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Strategic Supply Chain Management
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manufactured. Source provides information on what and when materials will be received from suppliers and what inventory is available for production. Make provides source with information on materials consumption, which determines how much to order from suppliers. For companies using available to promise as a strategy, make provides information on scheduled production to deliver for use in order promising. Integrate make with other enterprise business processes. Integrating with technology, product, and service development speeds time to market by inputting engineering changes more quickly. Integrating make with the marketing and sales process ensures that customer, market, and product priorities drive production scheduling. Some of the results such best practices can achieve are shown in Figure 2-11.
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Deliver
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The deliver process starts with the receipt of a customer order and includes all the activities needed to complete that order, from providing a price quote to collecting payment from the customer. Deliver makes the order visible to source and make for execution, ensuring that customer requirements are communicated clearly. Deliver also includes all warehousing, transportation, and distribution activities. Here are the four principles we recommend for deliver process excellence:
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Balance service with the cost to serve. Some customers are more profitable and more desirable than others. These are the customers you want to take especially good care of. Begin by
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F I G U R E 2 11
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Metrics of top performance in make.
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Best Performer Advantage Over Median/Average Discrete Process Discrete Process 4 times faster 3 times faster 36 times less inventory 14 times less inventory
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Direct Labor Availability (Days to increase by 20%) Work in Progress Inventory Days of Supply
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Copyright 2004 The Performance Measurement Group, LLC
CHAPTER 2 Core Discipline 2: Develop an End-to-End Process Architecture
clearly defining customer segments, and then differentiate your deliver processes, business rules, and services accordingly. For instance, you may offer high-value customers several order-management options while limiting other customers to self-service and other lower-cost order channels. You also may give priority to your best customers when allocating inventory in times of product shortages. Cut costs and time with straight-through processing. Send order information to all relevant functions credit approval, manufacturing (for make to order), warehousing, transportation, and invoicing so that, where possible, execution activities can be done simultaneously instead of sequentially, and all aspects of deliver can be organized for smoother, faster processing. As with information flows, design deliver physical flows for straightthrough processing to minimize non-value-added wait time. Choose your physical network production, warehousing, and transportation with an eye toward total costs and delivery time. Set up end-to-end tracking and traceability. The status of all customer orders and shipments, from order signal to cash collection, should be visible throughout the deliver process. For example, customers should be able to see where their orders are, and key account managers should have access to full order information for each of their accounts. Moreover, managing supply chain risks such as terrorism, counterfeiting, theft, and spoilage requires being able to seal and track shipments from point of production to point of delivery. Manage data for ongoing accuracy and timeliness. Good delivery performance depends on excellent data management. Customer order creation and management require a broad range of information, including product attributes, technical configurations, prices, and customer addresses. All this information must be kept current to avoid errors. Otherwise, orders and invoices will be rejected and reworked, adding time and cost and tying up cash in the supply chain. In most companies, data creation and maintenance are a challenge involving many departments. The challenge, though, is even greater beyond the enterprise, requiring data and process standards among customers, suppliers, and partners each of which may have different data structures, definitions, and repositories.
Strategic Supply Chain Management
You won t be able to follow all these principles without integrating delivery with other core business processes. For example, data management requires getting product-related data from the technology, product, and service development processes. Customizing supply chain processes as part of customer collaboration will require adjustments to the marketing and sales process so that customer contracts systematically take logistical aspects into account. Moreover, the marketing and sales process must provide deliver with information on pricing, customer-specific terms and conditions, and the clear guidelines on customer priorities needed to balance service and the cost to serve. To meet your customer delivery commitments consistently, you ll also have to integrate delivery with your company s other supply chain processes. Plan depends on the deliver process for information on demand based on order backlog and customer shipments for both resource and revenue planning. In addition, creating collaborative business models and tailoring deliver processes can have significant implications on plan, source, and make. For instance, the make and the plan processes provide deliver with the inventory and production scheduling data needed for customer order promising. Depending on the collaborative model chosen, the type of information needed and transaction frequency can change significantly. See Figure 2-12 for the metrics of top performance in deliver.
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