Order Promising

SCP Performance Management

Drive

Efficiency

Drive

Effectiveness


Participant Information: Regions/ Divisions Included:

ABC Company: Company Snapshot

Company Facts

Industry Consumer

Products

Total Revenue (in millions) 300.00

Cost of Goods Sold (in millions) 180.00

Operating Income (in millions) 35.00

Customer Service Performance

On-time Delivery Performance-To-Request Date (in %)

90.0

Order Fulfillment Lead Time

Make-To-Stock (in days) 25.0

Configure/ Package-To-Order (in days)

NA

Make-To-Order (in days) NA

Engineer-To-Order (in days) NA

Inventory Profile

Total Inventory (in millions) 70.00

Carrying Cost (in millions) 6.00

Obsolescence Cost (in millions) 3.00

Write-Offs Overhead (in millions)

4.00

Stock-Out Loss (in millions) 3.00

Supply Chain Execution

Costs

Warehouse Management Costs (in millions)

10.00

Transportation Spend (in millions)

15.00

Expedited Spend (in millions) 7.00

Demurrage/ Penalty Charges (in millions)

1.00

Technology Profile

SAP Customer *

Supply Chain Planning IT Platform

*

Entire Company XYZ, ABC Company


Company Baseline: Staffing and Cost Profile

Area Sub Processes FTEs

Avg. Cost/ FTE

(in ‘000s)

Total Headcount Cost

(in ‘000s)

Strategic Planning Sales and Operations

Planning 25.00 60.00 1500.00

Expertise Based/ Operational Planning

Demand Planning and

Forecasting 10.00 60.00 600.00

Inventory Planning

Supply Planning

4.00 60.00 240.00


Tactical Planning


Vehicle Scheduling

4.00 60.00 240.00

Production Planning and

Detailed Scheduling

Order Promising 7.00 60.00 420.00

Total 50.00 3,000.00


Participating Company Profile: Industry and

Revenue – Peer Group P1

By Revenue By Industry Sector Consumer Products 300.0M

0,5%

0,5%

0,5%

1,1%

1,6%

2,7%

4,3%

4,9%

7,6%

10,3%

10,9%

13,0%

13,6%

28,3%

Healthcare

Aerospace

WSD

Oil & Gas

Utilities

Life Sciences

Retail

Automotive

Other

Chemicals

IM&C

Mill Products

High Tech

Consumer Products 40,0%

20,0%

30,0%

10,0%

<1 B >=1 B, <5 B >=5 B, <10 B >=10 B

Number of Companies in Peer Group P1: 200

Company Response: Company Response:



Participating Company Profile: Industry and

Revenue – Peer Group P2

By Revenue By Industry Sector Consumer Products 300.0M

1,2%

1,2%

1,2%

1,2%

2,4%

3,6%

3,6%

6,0%

7,1%

8,3%

9,5%

11,9%

42,9%

Oil & Gas

Telecommunications

Healthcare

WSD

Life Sciences

Retail

Other

High Tech

IM&C

Automotive

Mill Products

Chemicals

Consumer Products 80,0%

20,0%

0,0% 0,0%

<1 B >=1 B, <5 B >=5 B, <10 B >=10 B

Number of Companies in Peer Group P2: 100




Participating Company Profile: Profitability

and Manufacturing Strategy

17%

31% 33%

14%

5%

12% 12%

19%

10%

1%

<50% >=50% <65% >=65% <80% >=80% <90% >=90%

56%

28%

4% 3% 5%

45% 40%

5% 5% 3%

<10% >=10% <20% >=20% <30% >=30% <40% >=40%

By Cost of Goods Sold* (% of revenue) By Operating Income* (% of revenue)

By Manufacturing Strategy - Peer Group P1

Process;

50% Discrete;

50% Process;

53%

Discrete;

47%

60.0 11.7

Company Process Manufacturing: 50.0%

Company Discrete Manufacturing: 50.0%

By Manufacturing Strategy - Peer Group P2


* Excluding companies that have not provided data Peer Group P1 Peer Group P2


Participating Company Profile: IT Landscape

SCP Systems Deployed

27%

1% 3%

44%

15%

2%

5%

28%

SAP ERP SAP ERP + Best of Breed SAP ERP + APO No SAP

Peer Group P1 Peer Group P2

*

Note :The sum of data labels may not add up to 100% since input on IT system deployed was not provided by all respondents

Company Response:


Integrate & Align Upstream and Downstream Planning Processes

For Improvement in On-Time Delivery Performance

Level 2 Strategy Best Practice Process

Gain cross-functional,

executive alignment on

mid and long term

operating plans (e.g.,

S&OP)

Tool in place supporting tactical and operational deployment of sales and operations plan across all functional areas Sales And Operations

Planning

Sales And Operations

Planning Formal and collaborative S&OP process

Ensure supply, distribution

and production plans are

consistent in short-term Ability to calculate allocation quantities for each location based on the latest master supply plan Distribution Planning

Create a closed loop

planning cycle by

integrating operational

actual

Frequent detailed scheduling (multiple times per shift) Production Planning And

Detailed Scheduling

Transportation planning performed as frequently as required Transportation Planning

And Vehicle Scheduling Transportation planning is integrated with key carriers, freight forwarders, 3PLs, etc

Provide visibility of

availability to customers

(e.g., order promising) Ability to prioritize customers and commit an allocation quantity (ATP) Order Promising

Level 2 Strategy KPI

Gain cross-functional, executive alignment on mid and

long term operating plans (e.g., S&OP)

FTEs per Billion in Revenue (overall)

Percentage of FTEs in Strategic and Expertise based Functions (in %)

Percentage of FTEs in Transactional Functions (in %)

Other Costs and External Spend (% of revenue)

Headcount Cost – Strategic and Expertise based (% of revenue)

Headcount Cost – Transactional (% of revenue)

Create a closed loop planning cycle by integrating

operational actual

Transportation Spend (% of revenue)

Revenue Loss Due to Stock-outs (% of revenue)



Identify and reduce

sources of variability (e.g.,

production, supply)

Supply planning what-if modeling capability Supply Planning

Exception-based reporting of transportation performance data shared with key suppliers Transportation Planning

And Vehicle Scheduling

Selectively use buffers to

manage remaining

variability (i.e., inventory)

Safety stock re-planning as frequent as needed

Inventory Planning SKU / inventory location safety stock planning


Create full visibility into

business and operational

performance indicators


Exception and role-based production planning and detailed scheduling reporting with workflow Production Planning And

Detailed Scheduling

Leverage analytics and

“What-if” modeling to

evaluate different problem resolution

approaches


Establish formal supply

chain risk management

processes

SC performance dashboards with KPIs and exception-based reporting Performance

Management

Formal planning process to manage safety stock levels with clear accountability Inventory Planning


Identify and reduce sources of variability (e.g.,

production, supply)

On-Time Delivery Performance-To-Customer Request Date (by total orders delivered) (in %)

Warehouse Management Cost (% of revenue)

Expedited Transportation Spend (% of revenue)

Demurrage/ Penalty/ Fine-related Charges (% of revenue)

Create full visibility into business and operational



Supply Chain Planning Technology Cost (% of revenue)

Establish formal supply chain risk management

processes (e.g. continuity, quality or costs of supply) Inventory Write-offs (% of revenue)


For Reduction in Inventory – Days of Supply and Improved On-Time Delivery Performance



Postpone product

differentiation Capable to Promise with dynamic sourcing capability and integration to key trading partners Order Promising

Transition to pull supply

model to align supply

plans to actual demand Concurrent material and capacity constraint plan generated as required

Production Planning And

Detailed Scheduling

Drive all activities by a

single, comprehensive

demand signal Distribution planning triggered by approval of demand plan Distribution Planning


Transition to pull supply model to align supply plans to

actual demand Order Fulfillment Lead Time – Make-To-Stock (in days)


For Reduction in Inventory – Days of Supply, Inventory Carrying

Cost and Improved On-Time Delivery Performance



Gain visibility into

customer demand and

actual sales (e.g. POS,

channel)

Dynamic and frequently updated forecasts Demand Planning And

Forecasting Forecasting at SKUs / inventory location granularity level

Customer data captured directly from an external feed e.g. EDI Customer (Demand)

Collaboration Vendor Managed Inventory in place with all key customers

Build forecast

collaboration capabilities

with sales & finance Consensus based and workflow enabled demand forecasting process

Demand Planning And

Forecasting

Incorporate new product

introductions, promotions

and sales force judgment into forecast

Forecasting system incorporates demand history and automatic adjustments for bad data and past promotions/ events Demand Planning And

Forecasting

Manage inventory and

replenishments for key

customers (e.g., VMI)

Automated replenishment planning process with tight integration with VMI customers Customer (Demand)

Collaboration


Gain visibility into customer demand and actual

sales (e.g. POS, channel, customer forecasts) Total Inventory – Days Of Supply (in days)

Build forecast collaboration capabilities with sales &

finance (Consensus forecasting) Forecast Accuracy (in %)

Incorporate new product introductions, promotions and

sales force judgment into forecast

Inventory Carrying Cost (% of revenue)

Inventory Obsolescence Cost (% of revenue)

Implement a Collaborative Demand Planning Process

For Reduction in Inventory – Days Of Supply and Inventory Carrying Cost



For Reduction in Inventory – Days Of Supply


Establish global, long term

supply plan Formal, frequent, globally applicable constraint based supply planning process Supply Planning

Secure supplier

commitment in line with

shared forecast Enterprise wide production planning process in place, integrated with external ecosystem


Detailed Scheduling

Allow supplier

management of low value

inventory (e.g. SMI) Supplier managed inventory managed via automated signals Supplier Collaboration

Monitor production and

supply in real-time across

supplier network (e.g.,

inbound delays, inventory

liability, quality)

SMI: The process is based on complete autonomy of the contract manufacturer with full visibility of components’ supply

situation provided to OEM Supplier Collaboration



For Reduction in Order Fulfillment Lead Time


Establish global, long term

supply plan Formal, frequent, globally applicable constraint based supply planning process Supply Planning

Secure supplier

commitment in line with

shared forecast Enterprise wide production planning process in place, integrated with external ecosystem


Detailed Scheduling

Allow supplier

management of low value

inventory (e.g. SMI) Supplier managed inventory managed via automated signals Supplier Collaboration

Monitor production and

supply in real-time across

supplier network (e.g.,

inbound delays, inventory

liability, quality)

SMI: The process is based on complete autonomy of the contract manufacturer with full visibility of components’ supply

situation provided to OEM Supplier Collaboration


Integrate & Align Upstream and Downstream Planning Processes

For Reduction in Inventory – Days of Supply and Order Fulfillment

Lead Time


Gain cross-functional,

executive alignment on

mid and long term

operating plans (e.g.,

S&OP)

Tool in place supporting tactical and operational deployment of sales and operations plan across all functional areas Sales And Operations

Planning

Sales And Operations

Planning Formal and collaborative S&OP process

Ensure supply, distribution

and production plans are

consistent in short-term Ability to calculate allocation quantities for each location based on the latest master supply plan Distribution Planning

Create a closed loop

planning cycle by

integrating operational

actual

Frequent detailed scheduling (multiple times per shift) Production Planning And

Detailed Scheduling

Transportation planning performed as frequently as required Transportation Planning

And Vehicle Scheduling Transportation planning is integrated with key carriers, freight forwarders, 3PLs, etc

Provide visibility of

availability to customers

(e.g., order promising)

Capable to Promise with dynamic sourcing capability and integration to key trading partners

Order Promising

Ability to prioritize customers and commit an allocation quantity (ATP)


Gain cross-functional, executive alignment on mid and

long term operating plans (e.g., S&OP)

FTEs per Billion in Revenue (overall)

Percentage of FTEs in Strategic and Expertise based Functions (in %)

Percentage of FTEs in Transactional Functions (in %)

Other Costs and External Spend (% of revenue)

Headcount Cost – Strategic and Expertise based (% of revenue)

Headcount Cost – Transactional (% of revenue)

Ensure supply, distribution and production plans are

consistent in short-term

Order Fulfillment Lead Time – Configure-To-Order (in days)

Order Fulfillment Lead Time – Engineer-To-Order (in days)

Order Fulfillment Lead Time – Make-To-Order (in days)

Create a closed loop planning cycle by integrating

operational actual

On-Time Delivery Performance-To-Customer Request Date (by total orders delivered) (in %)

Transportation Spend (% of revenue)

Expedited Transportation Spend (% of revenue)



Identify and reduce

sources of variability (e.g.,

production, supply)

Supply planning what-if modeling capability Supply Planning

Exception-based reporting of transportation performance data shared with key suppliers Transportation Planning

And Vehicle Scheduling

Selectively use buffers to

manage remaining

variability (i.e., inventory)

Safety stock re-planning as frequent as needed

Inventory Planning SKU / inventory location safety stock planning

Formal planning process to manage safety stock levels with clear accountability


Create full visibility into

business and operational



Exception and role-based production planning and detailed scheduling reporting with workflow Production Planning And

Detailed Scheduling

Leverage analytics and

“What-if” modeling to

evaluate different problem resolution

approaches


Establish formal supply

chain risk management

processes

SC performance dashboards with KPIs and exception-based reporting Performance

Management


Identify and reduce sources of variability (e.g.,

production, supply)

Warehouse Management Cost (% of revenue)

Demurrage/ Penalty/ Fine-related Charges (% of revenue)

Create full visibility into business and operational



Supply Chain Planning Technology Cost (% of revenue)

Establish formal supply chain risk management

processes (e.g. continuity, quality or costs of supply) Inventory Write-offs (% of revenue)


For Reduction in Inventory – Days of Supply and Order Fulfillment Lead Time



Transition to pull supply

model to align supply

plans to actual demand Concurrent material and capacity constraint plan generated as required


Detailed Scheduling

Drive all activities by a

single, comprehensive

demand signal Distribution planning triggered by approval of demand plan Distribution Planning


Transition to pull supply model to align supply plans to

actual demand Inventory Carrying Cost (% of revenue)


For Reduction in Inventory Carrying Cost and Order Fulfillment Lead Time



Gain visibility into

customer demand and

actual sales (e.g. POS,

channel)

Dynamic and frequently updated forecasts Demand Planning And

Forecasting Forecasting at SKUs / inventory location granularity level

Customer data captured directly from an external feed e.g. EDI Customer (Demand)

Collaboration Vendor Managed Inventory in place with all key customers

Build forecast

collaboration capabilities

with sales & finance Consensus based and workflow enabled demand forecasting process

Demand Planning And

Forecasting

Incorporate new product

introductions, promotions

and sales force judgment into forecast

Forecasting system incorporates demand history and automatic adjustments for bad data and past promotions/ events Demand Planning And

Forecasting

Manage inventory and

replenishments for key

customers (e.g., VMI)

Automated replenishment planning process with tight integration with VMI customers Customer (Demand)

Collaboration


Gain visibility into customer demand and actual

sales (e.g. POS, channel, customer forecasts) Total Inventory – Days Of Supply (in days)

Build forecast collaboration capabilities with sales &

finance (Consensus forecasting) Forecast Accuracy (in %)

Incorporate new product introductions, promotions

and sales force judgment into forecast Inventory Obsolescence Cost (% of revenue)

Implement a Collaborative Demand Planning Process

For Reduction in Inventory – Days Of Supply and Inventory Carrying Cost

SAP CONFIDENTIAL - - For subject Company Internal Use Only - This page is from the Benchmarking Analysis prepared for subject Company and subject to the terms, conditions and assumptions contained in the Benchmarking Analysis. Information contained herein is not a guarantee of future results, performance or cost savings. © SAP 2007

Glossary

KPI Description Corresponding

Questions

On-Time Delivery Performance-

To-Customer Request Date (by

total orders delivered) (in %)

[Total number of orders delivered in full and on time as per customer's request date] /

[Total number of orders received]. Delivery measurements are based on the date a

complete order is shipped. An order must be complete to be considered fulfilled. A

complete order has all items on the order delivered in the quantities requested. Multiple

line items on a single order with different planned delivery dates constitute multiple

orders. Multiple planned delivery dates on a single line item also constitute multiple

orders.

Performance Indicator: Q8

Forecast Accuracy (in %) ( Forecasted demand - Absolute Forecasting error) / Actual demand. It is the

difference between forecasted demand and demand variance, as a % of actual demand. Performance Indicator: Q8

Revenue Loss Due To Stock-outs

(% of revenue) [Revenue lost due to stock-outs]/,[revenue] Performance Indicator: Q10

Order Fulfillment Lead Time –

Configure-to-Order (days)

A process where the trigger to begin manufacture of a product is an actual customer

order or release, rather than a market forecast. In order to be considered a configure-to-

order environment, less than 20% of the value-added takes place after the receipt of the

order or release, and virtually all necessary design and process documentation is

available at time of order receipt.



Make-to-Order (days)

A manufacturing process strategy where the trigger to begin manufacture of a product is

an actual customer order or release, rather than a market forecast. For Make-to-Order

products, more than 20% of the value-added takes place after the receipt of the order or

release, and all necessary design and process documentation is available at time of

order receipt. (other manufacturing process strategies are Configure/ Package-to-Order,

Engineer-to-Order, and Make-to-Stock).



Engineer-to-Order (days)

A process in which the manufacturing organization must first prepare significant product

or process documentation before manufacture may begin. Performance Indicator: Q9


Make-to-Stock (days)

A manufacturing process strategy where finished product is continually held in plant or

warehouse inventory to fulfill expected incoming orders or releases based on a forecast.

(other manufacturing process strategies are Configure/ Package-to-Order, Engineer-to-

Order, and Make-to-Order).



Glossary Cont..


Questions

Inventory Carrying Cost (% of

revenue)

[Inventory Carrying Cost]/[Revenue]. One of the elements comprising a company's total

supply-chain management costs. These costs consist of the following: 1. Opportunity

Cost: The opportunity cost of holding inventory. This should be based on your company's

own cost of capital standards using the following formula. Calculation: Cost of Capital x

Average Net Value of Inventory. 2. Shrinkage: The costs associated with breakage,

pilferage, and deterioration of inventories. 3. Insurance And Taxes: The cost of insuring

inventories and taxes associated with the holding of inventory. 4. Total Obsolescence

For Raw Material, WIP, And Finished Goods Inventory: Inventory reserves taken due to

obsolescence and scrap (do not include reserves taken for field service parts). 5.

Channel Obsolescence: Aging allowances paid to channel partners, provisions for buy-

back agreements, etc. 6. Field Service Parts Obsolescence: Reserves taken due to

obsolescence and scrap.


Inventory Obsolescence Cost (%

of revenue) [Inventory Obsolescence Cost]/[Revenue]. Includes cost of out of date inventory Performance Indicator: Q10

Inventory Write-offs (% of

revenue) [Inventory Write-offs]/[Revenue]. Includes Write-off due to damages/ shrinkage Performance Indicator: Q10

Total Inventory – Days Of Supply

(in days)

[(Inventory /COGS) x 365]. Total gross value of inventory (RM, WIP, PFG & FFG) at

standard cost before reserves for excess and obsolescence. It includes only inventory

that is on the books and currently owned by the business entity. Future liabilities such as

consignments from suppliers are not included.


Warehouse Management Cost (%

of revenue)

[Warehouse Management Cost]/[Revenue]. Warehousing processes cover the entire

material flow from receiving through storing and shipping materials, cross-docking,

handling of packing and packages, yard management as well as advanced warehouse

management strategies for picking and receiving to accelerate the supply chain and

raise efficiencies. It includes Cost of maintaining and running warehouses including FTE,

infrastructure and other expenses


Transportation Spend (% of

revenue)

[Transportation Spend]/[Revenue]. Annual cost of transportation services (inbound,

outbound, and intra-company) including internal transportation costs as well as

payments made to external transportation providers Performance Indicator: Q11


Glossary Cont..


Questions

Expedited Transportation Spend

(% of revenue)

[Expedited Transportation Spend]/[Revenue]. Expense on raising the priority level of a

shipment/ load due to a past due condition or a change in the requirement date that

necessitates compressing the normal lead time. Expedited transportation spend can be

of 2 categories â “ inbound expedition and outbound expedition. Inbound Expedition â “

To raise the priority level on an inbound shipment/ load due to a past due condition or a

change in the requirement date that necessitates compressing the normal lead time. This

involves manual checks and taking steps to hasten or to assure delivery of goods

purchased in accordance with a time schedule, usually by contract by the purchaser with

the vendor. The necessity for expediting indicates the need to improve the planning

process. Out-bound Expedition â “ To raise the priority level on an outbound shipment/

load due to a past due condition or a change in the requirement date that necessitates

compressing the normal lead time. This involves manual checks and taking steps to

hasten or to assure delivery of goods purchased in accordance with a time schedule,

usually by contract by the purchaser with the vendor. The necessity for expediting

indicates the need to improve the planning process.


Demurrage/ Penalty/ Fine-

Related Charges (% of revenue)

[Demurrage/ Penalty/ Fine-related Charges][Revenue]. Compensation paid for detention

of ship, freight car, or other cargo conveyance during loading or unloading beyond the

scheduled time of departure. The extra days beyond the lay days (being the days

allowed to load and unload the cargo), are called the days of demurrage. Delays may be

due, either by the ship's detention, for the purpose of loading or unloading the cargo,

before, during or after the voyage, or in waiting for convoy.


FTEs per Billion in Revenue

(overall) [Number of FTEs]/[Revenue in Billions] Performance Indicator: Q13

Percentage of FTEs in Strategic

and Expertise based Functions

(in %)

[Number of FTEs in Strategic & Expertise-based Functions]/[Total FTEs] Performance Indicator: Q13


Glossary Cont..


Questions

Percentage of FTEs in

Transactional Functions (in %) [Number of FTEs in Transactional Functions]/[Total FTEs] Performance Indicator: Q13

Overall Supply Chain Planning

Cost (% of revenue)

[ Headcount Costs, Technology Costs, Other Costs, External Spend pertaining to

Supply Chain Planning]/[Revenue] Performance Indicator: Q12

Supply Chain Planning

Technology Cost (% of revenue)

[Supply Chain Planning Technology Cost][Revenue]. Technology costs associated with

major supply-chain management processes should include: Development costs (costs

incurred in process reengineering, planning, software development, installation,

implementation, and training associated with new and/or upgraded architecture,

infrastructure, and systems to support the described supply-chain management

processes), Execution costs (operating costs to support supply-chain process users,

including computer and network operations, EDI and telecommunications services, and

amortization/depreciation of hardware, Maintenance costs (costs incurred in problem

resolution, troubleshooting, repair, and routine maintenance associated with installed

hardware and software for described supply-chain management processes. Include

costs associated with data base administration, systems configuration control, release

planning and management.


Other Costs and External Spend

(% of revenue)

[Other Costs and External Spend]/[Revenue. This refers to supply chain planning

function cost. There may be certain activities that are completely outsourced (e.g.

logistics planning, warehouse planning) – this metric ensures that such expenses are

considered while estimating the total cost of supply chain planning. But this should only

be related to the planning related activities that require staffing and not inventory cost or

material spend.


Headcount Cost – Strategic and

Expertise based (% of revenue) [Headcount Cost of FTEs in Strategic & Expertise-based Functions]/[Revenue] Performance Indicator: Q13

Headcount Cost – Transactional

(% of revenue) [Headcount Cost of FTEs in Transactional-based Functions]/[Revenue] Performance Indicator: Q13

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