Return to the Blogosphere and Supply Chain Survey Update

Supply Chain / Value Chain Research - An Update and "Last Call"

(Since there is some reason to believe that this research will be long-term and an evolving measure of practice and performance, this might not be the last call for responses - just the last call for this instrument). As many of you already know, the survey builds on Dr. Sanjay Menon's delphi study of a few years ago. This update will provide a foundation for further research.

I reminded you in my last entry that with surveymethods.com you can begin the survey, leave the site, and then return to complete it without starting all over again. I should have also mentioned that for those of you who leave an incompleted survey (and forget to return), the incompleted survey can skew the numbers when analyzed during the peer review process. (So please, if you have not yet finished your survey, please log in and complete it).

For those of you who have not yet started your response, we would be pleased to include your response if you can complete it in the next several days. We particularly welcome practitioner input. If you are just now discovering the survey you can read the announcement of its launch here. And if the links don't work you can paste the link to your web browser. (http://www.surveymethods.com/EndUser.aspx?87A3CFD080C0D5D2)

Thanks again to everyone who is collaborating in this research.

Supply Chain / Value Chain Research - An Update

I wanted to send a word of thanks to those of you who have participated in the Supply Chain/Value Chain survey so far. With well over 100 respondents in the first few days we are in the process of making the first analytical pass of the data. The speed with which you have responded has been gratifying, particularly given the business demands associated with the holiday season and the end of the year.

A special thanks to the Value Chain Group for helping get the word out on the survey.

For those of you who started but then had to interrupt your survey, we will be looking at completed surveys again on December 12 so if you can complete your entry by then, your response will be included in the initial analysis. (As you know, with surveymethods.com you can begin the survey, leave the site, and then return to complete it without starting all over again). For those of you who have not yet started your response, the good news is that our initial estimate of approximately 20-25 minutes to complete the survey has been confirmed by a number of respondents.

If you are just now discovering the survey you can read the announcement of its launch here. And if the links don't work you can paste the link to your web browser. (http://www.surveymethods.com/EndUser.aspx?87A3CFD080C0D5D2)

Thanks again to everyone who is collaborating in this research.

Supply Chain Survey Research

A short while ago, I was flattered to be approacahed by Sanjay Menon, PhD, Lousisiana State University - Shreveport who was interested in continuing the supply chain research he began a few years ago. His original research used an expert panel (Delphi) to frame some basic questions regarding supply chain management - including developing a snapshot of best practices and basic management trends.


Dr. Menon is revisiting his research questions (with limited assistance from me) and expanding them to include: 1) how different people perceive supply chains and value chains, 2) how supply chain considerations drive human resource practices, 3) how organizations address performance measurement (KPIs) and who is responsible for those measurements, and 4) what the perceived state of the art in supply chain management today.


Unlike many surveys I have seen and participated in, this survey was designed to answer some very basic questions and can be completed by almost anyone in about 20 minutes. (I don't know is a valid answer for most questions). The results of the survey are intended to be published in academic, peer-reviewed publications. There are no sales or marketing efforts associated with the survey and you are invited to participate.

For the friends and colleagues I made during my tenure as the Chief Technology Officer of the Supply Chain Council, I encourage you to participate in the survey to help to frame answers for questions we have been asking since the 1990s. For those of you who are seasoned in value chain and supply chain practice, I would ask you to contribute your knowledge to help understand how to link management practice and measurement to the managers and exectuves who are responsible for their planning and execution.

What is your reward for participating in the survey? Your anonymity will be protected. You will not be put on a never-ending mailing list. You will receive a summary of the findings and there may be an opportunity for you to participate in additional research.

Thanks and the link to the survey is here.

In Search of the Perfect Order Webinar

As I mentioned in a previous post, the Value Chain Group was kind enough to host one of my webinars - this time, an overview of Perfect Order Fulfillment. In the one hour that we devoted to the topic, we were able to discuss how perfect orders are calculated and some of the issues associated with capturing and using the measurements.

As a special note, in the webinar I mentioned a survey that Louisiana State University at Shreveport's Sanjay Menon, PhD, and I are conducting on metrics, supply chain management, and human resources. If you are interested in this research please feel free to send him (or me) a note.

The webinar introduces the use of a powerful metric that has been termed a Key Performance Indicator (KPI) by practitioners, research organizations, academics, and consultants. While the measurement of Perfect Order Fulfillment may be the state of the art in fulfillment measures, it can be difficult to implement. Failing to reach consensus on the definition of the order, the required delivery times (what constitutes early/late), or quantities (e.g.,blanket order agreements, call-offs) can make any measurement impossible. Imperfect execution (inconsistent purchase order agreements, failure to collect delivery information, or an inability to link invoice accuracy with the on time in full delivery of a customer's order) can make it impossible to measure perfect order fulfillment but other measures (On Time In Full, Fill Rate, etc.) may provide acceptable alternatives.

The VCG recorded the webinar and has passed along a link to for those who may have missed the original broadcast. The recording includes the PowerPoint presentation and an audio recording of the event. The link to In Search of the Perfect Order uses GoToMeeting and will ask for an email address prior to launching a Windows Media file that will play the audio recording and show the accompanying PowerPoint presentation.

In Search of the Perfect Order - Webinar Invitation

A month ago I presented a webinar on Measuring, Managing, and Improving the Extended Value Chain for the Value Chain Group. About 40% of the attendees who responded to survey questions indicated they were interested in additional information on metrics, KPIs, and benchmarking. Statistics indicate that readers of my blog are frequently attracted by the entries on those same activities and the list of benchmarking resources that I maintain.

On November 6, I will present another webinar, this one focused specifically on a KPI / measurement that has attracted significant attention in the last few years - Perfect Order Fulfillment. In the hour long webinar, I hope to address the challenges in defining and measuring the Perfect Order and how "metrics maturity" might progress from fill rate to delivery performance to on time in full delivery to perfect order fulfillment. While we will talk about how to calculate the metrics, the webinar is intended to discuss the issues in applying these service level metrics across the value chain (suppliers - customers). We will also touch on how superior or substandard performance may effect the financial performance of members of the value chain.

I was very pleased with the number of participants we had in the last webinar and if this one is received as well as the last, I hope to follow it with several metric-specific sessions. The VCG Invitation follows including the link if you choose to participate:

You are invited to join our VCG Webinar:

In Search of the Perfect Order

Join us on 6 November from 11:00 AM to 12:00 PM ET US (16:00-17:00 GMT)

Space is limited.Reserve your Webinar seat now at:https://www1.gotomeeting.com/register/695292800

In Search of the Perfect Order is a webinar introducing a key performance indicator (KPI) that has soared in popularity in recent years. Perfect Order Fulfillment has been touted as the customer service delivery metric by state of the art companies.

For many companies, the costs associated with an accurate measurement of Perfect Order Fulfillment may be prohibitive. If you are building a business dashboard, leading a value chain team, trying to understand how business measurements can drive business design and performance, or considering participating in a benchmarking program - this webinar may provide some important insights.

Large and small businesses recognize that achieving consistent, superior results requires managers and executives to monitor business performance and take decisive steps to maintain or improve outcomes. Strategic partnerships, go-to-market-strategy, and business plans are built on service level agreements that use business performance metrics to specify the commitments of the business partners. "Standard" contracting terms employ measurements terms that are often not well-defined nor standard. World-class companies are investing in business intelligence/analytic applications, employing "dashboards," and investing in benchmarking programs. At the heart of these efforts is consistent and meaningful definition of what and how to measure.

This webinar focuses on the implementation questions of employing a perfect order metric. How is a perfect order calculated? What is the financial impact of less than perfect orders? Should you use On Time in Full Delivery or Perfect Order Fulfillment as your primary service level metric? How does a fill rate metric compare to Perfect Order Fulfillment? Where are the common failures in measuring Perfect Order Fulfillment across an extended value chain?

Scott Stephens will be leading the webinar based on his experience in defining and employing the metric in multiple industries, multiple geographies, and across the extended value chain. More about our Speaker.

Sponsor: Value Chain Group, Inc. See http://www.value-chain.org/

Title: VCG Webinar: In Search of the Perfect Order
Date: Thursday, 6 November 2008
Time: 11:00 AM-12:00 PM ET USA (16:00-17:00 GMT) Time Zone Converter


System RequirementsPC-based attendeesRequired: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendeesRequired: Mac OS® X 10.3.9 (Panther®) or newer

Webinar Link - Measuring, Managing, and Improving the Extended Value Chain

Recently I was privileged to present a basic introduction to using metrics and process mapping as tools and techniques to measure, manage, and improve the extended supply chain. The Value Chain Group was kind enough to invite me to present my thoughts on how to use a business-centered, metrics driven approach for value chain / supply chain improvement.

Besides hosting the webinar, the VCG recorded it and have posted it with a link on their website. They were also kind enough to conduct a brief survey regarding how the participants received the presentation and provided me with some feedback. Intriguingly, much of the feedback mirrored the comments I heard a decade ago when a few practitioner companies were forming the Supply Chain Council. When participants were asked in what area they would like to receive additional information, about 40% indicated they were interested in additional information about metrics and KPIs, 40% indicated they were interested in additional information about processes and value chain mapping and modeling, and the rest were interested in specific implementation techniques and tips.

I hope to continue to assemble information and resources that might help new value chain practitioners as well as those who are more experienced. I also hope that in the future I can work collaboratively with others in the field to share implementation experience, best practices, and case studies. Based on the feedback that I mentioned, I am working on a couple of presentations that focus on the challenges of effectively employing specific measurements across an extended value chain. I have started to put a presentation together that has a working title of: In Search of the Perfect Order (which will is focused on fulfillment metrics).

For those of you who had registered for the webinar but were unable to attend, the hour long presentation and the accompanying PowerPoint presentation can be accessed via the VCG link. There is a brief and painless registration process to access the archived presentation.

Thanks again to the VCG and thanks again for those of you who provided feedback. I would be pleased to receive additional feedback from the participants or from those who will be reviewing it for the first time.

Measuring, Managing, and Improving the Extended Value Chain Webinar

The Value Chain Group was kind enough to invite me to present my thoughts on how to use a business centered, metrics driven approach for value chain / supply chain improvement. It is a back to basics approach that focuses on the business drivers rather than the technology.

I am impressed that the Value Chain Group has opened the invitation (below) to anyone that might benefit from the webinar - not just their members. They have recognized that my presentation is model "neutral" and hopefully will provide some insights to the attendees who have little experience with value chain concepts as well as those that have considerable experience with process models like VRM, APQP, DFSS or SCOR.

VCG Invitation

You are invited to join our VCG Webinar: Measuring, Managing, and Improving the Extended Value Chain Join us for a Webinar on September 11 from 11:00 AM to 12:00 PM ET US Space is limited.Reserve your Webinar seat now t:https://www1.gotomeeting.com/register/640642420

Discussion: If you lead a business or team that has been tasked to improve the performance of your business unit, you have probably elected to use an approach that is driven by numbers. If you are a departmental leader or manager that is developing a business solution that requires collaboration with suppliers, customers, and other internal business units, you have probably been researching standards and practices that you can use. If you are a technology vendor or a consultant trying to build a business case for an IT solution or application, you have probably realized the imperative to successfully identify business drivers and processes that span sales, marketing, engineering, finance, IT, logistics, production, and customer service.

Large and small businesses recognize that achieving consistent, superior results requires managers and executives to monitor business performance and take decisive steps to maintain or improve outcomes. Strategic partnerships, go-to-market-strategy, and business plans are built on service level agreements that use business performance metrics to specify the commitments of the business partners. "Standard" contracting terms employ measurements terms that are often not well-defined nor standard.

World-class companies are investing in business intelligence/analytic applications, employing "dashboards," Measuring, Managing, and Improving Business Operations is a webinar introducing the use of business process models and metrics as frameworks for rapidly assessing and improving the extended value chain. It has been designed for those of us who are not experts in business and finance and statistics and information technology and logistics and process modeling and consulting and supply chain management.

If you are starting (or starting again) to explore a cross-functional, cross-enterprise KPI-driven approach to improving your business, this is designed to help orient you.

About our Speaker: Scott Stephens works as a consultant, trainer, and mentor with commercial and government executives, managers, and cross-functional project teams in value/supply chain management, performance measurement, and process improvement in both discrete and process industries. He has worked collaboratively with the Value-Chain Group in the past but may be best known for his contributions to the Supply Chain Council. This webinar is adapted from a workshop developed for the GPI - Global Performance Initiative (GPI), an organization dedicated to identifying and sharing measurable best practices for achieving operational excellence, particularly in the area of value/supply chain management.

From 1996 to 2006, Mr Stephens was a key contributor to the Supply Chain Council (SCC). As one of the founding members and the first chair of the Council's Board of Directors (representing Lockheed Martin), he was instrumental in establishing the Supply-Chain Council and transitioning the Council from a loose consortium of practitioners to an independent, not-for-profit trade association. For almost ten years, Mr. Stephens served as the Chief Technology Officer of the Council, working with practitioners, academicians, software providers, government organizations, and consulting companies in developing and advancing the Supply Chain Operations Reference (SCOR) Model. SCOR is a cross-industry supply-chain management reference model designed to describe, measure and analyze the performance of supply chain configurations. SCOR contains standard supply-chain process definitions, metrics, best practices, and references to enabling technology, which can contribute to SCM efficiency.

Mr. Stephens works with the world's leading organizations in industry, government, and academia in supply chain initiatives in Europe, Asia, Australia / New Zealand and the Americas. Mr. Stephens publishes and speaks frequently in international supply chain management and business forums. He is a guest lecturer at universities world-wide. He has delivered supply chain management workshops to over 2000 executives, globally and was responsible for training and certifying all SCOR instructors during his tenure as the SCC's Chief Technology Officer. He has assisted a number of Fortune 100 companies with business transformation and supply chain improvement.

Prior to establishing his business, and serving as the full time Supply Chain Council Chief Technology Officer, Mr. Stephens worked at Lockheed Martin with responsibilities in: all phases of the value chain (pre-sales, sales, design, production, and delivery through support and warranty management), development and implementation of supply chain strategy and technology to improve corporate competitiveness, the identification of commercial supply chain management best practice and off-the-shelf technology in support of DOD programs through the design and delivery of supply chain management "command and control systems," and supply chain management support for Lockheed Martin's commercial customers.

Sponsor: Value Chain Group, Inc. See http://www.value-chain.org/

Title: VCG Webinar: Measuring, Managing, and Improving the Extended Value Chain

Date: Thursday, 11 September 2008

Time: 11:00 AM - 12:00 PM ET USA

System Requirements

PC-based attendees Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees Required: Mac OS® X 10.3.9 (Panther®) or newer

Value Chain Benchmarking Reports and Surveys

As the list of benchmarking reports and surveys has grown, it has been a bit more difficult to scroll through links and reports on the Google Doc spreadsheet that I have been embedding in the blog. This posting marks the transition of the embedded spreadsheet to a web-based table hosted on the Global Performance website. Since it is one of the more frequently bits of information accessed on this blog, I have made the link a permanent feature (top right) of the blog.

On this first version of the posted table, I have kept the links and added a description of the site on which the surveys can be found. The organizations are grouped as academic organizations, commercial organizations (including trade associations and consultants), and government organizations. While some of these services require fees and/or participation in the benchmarking to access the data, I don't identify the fee structure or the agreement you might have to enter into to participate in the survey or extract data.

I will continue to provide updates to the list and intend to provide a brief description of any changes on this blog but will provide the updated list for maintenance on the GP site.

Additions or corrections to the list are welcome. Additionally, anyone that is willing to share their experience using the benchmarking services is encouraged to do so.

The Continuing Search for Standard KPIs and Metrics

Last month I started identifying sources for KPIs and Metrics. In my initial entry I included a short description and links to:

The KPI Library
The Palladium Group
APICS
APQC

I have also had previous entries on BPIR.COM (affiliated with Massey) which provides members access to a library of metrics.

Cranfield University's School of Management offers a catalogue of performance measurements organized around a framework called the Performance Prism. The Performance Prism is a measurement and management framework that attempts to address all of an organisation’s stakeholders - investors, customers & intermediaries, employees, suppliers, regulators and communities. While the Catalogue costs £95.00, Cranfield lets you sample it (including a glossary list of the metrics).

The advertisement for the publication indicates that it includes:

• The title of the measure.
• Why it should be measured.
• The role of the measure in different contexts.
• How to measure it. Definition / formula of the measure – providing possible options
  What do we need to consider when defining the measure ? Definitions of key terms, possible sources of data, ways in which the data should be analysed, questions to be asked when using the measure

Another resource that I would recommend is Better Management.com. A website run and maintained by SAS, it is not a typical commercial website. SAS does a respectable job in keeping advertising to a minimum and providing readers with access to a wide-range of articles, white papers, and research (much of it that does not originate with SAS). I have not found a KPI library on the site but exploring the resources should provide ideas and references for trying to identify the right metrics or KPIs to use.

Value Chain/Supply Chain Benchmarking and Studies Report Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

Recently, as I was searching for KPIs and metrics, I stumbled across the American Customer Satisfaction Index (ACSI).

One of the few benchmarking services that I have found that specifically attempts to measure customer satisfaction, the ACSI is administered by the National Quality Research Center at the University of Michigan's Ross Business School. Research support is provided by the Business School, the American Society for Quality (AQS), and the CFI Group.

According to their information page:

ACSI reports scores on a 0-100 scale at the national level and produces indexes for 10 economic sectors, 43 industries (including e-commerce and e-business) and more than 200 companies and federal or local government agencies. In addition to the company-level satisfaction scores, ACSI produces scores for the causes and consequences of customer satisfaction and their relationships. The measured companies, industries, and sectors are broadly representative of the U.S. economy serving American households.

The ASCI website also lists corporate sponsorships from some of the premier firms in the United States. It is possible, according to the website, to obtain additional services that allow benchmarking with your peers, with companies outside your industry, and to use predictive capabilities to estimate how your performance in satisfying your customers will effect your future business performance.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

In Search of Business Performance Measurement Standards

A sizable percentage of the people who find my blog for the first time are searching for specific answers. A number of you are trying to find a list of key performance metrics (KPIs) or how to calculate OTIF (on time in full), or how stock-outs effect revenue.


While a number of my posts deal with concepts, theory, and framework, the practical questions of how and what to measure have been one of the principle elements that have kept me interested in this area.


In the past few months I have been trying to use LinkedIn as a collaborative resource to find technical answers. I first tried to use the network tool to find benchmark programs and surveys but I had very little luck. Of course it is hard to determine whether I phrased the question poorly, few were interested in the subject, or the question didn't reach the right people.


Recently I asked people to identify their sources for KPI and metrics. I have been pleasantly surprised by the willingness of very knowledgeable professionals to share their experience. A number of them have volunteered to collaborate in the future.


As a result of the email exchanges with these professionals I am starting to assemble at least one other resource list that I will post and try to maintain as a living document - Metrics Resources.


The goal of my search has been a neutral respository of business metrics, preferably a handbook of definitions, formula, and discussions of how and why to collect them. While I haven't found that source, people have been identifying resources which have proven interesting and useful.


While the initial list is taking shape, here are a few of the initial resources:


The KPI Library - A web site of Key Performance Indicator (KPI) libraries for finance, IT, supply chain, project and other business processes.

The Palladium Group - A web site (formerly the Balanced Scorecard Collaborative) relies on Kaplan and Norton's books on the Balanced Score Card to support a consulting practice. The body of knowledge in the books provides the basic concepts required for using the Balanced Scorecard approach and their are a number of consultants who are apparently qualified to teach / assist in the area. (Books will be listed separately).

APICS - A web site for the Association for Operations Management is a source of information in operations management, including production, inventory, supply chain, materials management, purchasing, and logistics. The APICS Dictionary (will be listed separately) was a primary resource of Supply Chain Council members as they were developing versions of the SCOR Model.

APQC - A web site for the metrics, benchmarking, and a process framework. Most content is premium (available to members - membership requires a subscription fee).

Besides assembling this list for publication, I will be providing short monograms on metrics. I expect the first metric to be treated this way will be On Time In Full.

Finally, I will be asking for your input. What resources do you use to identify and deploy metrics? How do you compare the calculations and the source of the business metrics between two dashboard systems? What books, websites, blogs are important if you are a professional in the value chain area? I will include my library (even standard reference books like the MBA Desk Reference and a Pocket Guide to Financial Ratios) as well as sources of information that others find important. (I have begun asking people if they would be willing to help assemble an annotated bibliography - books, white papers, web sites, and blogs and a metrics dictionary. Unfortunately, I didn't ask them if I could mention them in my blog or point to their sites. Part of the learning curve).

If you know a source of standard business metrics please let me know.

Supply Chain / Value Chain Benchmark Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.



In this revision I have added The Hackett Group to the list. The Hackett Group maintains a proprietary benchmark database to support a benchmark service and their consulting group.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Supply and Value Chain Benchmark Programs and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added Ventana Research to the list.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Supply Chain / Value Chain Metrics - Getting Started (4) The Multiple Dimensions of Value Chain Measurement

There is, probably, no single measurement that effectively captures the health of a value chain, even though it may be easier to evaluate a value chain than an organization.

When you are performing a financial analysis of a company you expect to use multiple measures like: sales, costs, profit, and inventory. Managers and analysts understand that profit and loss statements and balance sheets provide multiple measurements in an attempt to capture a total picture of the organization. On the other hand, I have seen countless project teams use a single-point of measurement - cost, as their only measure of success in their value chain improvement project.


If you want to significantly reduce your costs - eliminate your product line. You should be able to drive your costs (and inventory) to zero. Sound crazy? If your only criteria is cost savings or cost avoidance, the elimation of a product makes perfect sense. While it may be a sound strategy if you are trying to close a business or business line focusing on cost reduction may be less important than improving your service level to your customers if you are trying to increase sales.


Just like you use multiple financial metrics to evaluate the business health of your organization, multiple operational metrics are necessary to properly evaluate the operational health of your organization. In a perfect world, your operational metrics will link to your financial metrics.


For a value chain / supply chain analysis, what business dimensions should you attempt to measure? As opposed to identifying metrics and trying to figure out how to use them, it may be useful to determine high level business performance and then derive the metrics that would help to drive changes in performance.


Revenue Value chain operations directly impact sales. Not only are sales and marketing activities directly linked to the generation of demand for products, product development, product quality, product delivery, and customer service / support. Because of the complex interrelationship of these activities it is useful to look at:

• Demand Generation (How effectively you establish a need for your products and services).
• Product Development / Introduction (How quickly and effectively you develop and introduce new, or modified, products and services).
• Service Level (How successfully you serve your customers through meeting their expectations/ your commitments to them).

Cost The cost of your operations will clearly determine how much profit you can make or, in the case of not-for-profit organizations (like government agencies) how much service you can provide. Cost generally falls into two categories:

• Direct Cost (The costs associated with producing the specific product or service).
• Indirect Cost (The costs associated with the business that are not specifically attributable to a specific product or service).

Asset Management (How effectively you use your assets changes your financial performance. More effective use of resources translates into a competitive advantage.

• Inventory Carrying raw, WIP, and finished goods inventory incurs a real cost as well as an opportunity cost.
• Payables When suppliers extend credit (e.g., 30 days net) to their customers, they are essentially making loaning assets.
• Receivables On the other hand, when you allow your customers to pay after delivery (e.g., 30 days net) you are making a loan of your assets. While it is may be beneficial, even necessary, for a sale, it means it may take longer for you to see a return from your assets.

Time Time is a critical factor in the success of any business. When evaluating value chains we frequently think in terms of time to market (the time between when a product is conceived to the time when it is first available for sale in the market). Sophisticated businesses understand that equally important may be time to volume. Nimble competitors can overtake a more innovative company if their manufacturing or distribution excellence allows them to imitate a product and make it available while the innovator is still trying to ramp up. Time metrics are interesting because shorter cycles times are usually less expensive and provide higher levels of customer satisfaction. It should be easy to understand that if you replace ground or sea transporation with air, you might get a shorter cycle time at a higher cost.

Agility The ability of the organization or value chain to adapt to unexpected changes in the market place.

These dimensions provide different, equally valid perspectives of the same value chain. While a Vice-President of Sales may focus on revenue, a Chief Operating Officer or a Transporation Manager may focus on cost. In a given quarter, a finance director may be focused on receivables. The challenge in a value chain analysis is to prioritize and balance these dimensions.

It is equally important to understand that priorities are going to shift between business and product lines. Many analysts and businesses struggle when they try to apply a one size fits all strategy to their businesses or products. (IT organizations frequently fall into that trap as they try to develop "common" processes or establish governance). The challenge is identifying common dimensions, metrics, and processes and varying their performance to effectively manage multiple and disparate product lines.

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added the SAP and the America's SAP User Group benchmark series. There is a series of benchmarking reports which extends across most supply chain processes, product development processes, and finance / human resource activities. They provide a sample of the benchmark reports on the SAP site.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of the supply chain and value chain benchmark report and studies list.

In this revision I have added the National Retail Foundation which provides benchmark information for that industry. The benchmark reports be interesting to manufacturers and distributors who provide products and / or services to retailers. The monthly Port Report may also be of interest to companies outside the retail industry.

The surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

Supply Chain / Value Chain Metrics - Getting Started (3) Government and Non-Profit Organizations

I have been fortunate to have worked with organizations in a wide variety of industries. As I was preparing the next entry in this Getting Started series, it occurred to me that I was writing it using language that would be most suited for those in, and working with, private for-profit companies.


One of the challenges that intrigues me in writing these blog entries is trying to describe my understanding of concepts and practices that I have used or seen used successfully in a style that effectively communicates to senior business executives, financial managers, functional or department managers, IT professionals, process modelers, small businesses, academicians, and anyone else who elects to read them.


During the course of these entries I hope I remember or am reminded to talk about how measuring business performance in process industries is similar to measuring performance in discrete industries. (That doesn't mean that there are not measurements and practices that are more suited to one industry than the other. It does mean that on time in full delivery, an example I used in my previous entry, can be used for either industry with equal success.)


More challenging might be trying to convey the similiarities between non-profit organizations and for-profit organizations. A government agency can provide a good or service to its "customers" just like a for-profit company. While it may not seem to make any sense to talk about revenue or profit margin as drivers for government or a not-for profit organization, there are more similarities then not. In the late 1990s, the US government commissioned a study that to determine whether or not commercial metrics could be applied to government performance. Ultimately, the government determined that metrics used by private industry translated very well for government use.


There are some adjustments that a government organization or not-for-profit organization will have to make. In some cases, revenue or sales measures don't seem to make sense. This top line of a profit and loss statement is fairly essential when doing some calculations. Substituting a budget allotment for sales fills the shortfall. (For-profit organizations may use the same technique for cost centers.) Similarly, the concept of profit may seem critical for private industry but irrelevant for government. There are any number of illustrations in which private industry sets profit goals to zero or negative (loss leaders or key value items) while government organizations employ revenue and profit goals.


As I describe how to get started using metrics, I recognize that I am not providing exhaustive descriptions that will necessarily align with every sector, industry, company or organization. I ask readers to view these entries in the broadest sense and if you have an unresolved question about applying to your situation feel free to make comments.

Supply Chain / Value Chain Metrics - Getting Started (1)

In the years that I have been working with companies in identifying and implementing supply chain and value chain improvments, I have watched how strategies change based on the prevailing economic conditions. In good times, when companies are struggling to meet demand and respond to market growth, successful companies invest to improve their operations, improve their margins, and increase their revenue. In bad times, when facing recession and business slowdown, successful companies invest to improve their operations, reduce their costs, and protect their margins. The constant drive to improve performance does not change - what may change is priorities.

I was reminded, recently, that a change in market conditions may require a fresh look at your business. Whether you have years of experience as an executive, you are a new manager or analyst, or you are a consultant / technology provider, sometimes you need to start from scratch. Businesses have proven, for years, that an outside perspective (consultant, research firm, partner) may challenge internal assumptions and lead to dramatic business change.

I thought it may be useful to provide a description of how I have "gotten started" when I have looked at companies and organizations for the first time. (I will be writing this in several installments). I supsect that most of this will be a pretty basic roadmap and I apologize to the more experienced among you. For the IT and sales account managers, the roadmap is essentially equivalent to a basic method for requirements definition or "discovery."

The approach that I will be outlining is based on a top-down approach.

Step One - Collecting Business Information

Unless you are a very small business, the odds are you provide more than one product (good or service) to your customers. In the case of the mid-to large company, the chances are that you have multiple businesses which each have multiple products. The first thing I try to do is get a sense of the company / organization and how it performs in the marketplace.

At the most basic level, what I would like to have is a description of the company, what products it provides, who the customers are, what it is trying to do in the markeplace, who its competitors are, and how it is performing. Not much, is it?

In the last 10 years, the freely available and accessible information has exploded. I typically start with an internet search. Here is how I frequently start:

Visit the company's website. Normally the company will provide a description of its goods and services, press releases, and information they want the public to know. (Not surprisingly, it is not uncommon that even senior executives are not aware of everything that is posted on their website).

On the websites of publicly traded companies, there is frequently a link for investors or investors relations. The information that you can find at these sites varies widely but frequently you can find:

• Annual Reports



• Quarterly Reports



• Other SEC (US Security and Exchange Commission) filings



• Analyst Briefings

The first three items on the list form a basic starting list of information whether you are doing a value chain performance analysis or a financial analysis. The United States Security and Exchange Commission (SEC) has simplified finding much of this information since it is available through EDGAR (Electronic Data Gathering, Analysis, and Retrieval of SEC filings).

A company's annual report contains two important financial statements: the balance sheet and the profit and loss statement. Additionally, the annual report typically provides management's view of the business, vision and broad plans for the future, assessment of the marketplace, and their identification of operational and financial risks.

For large businesses, the financial reports will usually identify major business segements and the markets in which they operate. Since this business segmentation helps in determining the scope of the value chain, it is important for the novice analyst to understand that how the business slices and dices its organization and rolls up financial reports may or may not reveal important details of the organization. (If you randomly select public companies and visit their websites or read their annual reports you will find that quite a bit of variation in how much detail they reveal about their organizations. Some of this is a result of trying to concisely report the general health of enormous organizations. Some, is simply a result of trying to safeguard competitiveness).

Check public business resources. There are countless resources for buying business intelligence. Before you spend your money, I would recommend starting with some free or virtually free resources.

I use all of these resources when I start - each for different reasons. This doesn't mean that there aren't more places to start your investigation. They may be (The Reuters site provides some of the most complete company overview / descriptions. The Businessweek site provides very good information on competitors and industries). Information access may very based on whether or not you subscribe to a periodical.

Businessweek

CNN Money (Fortune, Money)

Forbes

Reuters

Yahoo Finance

Subscription Services. When starting a value chain analysis for a medium or large company, it is frequently useful to see more detail regarding the organization of a company. Where are products manufactured, where are the warehouses, where is the sales organization, etc. That level of detail is very difficult to get from public sources. A relatively low-cost research option that I have used in the past is Hoover's, a research arm of Dun and Bradstreet. Hoover's has a "family tree" option that often provides substantially more information that is publicly available.

It is possible to purchase individual research reports for businesses. Obviously, due diligence is required to insure that you are buying information you can't get with a little of searching and the cost of the report can be in the hundreds or thousands of dollars.

Company Information. Whether you are an analyst, an executive, vendor/consultant, or an IT organization, once you have started working with a company it is useful to gather internal information (not typically publicly available) for initial reference. The information should include:

• Organization Charts


• Mission Statements


• Strategic (Long-Term Plans) and Business Plans

This assemblage of information should provide a basis of understanding of the company's markets, product lines, geographies, customers, and basic performance.

This first "quick look" of a company should only require a few days. You may spend more time in subsequent phases of analysis or implementation in getting more detailed information, testing assumptions, and answering questions.

In a perfect world, benchmarking information would be available to support this part of the analysis. In my next entry, I will spend a little time discussing benchmarking and participation in benchmarking programs.

Supply Chain and Value Chain Benchmark Reports and Studies Update

This is the latest revision of my supply chain and value chain benchmark report.

I have received comments that it was difficult to read the slideshow presentation I had previously included. I am re-posting the list as a spreadsheet using Google Docs. The sources of the surveys are links which are clickable and should open to their respective sites. I envision that future additions will add more benchmark reports, provide a short description for the surveys, and identify what part of the value chain / supply chain is included in the report.If you are aware of a benchmarking study or resource that should be included in this report please let me know.

The ROI of Supply Chain / Value Chain Improvement - The Need for Multiple Measurements

Return on investment, ROI, has become a mantra for organizations when they evaluate, initiate, and manage projects to improve their value chain or supply chain performance. Consulting companies, technology providers, and system integrators sell their products and services with promises based on ROI calculations. While the promise of ROI is seductive, determining what the real return for a project can be extraordinarily difficult. Promised ROI is frequently never realized.


In many cases ROI is calculated when projects are evaluated, proposals are awarded, and budgets are agreed upon. In many (most?) cases, once the project is completed, actual ROI is not tracked. As a result, there is little accountability for results - at least among those not responsibile for the business. While it can be challenging to meet budgets and schedules for a business improvement project, it can be far more challenging to meet overly ambitious business plans that may not depend just on a successful project.

For the small business or the large practitioner, the ROI calculation is essentially the same.

Return on investment is calculated as (the benefit of the project) minus (the cost of the project) divided by the cost of the project. The vast majority of the time, project improvements in supply chain or value chain operations are sold on cost savings or cost avoidance. So, a project that saves $1000 and costs $500 to implement, has an ROI of 1000 - 500 /500 or 1.0 (100%). If the project doesn't realize its promise and saves only $600 the ROI is 600-500/500 or .2 (20%).

For the business owner or executive, using the calculated ROI appears to be easy. If the calculated ROI is negative, it means the project is going to cost more than its "worth." So, you do not approve projects with a negative ROI. If one project has an ROI of 20% and another has an ROI of 50% the second project is given a higher priority. It may be more difficult to make decisions if a project is strategic, or produces positive and negative results. It may be that deploying a direct to cosnumer distribution system eliminates substantial logistics costs but may also threaten revenue when distributors are no longer motivated to sell.

Using an ROI calculation becomes more difficult when you compare projects and outcomes that extend over multiple years. Comparing a short term project with large (one-time) savings with a project that will last 18 months and generates small benefits (or savings) for the next 10 years requires a bit more sophistication. To help address this issue, the ROI calculation can be expressed in Net Present Value or NPV. (NPV is included in Excel worksheet forumulas). The NPV forumula allows an executive or an analyst to compare projects with multiple year time frames. Investopedia has an excellent description of how to calculate the value of money when time is a factor.

The real issue in supply chain and value chain ROI calculations lies in the assumptions. Supply chain and value chain operations include multiple functions and effect multiple business and financial results. If cost reductions lead to a reduction (or appearance in the reduction) of customer service, the result can be lost sales. As a result, a cost savings project can meet all of its ROI objectives and, if revenue is not considered, can produce a real financial loss.

So, how do you reduce the risk of inaccurate or incomplete assumptions? While there is no guarantee that your business executive, business analyst, or project manager will predict the right outcome, there are steps that can be taken to insure they consider different perspectives. One way is require the review of a project using multiple measurement dimensions. While cost and cost savings are almost always considered it is important to consider: impact on product positioning, impact on service level performance (as expressed in meeting customer commitments or expectations, impact on time / velocity, impact on the ability to adapt to marketplace changes, and the impact on the effective use of assets. It may be difficult to trace some operational project results to specific contributions (positive or negative) in revenue, however, the analysis will frequently identify project objectives and risks that would otherwise go unnoticed.

Likewise, not recognizing and accounting for the risks in implementing and deploying a solution can produce painful business outcomes. A company that invests in automating and modernizing a warehouse or manufacturing line and calculates how much it will save in the next 5 years loses its "return" if market conditions or strategy force the an early closing of the facility.

Perhaps one of the most important steps an organization can take to ensure they use ROI effectively is to measure their business performance consistently - before, during, and upon the completion of projects. The proliferation of executive dashboards and business intelligence solutions may be a sign that more and more businesses are learning that monitoring the right metrics and managing the business based on the results provides a competitive edge.

Is this a short term technology fad? How does a business know what or how to measure?