corebenchmarks scm

8/4/2019 corebenchmarks scm

1/34

enchmarking &

est Practices

Supply Chain Core Benchmarks

Understanding Key Metrics

Core Benchmarks Re

January 25, 2

www.supplychainconsortium.com


2/34

Table of Contents

Executive Summary 3

Core Benchmark Worksheet 5

Financial Benchmarks 8

Supply Chain Planning 13

Sourcing 14

Transportation 15

Manufacturing 28

Conclusion 33

References 33

Distribution 23

Technology 31

AuthorTo learn more about Supply Chain Core

Benchmark trends and leading practicesor the resources available through theSupply Chain Consortium, contact:

Bruce Tompkins

Executive DirectorSupply Chain Consortium(919) [email protected]

Chris Ferrell

Associate DirectorSupply Chain Consortium(407) 362-0369

[email protected]

Note: Throughout this report, importance is weighted on a scale of 1 to 5, with 1 being the loweand 5 being the highest unless otherwise noted.

Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Propr


3/34


4/34

PageSupply Chain Core Benchmarks Report

Copyright 2011 Supply Chain Consortium. All rights reserved. Confidential and Proprietary.

Core Benchmark Focus Areas

To provide insights into the core measures and indicators of supply chain performance, benchmarks are organized aroundthe major functional elements of the supply chain as well as financial and technology metrics. The areas highlighted inthis report are:

Financial Benchmarks Covers total supply chain, transportation and distribution center (DC) costs along withoutbound and inbound freight costs. Also included is data on days purchases outstanding, days receivablesoutstanding and financial inventory turns. The analysis has been done on an industry segment basis.

Supply Chain Planning Benchmarks Examines forecast accuracy metrics and scheduling and planning metrics.

Sourcing Benchmarks Provides foundation data on supplier partnership, outsourcing, and vendor performancemetrics, which are reviewed by industry (retail vs. manufacturing).

Transportation Benchmarks Provides data on truckload (TL), less than truckload (LTL), intermodal rail, air andparcel freight performance. In most cases, the data is presented by industry segment so that meaningful comparisonsto your transportation metrics are possible.

Distribution Benchmarks Highlights benchmarks in DC layout, inbound shipment flow and receiving, operationalperformance metrics, quality assurance, and labor management.

Manufacturing Benchmarks Covers several aspects of manufacturing operations. Included in the analysis is metricdata on quality systems, facility design, human resource management, maintenance, safety and energy, product

development, cost competitiveness, and production approaches. It also contains manufacturing philosophiesemployed by industry segments.

Technology Benchmarks Address capital investment in technology, internal and external cost associated withWMS, bar-code usage, and the use of a WMS.

The following sections are highly focused on data that are indicators of supply chain performance and provide a view tothe opportunities for improvement that may exist in your supply chain. As you review it, make comparisons and askyourself questions about how you rate against those included in the Consortiums database. To help with this comparison,pages 5-7 include a simple benchmark comparison worksheet. Use this worksheet; share it with others in yourorganization, and let it provide a framework for your supply chain improvement initiatives.


5/34

Page 5 Supply Chain Core Benchmarks Rep


Core Benchmark WorksheetInstructions: The Supply Chain Core Benchmarks Reportprovides extensive data on the most critical supply chain benchmarks. Thworksheet here is intended as a hands-on tool for you to collect relevant data points from figures throughout the report and compare theagainst your supply chain performance. To complete the worksheet, simply record the benchmark data from the report that provides thbest point of comparison with your supply chain and insert your companys results.

Benchmark Metrics Core Benchmark Report Data My Companys Benchmark DatFinancial

Supply chain cost as a percentage of revenue

Transportation cost as a percentage of revenue

Distribution cost as a percentage of revenue

Financial inventory turns

Days of purchases outstanding

Days of receiving outstanding

Supply Chain Planning

Forecast accuracy - MAPE and percentage error

Inventory turns

On-time delivery to customerOutbound order fulfillment lead time

Production plan adherence to a firm schedule

Sourcing

Vendor

Supplier on-time delivery

Fill rate on closed orders

In stock at stores

Lead time (days)

On-time availability at shipment origin

On-time delivery

Perfect order

Timely and accurate ASN

Timely and accurate P.O. acknowledgement

Timely and accurate ready to ship acknowledgement

Transportation

Truckload

On-time delivery

On-time pickup

Billing error rate

Claims incident rate

Claims response days

Electronic status update

LTL

On-time delivery

On-time pickup

Billing error rate

Claims incident rate


Electronic status updates

Continued on page

Proof of delivery

Capacity utilization for truckload containers


6/34

Page Supply Chain Core Benchmarks Report


Benchmark Metrics Core Benchmark Report Data My Companys Benchmark Dat

Transportation (continued)

Air

On-time pickup

On-time delivery

Proof of delivery

Claims incidence rate

Billing error rate



Ocean

On-time arrivals

Percentage of containers rolled

On-time sailing

Average container capacity utilizedElectronic status updates


Billing error rate


Proof of delivery

Shipment integrity

Pro-active alerts on late shipments

Bookings declined

On-time availability at destination port

Parcel

On-time pickup

On-time delivery

Proof of delivery


Billing error rate



Intermodal

On-time delivery

On-time pickup

Proof of delivery


Billing error rateClaims response rate


Continued on page


7/34



Benchmark Metrics Core Benchmark Report Data My Companys Benchmark Dat

Distribution Center

Storage utilization

Order accuracy

Order fill rate

On-time delivery

Perfect order completion

Order line accuracy

Part-time headcount as a percentage of FT headcount

Season part-time as a percentage of FT headcount

Headcount per million dollars of annual revenue

Headcount per million order lines shipped annually

Highest percentage order line picking method

Manufacturing

Customer rejection rate on shipped products (PPM)

Outgoing product quality (PPM)

Cost of quality as a percentage of COGS

Manufacturing cycle time

Percentage of total facility space used for storage andmaterial handling

Annual employee turnover

Annual absenteeism

Preventative maintenance compliance

Total annual research and development costs as apercentage of COGS

Change in manufacturing return on invested capital

Percentage of manufacturing cost change per unit

Percentage of change in manufacturing man-hoursper unit

Percentage of sales from make-to-plan

Percentage of sales from make-to-order

Technology

Percentage of inbound cartons that are bar-coded

Percentage of inbound container that are bar-coded

Percentage of inbound loose pieces that are bar-coded

Percentage of outbound cartons that are bar-coded

Percentage of outbound containers that are bar-coded

Percentage of outbound loose pieces that are bar-coded


8/34



Financial BenchmarksReviewing supply chain financial benchmarks provides an effective way of looking at overall supply chain performance.The data in this section has been divided by industry segment and into quartiles. Top quartile companies represent theleading 25% of all survey participants; the second quartile is the next 25% and so on.

Supply Chain CostSupply chain cost is steadily increasing over time despite concerted efforts to hold the line. As supply chain cost growsrelative to revenue, more pressure has been put on cost control efforts, and few companies can accept service levelerosion or inventory growth in exchange for reduced costs.

Figure 3 shows the average supply chain costs as a percentage of revenue divided by quartiles.

Each industry segment and company has varying views about how important the metric of supply chain cost as apercentage of revenue is to performance (Figure 4).

Supply

cost is s

increa

over

desp

conce

efforts t

the l

Figure 3. Average *Supply Chain Cost as a

Percentage of Revenue by SegmentTop Quartile 2nd Quartile 3rd Quartile 4th Quartile

Apparel, Fabric and Accessories 3.6% 5.2% 5.7% 9.8%

Automotive, Truck and Vehicles 3.0% 5.7% 5.9% 6.0%

Beauty, Health and Wellness 2.0% 4.5% 8.7% 9.2%

Department Store and Discount 2.3% 4.5% 6.6% 9.8%

Electronics and Electricals 3.0% 5.0% 6.9% 10.0%

Food and Beverage 5.0% 6.0% 7.8% 10.8%

Hobby, Toys, Arts, Crafts and Sporting Goods 3.6% 4.4% 5.6% 6.7%

Home Products/Furniture/Appliances 4.1% 5.0% 6.3% 7.2%

* Supply chain cost is defined as transportation, DC, LSP and overhead costs.

0 1 2 3 4 5

Average Importance

Apparel, Fabric and

AccessoriesAutomotive, Truck and

Vehicles

Beauty, Health and W ellness

Department Store and Discount

Electronics and Electricals

Food and Beverage

Hobby, Toys, Arts, Crafts and

Sporting GoodsHome

Products/Furniture/Appliances

Figure 4. Supply Chain Cost Importance by Segment

Apparel, Fabric and Accessories

Automotive, Truck and Vehicles

Beauty, Health and Wellness



Food and Beverage

Hobby, Toys, Arts, Crafts and Sporting Goods

Home Products/Furniture/Appliances

Figure 4. Importance of Supply Chain Cost

Average Importance (Scale 1-5)


9/34



0 1 2 3 4 5


Apparel, Fabric and


Vehicles




Food and Beverage

Hardware and Home

Improvement

Hobby, Toys, Arts and CraftsHome

Products/Furniture/AppliancesPharmaceutical and Drug

Specialty

Figure 6. Transportation Cost Importance by Segment

Respondentsare

xperiencing

significant

ncreases in

ansportation

cost as a

ercentage of

evenue over

time.

Transportation Cost

Transportation cost has been particularly hard hit with fuel pricing and capacity issues. In spite of tremendous efforreduce costs, respondents are experiencing significant increases in transportation cost as a percentage of revenue otime.

Figure 5 shows the breakdown by quartiles, and Figure 6 illustrates how respondents ranked the importanc

transportation cost.

Figure 5. Average Transportation Cost as a

Percentage of RevenueTop Quartile 2nd Quartile 3rd Quartile 4th Quar







Hardware and Home Improvement 2.4% 3.4% 3.5% 10.0%

Hobby, Toys, Arts and Crafts and Sporting Goods 2.6% 2.9% 3.3% 4.2%Home Products/Furniture/Appliances 3.1% 3.4% 4.5% 6.0%

Pharmaceutical and Drug 0.8% 1.3% 1.7% 2.1%

Specialty 0.9% 1.6% 2.2% 4.2%





Electronics and Electicals

Food and Beverage

Hardware and Home Improvement

Hobby, Toys, Arts and Sporting

Home Products and Appliances

Pharmaceutical and Drug

Specialty


10/34



In generdata fo

cost a

percent

reven

trend

downw

compa

last ye

survey r

Distribution Center Cost

There is a higher degree of variability in DC cost as a percentage of revenue than with transportation cost. Somecompanies strategies increase the cost of distribution in order to significantly reduce transportation cost and improvecustomer service, while other companies are focused on a strategy of improved DC productivity.

In general, the data for DC cost as a percentage of revenue is trending downward compared to last years survey results,indicating that improvement activities directed at cost reduction in the supply chain have been effective (Figure 7).

Figure 8 shows that all industry segments believe DC costs to be of high importance.

Figure 7. Average DC Cost as a Percentage

of RevenueTop Quartile 2nd Quartile 3rd Quartile 4th Quartile







Hardware and Home Improvement 3.8% 5.4% 6.0% 7.6%

Hobby, Toys, Arts and Crafts 1.9% 2.5% 4.3% 4.7%

Home Products/Furniture/Appliances 1.9% 2.5% 4.3% 16.3%

Pharmaceutical and Drug 1.6% 1.8% 2.1% 2.3%

Specialty 2.0% 2.1% 2.4% 3.0%

0 1 2 3 4 5


Apparel, Fabric and


VehiclesBeauty, Health and Wellness



Food and BeverageHardware and Home

ImprovementHobby, Toys , Arts, Crafts and

Sporting GoodsHome


Specialty

Figure 8. Distribution Center Cost Importance By SegmentFigure 8. Importance of DC Cost

Apparel, Fabrics and Accessories





Food and Beverage


Hobby, Toys, Arts and Crafts



Specialty


11/34



mprovements

in financial

turns have

been made

over the last

everal years,

as companies

ave struggled

with the

ecession and

ound reduced

inventories

effective.

Financial Inventory Turns

Financial inventory turns are based on the inventory dollar value at a specific point in time compared to the costgoods sold (COGS) at that same time. Improvements in financial turns have been made over the last several years,companies have struggled with the recession and found reduced inventories effective.

From the survey, the three industry segments with the highest inventory turns are (1) electronics and electricals, (2) foand beverage, and (3) beauty, health and wellness, which is not surprising given the nature of those segments (Figure

Days Purchases Outstanding

Days purchases outstanding is an indicator of the amount of time a company takes to pay its trade creditors. In t

current financial environment, the days purchases number is growing as companies are conserving cash. Figure 10 nothat retail companies have a higher number of days purchases outstanding than manufacturing companies.

Figure 10. Days Purchases Outstanding

0

5

10

15

20

25

30

35

40

45

50

Retail Manufacturing

Numbero

fDay

Numbe

rofDays

Figure 10. Days Purchases Outstanding

Figure 9. Inventory Turns By Industry Segment

0 1 2 3 4 5 6 7 8 9

Apparel, Fabric and






ImprovementHobby, Toys , Arts, Crafts and

Sporting GoodsHome


Specialty

Inventory Turns

Figure 9. Inventory Turns

Inventory Turns

Apparel, Fabrics and Accessories





Food and Beverage


Hobby, Toys, Arts and CraftsHome Products/Furniture/Appliances


Specialty


12/34



Manufact

and re

companie

virtually

same ave

outbou

freigh

percent

Days Receivables Outstanding

Days receivables outstanding is a measure of the average number of days that a company takes to collect revenue after asale has been made. A low days receivable number means that it takes fewer days to collect accounts receivable. Thefinancial environment is also challenging the ability of many companies to collect receivables in a timely fashion.

Figure 11 (below) and Figure 10 (previous page) show that for retail companies and manufacturing companies, dayspurchases is greater than days receivables, which is the reverse trend from last years survey.

Freight Cost: Outbound and Inbound

The average outbound freight cost as a percentage of gross sales is slightly more than 2% (Figure 12). Manufacturing andretail companies have virtually the same average outbound freight cost percentage.

Inbound freight cost as a percentage of purchases averages 1.2% for all survey participants (Figure 13). As with outboundfreight, manufacturing and retail companies averages are very similar.

Figure 11. Days Receivables Outstanding

05

10

15

20

25

30

35

40

45

50

Retail Manufacturing

NumberofDay

NumberofDays

Figure 11. Days Receivables Outstanding

Figure 12. Outbound Freight Costs as a Percentage of Gross Sales

31%

34%

11%

24% Less than 1%

1% to 3%

3% to 5%

Greater than 5%

Figure 12. Outbound Freight Cost as a Percentage of Gross Sales

Figure 13. Inbound Freight Costs as a Percentage of Purchases

29%

48%

7%

16%Less than 1%

1% to 3%

3% to 5%

Greater than 5%

Figure 13. Inbound Freight Cost as a Percentage of Purchases


13/34



Nearly

wo-thirds ofrespondents

ndicate that

their

production

plan

dherence to

a firm

schedule is

reater than

90%.

Supply Chain PlanningThis section discusses forecast accuracy metrics as well as scheduling and planning metrics.

Sales Forecast Accuracy Metrics

Although both methods are commonly used, more companies utilize the percentage error measure than mean absolpercentage error (MAPE) for forecast accuracy (Figure 14). Responses of survey participants for percentage erranged from 5% to 75% and for MAPE from 15% to 80%.

According to the survey, MAPE and percentageerror are viewed by respondents as the mostimportant forecasting methods, with the highestlevel of accuracy for their operations (Figure 15).

Scheduling and Inventory Management Metrics

The average performance of companies for on-time delivery of product to customer/consumers as required by tcustomer is 94.9%. Manufacturers average 93% delivery performance versus 97% for retailers. Total inventory tu

averages 7.0 but varies widely from industry to industry and company to company. Top quartiles companies haveaverage of more than 12.0 total turns.

The outbound order fulfillment lead-time is measured by the time from receipt of an order until an invoice is sent payment, and the average performance overall is 5.9 days (Figure 16). Top quartile companies have lead times of lthan three days.

Production Plan Adherence

Nearly two-thirds of respondents indicatethat their production plan adherence to afirm schedule is greater than 90%(Figure 17). Production plan adherencerequires products to be produced in thequantity and sequence specified by theschedule.

Figure 14. Accuracy Measurement Average Forecast Er

Percentage Error 22.6%

Mean Absolute Percentage Error (MAPE) 32.5%

Figure 16. Scheduling and Inventory Management MetricsAverage Importance

(Scale 1-5)

Average

Performance

On-time delivery to customers/consumers 4.6 94.9%

Total inventory turns 4.2 7.6 turns

Outbound order fulfillment lead time 4.1 5.0 days

Figure 15. Forecast Accuracy Metrics

00.5

11.5

22.5

33.5

44.5

5

Mean absolute

percentage

error (MAPE)

Percentage

error

Forecas t ratio Standard

deviation

Mean error Mean absolute

error

Mean squar

error

Importance(max=10

Importance(Scale1-10)

Figure 15. Importance of Forecast Accuracy Metrics

Figure 17. Production Plan Adherence to a Firm Schedule

3% 6%

28%

63%

Less than 70%

70% to 80%

80% to 90%

Greater than 90%

Figure 17. Production Plan Adherence to a Firm Schedule


14/34



Compa

previ

years,

compa

hav

employ

perf

order

with ve

SourcingThe sourcing analysis provides foundation data onsupplier on-time delivery, product outsourcing, andnumerous vendor performance metrics.

Supplier Partnerships Metrics

The top-performing companies average supplier on-time delivery greater than 99% (defined as deliveryon-time based on the request of the company). Theaverage for all survey participants was 95% on-timedelivery (Figure 18).

Outsourcing Metrics

Supply chains have clearly changed over the past few years, with more and more manufacturing being done by contractmanufacturers and more raw materials and components being sourced from global suppliers (Figure 19). There are noindicators that this trend will lessen.

Vendor Performance Metrics

Vendor performance metrics cover operational measures related to fill rates, lead time, and status measures for theeffective communication of information and updates from vendors. Compared to previous years, more companies haveemployed the perfect order metric with vendors (Figure 20).

Figure 20. Vendor Performance Metrics Retail Manufacturing

Fill rate on closed orders 91.8% 93.8%

In stock at stores (retail only) 94.7% NA

Lead-time (days) 14 days 17 days

On-time availability at shipment origin 87.5% 91.3%

On-time delivery 88.0% 90.3%Perfect order 85.7% 92.7%

Timely and accurate advance shipment notifications 89.4% 90.7%

Timely and accurate PO acknowledgement 90.7% 96.5%

Timely and accurate ready to ship acknowledgement 78.4% 89.6%

Percentage of ProductsShipped to Global Markets

2%

15%

7%

76%

Les s Than 10% 10% to 30% 30% to 50% Greater than 50%

25%

25%

5%

45%

Figure 19. Outsourcing Metrics

35%

6%

6%

53%

Percentage of Products Produced byContract Manufactures

Percentage of ProductsShipped to Global Markets

Percentage of Raw Material and ComponentsSourced from Global Suppliers

Figure 18. Supplier On-time Delivery

0%10%

20%30%40%50%

Less than

90%

90-95% 95% to

99%

Greater

than 99%

Metric Percentage

Percentageo

Resp

ondents

Figure 18. Supplier On-time Delivery

Percentageof

Respon

dents


15/34



est-in-class

companies

have TL on-

me delivery

reater than

99%.

TransportationThe transportation section includes data for each of the major transportation modes used extensively across NorAmerica and around the globe. In most cases throughout this section, the data has been organized by industry segmefor easier comparison.

Figure 21 shows the breakdown of transportation utilization by the different modes. Not surprisingly, truckload (TL)the most utilized by both retail and manufacturing companies.

Truckload Metrics: Pickup and Delivery

There is a surprising amount of variability in TL on-time pickup across industry segments. The overall average is 91for all survey participants. Best-in-class companies have TL on-time delivery greater than 99%. Across all surveparticipants, 15% have TL on-time delivery greater than 99%. Figure 22 shows the percentage of on-time pickup andelivery by segment.

Figure 21. Mode Utilization Profile

by Percentage of Total SpendTL LTL Air Parcel Intermodal Boxcar Ocean

Retail 36.1% 15.0% 3.9% 8.3% 11.0% 0.0% 25.8%

Manufacturing 51.5% 13.8% 10.1% 12.7% 4.8% 2.9% 4.2%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Apparel, Fabric and





Food and Beverage

Hardware and HomeImprovementHobby, Toys , Arts, Crafts and

Sporting GoodsHome


Specialty

Figure 22. Percentage of On-time Pickup and Delivery by Segment

On-time Pickup Percentage On-time Delivery Percentage

Figure 22. Percentage of On-time Pickup and Delivery






Food and Beverage


Hobby, Toys, Arts and Sporting

Home Products and Appliances


Specialty


16/34



TL b

error ra

sur

partic

ranged

less tha

more

10

Proof of Delivery

Best-in-class companies have TL proof of delivery percentage greater than 99%. Across all survey participants, more thanhalf have TL proof of delivery greater than 99%. Figure 23 illustrates the proof of delivery percentage by segment.

Billing Error Rates

TL billing error rates for survey participants ranged from less than 1% to more than 10%, with an average of 3.3%. SeeFigure 24 for the breakdown by segment.

Figure 23. Truckload Proof of Delivery Percentage by Segment

90% 91% 92% 93% 94% 95% 96% 97% 98% 99% 100%

Apparel, Fabric and Acces soriesAutomotive, Truck and Vehicles




Food and Beverage


Hobby, Toys , Arts, Crafts and Sporting Goods

Home Products / Furniture / Appliances


Specialty

Proof of Delivery Percentage

Figure 24. Truckload Billing Error Rate Percentage by Segment

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%






Food and Beverage

Harware and Home Improvement


Home Products / Furniture / Appliances


Specialty

Billing Error Rate Percen tage


17/34



anufacturing

companiesave slightly

igher results

han retailers

when asked

about the

ercentage of

ipments with

ccurate and

complete

atus updates.

Claims Incidents and Response Times

TL claims incidence rates vary greatly among industry segments and from company to company. There is a negligdifference between manufacturing and retail companies claims rates. Likewise, there is a wide variation in the TL claresponse days for survey participants, with an average of 56 days and a standard deviation of 34 days (Figure 25Figure 26).

Electronic Status Updates

Manufacturing companies have slightly higher results than retailers when asked about the percentage of shipments waccurate and complete electronic status updates. Few companies provided data on this metric, indicating that it is not uas often and it may be more open to judgment than other measures (Figure 27).

Figure 25. Truckload Claims Incidence Percentage by Segment

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0

Apparel, Fabric and

Accessories

Automotive, Truck and

Vehicles




Food and Beverage

Hardware and Home

Improvement

Hobby, Toys , Arts, Crafts and

Sporting Goods

HomeProducts/Furniture/Appliances

Claims Incidence Percentage






Food and Beverage


Hobby/Toys/Arts/Crafts/Sporting Goods



Figure 25. Truckload Claims Incidence (Percentage)

Figure 27. Truckload Accurate and Complete Electronic Status Updates Percentage

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10

Apparel, Fabric and

AccessoriesBeauty, Health and Wellness




ImprovementHobby, Toys, Arts, Crafts and

Sporting GoodsHome


Electronic Status Updates Percentage

Apparel, Fabric and AccessoriesBeauty, Health and Wellness



Food and Beverage


Hobby/Toys/Arts/Crafts/Sporting Goods



Figure 27. TL Accurate and Complete Electronic Status Updates (Percentage)

Figure 26. TL Claims Response Time in days by Segment

0 10 20 30 40 50 60 70 80

Apparel, Fabric and

Accessories




Food and Beverage

Home


Average Number of Days





Food and Beverage


Figure 26. TL Claims Response Time (Days)

Number of Days


18/34



More

40%

compa

reache

go

perform

greate

95% on

pick

Capacity Utilization for Truckload Containers

The data for TL shipment capacity utilization follows a predictable pattern, with shipments from manufacturing plantshaving the best capacity utilization and inbound shipments from vendors to DCs having a lower percentage of capacityutilization. The more interesting observation is the range of responses, indicating some companies fill up trailers andsome do not (Figure 28).

Less than Truckload: Pickup and Delivery

By company, LTL on-time pickup percentages range from values nearing 80% to 100% and averaged 94.8%. More than40% of companies reached their goal performance of greater than 95% on-time pickup.

LTL on-time delivery does not vary much by segment (Figure 29). The standard deviation of the data for this metric isonly 3.8%. The average on-time delivery is 94.2% across all companies, with very little difference between manufacturers

and retailers.

Billing Errors

Retail companies have almost twice theamount of LTL billing errors asmanufacturing companies (Figure 30). This

variance is difficult to explain but may haveto do with the profile of the LTL shipments,which creates more complexity for retailers.Overall, the LTL billing error rate averages2.7%.

Figure 28. Truckload Capacity Utilization Range Average

Shipments inbound from suppliers to manufacturing plants 75% to 98% 86.9%

Shipments inbound from vendors to DCs or consolidation centers 65% to 96% 84.8%

Shipments outbound from manufacturing plants to DCs or customers 75% to 99% 91.5%

For shipments outbound from DCs to customers or stores 67% to 99% 85.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

BillingErrorRat

Percentage

Manufacturers Retail

Figure 30. LTL Billing Error Rate Percentage by Industry

BillingErrorRatePercentage

Figure 30. LTL Billing Error Rate Percentage

10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percentage On-time

Apparel, Fabric and


VehiclesDepartment Store and Discount




Sporting GoodsHome


Figure 29. LTL On-time Pickup and Delivery by Segment

On-time Pickup Percentage On-time Delivery Percentage





Food and Beverage




Figure 29. LTL On-time Pickup and Delivery

On-time DeliveryOn-time Pickup

Percentage On-time


19/34



Many

companies

see claims

response as

an area of

opportunity

and are

developing

goals for

significant

mprovement.

Claims Incidents and Response Rates

For respondents, LTL claims incidence rates range from far less than 1% to greater than 5%. Figure 31 illustrates claims incidence rate averages by segment. The Consortium data trends show claims rates declining over time. Taverage LTL claims response is 60 days, with an average goal of 45 days (Figure 32). So, many companies see this asarea of opportunity and are developing goals for significant improvement.

Electronic Status Updates

The responses to the question on LTL electronic status updates are based on a relatively small number of compancompared to the other metrics, leading to the conclusion that less companies track this measure for LTL carriers than TThe average percentage of shipments with accurate and complete electronic updates is 87.1%. Figure 33 has the accurand complete electronic status updates breakdown by segment.

Figure 33. LTL Accurate and Complete Electronic Status Updates

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 10

Apparel, Fabric and

Accessories





ImprovementHome


Electonic Status Updates Percentage





Food and Beverage




Figure 33. LTL Accurate and Complete Electronic Status Updates

Figure 32. LTL Claims Response Time in Days by Segment

0 20 40 60 80 100 1

Apparel, Fabric and

Accessories




Food and Beverage

Home






Food and Beverage


Claims Response (Days)

Figure 32. LTL Claims Response Time in Days

Figure 31. LTL Claims Incidence Rate by Segment

0% 1% 2% 3% 4% 5

Apparel, Fabric and


Vehicles



Food and BeverageHobby, Toys, Arts, Crafts and

Sporting GoodsHome







Food and Beverage




Figure 31. LTL Claims Incidence Rate


20/34



Rate ch

in air f

have be

the inc

over th

three y

Air Freight Metrics

All of the air freight metrics have an average importance level higher than 3.0 (Figure 34). Moreover, on-time deliverytops the list of important air freight metrics, which clearly points to the reason air is used for expediting goods andmaterials and reducing in-transit time. Leading companies have on-time rates nearing 100% as well as 100% proof ofdelivery.

Rate changes in air freight have been on the increase over the past three years, and these ncreases are being felt from bothtrans-Atlantic and trans-Pacific routes. Retail companies have seen increased air rates, particularly for trans-Pacific

routes, and are feeling the rate increases more than manufacturers (Figure 35 - Figure 37).

Figure 34. Air Freight Metrics Average Performance

Average Importance for Companies

Using Metric (Sca1e 1-5)On-time delivery 4.9 97.4%

On-time pickup 4.5 95.6%

Proof of delivery 4.3 97.7%

Electronic status updates 4.2 93.0%

Claims incidence rate 3.9 1.6%

Billing error rates 3.8 2.5%

Claims response time 3.7 51.3 days

Figure 37. Percentage Change in Air Rate Trends Over the Past Three Years

Trans-Atlantic 1-3% 4-6% >6%

All 68% 24% 8%

Trans-Pacific

All 56% 29% 15%

Figure 36. Respondents' Views of Trans-

PacificChange Over the Past

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

Increasing Decreas ing No Change

PercentageofRespondent

Percentage

ofRespondents

Figure 36. Retail Respondents Views

Rate of Change Over the Past Three

Increasing Decreasing No Change

Figure 35. Respondents' Views of Trans-

Atlantic Change Over the Past Three

0%

10%

20%

30%

40%50%

60%

70%

80%

90%

100%

Increas ing Decreas ing No Change

Percentageo

fRespondents

Figure 35. Manufacturing Respondents Views

Rate of Change Over the Past Three Years

Increasing Decreasing No Change


21/34



Companies

at are taking

e initiative to

benchmark

nd research

ean provider

rates are

seeing a

decrease in

heir ocean

rates.

Ocean Metrics

The ocean transportation metrics are sorted by the percentage of survey participants using this metric. The results indithat some metrics such as on time availability at destination port can still be very important to those who use th(Figure 38 and 39).

The ocean rate trends over the last three years do not differ much between retail and manufacturing companies, but th

are clearly weighted toward increasing rates, as expected. The Consortium noticed that a much greater percentage of years survey respondents have indicated that their ocean rate trend is increasing compared to the previous year (Fig40). However, companies that are taking the initiative to benchmark and research ocean provider rates are seeindecrease in their ocean rates.

Figure 38. Ocean Metric Percentage of Respondents Using Metric Average Performanc

On-time arrivals 81% 91.0%Percentage of containers rolled 77% 2.1%

On-time sailings 70% 91.9%

Container capacity utilization 68% 88.0%

Electronic status updates 68% 87.7%

Claims incidence 63% 0.9%

Billing error rate 63% 8.8%

Claims response time in days 63% 61.7 days

Proof of delivery 61% 97.2%

Shipment integrity 58% 97.5%

Proactive alerts on late shipments 58% 83.9%

Bookings declined 44% 23.4%On-time availability at destination port 36% 90.1%

Decreasing No Change Increasing

1-3% 4-6% >6% 0% 1-3% 4-6% >6%

Retailers 2% 10% 17% 12% 17% 12% 29%

Manufacturing 7% 7% 17% 8% 17% 18% 27%

Figure 40. Ocean Rate Trends Over the Last Three Years

Figure 38. Average Importance for Companies Using Metric

0 1 2 3 4

On-time arrivals

Percent of containers rolled

On-time sailings

Average container capacity utilization


Claims incidence

Billing error rateClaims response time in days

Proof of delivery

Shipment integrity

Proactive alerts on late shipments

Bookings declined

On time availability at destination port


On-time arrivals

Percentage of containers rolled

On-time sailings

Average container capacity utilization


Claims incidence

Billing error rate

Claims response time in days

Proof of delivery

Shipment integrity

Proactive alerts on late shipments

Bookings declined

On-time availability at destination port

Figure 39. Average Importance for Companies Using Metric



22/34



More

80% of

partici

see the

of inter

increa

over th

three y

Parcel Metrics

As noted in Figure 41, on-time pickup anddelivery and proof of delivery are the mostimportant air carrier metrics. Fortunately,parcel shipments are known for having veryhigh on-time percentages and proof ofdelivery, as well as low claims and billingerror rates.

The majority of survey participants indicatethat domestic parcel rates have increased overthe last three years. Additionally, there is asignificant difference in the percentage ofchange between manufacturing and retailcompanies. While retail companies haveexperienced a more considerable change (42%expect a 4-6% change), the majority ofmanufacturers indicate a 1-3% change.

International parcel rates have also beenincreasing over the last three years for both

manufacturing and retail companies. Retailersagain have had higher changes in their parcelrates than manufacturers (Figure 42 andFigure 43).

Intermodal Metrics

Respondents from manufacturing companiesaverage $20 million in annual intermodalspend, with several companies spendingnearly $100 million a year. The averageintermodal spend for retail survey participantsis $6 million, but several companies areapproaching $50 million a year. More than80% of survey participants see their use ofintermodal increasing over the next three

years. And once again, on-time delivery isleading the list of important intermodalmetrics (Figure 44 and Figure 45).

Figure 42. Parcel Metrics Average Performance

On-time pickup 98.0%

On time delivery 96.9%

Proof of delivery 98.3%

Claims incidence rate 1.4%

Billing error rates 1.8%

Claims response time 49.5 days

Electronic status updates 87.9%

Figure 43. Parcel Rate Trends Over the Last Three Years

Respondents View of Change

Domestic Increasing Decreasing No Change 1-3% 4-6% >6%

Manufacturing 84% 5% 11% 71% 24% 6%

Retail 79% 21% 0% 47% 42% 11%

International

Manufacturing 83% 6% 11% 88% 13% 0%

Retail 75% 13% 13% 36% 36% 39%

Percentage Change

Figure 45. Intermodal Metrics Average Performance

On-time pickup 96.5%

On-time delivery 93.1%

Proof of delivery 97.2%

Claims incidence rate 1.2%

Billing error rates 6.8%

Claims response time 64.7 days

Electronic status updates 87.1%

Figure 41. Importance for Companies Using Metric

0 1 2 3 4 5

On-time pickup

On time delivery

Proof of delivery


Billing error rates

Claims respons e time


Average Importance (Scale 1-5)Average Importance (Scale 1-5)

Figure 41. Importance for Companies Using Metrics

On-time pickup

On-time delivery

Proof of delivery


Billing error rates

Claims response time


Figure 44. Importance for Companies Using Metric

0 1 2 3 4 5

On-time pickup

On-time delivery

Proof of delivery


Billing error rates




On-time pickup

On-time delivery

Proof of delivery


Billing error rates




Figure 44. Importance for Companies Using Metrics


23/34



The survey

hows that

the

majority

(60%) of

DC floor

space is

devoted to

storage.

DistributionThis section of the report covers all the key aspects of distribution operations. Analysis includes foundation data on layand inbound flow approaches. The metrics of distribution are presented in detail along with highlighted informationfunctions such as quality assurance (QA), returns, picking, packing and value-added services. The intent of this sectioto provide DC metrics that you can benchmark against to look for cost, quality and safety improvements.

DC Layout: Percentage of Floor Space by Function

According to respondents, the majority (60%) of DC floor space is devoted to storage (Figure 46).

Inbound Shipment Flow

Participants were asked what percentage of their inbound flow they would classify as crossdock, flow through or pifrom-stock. Clearly pick-from-stock is the predominant process in use, but 8% of manufacturers and 15% of retailers a crossdock process (Figure 47).

Figure 47. Percentage of Inbound Shipments by Activity

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Crossdock Flow through Pick-from-stock

P

ercentageofShipments

Manufacturing

Retail

PercentageofShipments

Figure 47. Percentage of Inbound Shipments by Activity

Figure 46. Percentage of Floor Space for Activities

Picking

3%

Packing and value

added services14%

Shipment staging

13%

Receiving

10%

Storage

60%

Figure 46. Percentage of Floor Space for Activities


24/34



Over th

several

there

been

gradua

of incre

ord

accura

DC

Productivity

Average lines shipped per hour are based on a high number of variables, which makes direct comparisons betweenindustries or even within an industry difficult. Data from the survey indicates that the grocery, food and beveragesegment has some of the highest lines shipped rates, averaging more than 130 lines an hour, followed by apparel at 80-plus lines an hour.

Storage Utilization

DC storage utilization for the manufacturing surveyparticipants averages 79%; it is 75% for retailers (Figure48). In general, storage utilization greater than 90% iscause for concern.

Order Accuracy

Order accuracy is measured as orders filled error-free(correct quantity, product and value-added services) as apercentage of total orders placed with the DC. Thepercentage of accurate orders varies from 96% to greaterthan 99% by segment, but averages 98.4%. Over the lastseveral years, there has been a gradual trend ofincreasing order accuracy in DCs (Figure 49).

Fill Rate

Order fill rate is measured by the orders filled complete on the first shipment as a percentage of total orders placed at aDC. The rates for all industry segments are greater than 90%, with several survey participants nearing 100% (Figure 50).

Figure 49. Order Accuracy by Segment

80% 85% 90% 95% 100%






Food and Beverage







Food and Beverage


Percentage of Total Orders (Scale 80-100%)

Figure 49. Order Accuracy (Percentage of Total Orders)

Figure 48. DC Inventory Storage Utilization

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%100%

Manufacturing Retail

PercentageofStorgaeUtilizatio

PercentageofStorageUtilization

Figure 48. DC Inventory Storage Utilization

Figure 50 . Order Fill Rate Percentage by Segment

80% 85% 90% 95% 100%

Apparel, Fabric and Acces sories

Automotive, Truck and VehiclesBeauty, Health and Wellness



Food and Beverage




Automotive, Truck and VehiclesBeauty, Health and Wellness



Food and Beverage


Hobby, Toys, Arts, Crafts and Sporting

Percentage of Total Orders (Scale 80-100%)

Figure 50. Order Fill Rate (Percentage of Total Orders)


25/34



The most

common

audit

erformed for

outbound

quality

ssurance is

a count

check.

On-time Delivery

On-time delivery is measured as orders delivered on time to customers or stores as a percentage of total orders. On-tidelivery percentages also are an indication of the effectiveness of methods for transporting product to the customerretail store. This measurement can be subject to company policies and shipment window requirements, particularlyretail companies (Figure 51).

Perfect Order Completion

Perfect order completion is measured as the orders shipped completely error free the first time and delivered on time percentage of the total orders placed with the DC. Roughly 10% of survey participants utilize perfect order completiona DC shipping metric. From this small percentage of companies, the performance ranges from the nearly 80% to mthan 99%, with an average of 89%.

Order Line Accuracy

Order line accuracy is measured by order lines filled complete on the first shipment as a percentage of total orders plaat a DC. However, order line accuracy is also not a commonly used metric for DC operations. Performance ranges fr97% to 100%, with an average of 98.7%.

Outbound Quality Assurance: Audit Selection Methodology and Audit TypesSurvey participants were asked to identify all methods used to audit outbound orders from their DCs. As clearly showFigure 52, random audits, which are based on sampling, are used by a majority of companies, followed by companperforming 100% audits of all orders. Only 2% of companies indicate that they do not perform outbound audits.

The most common audit performed is a count check, with 78% of the respondents who complete outbound checks docount checks. Checking labels for accuracy is the next most frequently performed audit, at 69% (Figure 53).

Figure 52. Audit Selection Methodologies

0% 20% 40% 60% 80% 100%

Value audit

No Audit

Random Audit

100% audit of all orders

Customer-specific audits

Percentage of CompaniesPercentage of Companies

Figure 52. Audit Methodologies for Outbound Orders

Customer-specific audits

100% audit of all orders

Random audit

No audit

Value audit

Figure 53. Audit Types

0%10%

20%30%

40%

50%60%

70%80%

90%

100%

Count

Check

Weight

Check

Size

Check

Label

Check

PercentageofCompanie

Figure 53. Audit Types

PercentageofC

ompanies

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Percentage of Orders





Food and Beverage



Figure 51. On-time Delivery Percentage by Segment





Food and Beverage



Percentage of Total Orders

Figure 51. On-time Delivery (Percentage of Total Orders)


26/34



The low

headcou

million

lines, th

efficie

opera

from a

proce

perspe

DC Labor Management

Figure 54 shows the differences among segments for part-time and seasonal headcounts as a percentage of full-timeheadcounts. Figure 55 and Figure 56note the difference among segments for DC headcount per million dollar of annualrevenue and per million order lines shipped annually. Strategies for headcount vary considerably by industry, companyand by geography with respect to the rise of part-time and seasonal workers.

The larger the headcount per dollar of revenue, the more revenue dollars are being shipped per employee. The lower theheadcount per million order lines, the more efficient the operation, from a lines processed perspective.

Figure 56. Headcount per Million Order Lines Shipped Annually

0 10 20 30 40 50 60 70 80 90 100

Apparel, Fabric and







Sporting GoodsHome


Headcount






Food and Beverage




Figure 56. Headcount per Millions Order Lines Shipped Annually

Headcount per Million Order Lines Shipped

Figure 55. Headcount per Million of Annual Revenue

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1

Apparel, Fabric and




Electronics and ElectricalsFood and Beverage

Hardware and Home


Sporting GoodsHome


Headcount





Electronics and ElectricalsFood and Beverage




Headcount per Million Dollars of Revenue

Figure 55. Headcount per Million of Annual Revenue

Figure 54. Part-time and Seasonal Headcount as a Percentage of Total Headcount

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Apparel, Fabric and







Sporting GoodsHomeProducts/Furniture/Appliances

Percentage of Total Headcount

Part-time Headcount

Seasonal Headcount






Food and Beverage




Percentage of Total Headcount

Figure 54. Part-time and Seasonal Headcount as a Percentage of Total Headcount


27/34



Pick and Pack Processes

Figure 57 lists the definitions of pickingflows. Discrete order picking is the simplestand most often used method of pickingamong survey participants (Figure 58). Thebest picking method for an operation depends

on a combination of factors, including layout,equipment and product type. Generally, themore advanced the systems and equipment,the more likely those variations of zone, batchand wave picking will be the most productive.

Figure 59 identifies the primary (mostoften selected) picking flow selected foreach industry segment by surveyparticipants. Some industries have movedinto picking methods other than discrete.

Value-added Services

Value-added services (VAS) in DCs areclearly on the rise, not only in volume butalso in the kinds of services that are beingoffered (Figure 56).

There are some logical differences in the VAS that are being performed in retail DCs versus the VAS that are beperformed in manufacturing DCs, but both are experiencing a major increase in this activity. The percentage of ordthat require VAS averages 10% but can be as high as 20-30%, and almost all companies that do VAS believe the upwtrend will continue.

Figure 57. Definitions of

Picking Flows

Number of

PickersNumber of

OrdersNumber

Time Per

Discrete One One One

Zone Multiple One One

Batch One Multiple One

Wave One Multiple MultipZone-Batch Multiple Multiple One

Zone-Wave Multiple One Multip

Zone-Batch-Wave Multiple Multiple Multip

Value-added

rvices (VAS)

n DCs are

early on the

se, not only

volume but

also in the

kinds of

ervices that

are being

offered.

Apparel, Fabric and Accessories Zone-batch-wave

Automotive, Truck and Vehicles Batch and zone-batch-w

Beauty, Health and Wellness Zone-wave and other

Department Store and Discount Batch

Electronics and Electricals Discrete (order)

Food and Beverage Discrete (order)

Hardware and Home Improvement Discrete (order)

Hobby, Toys, Arts, Crafts and Sporting Goods Discrete (order) and wa

Home Products / Furniture / Appliances Discrete (order)

Figure 59. Primary Picking Flow for each Segment

Figure 60. Percentage of Orders Required for each Value-Added Activity

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Ticketing

Price labeling

Folding, hanging, bagging, etc.

Pre-packs

Store-ready displays

Special value packs

Customer specific repackaging

Kitting/product repacking

Attaching RFID tags

Pre-routed pallets or carton labels


Retail

Manufacturing

Ticketing

Price labeling

Folding, hanging, bagging, etc.

Pre-packs

Store-ready displays

Special value packs

Customer specific repackaging

Kitting/product repacking

Attaching RFID tags

Pre-routed pallets or carton labels


Figure 60. Percentage of Orders Required for each Value-Added Activity

Figure 58. Percentage of Order Lines Picked

0%10%

20%

30%

40%

50%

Discrete

(order)

Zone Batch Wave Zone-batch Zone-wave Zone-

batch-wave

OtherPercenta

geofOrderLine

Picked

Perce

ntageofOrder

L

inesPicked

Figure 58. Percentage of Order Lines Picked by Picking Method


28/34



Comp

that ach

turnov

less tha

are cons

to be

perfor

ManufacturingThis section covers several aspects of manufacturing operations, with analysis of metric data on quality systems, facilitydesign, human resource management, maintenance, safety and energy, product development, cost competitiveness, andproduction approaches. Also included are the manufacturing philosophies employed by industry segments.

Quality Systems and Performance Metrics

Quality system metrics include customer rejection rate, which averages more than 6,000 parts per million (PPM) with arange from 200 PPM to 11,000 PPM. Outgoing product quality is used more frequently by manufacturing companies, butaverages nearly 16,000 PPM. Both of these measures for Consortium companies are very good relative to othercompanies in general. The cost of quality as a percentage of COGS is not as common as other quality systems andperformance metrics, but values less than 1% are considered very good (Figure 61).

Facility Design and Layout Metrics

The manufacturing cycle time is measured as the time a product order is released for production until that product hasbeen shipped. The variability and complexity of the manufacturing processes has a great deal to do with this measure.Also impacting manufacturing processes is space utilization. While it is necessary to use space for storage and materialhandling in a manufacturing facility, the amount of space required should be minimized. Percentages of 20-40% are notuncommon (Figure 62 and Figure 63).

Human Resource Management MetricsEmployee turnover is a measure of workforce churn and is the product of many factors, including morale, pay,management and work environment. Companies that achieve a turnover of less than 10% are considered to be goodperformers. Similarly, absenteeism is defined as absent or late arriving employees, which the Consortium finds is notmeasured by most companies, but it averages almost 4% (Figure 64).

Figure 61. Quality Systems and PerformancePercentage of

Companies UsingLevel of Importance

(Scale 1-5)Average

Performance

Customer rejection rate on shipped products (PPM) 74.7% 4.9 6,031 PPM

Outgoing product quality (PPM) 45.5% 4.7 15,808 PPM

Cost of quality as a percentage of COGS 18.2% 4.0 1.3%

Figure 62. Facility Design and LayoutPercentage of


(Scale 1-5)Average

Performance

Manufacturing cycle time 80.0% 4.8 170 hrs.

Percentage of total facility space (sq. ft.) used forstorage and material handling

54.5% 4.3 32.7%

Figure 64. Human Resource ManagementPercentage of


(Scale 1-5)Average

Performance

Annual employee turnover 90.9% 4.1 12.2%

Annual absenteeism 36.4% 3.7 3.9%

Figure 63. Percentage of Material Handling Labor to Total Direct Labor

38%

49%

13%Less Than 1%

1% to 5%

5% to 10%

Less than 1%

1% to 5%

5% to 10%

Figure 63. Percentage of Material Handling Labor to Total Direct Labor


29/34



Preventative Maintenance Compliance

Preventative maintenance compliance is the percentage of maintenance tasks done on a scheduled basis. Consorticompanies have an unusually high value of 89.6% (Figure 65).

Operations Average OEE (Overall Equipment Efficiency)

Nearly 90% of respondents note that they have an OEE greater than 60%, which indicates a high level of operatperformance versus schedule, a high output compared to standard equipment outputs, and good quality performance.

Product Development Metrics

Total annual research and development (R&D) cost as a percentage of COGS is highly industry specific. High technoland consumer products companies spend 5-10% on annual R&D, and lower technology industries spend fewer dollarR&D (Figure 66).

Product development cycle time has emerged as a critical business metric for companies in industries that demproduct differentiation (Figure 67).

Cost and Competitive Metrics

Manufacturing cost metrics indicate the efficiency of capital investment in manufacturing, the change in unit costs products produced, and the change in labor content in manufacturing products. Over the last three years, surrespondents have seen return on investment capital (ROIC) improve to 6.1%. Either through wise investment or usepartners assets, manufacturing unit costs have declined more than 8%, with some companies exceeding 1Additionally, manufacturing labor per unit is down by an average of nearly 9% (Figure 68).

ver the last

hree years,

survey

espondents

have seen

return on

nvestment

pital (ROIC)

mprove to

6.1%.

Figure 65. Maintenance, Safety and EnergyPercentage of


(Scale 1-5)Average

Performan

Preventive maintenance compliance 92.0% 4.7 89.6%

Figure 66. Product DevelopmentPercentage of

Companies Using

Level of Importance

(Scale 1-5)

Average

PerformanTotal annual R&D cost as a percentage of COGS 45.4% 2.4 2.2%

Figure 68. Cost and CompetitivenessPercentage of


(Scale 1-5)Average

Performanc

Change in manufacturing ROIC over the last threeyears

89.0% 4.4 6.1%

Percentage of manufacturing cost change per unit forproduct shipped over the last three years

88.0% 4.9 7.6%

Percentage of change in manufacturing man-hours perunit of output over the last three years

63.0% 4.2 8.7%

Figure 67. Percentage Improvement in Product Development Cycle Time Over the Last Three

Years

78%

22%

Less Than 20%

20% to 40%

Less than 20%

20% to 40%

Figure 67. Percentage Improvement in Product Development Cycle Time Over the Last Three Years


30/34



Respon

indicat

redu

manufa

cycle ti

critic

meetin

rapi

chan

deman

produ

Push (Make-to-Plan) and Pull (Make-to-Order)

A majority of manufacturers utilize a push approach for production in some segments such as personal care and drugs which essentially produce all products to a plan.

Make-to-order remains a much smaller percentage of most industries sales than those using a push process (Figure 69).In some cases, the make-to-order process is not a practical alternative with the manufacturing processes in use and the

customer requirements. Survey participants were asked about initiatives they were pursuing. They indicate that reducingmanufacturing cycle times is critical to meeting the rapidly changing demand for products.

Figure 70. Precentage of Sales for Make-to-Order versus Make-to-Plan

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Apparel, Fabric and


Vehicles




Food and Beverage

Hardware and Home

ImprovementHobby, Toys, Arts , Crafts and

Sporting GoodsHome


Percentage of Sales

Push (Make-to-Plan)

Pull (Make to Order)






Food and Beverage




Percentage of Sales

Figure 69. Percentage of Sales for Make-to-Order versus Make-to-Plan


31/34



Supply Chain TechnologyThis section covers capital expenditures for supply chain technology by segment, the use of bar-code technology, and use of warehouse management systems (WMSs).

Budget for Supply Chain Technology

Forty percent of the surveyed companies allocate less than 3% of their total capital budget to supply chain technol(Figure 70). The total technology expenditures over the last 12 months for manufacturing companies is $3 million andretail companies, $6 million.

Bar-Coded Inbound and Outbound Containers

Obviously, bar-code technology has been in place for many years, and it is engrained in most companies inbound outbound processes. On the outbound side, most products are bar-coded today and there is some movement toward use of RFID technology (Figure 71).

early half ofsurveyed

companies

llocate less

than 3% of

their total

capital

budget to

upply chain

echnology.

Figure 71. Average Percentage of Shipments

that Are Bar-CodedInbound Shipments Outbound Shipments

Manufacturing Cartons Containers Pieces Cartons Containers Piec

Apparel, Fabric and Accessories 99% 75% 99% 100% 80% 99%

Automotive, Truck and Vehicle 84% 50% NA 100% NA 100%

Beauty, Health and Wellness 76% NA 50% 100% 100% 100%

Electronics and Electricals 84% 75% 75% 96% 91% 85%

Food and Beverage 98% NA 98% 75% NA 100%

Hobby, Toys, Arts, Crafts and Sporting Goods 94% 80% 80% 98% NA 95%

Home Products/Furniture/Appliances 65% 100% NA 100% 100% 100%

Retail Cartons Containers Pieces Cartons Containers Piec

Apparel, Fabric and Accessories 74% 46% 74% 100% 0% 50%

Automotive, Truck and Vehicle 78% 75% 100% 80% 100% NA

Department Store and Discount 85% 97% 99% 99% 100% 100%

Beauty, Health and Wellness 75% 53% 95% 100% 100% 100%Electronics and Electricals 61% 54% 63% 98% 98% 98%

Food and Beverage 87% 85% 98% 94% 97% 96%

Hardware and Home Improvement 83% 83% 95% 99% 100% 99%

Hobby, Toys, Arts, Crafts and Sporting Goods NA NA 90% 100% 100% 100%

Home Products/Furniture/Appliances 73% 95% 95% 100% 100% NA

Specialty 72% 72% NA 100% NA NA

Figure 71. Percentage of Total Capital Budget Allocated to Supply Chain Technology

40%

33%

27%Less than 3%

3% to 6%

Greater than 6%

Figure 70. Percentage of Total Capital Budget Allocated to Supply Chain Technology

Less than 3%

3% to 6%

Greater than 6%


32/34


33/34



ConclusionThis Supply Chain Core Benchmarks Reportuses data available at the time the report was written and only when a vnumber of data points exist. The objective is to provide further insights in future editions as more benchmark datcollected and more comparisons and trending are possible. The foundation and metrics presented in the report cover:

Financial Benchmarks

Supply Chain Planning Benchmarks

Sourcing Benchmarks Transportation Benchmarks

Distribution Benchmarks

Manufacturing Benchmarks

Technology Benchmarks

The goal of benchmarking is to use data to help identify specific, actionable tactics for improvements which align wyour companys goals. Thus, this report is intended to provide meaningful data in sufficient detail to allow yocompare your relative performance to the survey population as a whole, as well as by industry and/or segment. The fois on presenting data and not on commentary or reaching specific conclusions on what is good or bad, right or wrPlease make use of the benchmark comparison worksheet located on pages 5-7 to record benchmark values fromfigures presented in this report and directly compare them to your data.


34/34

Join the Supply Chain Consortium Group on LinkedIn:

www.linkedin.com/groupRegistration?gid=1966314

Become a member of the Consortiums Xing Group at:

http://www.xing.com/group-50193.4ed4eb

The Supply Chain Consortium is the premier source for supply chain

benchmarking and best practices knowledge. The consortium sponsors a

comprehensive repository of more than 17,000 benchmarks complemented by

search capabilities, online analysis tools, topic forums, and peer networking for

executives and practitioners. All these elements are designed to drive world-class

performance in your organization.

Benchmarking &

Best Practices

The Supply Chain Consortium is led by the needs of its membership and an

Advisory Board that includes:

www.supplychainconsortium.com

Bruce Tompkins, Executive Director

(919) 855-5527

[email protected]

Chris Ferrell, Associate Director

(407) 362-0369

[email protected]

Documents

corebenchmarks scm