Chapel Hill, NC — March 14, 2003 — Top manufacturing and high-tech companies can achieve flawless on-time delivery and exceptional fill rates through effective supply chain practices that get the right information to the right place at the right time, according to a study by benchmark and consulting firm Best Practices, LLC.
The study identified the best performers across the supply chain and uncovered successful tactics and strategies employed at more than 100 companies.
The research findings — collected from interviews, surveys and research with companies with near 100 percent on-time delivery performance — included:
- Systems at top-performing companies are optimized to provide the customer with transparent order management systems, available-to-promise and build-to-order features. Order accuracy, along with exceptional forecasting and distribution planning have direct bearings on performance.
- Companies drive superior performance with flexible and responsive manufacturing processes, short production cycles and a sophisticated balance between build-to-stock and build-to-order processes.
"Companies that excel in on-time and fill rate performance have optimized their systems to get the right information to the right place at the right time," said Keith Symmers, vice president and head of supply chain research at Best Practices. "From the customer's vantage point, order accuracy, stock and manufacturing cycle time transparency, and exceptional logistics are the key drivers in supply chain success."
In the course of its research, the consultancy identified five companies that reported perfect delivery performance to request. One of the companies, identified as "Company M" in the report, attributed its perfect score to its manufacturing system, which it described as "highly flexible and responsive."
"Company M has an extensive build-to-order system, supplemented with a 'pull' supply chain," Best Practices wrote. "This company also practices 'postponement,' which allows for mass customization near the end of the production process, thereby speeding the availability of finished goods, which in turn greatly aids in on-time delivery."
The company also benefited from short production cycles and by a practice of holding a quantity of finished inventory to meet new demand, despite the increased obsolescence and higher storage costs inherent in this approach.
Other companies cited in the report pursued such practices as involving distributors and customers in new product development and performance improvement initiatives, or producing and sticking to accurate forecasts and ensuring ongoing communications with sales staff and suppliers.
Supply chain software also figured in the positive results, with one manufacturer reporting that its use of Manugistics' demand- and distribution-planning applications helped the company overcome issues with inventory levels and problems planning for seasonal surges.
Many of these same best practices allowed the companies studied to achieve high or perfect fill rates, too.
Meanwhile, companies that reported perfect or near-perfect delivery to commitment dates were found to have very tight supply chains, "one that is transparent to sales rep, manufacturer rep or other individual taking the customer order," Best Practices wrote. "Customers can ask about a certain order size and delivery date, and the order management system builds upon the information available on raw material timing, production flow, work in process and finished goods inventory levels — ensuring that orders will be filled on the date promised."
Another practice for ensuring perfect delivery included using top-tier carriers with high on-time delivery rates.
The Best Practices offers such benchmark measures as on-time delivery, fill rate and lead times, and it describes supply chain costs and cost saving initiatives, along with initiatives for improving supplier and customer relationships.