On Top of Their Game

White paper reveals companies, best practices that surpass company demands

White paper reveals the best supply chain practices that surpass company demands

Chapel Hill, NC — March 17, 2004 — Top manufacturing and high-tech companies use specific tactics and practices to produce nearly flawless supply chain cycle times and customer lead times, according to a study by benchmark and consulting firm Best Practices LLC.

The study, "Supply Chain Management: Delivery Performance White Paper," focuses on over 100 successful companies and captures 20 metrics to identify the best performers across the entire supply chain.

Research findings, which were collected from interviews, surveys and research with companies with near 100 percent on-time delivery performance, include:

* Supply chain planning software and electronic data interchange (EDI)/extensible markup language (XML) communication mechanisms dramatically shorten the time from raw materials at supplier facilities to finished goods in the customers' hands.

* Successful companies employ flexible and responsive manufacturing processes, available capacity, and a sophisticated balance between build-to-order and build-to-stock systems.

* Materials resource planning (MRP) systems, with seamless communication between order management and vendor inventory pull systems, also help to drive superior performance. Third-party logistics (3PL) providers, distributed stocking programs, local supplier bias and accurate forecasting systems all have direct bearings on such performance.

One example in the study cites Ames, the world's largest manufacturer of non-powered lawn and garden tools, which believes that supply chain software has helped it to consistently meet delivery dates.

Prior to implementing demand- and distribution-planning modules, the company had struggled with inventory levels and had difficulty anticipating seasonal surges in demand from January to May. Additionally, Ames lacked the capabilities for consistently updating demand forecasts.

Now the company can take two or more years' worth of historical data and figure out on a weekly basis how much it costs to produce products. On the distribution side, the system goes through the inventory and alerts managers as to whether or not they're in danger of a stock outage, enabling them to produce orders based on anticipation when necessary.

The manufacturer also partnered with retail giant Ace Hardware to create a plan for managing and warehousing inventory with regard to Ames' snow shovels that Ace was selling at its stores. Ames proposed producing the shovels exclusively for Ace and delivering them exactly when and where the retailer needs them. The manufacturer accomplishes this by using its new supply chain software to keep tabs on the Ace warehouse and monitoring the stock inventory.

"Companies that excel in customer lead time and supply chain cycle time performance demonstrate exceptional use of order promising and electronic linkage systems," said Chris James, vice president and head of supply chain research at Best Practices LLC. "Satisfying demands, without unduly burdening inventory levels and obsolescence risk, is a key driver in supply chain management success."

Best Practices LLC's supply chain research also includes benchmark measures, such as on-time delivery, fill rate and lead times; supply chain costs and cost saving initiatives; and initiatives that enhance vendor and customer relationships.