Supply Chain Performance & Cost-to-Serve – Seeing the Bigger Picture

You can achieve great business value by visualizing quite simple measures of supply chain performance end-to-end, meaning from your customers, through your own group of companies, and further on to your suppliers. This horizontal view is, however, hard to get if you just work with ERP systems, since they are function oriented (typically “silo based”).

Continuously measuring your customers’ forecast or delivery schedule quality and relating it to your own service levels, gives you a basic foundation for improved customer collaboration with the common goal of improved OTD (On Time Delivery). But to be successful in collaboration, you first need to see the bigger picture in your own company for priority reasons, as well as the specifics when you meet the most critical customers to discuss improvements for specific products, sites or countries.

But your OTD comes at a price. You need the horizontal view to understand the “cost to serve” and the correlation between your customers’ performance, your own performance, and your suppliers’ performance. You need to measure exactly the same things related to your own performance towards your suppliers, their performance, and the correlations between these measurements. And it’s equally important to see the bigger picture on your supplier-side, to prioritize your worst performing products, sites or countries, based on the specific performance, as well as aggregated, for your own group of companies.

Even a long journey begins with the first single step…