What it Takes to Be the Best
-- Semiconductor International, 10/1/2000
What separates best-in-class performers from the rest of the pack? According to Steve Geary and Jan Paul Zonnenberg of Performance Measurement Group (PMG, Waltham, Mass.), in most cases the answer is relatively simple: Top performers have a clear supply chain strategy that is aligned closely with the overall business objective and customer requirements.A survey of 110 organizations in five major manufacturing sectors shows that, while companies are driving to become more flexible, they are doing so without the added expense of idle inventory or runaway capital investments. Emphasis is on balance in all aspects of the supply chain and financial accountability. Leaders drive further gains by Web-enabling supply chains. The top performers conduct ongoing initiatives to squeeze costs, improve speed and flexibility, and maintain reliability. Among the leaders' other traits:
They make breakthroughs in responsiveness. Best-in-class upside production flexibility results are up 65% since 1995. Labor and internal manufacturing are no longer key constraints; the real limit is material availability.
They achieve breakthroughs in efficiency. Best-in-class performance in total supply chain management costs is 27% below 1995 levels; cash-to-cash cycle time is down 18%.
They are making advances in speed, flexibility and efficiency while still maintaining reliability. Delivery performance has remained essentially unchanged since 1995.
They use the Web to fundamentally alter communications among trading partners. In the next two years, the value of orders placed via the Web in high-tech segments is expected to increase sixfold.
They realize eClass is about more than e-tail. It's about leveraging the Web across the supply chain. Some 75% of Internet exchanges are unrelated to order placement. The Web is being used to transmit other information, such as shipment status, order status and inventory.
They are moving beyond on-time delivery in defining reliability. Best-in-class performance in perfect order fulfillment is up 5% since the mid-1990s, as industry moves to a holistic view of complete, on-time, accurate order fulfillment.
These findings were presented in Supply Chain Management Review, a Cahners Business Information publication. For executive summaries of PMG's surveys or information about subscribing and participating in the survey process, visit the firm's Web site at www.pmgbenchmarking.com.
