benchmarking

The 11 Golden Rules for Meaningful Supply Chain KPIs

The 11 Golden Rules for Meaningful Supply Chain KPIs

In an attempt to help you keep your supply chain organisation from analysis paralysis, metric manipulation, or measurement misnomers, I decided to use this post to share nine important guidelines, or golden rules, for benchmarking your business and monitoring performance using meaningful supply chain KPIs. Golden Rule #1: Meaningful KPIs Require a Meaningful Strategy I’ve written many posts on this blog about the importance of having a supply chain strategy aligned with the overall business plan, and why it is a mistake to have misaligned strategies. I’ve also described some of the issues that can arise from such an error. However, it’s a topic worth touching on again, as an unclear or misaligned supply chain strategy will make it difficult for you to develop meaningful KPIs. Your supply chain strategy should be the basis for your KPIs, but for that to be possible, the strategy must be clear, understandable, and aligned with the business plan. With these conditions assured, you should be able to identify (broadly) the areas of measurement that will steer your organisation towards its goals. Golden Rule #2: Don’t Meddle or Manipulate If you want meaningful supply chain KPIs, you need to live with the numbers they reveal. I’ve seen more than one management team create or exploit process loopholes to arrive at better KPI results. It’s a folly to do so, and it doesn’t do the managers or the company any favours. A prime example of this kind of manipulation (and really, it is manipulation), is when performance issues arise which result in shipment delays. Instead of concentrating on resolving the issues at hand, the management team starts contacting customers and asking if they will accept a later delivery date or time. If the customers agree, the management team dispatches the shipments and records them as delivered on time. Of course, contacting the customers is the right thing to do, but when it is the shipper and not the customer, who initiates a change in the delivery schedule, there is no way it should be recorded as “on-time delivery.” Late is late, even when it is with a customer’s permission. Golden Rule #3: Put Yourself on the Outside, Looking In You can come up with a list of service metrics and call them KPIs, but that doesn’t automatically make them meaningful supply chain KPIs. For them to be useful, your service KPIs should reflect how...

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Why Large Companies Move to 4PL Services

Why Large Companies Move to 4PL Services

SUMMARY: Because 4PL providers handle a company’s entire chain, including challenges that are thrown up by advances in technology, they are increasingly being favoured over third-party logistics (3PL) providers, especially by big companies with complex supply chains. In its simplest form, fourth-party logistics is a model in which manufacturers hand over the entirety of the organisation and oversight of their supply chain to a 4PL provider. By contrast, the third-party logistics model is where a manufacturer retains oversight of its supply chain but outsources such processes as warehousing, shipping, packing, and distribution to a 3PL provider. When the COVID-19 pandemic began wreaking havoc in global supply chains, smaller companies turned to 3PL providers for help. Bigger companies with complex global supply chains, however, realised they needed sophisticated digital technologies and streamlined supply chain processes offered by 4PL providers to help them ride out the storm. The concept of fourth-party logistics has existed for some time but only truly began evolving with the arrival of Industry 4.0—the digitisation of manufacturing. Because 4PL providers handle a company’s entire chain, including challenges that are thrown up by advances in technology, they are increasingly being favoured over third-party logistics (3PL) providers, especially by big companies with complex supply chains. The Differences between 4PL and 3PL It will be helpful at this stage to determine the differences between 4PL and 3PL. The terms are often mixed up and some firms claim to be 4PL providers when in fact they only provide 3PL services. What is 4PL? In its simplest form, fourth-party logistics is a model in which manufacturers hand over the entirety of the organisation and oversight of their supply chain to a 4PL provider. What is 3PL? The third-party logistics model is where a manufacturer retains oversight of its supply chain but outsources processes such as warehousing, shipping, packing, and distribution to a 3PL provider. The key difference between the two can perhaps be explained in the following example: A 3PL provider working with a paint manufacturer may package and store products as well as transport them to retailers and/or customers. Unlike a 4PL, however, it won’t manage the paint maker’s entire supply chain. There are, of course, some other important differences between the two types of providers: 4PL is, in general, better suited for medium-to-large businesses, while 3PL is more suited to small-to-medium businesses.4PL companies operate at the optimisation and collaboration level...

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A Case Study of Warehouse & Distribution Centre Benchmarking

A Case Study of Warehouse & Distribution Centre Benchmarking

BENCHMARKING IS A FANTASTIC BUSINESS IMPROVEMENT TOOL. John Monck, Manager Consulting at Logistics Bureau will demonstrate its use and explain more about it. Kindly watch the video below: Editor’s Note: This post was originally published on August 05, 2020, under the title “Warehouse & Distribution Centre Benchmarking Case Study— John Monck” on Logistics Bureau’s website. Best Regards,Rob O’ByrneEmail: robyrne@logisticsbureau.comPhone: +61 417 417...

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