Supply Chain Operation (scor-8)

Supply Chain Operations Reference Model ® SCOR Version 8.0 © Supply-Chain Council, 2006. All rights reserved. The Supply-Chain Council has made every effort to assure the accuracy and usefulness of the information and metrics contained herein and is provided on an "AS IS" basis. The Supply-Chain Council makes no warranty, express or implied, of merchantability, fitness for a particular purpose, or accuracy. The Supply-Chain Council makes no representation as to the results obtained or obtainable and disclaims all liability for direct, indirect, special or consequential damage, including lost profits, lost business or the like, whether based in contract, tort (including negligence), product liability or otherwise.

®

SCOR is a registered trademark in the United States and Canada.

© Copyright 2006 Supply-Chain Council, Inc.

Acknowledgements The following members (alphabetical by company) of the Supply-Chain Council Technical Development Steering Committee and Project Teams devoted extensive time and/or effort to the development of this Model – SCOR Version 8.0. Name

Kevin Mansfield Cheryl Harrity Joe Faccenda Steve Hensley Bill Garrison Jörg Nienhaus Paul Schiller Paul Tilsley Sergio Vacca Steven Vanne Eric Cosman Russ Dickinson Stephen Graham Ray Walker Lars Magnusson Charles-Eric Roussel Alex Van Breedam Charlie Gifford Georgeann Fears Chang-rui Ren Jin Dong Luc Kremers Rob Hagan Jürgen Richert Taylor H. Wilkerson Shruti Mandana Dan Swartwood Monty Boyle Gary Cokins Keith Unger Melinda Spring Scott Stephens Arne Ziegenbein Scott Sealing John Nyere Peter Baker Nancy Craft Nishioka-san

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Company

Air Products & Chemicals, Inc APQC Aspentech Blue Sky Logistics Boeing Bosch, BP Chemicals BP Bulgari Caterpillar Logistics The Dow Chemical Company The Dow Chemical Company The Dow Chemical Company DuPont Ericsson Essilor France Flanders Institute for Logistics GE/Fanuc IBM Benchmarking IBM China IBM China iCognitive International Paper J&M Management Consulting AG LMI The Performance Measurement Group Pragmatek PriceWaterhouseCoopers SAS Stone Technologies, Inc. Supply-Chain Council Supply-Chain Council ETH Zurich United Space Alliance United States Department of Defense UTi Volvo Accenture

Supply Chain Operations Reference-model (SCOR) 8.0 Contents • Introduction

1

• PLAN

12

• SOURCE

68

• MAKE

115

• DELIVER

168

• RETURN

252

• Workflow Graphics

306

• Glossary Process Terms

354

Metrics

368

Best Practices

386

Inputs and Outputs

419

• Appendices Appendix A: Metrics Background Development Information

434

Appendix B: Best Practices Background Development Information

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Supply Chain Operations Reference-model (SCOR) 8.0 Introduction The Supply Chain Operations Reference-model (SCOR) is the product of the Supply-Chain Council (SCC), an independent, not-for-profit, global corporation with membership open to all companies and organizations interested in applying and advancing the state-of-the-art in supply-chain management systems and practices. The SCOR-model captures the Council’s consensus view of supply chain management. While much of the underlying content of the Model has been used by practitioners for many years, the SCOR-model provides a unique framework that links business process, metrics, best practices and technology features into a unified structure to support communication among supply chain partners and to improve the effectiveness of supply chain management and related supply chain improvement activities. The SCC was organized in 1996 and initially included 69 practitioner companies meeting in an informal consortium. Subsequently, the companies of the Council elected to form an independent not for profit trade association. The majority of the SCC’s members are practitioners and represent a broad cross-section of industries, including manufacturers, distributors, and retailers. Equally important to the Council and the advancement of the SCOR-model are the technology suppliers and implementers, the academicians, and the government organizations that participate in Council activities and the development and maintenance of the Model. At the time of this release, the Council has approximately 800 members worldwide and has established international chapters in Australia/New Zealand, Brazil, Greater China, Europe, Japan, Southeast Asia, and Southern Africa with additional requests for regional chapters pending. The Supply-Chain Council is interested in providing the widest possible dissemination of the SCOR-model. The wide-spread use of the Model results in better customer-supplier relationships, software systems that can better support members through the use of common measurements and terms, and the ability to rapidly recognize and adopt best practice no matter where it originates. SCC requests that all who use the SCOR-model provide attribution to the Supply-Chain Council. Additionally, members are encouraged to monitor the members section of the SCC website (www.supply-chain.org) to ensure that they are using the latest version of SCOR. This introduction is provided to assist new users of the SCOR-model to begin analytic and implementation projects. It is intended to remind experienced users of the framework and structure of the Model to assist in more complex applications and operationalizing the Model for their businesses. Finally, it is provided to orient members to the changes between Version 8.0 and Version 7.0. Version 8.0 of the SCOR-model is the tenth revision since the Model’s introduction in 1996. Revisions of the Model are made when it is determined by Council members that changes should be made to facilitate the use of the Model in practice. Specific changes in Version 8.0 are outlined later in this Introduction.

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Scope The SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customer’s demand. The Model itself contains several sections and is organized around the five primary management processes of Plan, Source, Make, Deliver, and Return (shown in Figure 1). By describing supply chains using these process building blocks, the Model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. The Model has been able to successfully describe and provide a basis for supply chain improvement for global projects as well as site-specific projects.

Plan

Plan

Plan

Deliver Return

Suppliers’ Supplier

Source

Make

Return

Plan

Deliver Return

Source

Make

Deliver

Supplier

Source

Make

Return

Plan

Deliver

Return

Return

Customer’s

Customer

Return

Source

Return

Internal or External

Internal or External

Customer

Your Company Figure 1 - SCOR is organized around five major management processes. It spans: all customer interactions (order entry through paid invoice), all physical material transactions (supplier’s supplier to customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.) and all market interactions (from the understanding of aggregate demand to the fulfillment of each order). It does not attempt to describe every business process or activity. Specifically, the Model does not address: sales and marketing (demand generation), product development, research and development, and some elements of post-delivery customer support. It should be noted that the scope of the Model has changed and is anticipated to change based on Council member requirements. With the introduction of Return, the Model has been extended into the area of post-delivery customer support (although it does not include all activities in that area). As shown in Figure 2, the Model is designed and maintained to support supply chains of various complexities and across multiple industries. The Council has focused on three process levels and does not attempt to prescribe how a particular organization should conduct its business or tailor its systems / information flow. Every organization that implements supply chain improvements using the SCOR-model will need to extend the Model, at least to Level 4, using organization-specific processes, systems, and practice.

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The Model is silent in the areas of human resources, training, and quality assurance among others. Currently, it is the position of the Council that these horizontal activities are implicit in the Model and there are other highly qualified organizations that are chiefly concerned with how an organization should train, retain, organize, and conduct their quality programs. Just as the Council recognized the requirements for marketing and sales in commercial organizations, the Council is not minimizing the importance of these other activities.

SCOR Contains Three Levels of Process Detail Level #

Description

1

Supply-Chain Operations Reference-model

Top Level (Process Types)

Comments

Schematic

Plan Source

Make Deliver Return

Return

2

A company’s supply chain can be “configured-to-order” at Level 2 from core “process categories.” Companies implement their operations strategy through the configuration they choose for their supply chain.

Configuration Level (Process Categories)

3

Process Element Level (Decompose Processes) P1.1 Identify, Prioritize, and Aggregate Supply-Chain Requirements

P1.2

Level 1 defines the scope and content for the Supply chain Operations Reference-model. Here basis of competition performance targets are set.

P1.3

P1.4

Balance Production Resources with Supply-Chain Requirements

Establish and Communicate Supply-Chain Plans

Identify, Assess, and Aggregate Supply-Chain Requirements

Level 3 defines a company’s ability to compete successfully in its chosen markets, and consists of: • Process element definitions • Process element information inputs, and outputs • Process performance metrics • Best practices, where applicable • System capabilities required to support best practices • Systems/tools Companies “fine tune” their Operations Strategy at Level 3.

4 Not in Scope

Implementation Level (Decompose Process Elements)

Companies implement specific supplychain management practices at this level. Level 4 defines practices to achieve competitive advantage and to adapt to changing business conditions.

Figure 2 - SCOR is a hierarchical model with specific boundaries in regard to scope.

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The SCOR-model is a business process reference model as illustrated in Figure 3. That is, it is a Model that links process elements, metrics, best practice and the features associated with the execution of a supply chain in a unique format. The uniqueness and power of the Model and its successful implementation is chiefly derived from using these four elements together. It is important to note that this Model describes processes not functions. In other words, the Model focuses on the activity involved, not the person or organizational element that performs the activity.

Business Process Reengineering

Capture the “as-is” state of a process and derive the desired “to-be” future state

Benchmarking

Best Practices Analysis

Process Reference Model

Capture the “as-is” state of a process and derive the desired “to-be” future state

Quantify the operational performance of similar companies and establish internal targets based on “best-inclass” results

Quantify the operational performance of similar companies and establish internal targets based on “best-in-class” results Characterize the management practices and software solutions that result in “best-in-class” performance

Characterize the management practices and software solutions that result in “best-inclass” performance

Figure 3 - SCOR is a business process reference model.

SCOR-model Structure Besides the five basic management processes (Plan, Source, Make, Deliver, Return) that provide the organizational structure of the SCOR-model, it is useful to distinguish between the three process types in the Model: planning, execution, and enable (formerly infrastructure). A planning element is a process that aligns expected resources to meet expected demand requirements. Planning processes balance aggregated demand across a consistent planning horizon. Planning processes generally occur at regular intervals and can contribute to supply chain response time. Execution processes are triggered by planned or actual demand that changes the state of products. They include scheduling and sequencing, transforming materials and services, and moving product. Enable processes prepare, maintain, and manage information or relationships upon which planning and execution processes rely. A set of standard notation is used throughout the Model. P depicts Plan elements, S depicts Source elements, M depicts Make elements, D depicts Deliver elements, and R depicts Return elements. SR = Source Return and DR = Deliver Return. An E preceding any of the others (e.g., EP) indicates that the process element is an Enable element associated with the Planning or Execution element (in this case, EP would be an Enable Planning element). As indicated in Figure 2, the Model is hierarchical with three levels. P1.1 is a notation that indicates a third level process element. In this case, it is a Plan (P – Level 1) element that is concerned with supply chain planning (1 – Level 2) and is specific to identifying, prioritizing, and aggregating supply chain requirements (.1 – Level 3).

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The SCOR-model contains 8 basic sections: Introduction, Plan, Source, Make, Deliver, Return, Glossary and Appendices. For modeling purposes, Return is documented in two locations – Source and Deliver. Those Return processes that connect an organization with its supplier (i.e., the return of raw material) are documented as Source Return activities. Those processes that connect an organization with its customer (i.e. the receipt of returned finished goods) are documented as Deliver Return activities. This preserves the concept that Source connects an organization with its suppliers and Deliver connects an organization with its customers. The Plan and Execution (Source, Make, Deliver, Return) sections are the heart of the Model while the Glossary provides a listing of the standard process and metrics terms that are used within the Model. The Appendices provide detailed information on metrics and best practices. Plan, Source, Make, Deliver, and Return sections are organized with a standard structure. At the beginning of each section, there are graphics that provide a visual representation of the process elements, their relationships to each other, and the inputs and outputs that are germane to each process element. Following the graphics are text tables that identify: 1) the standard name for the process element, 2) the notation for the process element, 3) SCC’s “standard” definition for the process element, 4) performance attributes that are associated with the process element, 5) metrics that are associated with the performance attributes, 6) best practices that are associated with the process (candidates, not necessarily an exhaustive list), and features (generally technologically related) that can contribute to heightened performance of the process. Within the Source, Make and Deliver process elements, a common internal structure has been agreed upon. The Model focuses on three environments, Make-to-Stock, Make-to-Order, and Engineerto-Order. As a result, S1 becomes Source Make-to-Stock Product, S2 becomes Source Make-to-Order Product and S3 becomes Source Engineer-to-Order Product. This same convention is used for Make, i.e. M1 – Make-to-Stock, and Deliver, i.e. D2 – Deliver Make-to-Order Product. This convention was extended to Return in Version 5.0. R1 is the Return of Defective Product, R2 is the Return of Maintenance, Repair or Overhaul (MRO) Product, and R3 is the Return of Excess Product. Within each of the planning and execution sections and following the graphic and text descriptions, the associated Enable elements are described using the same graphic and text formats. It is important to note, that like the process elements themselves, the metrics are intended to be hierarchical. Although not explicit in the Model, Level 1 metrics, as shown in Figure 4 are typically “assigned” to P1 (Plan Supply Chain) and are decomposed (Level 2 and diagnostic metrics) to the respective planning, execution and enable elements.

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Performance Attributes and Level 1 Metrics Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN).

Performance Attributes Level 1 Metrics

Customer-Facing Responsiveness

Reliability Perfect Order Fulfillment

Flexibility

Internal-Facing Costs Assets

x

Order Fulfillment Cycle Time

x

Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold

x x x x x

Cash-To-Cash Cycle Time

x x

Return on Supply Chain Fixed Assets Return on Working Capital

x

Figure 4 - SCOR Performance Attributes and Level 1 Metrics The metrics are used in conjunction with performance attributes. In Version 4.0 of the Model, the Performance Attributes were expanded from four (Supply Chain Reliability, Supply Chain Flexibility and Responsiveness, Supply Chain Costs, and Supply Chain Asset Management) to five (Supply Chain Reliability, Supply Chain Responsiveness, Supply Chain Flexibility, Supply Chain Costs, and Supply Chain Asset Management). Generally, the impact of this exercise was to associate cycle time measures with Responsiveness and to identify needed metrics in the area of Flexibility. The table in Figure 5 defines the performance attributes and indicates which Level 1 metrics are associated with each attribute. The Performance Attributes are characteristics of the supply chain that permit it to be analyzed and evaluated against other supply chains with competing strategies. Just as you would describe a physical object like a piece of lumber using standard characteristics (e.g., height, width, depth), a supply chain requires standard characteristics to be described. Without these characteristics it is extremely difficult to compare an organization that chooses to be the low-cost provider against an organization that chooses to compete on reliability and performance.

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Performance Attributes and Associated Level 1 Metrics Performance Attribute Supply Chain Reliability

Supply Chain Responsiveness Supply Chain Flexibility

Supply Chain Costs Supply Chain Asset Management

Performance Attribute Definition

Level 1 Metric

The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. The speed at which a supply chain provides products to the customer. The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage.

Perfect Order Fulfillment

The costs associated with operating the supply chain. The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.

Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital

Figure 5 – Definitions for SCOR Performance Attributes and which Level 1 metrics are associated with each attribute. Associated with the Performance Attributes are the Level 1 Metrics. These Level 1 Metrics are the calculations by which an implementing organization can measure how successful they are in achieving their desired positioning within the competitive market space. While these Performance Attributes are critical in implementing the Model, formal definitions were not previously included in the Model. In Version 4.0, standard Performance Attribute definitions were provided. In Version 5.0, the process tables associated with Level 2 and 3 activities were reconciled to reflect the separation of the flexibility and responsiveness attributes and to ensure that the metrics measured what they were intended to measure. First time users of the Model should be aware that the metrics in the Model are hierarchical – just as the process elements are hierarchical. Level 1 Metrics are created from lower level calculations. (Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN). Lower level calculations (Level 2 metrics) are generally associated with a narrower subset of processes. For example, Delivery Performance is calculated as the total number of products delivered on time and in full based on a commit date. Additionally, even lower level metrics (diagnostics) are used to diagnose variations in performance against plan. For example, an organization may wish to examine the correlation between the request date and commit date.

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SCOR Version 8.0 Changes No Process Changes In Version 8.0, there are no changes to the Level 1, 2, or 3 Processes. Metrics There is an additional Level 1 metric – Return on Working Capital – in the Assets Attribute category. The definition and other detailed information regarding this metric are included in the Metrics Appendix A in this publication. It is also listed in the appropriate processes under “Metrics.” The Metrics in SCOR 8.0 have been significantly streamlined. Level 2 processes now only include Level 1 metrics and a Cost metric has been added for every single process in the model. Version 7.0 similarly saw the addition of a Cycle Time metric for every process. This allows the easy “roll up” of cost and cycle time metrics to the Level 1 metrics. Metrics that are considered to be “diagnostic” are not included in the Appendix A Metrics Hierarchy. These measures are important measures, but do not “roll up” to Level 1 Metrics. There are a few new hierarchical Level 3 metrics that are not yet defined and listed in the tables – this will be included in the next SCOR update – likely to be a minor update 8.1. SCOR 7.0 Metrics that were categorized as lower level or no longer relevant have been archived. An archived list of SCOR metrics is available upon request. Best Practices The Best Practices Appendix has also been reworked to make it a more clean and consistent reference. Changes to some of the definitions throughout the Model have been updated and some process affiliations are changed. Best Practices no longer contain the “Feature” column, as this was a “hangover” from when the Model used to list affiliated software features, now not maintained by the Council. This column has been replaced by a definition where it has been identified. The team surveyed SCC members on Best Practices that they want to see included in the future and this work is ongoing. Changed definitions in Version 8.0 include: Barcoding Design/upgrade production equipment to maximize flexibility and avoid line stoppages Assessing export/import requirements during time of product development/manufacture Bar coding is used to minimize handling time and maximize data accuracy Cellular manufacturing Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Replanning Business Rules Plan Changes Design/upgrade production equipment to maximize flexibility and avoid line stoppages Electronic material move transactions ATP and Product Reservation

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add RFID old: None Identified new: Machine productivity and downtime monitoring. (consistent to the other occurrences of the best practice process characteristic) old: None Identified new: Multi-country Export/Import documentation compliance old: Product serial number used as identifier new: Bar code interface for data collection devices Generate bar coded receiving documents old: None Identified new: Manufacturing is broken into work cells old: None Identified new: Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain Advanced Planning and ERP execution systems Supply Chain Capacity Planning Systems old: None Identified new: Machine productivity and downtime monitoring old: Bar code data collection new: Automated process control and/or barcode data collection old: ATP and Product Reservation, Integration with scheduling and inventory management new: Available-to-Promise (ATP), See Glossary

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Supplier (Carrier) Agreements CPFR®, Collaborative Planning, Forecasting, Replenishment Postponement

S&OP, Sales and Operations Planning Inventory Cycle Counting Assess Supplier Performance

old: Supplier (Carrier) Agreements new: Carrier Agreements old: CPFR®, Collaborative Planning, Forecasting, Replenishment new: Collaborative Planning, Forecasting, Replenishment (CPFR) New: Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. old: S&OP, Sales and Operations Planning new: Sales and Operations Planning (S&OP) old: Inventory Cycle Counting new: Statistical Test Count old: Assess Supplier Performance new: Supplier Performance Assessment System

Inputs and Outputs New in the Glossary are the Inputs/Outputs and their definitions. These were not defined or listed for reference in any previous versions of SCOR. This piece of the SCOR 8.0 development was facilitated by a team working to use the ISA 95 standard in conjunction with SCOR. The definitions they added were included to also satisfy their use of both SCOR and ISA 95. Workflow Graphics Prompted by the first time re-hosting of the SCOR model into a BPM native format, the workflow diagrams are very different than the previously published Microsoft Word graphics. They now also include “deliverables” – what is moving from one process to another, or into and out of the process. As a result of these complex workflows and the rehosting in software rather than maintenance in Microsoft Word, the type is very small in the workflow graphics. The TDSC has agreed to post them ‘as is” for this printing until a more legible print version can be developed. They are included behind the process tables. They are also available as HTML files on the www.supply-chain.org members’ website with a zoom feature so that they can be enlarged for easy reading. SCOR database For the next version of SCOR (most likely 8.1), the database output from this BPM will be released as a vendor-neutral format. The suppliers working with SCC on this project will help determine how this will be released and made available. A software licensing program is also being developed for future releases of SCOR in electronic format.

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SCOR Toolkit

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The Technical Change Process The SCOR-model is developed and maintained by the voluntary efforts of the Supply Chain Council members. Unlike other organizations with large technical staffs, the Council depends on the contributions of its members to actively advance the state of knowledge in supply chain by identifying required Model changes, researching and validating those changes, and developing the consensus regarding the proposed changes. SCOR-model versions prior to Version 6.0 were developed in a Committee structure that was focused on developing a stable, usable Model that could be used by experienced Council members as well as organizations newly introduced to the SCOR concept. In 2002, confident that the Model’s stability had been demonstrated with over 5 years of application experience by Council members, the Supply Chain Council shifted its technical development focus to specific implementation issues. The current technical development process relies on project teams composed of volunteers from Supply Chain Council member organizations. These project teams are short-lived groups that focus on specific Model challenges. It is expected that the normal term of a project team will be between 3-6 months. The change process and the coordination of the project team activities is led by the Technical Development Steering Committee (TDSC), a standing body elected by their peers in the Council. Changes to the Model are normally initiated by a Council member or members (but may be initiated by a Special Industry Group, an implementation project team, or the Chief Technical Officer). The primary mechanism for changing the Model is the Project Team. These self-organizing and self-directed teams propose areas of investigation, pursue and develop proposals for Model development and publish research results on the Council website. These activities are coordinated by the Supply Chain Council’s Technical Development Steering Committee, which is comprised of elected representatives from the Council’s membership. The Model change process is documented on the SCC’s website. Essentially, the process consists of: 1) The Council issues a call for volunteers to work on an identified need for revision or change, 2) volunteers submit a Charter Proposal to the TDSC outlining the concept, scope of work, schedules and milestones, and identifying the volunteer resources, 3) the TDSC reviews the proposed Charter and provides feedback on the proposed changes to the initiating group, 4) upon approval, the Project Team crafts the details of their scope of work and determines whether it is likely their efforts will lead to a Model change (which generally includes the modification of SCOR processes, metrics, best practice, features and inputs and outputs) or a research report (white paper), 5) the Project Team proposes how to integrate proposed changes into the overall Model, 6) after final technical review the TDSC forwards the technical community recommendations for proposed changes/additions to the SCC Board of Directors, and 7) following the approval of the Board, the new Model is published for the SCC membership.

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P1 Plan Supply Chain The development and establishment of courses of action over specified time periods that represent a projected appropriation of supply chain resources to meet supply chain requirements for the longest time fence constraints of supply resources. The Category P1 includes four Level 3 Elements: P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements

The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.

The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. P1.2 Identify, Assess, and Aggregate Supply The process of identifying, prioritizing, and aggregating, as a whole with Chain Resources constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. P1.3 Balance Supply Chain Resources with The process of identifying and measuring the gaps and imbalances between Supply Chain Requirements demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment.

P1.4 Establish Supply Chain Plans

The process of developing a time-phased course of action that commits supply-chain resources to meet supply-chain requirements. The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

Cost to Plan Supply Chain Order Fulfillment Cycle Time Plan Cycle Time Return on Supply Chain Fixed Assets

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[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. The sum of the costs associated with planning supply chain activities. The average actual cycle time consistently achieved to fulfill customer orders. The average time associated with planning source activities Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset.

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Return on Working Capital

Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Best Practices: All Functions and Organizations Understand Their Impact on Supply/Demand Balancing, Including Sales, Marketing, Product Management, Manufacturing, Customer, Suppliers, Materials Management, and Product Development Capability to Run “Simulated“ Full-Stream Supply/Demand Balancing for “What-If“ Scenarios Change in the Demand Signal Instantaneously “Reconfigures“ the Production and Supply Plans Collaborative Planning, Forecasting, Replenishment (CPFR)

None identified

Supply chain modeling and visualization system Event-driven supply chain re-planning

Collaborative Planning, Forecasting and Replenishment is a concept that allows collaborative processes across the supply chain, using a set of process and technology models.... (From www.cpfr.org/intro.html) Enterprise resource planning system Customer relationship management On-Line Visibility of All Supply-Chain Demand Requirements and Resources, both system Currently Available and Committed (Pegged) Enterprise-wide planning system customer Relationship Systems Re-Balancing of Full-Stream Supply/Demand on a Daily Basis, Including Source-Make-Deliver Resources and Requirements from “Customers’ Customer to Suppliers’ Supplier“ Integrated process modeling and software reconfiguration tools Responsiveness and Flexibility Are Emphasized By Developing Expertise in Making Business Processes ReProgrammable, Re-Configurable and Continuously Changeable Sales and Operations Planning (S&OP) A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company’s plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. (From APICS online dictionary.) Supply Chain is Designed to Have Supply None identified Flexibility Equal to Demand Volatility Supply/Demand Process is Highly Integrated Integrated supply chain planning system with interfaces to all supply/demand data sources through public and private digitally enabled from Customer Data Gathering to Order supply networks. Receipt, through Production to Supplier Request Supply chain planning optimization system Tools Support Balanced Decision Making (e.g., Trade-Off between Service Level and Inventory Investment)

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Vendor Managed Inventory

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VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

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P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. Metrics (see Appendix A for metrics attributes): Cost to Identify, Prioritize, and Aggregate Supply Chain Requirements

Forecast Accuracy Identify, Prioritize, and Aggregate Supply Chain Requirements Cycle Time

The sum of the costs associated with identifying, assessing and aggregating supply chain requirements. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. The average time associated with the identifying, prioritizing, and aggregating supply chain requirements

Best Practices: Collaboration among Operations Strategy Team

Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems Supply Chain Capacity Planning Systems Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Push-Based Forecasts Are Replaced with Standards Based (RosettaNet, eBXML, OAGI, etc) B2B integration tools Customer Replenishment “Pull-Based“ and systems Signals Supply Chain Advance Planning System Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Re-planning Business Rules Plan Changes Systems Support Accurate On-Line Visibility Advance Planning and Scheduling System of Full-Stream Demand Requirements and Supply Chain Event Management Software Priorities

Inputs: Customer Requirements from Source: Customer

The part of the supply chain requirements related to the customer’s needs, including sales forecasts and actual orders and backorders

Order Backlog from D1.3 Reserve Inventory & Determine Delivery Date Order Backlog from D1.11 Load Vehicle & Generate Shipping Documentation

Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Planning Data from EP.3 Manage PLAN Data Collection

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by from EP.9 Align Supply Chain Unit Plan with Product Family supporting the Market/Channel Plans. Corresponding Financial Plan Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions from EP.5 An update to the expected cause and effect statements that are the base Manage Integrated Supply Chain Capital for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and Assets effect. Revised Business Assumptions from EP.9 An update to the expected cause and effect statements that are the base Align Supply Chain Unit Plan with Financial for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and Plan effect. Shipments from D1.11 Load Vehicle & Transactions related to sending the product to the customer. Generate Shipping Documentation Shipments from D1.3 Reserve Inventory & Transactions related to sending the product to the customer. Determine Delivery Date

Outputs: Supply Chain Requirements to P1.3 Balance Sources of demand for the integrated supply chain of a product or service Supply Chain Resources with Supply Chain at the appropriate level, horizon and interval. Requirements

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

P1.2 Identify, Assess, and Aggregate Supply Chain Resources The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. Metrics (see Appendix A for metrics attributes): Cost to Identify, Assess, and Aggregate Supply Chain Resources Identify, Assess, and Aggregate Supply Chain Resources Cycle Time Inventory Days of Supply

The sum of the costs associated with identifying, assessing and aggregating supply chain resources. The average time associated with the identifying, assessing, and aggregating supply chain resource availability Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices: Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Lead Times Updated Monthly None identified Review Product Profitability ABC and cost modeling.

Inputs: Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Inventory from Source: Customer In business management, inventory consists of a list of goods and materials held available in stock. Also, those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts) Make/Buy Decision from EP.5 Manage Integrated Supply Chain Capital Assets Outsource Plan from EP.5 Manage Integrated Supply Chain Capital Assets

Outsource Plan from EP.6 Manage Integrated Supply Chain Transportation

Planning Data from EP.3 Manage PLAN Data Collection Production Plans from P3.4 Establish Production Plans

The output of the process used to determine whether a demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Regulatory Requirements from EP.8 Manage Requirements dictated by process standards set by external entities (i.e. PLAN Regulatory Requirements and government, trade officials, etc.). Compliance Revised Capital Plan from EP.6 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Transportation in specific business plans or factors and assumptions affecting a business plan. Revised Capital Plan from EP.5 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Capital Assets in specific business plans or factors and assumptions affecting a business plan. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs: Supply Chain Resources to P1.3 Balance As a whole with constituent parts, all sources of supply that are required Supply Chain Resources with Supply Chain to add value in the supply chain of a product or service at the appropriate Requirements level, horizon and interval.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

P1.3 Balance Supply Chain Resources with Supply Chain Requirements The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment. The process of developing a time-phased course of action that commits supply-chain resources to meet supply-chain requirements. Metrics (see Appendix A for metrics attributes): Balance Supply Chain Resources with Supply Chain Requirements Cycle Time Cost to Balance Supply Chain Resources with Supply Chain Requirements Fill Rate Inventory Days of Supply

The average time associated with balancing supply chain resources with supply chain requirements. The sum of the costs associated with balance of supply chain resources with supply chain requirements. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices: Business Intelligence (BI)

A data warehouse / data mart is the source of all planning (master) data, business rules and transaction data. Analytical tools enable the ongoing maintenance and improvement of the business rules based on actual data. Customer Relationship Management (CRM) Software that provides customer input and keeps the customer informed about the planning of the production and delivery process by managing all contacts and communication with the customer thorough all channels including internet and traditional sales and customer service channels. Demand Planning, Demand Flow Software that provides multiple data models including the business rules Leadership and metrics for the entire supply chain planning process. Algorithms use the business rules and metrics as the drivers for the planning engine.

Inputs: Supply Chain Resources from P1.2 Identify, Assess, and Aggregate Supply Chain Resources Supply Chain Requirements from P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements Inventory Strategy from EP.4 Manage Integrated Supply Chain Inventory

As a whole with constituent parts, all sources of supply that are required to add value in the supply chain of a product or service at the appropriate level, horizon and interval. Sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval.

The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed. Supply Chain Performance Improvement A plan that describes goals and objectives for a supply chain and the Plan from EP.2 Manage Performance of steps that will be taken to reach those goals and objectives from the Supply Chain current performance levels.

Outputs: Workflow to P1.4 Establish Supply Chain Plans © Copyright 2006 Supply-Chain Council, Inc.

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June 2006

P1.4 Establish Supply Chain Plans The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements. Metrics (see Appendix A for metrics attributes): Cost to Establish and Communicate Supply The sum of the costs associated with establishing and communicating Chain Plans supply chain plans. Establish Supply Chain Plans Cycle Time The average time associated with establishing and communicating supply chain plans Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included

Best Practices: Collaboration among Operations Strategy Team

Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems Supply Chain Capacity Planning Systems Digital Links (XML Based, EDI. Etc.) Among Real-time exchange of supply chain information between supply chain Supply Chain Members members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems Joint Service Agreements (JSA) Collaborative Planning Systems Supply Chain Advance Planning System Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning Replanning Business Rules Plan Changes Systems Support Accurate On-Line Visibility Advance Planning and Scheduling System of Full-Stream Demand Requirements and Priorities as Well as Resource Utilization and Availability

Inputs: Workflow from P1.3 Balance Supply Chain Resources with Supply Chain Requirements

Outputs: Supply Chain Plans to P5.1 Assess, and Aggregate Return Requirements

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Supply Chain Plans to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Supply Chain Plans to Customer

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Supply Chain Plans to P2.1 Identify, Prioritize, and Aggregate Product Requirements

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Supply Chain Plans to P3.1 Identify, Prioritize, and Aggregate Production Requirements

© Copyright 2006 Supply-Chain Council, Inc.

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

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P2 Plan Source The development and establishment of courses of action over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements. The Category P2 includes four Level 3 Elements: P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources P2.3 Balance Product Resources with Product Requirements P2.4 Establish Sourcing Plans

The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The process of developing a time-phased course of action that commits resources to meet requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Cost to Plan Source Order Fulfillment Cycle Time Plan Source Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

The sum of the costs associated with planning source activities. The average actual cycle time consistently achieved to fulfill customer orders. The average time associated with planning source activities Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Best Practices: All Key Participants in the Supply Chain, Including Strategic Partners, Have Full Visibility of the Demand/Supply Plan Distinct and Consistent Linkages Exist to Ensure Disruptions and Opportunities in Material Resources Are Quickly and Accurately Communicated and Acted Upon EDI Links Integrate Supplier Resource Information (Inventory, Capacity Availability, Etc.) with Own Resources Joint Service Agreements with Suppliers Define the Levels of “Flexibility“ or Resource Upside Available Within Stated Lead Times and Agreed Upon Conditions

© Copyright 2006 Supply-Chain Council, Inc.

Supply Chain Event Management Systems Bi-directional Digital Links (XML, EDI, etc) or Internet procurement networks to customer service linkage Inter-company resource planning with EDI/Internet communication None identified

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June 2006

P2.1 Identify, Prioritize, and Aggregate Product Requirements The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. Metrics (see Appendix A for metrics attributes): Cost to Identify, Prioritize, and Aggregate Product Requirements Forecast Accuracy

The sum of the costs associated with identifying, assessing and aggregating deliver requirements. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Identify, Prioritize, and Aggregate Product Requirements Cycle Time

The average time associated with the identifying, prioritizing, and aggregating product requirements

Best Practices: Capacity and Supply Constraints Are Balanced Against Demand during the Planning Cycle Categorize 100% of Total Inventory (Active, Usable, Excess, Obsolete) for Appropriate Action Master Production Scheduling Reflects Management of Capacity and/or Supply Constraints Sales and Operations Agree to Limits of Short Term Flexibility The Demand Plan is Updated Frequently to Reflect Actual Consumption or Customer Forecast Information

None identified None identified None identified None identified None identified

Inputs: Bill of Materials from EP.7 Manage Planning The Bill of Materials is a structured list of all the materials or parts needed Configuration to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Item Master from EP.7 Manage Planning A record of specific information for each product, which defines the Configuration system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Order Signal from D3.3 Enter Order, Commit Reserved inventory and/or planned capacity and delivery date for a Resources & Launch Program specific order. Order Signal from D2.3 Reserve Resources Reserved inventory and/or planned capacity and delivery date for a & Determine Delivery Date specific order. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product Routings from EP.7 Manage Product routings represent the way products are made and are integrated Planning Configuration with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Production Plans from P3.4 Establish Production Plans

Source Return Requirements from P5.4 Establish and Communicate Return Plans Supply Chain Plans from P1.4 Establish Supply Chain Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. All sources of demand in the Source Return of a product or service. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Outputs: Product Requirements to P2.3 Balance Product Resources with Product Requirements

© Copyright 2006 Supply-Chain Council, Inc.

As a whole with constituent parts, all sources of demand for a product or service in the supply chain.

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June 2006

P2.2 Identify, Assess, And Aggregate Product Resources The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. Metrics (see Appendix A for metrics attributes): Cost to Identify, Assess, and Aggregate Product Resources Identify, Assess, and Aggregate Product Resources Cycle Time

The sum of the costs associated with identifying, assessing and aggregating product resources. The average time associated with the identifying, assessing, and aggregating product resource availability

Best Practices: Capacity and Supply Constraints Identified None identified During MPS Schedule Process Are Balanced Against Demand during the Planning Cycle Categorize 100% of Total Inventory (Active, None identified Usable, Excess, Obsolete) for Appropriate Action Inventory is Planned at the Part Level, None identified Based on Supply and Demand Variability Inventory Performance is Measured at the None identified Dollar and Unit Levels Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to Inventory Targets Are Reviewed and Adjusted Frequently automatically query inventory levels. Obsolete Inventory is Reviewed at the Part None identified Number Level

Inputs: Inventory Availability from S3.6 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability from S2.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Planning Data from EP.3 Manage PLAN Data Collection

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Availability of a product by location that is reserved, scheduled or available for sale, or the number of products ready to be or planned to be shipped to the specific customer or market at the specific time.

Product Availability from Source:

Product Inventory Target Levels from ES.4 Manage Product Inventory

The target for the total product inventory, including e.g. raw material, work in progress and finished goods.

Product On Order from S1.1 Schedule Product Deliveries Product On Order from S3.3 Schedule Product Deliveries Product On Order from S2.1 Schedule Product Deliveries

Product on order with a selected source.

© Copyright 2006 Supply-Chain Council, Inc.

Product on order with a selected source. Product on order with a selected source.

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Outputs: Product Sources to P2.3 Balance Product Resources with Product Requirements

© Copyright 2006 Supply-Chain Council, Inc.

As a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services.

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P2.3 Balance Product Resources with Product Requirements The process of developing a time-phased course of action that commits resources to meet requirements. Metrics (see Appendix A for metrics attributes): Balance Product Resources with Product Requirements Cycle Time Cost to Balance Product Resources with Product Requirements

The average time associated with balancing product resources and product requirements. The sum of the costs associated with balance of product resources with product requirements.

Best Practices: Suppliers Share Responsibility for Balancing None identified Supply and Demand through Joint Service Agreements

Inputs: Product Sources from P2.2 Identify, Assess, As a whole with constituent parts, all material and other resources used to And Aggregate Product Resources add value in the supply chain for a product or services. Product Requirements from P2.1 Identify, As a whole with constituent parts, all sources of demand for a product or Prioritize, and Aggregate Product service in the supply chain. Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs: Workflow to P2.4 Establish Sourcing Plans

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

P2.4 Establish Sourcing Plans The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements. Metrics (see Appendix A for metrics attributes): Cost to Establish Sourcing Plans Establish Sourcing Plans Cycle Time

The sum of the costs associated with establishing and communicating source plans. The average time associated with establishing and communicating source plans

Best Practices: Blanket Purchase Orders Cover Period None identified Requirements Digital Linkage (EDI, XML, Etc.) is Used to None identified Provide Real-Time Demand Information and Handle Routine Transactions

Inputs: Workflow from P2.3 Balance Product Resources with Product Requirements

Outputs: Sourcing Plans to DR1.4 Transfer Defective Product Sourcing Plans to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Sourcing Plans to D1.3 Reserve Inventory & Determine Delivery Date Sourcing Plans to ES.4 Manage Product Inventory Sourcing Plans to D2.3 Reserve Resources & Determine Delivery Date Sourcing Plans to ES.3 Maintain Source Data Sourcing Plans to S1.1 Schedule Product Deliveries Sourcing Plans to P1.2 Identify, Assess, and Aggregate Supply Chain Resources Sourcing Plans to P3.2 Identify, Assess, and Aggregate Production Resources Sourcing Plans to S3.3 Schedule Product Deliveries Sourcing Plans to P5.2 Identify, Assess, and Aggregate Return Resources Sourcing Plans to S3.1 Identify Sources of Supply Sourcing Plans to P5.1 Assess, and Aggregate Return Requirements Sourcing Plans to DR2.4 Transfer MRO Product Sourcing Plans to DR3.4 Transfer Excess Product Sourcing Plans to S2.1 Schedule Product Deliveries Sourcing Plans to D3.3 Enter Order, Commit Resources & Launch Program

© Copyright 2006 Supply-Chain Council, Inc.

An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

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P3 Plan Make The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements. The Category P3 includes four Level 3 Elements: P3.1 Identify, Prioritize, and Aggregate Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P3.3 Balance Production Resources with Production Requirements P3.4 Establish Production Plans

The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Best Practices: Multi-plant supply/demand planning and execution Distinct and Consistent Linkages Exist to Ensure that Disruptions and Opportunities in Production Are Quickly and Accurately Communicated and Responses Made

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

P3.1 Identify, Prioritize, and Aggregate Production Requirements The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. Metrics (see Appendix A for metrics attributes): Cost to Identify, Prioritize, and Aggregate Production Requirements Forecast Accuracy

The sum of the costs associated with identifying, assessing and aggregating production requirements Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Identify, Prioritize, and Aggregate Production Requirements Cycle Time

The average time associated with the identifying, prioritizing, and aggregating production requirements

Best Practices: Digital linkage to supplier quoting, planning, configuration and customer Consideration of Supplier’s Material Availability in Company’s Supply Resources service applications (Including Supplier’s Production Plans & Capability, Inventory, and Delivery Plans)

Inputs: Bill of Materials from EP.7 Manage Planning The Bill of Materials is a structured list of all the materials or parts needed Configuration to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Item Master from EP.7 Manage Planning A record of specific information for each product, which defines the system Configuration parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Order Signal from D3.3 Enter Order, Commit Reserved inventory and/or planned capacity and delivery date for a specific Resources & Launch Program order. Order Signal from D2.3 Reserve Resources Reserved inventory and/or planned capacity and delivery date for a specific & Determine Delivery Date order. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product Routings from EP.7 Manage Product routings represent the way products are made and are integrated Planning Configuration with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Return Production Requirements from P5.4 As a whole with constituent parts, all sources of demand in the creation of Establish and Communicate Return Plans a product or service. Supply Chain Plans from P1.4 Establish Courses of action over specified time periods that represent a projected Supply Chain Plans appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Outputs: Return Production Requirements to P3.3 Balance Production Resources with Production Requirements

© Copyright 2006 Supply-Chain Council, Inc.

As a whole with constituent parts, all sources of demand in the creation of a product or service.

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P3.2 Identify, Assess, and Aggregate Production Resources The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. Metrics (see Appendix A for metrics attributes): Cost to Identify, Assess, and Aggregate Production Resources Identify, Assess, and Aggregate Production Resources Cycle Time

The sum of the costs associated with identifying, assessing and aggregating production resources. The average time associated with the identifying, assessing, and aggregating production resource availability

Best Practices: Inventory Targets Are Reviewed and Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to Adjusted Frequently automatically query inventory levels. Obsolete Inventory is Reviewed at the Part None identified Number Level

Inputs: Equipment and Facilities Replacement and Disposition Plans from EM.5 Manage Equipment and Facilities

Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Inventory Availability from M3.3 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability from M1.2 Issue Material

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability from M2.2 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Planning Data from EP.3 Manage PLAN Data Collection Production Schedule from M3.2 Schedule Production Activities

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs: Production Resources to P3.3 Balance Production Resources with Production Requirements

© Copyright 2006 Supply-Chain Council, Inc.

As a whole with constituent parts, all things that add value in the creation of a product or performance of a service.

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P3.3 Balance Production Resources with Production Requirements The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. Metrics (see Appendix A for metrics attributes): Balance Production Resources with Product Creation Requirements Cycle Time Cost to Balance Production Resources with Product Creation Requirements

The average time associated with balancing production resources with production creation requirements. The sum of the costs associated with balance of production resources with product creation requirements.

Best Practices: Inventory Targets Are Reviewed and Adjusted Frequently

Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query inventory levels.

Inputs: Return Production Requirements from P3.1 As a whole with constituent parts, all sources of demand in the creation of Identify, Prioritize, and Aggregate Production a product or service. Requirements Production Resources from P3.2 Identify, As a whole with constituent parts, all things that add value in the creation of a product or performance of a service. Assess, and Aggregate Production Resources Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs: Workflow to P3.4 Establish Production Plans

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P3.4 Establish Production Plans The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements. Metrics (see Appendix A for metrics attributes): Cost to Establish Production Plans Establish Production Plans Cycle Time

The sum of the costs associated with establishing and communicating production plans. The average time associated with establishing and communicating production plans

Best Practices: Unplanned Orders Are Accepted and Scheduled Only When There is No Detrimental Impact on Overall Product Delivery Plan

Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query production capacity and ATP and schedule unplanned orders.

Inputs: Workflow from P3.3 Balance Production Resources with Production Requirements

Outputs: Production Plans to EM.5 Manage Equipment and Facilities

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to EM.1 Manage Production Rules

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M3.2 Schedule Production Activities

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Production Plans to P2.1 Identify, Prioritize, A master production plan used to allocate capacity among manufacturing and Aggregate Product Requirements resources and schedule finite manufacturing activities or executing the performance of a service. Production Plans to D2.3 Reserve Resources & Determine Delivery Date

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to D3.3 Enter Order, Commit Resources & Launch Program

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

© Copyright 2006 Supply-Chain Council, Inc.

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Production Plans to D1.3 Reserve Inventory A master production plan used to allocate capacity among manufacturing & Determine Delivery Date resources and schedule finite manufacturing activities or executing the performance of a service. Production Plans to EM.2 Manage Production Performance

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M2.1 Schedule Production Activities

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to P5.2 Identify, Assess, and Aggregate Return Resources

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M2.5 Stage Finished Product

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to P1.2 Identify, Assess, and Aggregate Supply Chain Resources

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M3.6 Stage Finished Product

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to P5.1 Assess, and Aggregate Return Requirements

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M1.1 Schedule Production Activities

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans to M1.5 Stage Product

Production Plan includes production capability. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

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P4 Plan Deliver The development and establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. The Category P4 includes four Level 3 Elements: P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P4.4 Establish Delivery Plans

The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Cost to Plan Deliver Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Total Deliver Costs

The sum of the costs associated with planning the delivery of product. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the Deliver processes.

Best Practices: Distinct and Consistent Linkages Exist to Bi-directional Digital Links (XML, EDI, etc) or Internet procurement Ensure Disruptions and Opportunities in networks to customer service linkage Material Resources Are Quickly and Accurately Communicated and Acted Upon Proactive Education of Customers to Set None identified Expectations and Encourage Close Working Relationships (Knowledge of Long-Lead Items, Visibility to Supply Resources, Agreement on Levels of Flexibility)

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P4.1 Identify, Prioritize, and Aggregate Delivery Requirements The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. Metrics (see Appendix A for metrics attributes): Cost to Identify, Prioritize, and Aggregate Delivery Requirements Forecast Accuracy

The sum of the costs associated with identifying, assessing and aggregating deliver requirements Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Identify, Prioritize, and Aggregate Delivery Requirements Cycle Time

The average time associated with the identifying, prioritizing, and aggregating delivery requirements

Best Practices: Customer Relationship and Digital Linkages Tightly integrated supply chain or demand planning with point of sale and (XML, EDI, Etc.) Provide Accurate Visibility customer inventory systems into Actual Demand via Customer Forecasts, Product Plans, Production Plans, and Inventory Positions Electronic Matching Between POS Data and Integrated Software Systems Store Inventory (Shelves and Back Room) Eliminate “Special Deals“ Sales to Reduce None identified Returns and Improve Forecast Accuracy (Reduces Uncertainty, Lowers Safety Stock Requirements, Cheaper to Administer) Forecasts Are Replaced with Actual B2B Integration and Application Server Systems Customer Replenishment Signals and Orders Where Possible Ideal Stock Position Based on Days/Weeks Pilot by Wal-Mart. MIT of Supply Matching Shelf Stock to Expectations A software based system that corrects shelf inventory levels based on actual product present (possible RFID solution). Identifies stock-outs from shrinkage or item misplacement. Planogram Flexibility for None identified Seasonal/Promotional changes RFID and Other Tagging POG software/field force Unplanned Orders Are Accepted and Digital Linkages using XML standards (Rosettanet, eBXML, OAGI) to Scheduled Only When There is No automatically query production capacity and ATP and schedule unplanned Detrimental Impact on Overall Product orders. Delivery Plan Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Actual Shrink from Source: Company

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Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc.

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DC/Vendor Lead Time from Source: Company

The amount of time that normally elapses between the time an order is received and the time the order is shipped.

DC/Vendor Transit Time from Source: Company

A standard allowance that is assumed on any given order for the movement of items from one operation to the next.

Deliver Return Requirements from P5.4 Establish and Communicate Return Plans

A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing)

EOQ/ESQ’s from Source: Company

Economic Order Quantity - Result of a calculation that determines the most cost effective to quantity to order or produce. Economic Shipping Quantity - Result of a calculation that determines the most cost effective quantity to ship.

Item Master from EP.7 Manage Planning Configuration Markdown Plans from Source: Company

A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Part of the Market Plan, which establishes an allowance or deduction, granted by the seller to the buyer, usually when the buyer meets certain stipulated conditions that reduce the price of the products purchased. For example, based upon paying early, buying in quantity, etc.

Merchandise Category/Classification from Source: Company

The categorization of goods based upon the range of specifications met during the manufacturing process.

Order Backlog from D1.3 Reserve Inventory & Determine Delivery Date Order Backlog from D2.3 Reserve Resources & Determine Delivery Date Order Backlog from D3.3 Enter Order, Commit Resources & Launch Program Planning Data from EP.3 Manage PLAN Data Collection

Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment.

Point of Sale Data (Daily) from D4.6 Checkout Product Routings from EP.7 Manage Planning Configuration

Product/Category Lifecycle from Source: Company Promotion/Event Plans from Source: Company

Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. The time from initial research and development to the time at which the sales and support of the product to customers are withdrawn. Promotion activities - other than advertising, publicity, and personal selling - that stimulate, interest, trial or purchase by final customers or others in the marketing channel.

Service Levels from EP.1 Manage Business Performance targets in service related measures (i.e. delivery Rules for PLAN Processes performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy. Stock-out History from Source: Company History of a lack of materials, components, or finished goods that are ordered. Store Shelf Inventory Counts from D4.4 Stock Shelf

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The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis.

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Supply Chain Plans from P1.4 Establish Supply Chain Plans

Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Year-to-Year for Like SKU/Subclass from Source: Company

The sales or demand history that is analogous to the present situation for similar products, a SKU / Subclass.

Outputs: Delivery Requirements to P4.3 Balance As a whole with constituent parts, all sources of demand in Delivery Resources and Capabilities with the delivery of a product or service. Delivery Requirements Item Stocking Requirements to D4.2 Receive The activities and techniques of determining the desired Product at Store levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts.

© Copyright 2006 Supply-Chain Council, Inc.

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P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. Metrics (see Appendix A for metrics attributes): Cost to Identify, Assess, and Aggregate Production Resources Forecast Accuracy

The sum of the costs associated with identifying, assessing and aggregating production resources. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Identify, Assess, and Aggregate Delivery Resources Cycle Time

The average time associated with the identifying, assessing, and aggregating delivery resource availability

Inputs: Deliver Return Requirements from P5.4 Establish and Communicate Return Plans

A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing)

Finish Goods Inventory Target Levels from ED.4 Manage Finished Goods Inventories

In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.

Inventory Availability/Delivery Date from D1.3 Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and Reserve Inventory & Determine Delivery operating supplies), and customer service (finished goods and spare Date parts). Determination of the time required from the receipt of the order until the item should be delivered. Inventory Availability/Delivery Date from D2.3 Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and Reserve Resources & Determine Delivery operating supplies), and customer service (finished goods and spare Date parts). Determination of the time required from the receipt of the order until the item should be delivered. Load Information from D1.5 Build Loads

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

Planning Data from EP.3 Manage PLAN Data Collection

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plans from P3.4 Establish Production Plans

Production Plan includes production capability. Resource Availability from D3.3 Enter Order, The capability of a system or resource to produce a quantity of output in a Commit Resources & Launch Program particular time period, or the available resources at a point in time able to generate an output. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

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Outputs: Delivery Resources and Capabilities to P4.3 As a whole with constituent parts, all things that add value in the delivery of Balance Delivery Resources and Capabilities a product. with Delivery Requirements

© Copyright 2006 Supply-Chain Council, Inc.

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P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. Metrics (see Appendix A for metrics attributes): Balance Delivery Resources with Delivery Requirements Cycle Time Cost to Balance Delivery Resources with Delivery Requirements

The average time associated with balancing deliver resources and deliver requirements. The sum of the costs associated with balance of delivery resources with delivery requirements.

Best Practices: Rules-based distribution planning system Demand Priorities Reflecting Strategic Customer Relationships as Business Policies Trading partner agreements Are Automatically Followed in Allocating Resources; First-In-First-Out (FIFO) is Utilized as the Default Scheduling Priority

Inputs: Delivery Resources and Capabilities from As a whole with constituent parts, all things that add value in the delivery of P4.2 Identify, Assess, and Aggregate a product. Delivery Resources and Capabilities Delivery Requirements from P4.1 Identify, As a whole with constituent parts, all sources of demand in the delivery of Prioritize, and Aggregate Delivery a product or service. Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed.

Outputs: Workflow to P4.4 Establish Delivery Plans

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P4.4 Establish Delivery Plans The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. Metrics (see Appendix A for metrics attributes): Cost to Establish Delivery Plans Establish Delivery Plans Cycle Time Fill Rate

The sum of the costs associated with establishing and communicating deliver plans. The average time associated with establishing and communicating deliver plans The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours

Best Practices: Plans that Violate Business Rules (e.g. Joint None identified Service Agreements) Are Addressed CrossFunctionally, Considering Total Business Impacts (Revenue, Cost, Quality, Customer Service, Etc.) Plans Which Do Not Violate Business Rules None identified Are Communicated Openly and CrossFunctionally for Execution Specific Changes to the Plan Are Agreed to None identified Cross-Functionally, According to Defined Business Rules None identified To Address Conditions which Cannot be Adequately Satisfied During the Current Planning Period, Each Functional Area Develops Prioritized Recommendations for the Subsequent Planning Period

Inputs: Workflow from P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements

Outputs: Delivery Plans to P1.2 Identify, Assess, and A plan for a course of action over specified time periods that involves a Aggregate Supply Chain Resources projected appropriation of supply resources to meet delivery requirements. Delivery Plans to D1.3 Reserve Inventory & A plan for a course of action over specified time periods that involves a Determine Delivery Date projected appropriation of supply resources to meet delivery requirements. Delivery Plans to P5.1 Assess, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Return Requirements Delivery Plans to P3.1 Identify, Prioritize, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Production Requirements Delivery Plans to P2.1 Identify, Prioritize, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Product Requirements Delivery Plans to D3.3 Enter Order, Commit A plan for a course of action over specified time periods that involves a Resources & Launch Program projected appropriation of supply resources to meet delivery requirements. Delivery Plans to P5.2 Identify, Assess, and A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Aggregate Return Resources Delivery Plans to M3.6 Stage Finished A plan for a course of action over specified time periods that involves a Product projected appropriation of supply resources to meet delivery requirements. Delivery Plans to D2.3 Reserve Resources & A plan for a course of action over specified time periods that involves a Determine Delivery Date projected appropriation of supply resources to meet delivery requirements. Delivery Plans to M1.5 Stage Product A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Delivery Plans to M2.5 Stage Finished A plan for a course of action over specified time periods that involves a Product projected appropriation of supply resources to meet delivery requirements. © Copyright 2006 Supply-Chain Council, Inc.

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Stocking Requirements to D4.1 Generate Stocking Schedule

© Copyright 2006 Supply-Chain Council, Inc.

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts.

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P5 Plan Return A strategic or tactical process to establish and adjust courses of action or tasks over specified time periods that represent a projected appropriation of return resources and assets to meet anticipated as well as unanticipated return requirements. The scope includes unplanned returns of sold merchandise as well as planned returns of “rotable” products that are refurbished for reissue to customers. The Category P5 includes four Level 3 Elements: P5.1 Assess, and Aggregate Return Requirements P5.2 Identify, Assess, and Aggregate Return Resources

The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. P5.3 Balance Return Resources with Return The process of developing courses of action that make feasible the Requirements commitment the appropriate return resources and or assets to satisfy return requirements. P5.4 Establish and Communicate Return The establishment and communication of courses of action over specified Plans time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements.

Metrics (see Appendix A for metrics attributes): Cost to Plan Return

The sum of the costs associated with planning the returning of product.

Order Fulfillment Cycle Time

The average actual cycle time consistently achieved to fulfill customer orders.

Best Practices: Planning and Forecasting Outsourced Return process Use Demand Planning

© Copyright 2006 Supply-Chain Council, Inc.

Collaborative planning and forecasting with RETURN outsourcing partners (3PL, reverse drop shippers, etc.) Demand Planning Systems to forecast returns, predict yield rates for reusable products or components, determine demand in a resale market, and project a revenue stream.

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P5.1 Assess, and Aggregate Return Requirements The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. Metrics (see Appendix A for metrics attributes): Cost to Identify, Prioritize, and Aggregate Return Requirements Identify, Prioritize, and Aggregate Return Requirements Cycle Time

The sum of the costs associated with identifying, assessing and aggregating return requirements. The average time associated with the identifying, prioritizing, and aggregating return requirements

Best Practices: Real Time Return Anticipation

Having real time data on return demand and including it in the plan and forecast. Requires a connection with customers, call centers or CRM system, possibly to the store level with retail returns. The return demand needs to be included in the production plan as soon as possible because upon repair it may be the next piece of serviceable inventory to satisfy demand. Use Historical Based Return Rate Forecasts None identified

Inputs: Actual Sales History from D2.2 Receive, Configure, Enter and Validate Order

Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.)

Actual Sales History from D3.3 Enter Order, Amount of past sales spanning any specified period of time (weeks, Commit Resources & Launch Program months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Actual Sales History from D1.2 Receive, Enter & Validate Order

Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.)

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Contractual Obligations from Source: Plan (Marketing, Sales, Legal)

A promise in a contract that binds one to a specific course of action. These promises maybe made by either the buyer of seller.

Delivery Plans from P4.4 Establish Delivery A plan for a course of action over specified time periods that involves a Plans projected appropriation of supply resources to meet delivery requirements. Historical Return Rates from SR1.3 Request A judgmental forecasting technique based upon the a return history that is Defective Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR3.1 Authorize Excess Product Return

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

Historical Return Rates from SR3.3 Request A judgmental forecasting technique based upon the a return history that is Excess Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR2.1 Authorize MRO Product Return © Copyright 2006 Supply-Chain Council, Inc.

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar 45

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product, and using the past pattern to predict future returns. Historical Return Rates from SR2.3 Request A judgmental forecasting technique based upon the a return history that is MRO Return Authorization analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Historical Return Rates from DR1.1 Authorize Defective Product Return

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

Item Master from EP.7 Manage Planning Configuration

A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Planning Data from EP.3 Manage PLAN Data Collection Product Routings from EP.7 Manage Planning Configuration

Production Plans from P3.4 Establish Production Plans

Production Plan includes production capability. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). An update to the aggregate Supply-Chain Forecasts of Demand by Product Family supporting the Market/Channel Plans. Corresponding Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by from Source: Plan (Marketing, Sales, Product Product Family supporting the Market/Channel Plans. Corresponding Management/Engineering) Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions from EP.5 An update to the expected cause and effect statements that are the base Manage Integrated Supply Chain Capital for the Revised Aggregate Forecast and Projections. These are reviewed Assets periodically with actual results to verify the linkage of actual cause and effect. Revised Business Assumptions from EP.9 An update to the expected cause and effect statements that are the base Align Supply Chain Unit Plan with Financial for the Revised Aggregate Forecast and Projections. These are reviewed Plan periodically with actual results to verify the linkage of actual cause and effect. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supply Chain Plans from P1.4 Establish Courses of action over specified time periods that represent a projected Supply Chain Plans appropriation of total supply-chain resources to meet total supply-chain demand requirements. Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Revised Aggregate Forecast and Projections from EP.9 Align Supply Chain Unit Plan with Financial Plan

Outputs: Return Requirements to P5.3 Balance As a whole with constituent parts, all sources of demand for the return of a Return Resources with Return Requirements product.

© Copyright 2006 Supply-Chain Council, Inc.

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P5.2 Identify, Assess, and Aggregate Return Resources The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. Metrics (see Appendix A for metrics attributes): Cost to Identify, Assess, and Aggregate Return Resources Identify, Assess, and Aggregate Return Resources Cycle Time

The sum of the costs associated with identifying, assessing and aggregating return resources. The average time associated with the identifying, assessing, and aggregating return resource availability

Best Practices: Allow Source Suppliers Full Visibility into the Shared supply chain forecasting and event management functionality with Current Return Situations and the Source suppliers Forecasted Return Activity Joint Service Agreements with Source Collaborative planning tools with the Source suppliers Suppliers to Share Responsibilities and Costs of Returns Rapid Reconfiguration of Return Capacity Use of RETURN tracking and projection systems and flexible partner agreements that allow the rapid addition of RETURN capacity to match unexpected demand.

Inputs: Budget Constraints from EP.9 Align Supply Chain Unit Plan with Financial Plan

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as pattern for and a control over future operations.

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Data About Return Capabilities from ER.3 Manage Return Data Collection

Information required in the process of integrating and maintaining the accuracy of return execution.

Delivery Plans from P4.4 Establish Delivery Plans Inventory Strategy from EP.4 Manage Integrated Supply Chain Inventory

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Make/Buy Decision from EP.5 Manage The output of the process used to determine whether a demand will be Integrated Supply Chain Capital Assets supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. MRO Product Return Capabilities from ER.2 See “Product Return Capabilities“ Manage Performance of Return Processes MRO Product Return Capabilities from ER.5 See “Product Return Capabilities“ Manage Return Capital Assets Outsource Plan from EP.6 Manage A plan that describes how a company will utilize third party business Integrated Supply Chain Transportation partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Planning Data from EP.3 Manage PLAN Execution information necessary to plan the balance of supply chain Data Collection resources to demand requirements at both the highest aggregate and lowest SKU planning levels. © Copyright 2006 Supply-Chain Council, Inc.

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Projected Internal and External Capacity An estimate of the amount of product or service a particular part of the from EP.6 Manage Integrated Supply Chain business (internal capacity) or a third party business partner (external Transportation capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Regulatory Requirements from EP.8 Manage Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). PLAN Regulatory Requirements and Compliance Return Inventory Targets from ER.4 Manage The goals and approach to the management of return inventories. Return Inventory Return Inventory Transfer Data from DR2.3 The process of receipt and verification of the returned item against the Receive MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.3 The process of receipt and verification of the returned item against the Receive Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.3 The process of receipt and verification of the returned item against the Receive Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Process Capabilities from EP.2 Manage Performance of Supply Chain

The capability of a system or resources to produce a quantity output in a particular time period

Return Process Workflow Definition and Definition and maintenance of the information flow about the Returns Policies from ER.7 Manage Return Network supply chain network for a group of similar or complimentary items through Configuration out their life cycle Return Regulatory Requirements from ER.8 Return requirements dictated by process standards set by external entities Manage Return Regulatory Requirements (i.e. government, trade officials, etc.). Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements from ER.6 Manage Return Transportation Revised Capital Plan from EP.5 Manage A revision to plan for capital expenditures necessitated by either changes Integrated Supply Chain Capital Assets in specific business plans or factors and assumptions affecting a business plan. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan.

Outputs: Return Resources to P5.3 Balance Return Resources with Return Requirements

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All resources that add value to, execute, or constrain the processes for the return of a product.

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P5.3 Balance Return Resources with Return Requirements The process of developing courses of action that make feasible the commitment the appropriate return resources and or assets to satisfy return requirements. Metrics (see Appendix A for metrics attributes): Balance Return Resources with Return Requirements Cycle Time Cost to Balance Return Resources with Return Requirements

The average time associated with balancing return resources and return requirements. The sum of the costs associated with balance of return resources with return requirements.

Best Practices: Advance Planning Engines Applied to Advanced math model “solvers“ that optimize / minimize constraints, Returns routing, restocking priorities and costs. Cost Accounting System to Determine the ABC costing system Best Return Process to Follow from a Cost of Business Perspective Dynamic Return Restocking Management Dynamic prioritization of restocking plans in order to rapidly re-sell products that are in demand thus reducing new inventory demand.

Inputs: Return Resources from P5.2 Identify, All resources that add value to, execute, or constrain the processes for the return of a product. Assess, and Aggregate Return Resources Return Requirements from P5.1 Assess, and As a whole with constituent parts, all sources of demand for the return of a product. Aggregate Return Requirements Planning Decision Policies from EP.1 Any company policies that affect how a planning process is defined, Manage Business Rules for PLAN Processes approved, and performed. Supply Chain Performance Improvement A plan that describes goals and objectives for a supply chain and the steps Plan from EP.2 Manage Performance of that will be taken to reach those goals and objectives from the current Supply Chain performance levels.

Outputs: Workflow to P5.4 Establish and Communicate Return Plans

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P5.4 Establish and Communicate Return Plans The establishment and communication of courses of action over specified time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements. Metrics (see Appendix A for metrics attributes): Cost to Establish and Communicate Return Plans Establish and Communicate Return Plans Cycle Time

The sum of the costs associated with establishing and communicating return plans. The average time associated with establishing and communicating return plans

Best Practices: Full Internal (And External If Source Suppliers Share in the Return Process Responsibilities) Visibility to Return Plans Rapid, Dynamic Reconfiguration of Return Process to Meet Demand

Intranet and Extranet communications tools The ability to reset and reconfigure the RETURN process capacity, routings, etc. by transmitting new requirements and directives using mathematical models, the Internet, outsourcing and flexible partnership agreements. Also requires integration with the CRM system for real time redirection of customer returns based upon cost and capacity.

Inputs: Workflow from P5.3 Balance Return Resources with Return Requirements

Outputs: Deliver Return Requirements to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Deliver Return Requirements to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Process Procedures to ER.2 Manage Performance of Return Processes

A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process.

Process Procedures to ER.8 Manage Return A planned series of actions or operations that advances returns from one Regulatory Requirements stage to another, or established procedures to manage and execute all activities in the process. Process Procedures to ER.1 Manage Business Rules for Return Processes

A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process.

Product Return Capabilities to DR1.1 Authorize Defective Product Return

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

Product Return Capabilities to DR2.1 Authorize MRO Product Return

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

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Product Return Capabilities to DR3.1 Authorize Excess Product Return

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

Return Plans to ER.4 Manage Return Inventory

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to SR2.2 Disposition MRO Product

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to ER.5 Manage Return Capital Courses of action over specified time periods that represent the projected Assets appropriation of required return resources and or assets to meet the return process requirements. Return Plans to ER.6 Manage Return Transportation

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to SR3.2 Disposition Excess Product

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to DR1.1 Authorize Defective Product Return

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to ER.7 Manage Return Network Configuration

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to DR3.1 Authorize Excess Product Return

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Plans to SR1.2 Disposition Defective Courses of action over specified time periods that represent the projected Product appropriation of required return resources and or assets to meet the return process requirements. Return Plans to DR2.1 Authorize MRO Product Return

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Production Requirements to P3.1 Identify, Prioritize, and Aggregate Production Requirements Return Rules and Policies to ER.1 Manage Business Rules for Return Processes

As a whole with constituent parts, all sources of demand in the creation of a product or service.

Source Return Requirements to P2.1 Identify, Prioritize, and Aggregate Product Requirements

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Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organization’s business strategy, goals and objectives. All sources of demand in the Source Return of a product or service.

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EP Enable PLAN A plan for the development and establishment of courses of action over specified time periods to appropriate delivery resources to meet projected delivery requirements. The plan contains necessary business requirements for information and relationships to effectively and efficiently PLAN the Supply Chain. The Category EP includes nine Level 3 Elements: EP.1 Manage Business Rules for PLAN Processes

The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. EP.2 Manage Performance of Supply Chain The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. EP.3 Manage PLAN Data Collection The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. EP.4 Manage Integrated Supply Chain The process of establishing total supply chain inventory strategy and Inventory planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. EP.5 Manage Integrated Supply Chain The process of defining capacity strategy (i.e. internal versus contract Capital Assets manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organization’s capital assets to operate the integrated supply chain. EP.6 Manage Integrated Supply Chain The process of defining an integrated supply chain transportation strategy Transportation and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. EP.7 Manage Planning Configuration The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and after-market support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. EP.8 Manage PLAN Regulatory The process of identifying and complying with regulatory documentation Requirements and Compliance and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. EP.9 Align Supply Chain Unit Plan with The process of revising the long-term supply chain capacity and resource Financial Plan plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions.

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EP.1 Manage Business Rules for PLAN Processes The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. Metrics (see Appendix A for metrics attributes): Cost to Manage Business Rules for PLAN Processes Manage Business Rules for PLAN Processes Cycle Time

The sum of the .Costs to Manage Business Rules for PLAN Processes The average time associated with managing plan business rules

Best Practices: Integrated Business and Supply-Chain Supply Chain performance dashboard capability. Planning Processes Where Cross-Functional Input is Leveraged to Set Business Rules

Inputs: Business Plan from Source: Company

Service Requirements from Source: Company Strategic Plan from Source: Company

A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. A set of minimum acceptable values that describe service requirements of a particular industry, channel, and/or customer segment. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance.

Outputs: Planning Decision Policies to P4.3 Balance Any company policies that affect how a planning process is defined, Delivery Resources and Capabilities with approved, and performed. Delivery Requirements Planning Decision Policies to P3.3 Balance Any company policies that affect how a planning process is defined, Production Resources with Production approved, and performed. Requirements Planning Decision Policies to P1.3 Balance Any company policies that affect how a planning process is defined, Supply Chain Resources with Supply Chain approved, and performed. Requirements Planning Decision Policies to P5.3 Balance Any company policies that affect how a planning process is defined, Return Resources with Return Requirements approved, and performed. Planning Decision Policies to P2.3 Balance Any company policies that affect how a planning process is defined, Product Resources with Product approved, and performed. Requirements Service Levels to P4.1 Identify, Prioritize, Performance targets in service related measures (i.e. delivery and Aggregate Delivery Requirements performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy.

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EP.2 Manage Performance of Supply Chain The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. Metrics (see Appendix A for metrics attributes): Cost to Manage Performance of Supply The sum of the costs associated with assessing supplier performance. Chain Manage Performance of Supply Chain Cycle The average time associated with managing the performance of return Time activities

Best Practices: Efficient and Effective Benchmarking None identified Process Leveraging Cross Industry Metrics and Definitions Reliable Continuous Improvement Process None identified and Methodology. Sound Project Management Process and None identified Methodology

Inputs: Continuous Improvement Process from Source: Company Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance Supply-Chain Performance Metrics from ES.4 Manage Product Inventory Supply-Chain Performance Metrics from ER.2 Manage Performance of Return Processes Supply-Chain Performance Metrics from EM.2 Manage Production Performance

A process that identifies opportunities for performance improvement and facilitates their realization through the use of metrics, process development methodologies/approaches, project management principles, and reporting tools that support strategic and business plans. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Outputs: Return Process Capabilities to P5.2 Identify, The capability of a system or resources to produce a quantity output in a Assess, and Aggregate Return Resources particular time period Supply Chain Performance Improvement Plan to P1.3 Balance Supply Chain Resources with Supply Chain Requirements Supply Chain Performance Improvement Plan to P5.3 Balance Return Resources with Return Requirements

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A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels. A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels.

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EP.3 Manage PLAN Data Collection The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): Cost to Manage PLAN Data Collection Manage PLAN Data Collection Cycle Time

The sum of the costs to Manage PLAN Data Collection. The average time associated with collecting plan data

Best Practices: Integrated Demand and Supply Planning Demand Planning, Supply Planning and especially the Supply Plan Execution Are no longer disconnected. All required planning and execution data is integrated and shared in between all functional areas within an organization. Single Data Source for Decision Support and Business Rules

Memory based planning systems provide one single data model and data mart (including the business rules) for the entire supply chain planning and execution process. Algorithms use the business rules as the driver for the planning engine.

A data warehouse/data mart is the source of all planning (master) data, business rules and transaction data. Analyzing tools enable the ongoing maintenance and improvement of the business rules based on actual data.

Inputs: Supply Chain Execution Data from Source: Company

Information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

Outputs: Planning Data to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Planning Data to P5.1 Assess, and Aggregate Return Requirements

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P1.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Supply Chain Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P1.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Supply Chain Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P2.2 Identify, Assess, And Execution information necessary to plan the balance of supply chain Aggregate Product Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P3.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Production Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P5.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Return Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P4.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Delivery Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Planning Data to P2.1 Identify, Prioritize, and Execution information necessary to plan the balance of supply chain Aggregate Product Requirements resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

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Planning Data to P3.2 Identify, Assess, and Execution information necessary to plan the balance of supply chain Aggregate Production Resources resources to demand requirements at both the highest aggregate and lowest SKU planning levels.

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EP.4 Manage Integrated Supply Chain Inventory The process of establishing total supply chain inventory strategy and planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Metrics (see Appendix A for metrics attributes): Cost to Manage Integrated Supply Chain Inventory Forecast Accuracy

The sum of the costs associated with managing the integrated supply chain inventory. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Manage Integrated Supply Chain Inventory The average time associated with managing integrated supply chain Cycle Time inventory

Best Practices: Capability to Run Multiple “Simulated“ Full- Supply Chain modeling capabilities, i.e. Advanced Planning Systems. Stream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios

Inputs: Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information from DR3.1 Authorize Excess on uncertain demand for the finished products Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information from DR1.1 Authorize Defective on uncertain demand for the finished products Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Information from DR2.1 Authorize MRO Product Return Planning Decision Policies from Source: Any company policies that affect how a planning process is defined, Company approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs: Inventory Capacity to EM.1 Manage Production Rules

Maximum rate of output for the inventory management and warehouse process

Inventory Capacity to EM.2 Manage Production Performance

Maximum rate of output for the inventory management and warehouse process

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Inventory Strategy to P5.2 Identify, Assess, and Aggregate Return Resources

Inventory Strategy to P1.3 Balance Supply Chain Resources with Supply Chain Requirements

The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

Manage Integrated Supply Chain Inventory Information to DR1.1 Authorize Defective Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products Information to DR3.1 Authorize Excess Product Return Manage Integrated Supply Chain Inventory Managing the flow of raw materials and products in a supply chain based Information to DR2.1 Authorize MRO Product on uncertain demand for the finished products Return

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EP.5 Manage Integrated Supply Chain Capital Assets The process of defining capacity strategy (i.e. internal versus contract manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organization’s capital assets to operate the integrated supply chain. Metrics (see Appendix A for metrics attributes): Cost to Manage Integrated Supply Chain Capital Assets Forecast Accuracy

The sum of the costs associated with managing integrated supply chain assets. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Manage Integrated Supply Chain Capital Assets Cycle Time

The average time associated with managing integrated supply chain capital assets

Best Practices: Alignment of Strategic and Business Plans with Long-Term Capacity and Resource Planning Capability to Run Multiple “Simulated“ FullStream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios Use of Cross Functional Teams to Execute the Process of Developing Long-Term Capacity and Resource Plans

None identified Supply Chain modeling capabilities, i.e. Advanced Planning Systems. None identified

Inputs: Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Planning Decision Policies from Source: Any company policies that affect how a planning process is Company defined, approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs: Make/Buy Decision to P5.2 Identify, Assess, The output of the process used to determine whether a and Aggregate Return Resources demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. Make/Buy Decision to P1.2 Identify, Assess, The output of the process used to determine whether a and Aggregate Supply Chain Resources demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally.

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Outsource Plan to P1.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Supply Chain Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Production Capacity to EM.2 Manage The highest, sustainable output rate which can be achieved Production Performance with the current product specifications, product mix, worker effort, plant, and equipment. Production Capacity to EM.1 Manage Production Rules

The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment.

Projected Internal and External Capacity

An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan.

Revised Business Assumptions to P5.1 Assess, and Aggregate Return Requirements Revised Business Assumptions to P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements Revised Capital Plan to P5.2 Identify, Assess, and Aggregate Return Resources Revised Capital Plan to P1.2 Identify, Assess, and Aggregate Supply Chain Resources

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EP.6 Manage Integrated Supply Chain Transportation The process of defining an integrated supply chain transportation strategy and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. Metrics (see Appendix A for metrics attributes): Cost to Manage Integrated Supply Chain Transportation Forecast Accuracy

The sum of the costs associated with managing integrated supply chain transportation. Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Manage Integrated Supply Chain Transportation Cycle Time

The average time associated with managing integrated supply chain transportation

Best Practices: Alignment of Strategic and Business Plans None identified with Long-Term Capacity and Resource Planning Capability to Run “Simulated“ Full-Stream Supply chain modeling and visualization system Supply/Demand Balancing for “What-If“ Scenarios Use of Cross Functional Teams to Execute None identified the Process of Developing Long-Term Capacity and Resource Plans

Inputs: Capacity Constraints from Source: Company A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. Planning Decision Policies from Source: Any company policies that affect how a planning process is Company defined, approved, and performed. Product Routings from Source: Company Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

Outputs: Outsource Plan to P1.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Supply Chain Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations.

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Outsource Plan to P5.2 Identify, Assess, and A plan that describes how a company will utilize third party business partners to provide products and services which Aggregate Return Resources the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. Projected Internal and External Capacity An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Projected Internal and External Capacity to An estimate of the amount of product or service a particular P5.2 Identify, Assess, and Aggregate Return part of the business (internal capacity) or a third party Resources business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Revised Capital Plan to P1.2 Identify, A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and Assess, and Aggregate Supply Chain assumptions affecting a business plan. Resources Transportation Capacity to EM.2 Manage The capability of a transportation system to perform it’s Production Performance function. Transportation Capacity to EM.1 Manage Production Rules

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The capability of a transportation system to perform it’s function.

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EP.7 Manage Planning Configuration The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and after-market support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. Metrics (see Appendix A for metrics attributes): Cost to Manage Planning Configuration Forecast Accuracy

The sum of the Cost to Manage Planning Configuration Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation is Forecast Sum - Sum of Variance/Sum of Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates.

Manage Planning Configuration Cycle Time The average time associated with managing the planning of the supply chain configuration

Best Practices: ABC Classification Incorporates leading practices such as Efficient Consumer Response, Collaborative Planning, Forecasting, and Replenishment, Vendor Managed Inventory, and real time point of consumption reporting. New Items Introductions Are part of the Sales and Operations Planning Process at the General Management Business Team Level SKU Rationalization Use of Platform Teams in the New Product Development Process

None identified None identified

None identified

None identified None identified

Outputs: Bill of Materials to P3.1 Identify, Prioritize, and Aggregate Production Requirements

The Bill of Materials is a structured list of all the materials or parts needed to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Bill of Materials to P2.1 Identify, Prioritize, The Bill of Materials is a structured list of all the materials or parts needed and Aggregate Product Requirements to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. Item Master to P5.1 Assess, and Aggregate A record of specific information for each product, which defines the system Return Requirements parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Item Master to P2.1 Identify, Prioritize, and A record of specific information for each product, which defines the system Aggregate Product Requirements parameters with which to effectively plan and execute using ERP (MRP, etc) systems. Item Master to P4.1 Identify, Prioritize, and A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, Aggregate Delivery Requirements etc) systems. Item Master to P3.1 Identify, Prioritize, and A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, Aggregate Production Requirements etc) systems.

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Product Routings to P2.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Product Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P3.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Production Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P5.1 Assess, and Product routings represent the way products are made and are integrated Aggregate Return Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. Product Routings to P4.1 Identify, Prioritize, Product routings represent the way products are made and are integrated and Aggregate Delivery Requirements with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules.

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EP.8 Manage PLAN Regulatory Requirements and Compliance The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. Metrics (see Appendix A for metrics attributes): Cost to Manage Plan Regulatory Requirements and Compliance Manage Plan Regulatory Requirements and Compliance Cycle Time

The sum of the costs to Manage Plan Regulatory Requirements and Compliance. The average time associated with managing the planning of regulatory requirements and compliance

Outputs: Regulatory Requirements to P5.2 Identify, Assess, and Aggregate Return Resources Regulatory Requirements to P1.2 Identify, Assess, and Aggregate Supply Chain Resources

© Copyright 2006 Supply-Chain Council, Inc.

Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.).

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EP.9 Align Supply Chain Unit Plan with Financial Plan The process of revising the long-term supply chain capacity and resource plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions. Metrics (see Appendix A for metrics attributes): Align Supply Chain Unit Plan with Financial Plan Cycle Time Cost to Align Supply Chain Unit Plan with Financial Plan

The average time associated with aligning the supply chain unit plan with the financial plan The sum of the costs associated with aligning supply chain performance plans with financial plans.

Best Practices: Re-Planning Process Exists in Multi-Levels Business to business Internet capability to share common data. of the Supply-Chain between Business Enterprises None identified Re-Planning Process Links the Supply Chain Operation with the Business Strategy and the Marketing Strategy Strategic Sales and Operations Planning None identified Process in Place and Managed at the Executive Level

Inputs: Business Plan from Source: Company

Strategic Plan from Source: Company

A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance.

Outputs: Budget Constraints to P5.2 Identify, Assess, A plan that includes an estimate of future costs and revenues related to and Aggregate Return Resources expected activities. The budget serves as pattern for and a control over future operations. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by Product to P5.1 Assess, and Aggregate Return Family supporting the Market/Channel Plans. Corresponding Projections, Requirements supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Aggregate Forecast and Projections An update to the aggregate Supply-Chain Forecasts of Demand by Product to P1.1 Identify, Prioritize, and Aggregate Family supporting the Market/Channel Plans. Corresponding Projections, Supply Chain Requirements supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand. Revised Business Assumptions to P5.1 An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed Assess, and Aggregate Return periodically with actual results to verify the linkage of actual cause and Requirements effect. Revised Business Assumptions to P1.1 An update to the expected cause and effect statements that are the base Identify, Prioritize, and Aggregate Supply for the Revised Aggregate Forecast and Projections. These are reviewed Chain Requirements periodically with actual results to verify the linkage of actual cause and effect.

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S1 Source Stocked Product The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services. The Category S1 includes five Level 3 Elements: S1.1 Schedule Product Deliveries

S1.2 Receive Product S1.3 Verify Product S1.4 Transfer Product

S1.5 Authorize Supplier Payment

Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

Metrics (see Appendix A for metrics attributes): Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Product Acquisition Costs

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

The sum of the costs associated with Source. Value of raw materials ÷ (COGS ÷ 365). The average actual cycle time consistently achieved to fulfill customer orders. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Best Practices: Alliance and Leverage Agreements Joint Service Agreements (JSA) Postponement

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None identified Collaborative Planning Systems Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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S1.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): % Schedules Changed within Supplier’s Lead Time Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time

The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices: Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs

Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs: Logistics Selection from ES.6 Manage Incoming Product

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M3.2 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supplier Performance from ES.2 Assess The results of measuring the actual supplier performance on cost, quality, Supplier Performance engineering, purchasing, and so on, based on an agreed set of measurements.

Outputs: Procurement Signal (Supplier) to Supplier

Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

Product On Order to P2.2 Identify, Assess, Product on order with a selected source. And Aggregate Product Resources Product On Order to ES.9 Manage Supplier Product on order with a selected source. Agreements Scheduled Receipts to D1.8 Receive Product Product due to arrive. from Source or Make Scheduled Receipts to M1.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to S1.2 Receive Product Product due to arrive. Scheduled Receipts to D4.2 Receive Product Product due to arrive. at Store Scheduled Receipts to M2.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to M3.2 Schedule Product due to arrive. Production Activities

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S1.2 Receive Product The process and associated activities of receiving product to contract requirements. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): % Orders/ Lines Processed Complete % Orders/ Lines Received On-Time To Demand Requirement % Orders/ Lines Received with Correct Shipping Documents Cost to Receive Product Receiving Product Cycle Time

The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices: Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Carrier Agreement

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use - Electronic Tag tracking to Point of Use (POU) destination (Dock to Line or End Destination) Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Defective Products from DR1.4 Transfer Defective Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Excess Products from DR3.4 Transfer Excess Product MRO Products from DR2.4 Transfer MRO Product

Material in excess of the current requirements.

Product from Source: Supplier

The end object of a transformation process that includes physical objects, information or services.

Scheduled Receipts from S1.1 Schedule Product Deliveries

Product due to arrive.

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Outputs:

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Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria. Receipt Verification to ES.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.1 Manage Sourcing Business Rules

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to S1.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ED.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.6 Manage Incoming Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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S1.3 Verify Product The process and actions required determining product conformance to requirements and criteria. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): % Orders/ Lines Received Defect Free Cost to Verify Product Verify Product Cycle Time

The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices: Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Electronic Tag tracking to Point of Use (POU) destination Supplier Replaces Defective Material at Electronic Tag tracking to Point of Use (POU) destination Customer’s Facility with Good Product as Required

Inputs: Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs: Receipt Verification to S1.4 Transfer Product Acknowledgement that the product received conforms to specified requirements and criteria. Receipt Verification to ES.1 Manage Sourcing Business Rules

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria.

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S1.4 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. Metrics (see Appendix A for metrics attributes): % Product Transferred On-Time to Demand The number of product orders / lines that are transferred on-time to Requirement demand requirements divided by the total orders / lines transferred in the measurement period % Product Transferred without Transaction The number of transactions processed without error divided by the total Errors transactions processed in the measurement period Cost to Transfer Product The sum of the costs associated with transferring product to Make or Deliver processes Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Transfer Product Cycle Time The average time associated transfer until product is moved to the next process.

Best Practices: Capability Transfer to Organization Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time

None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs: Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

Product Inventory Location from ES.4 Manage Product Inventory

The physical storage location where product inventory is held in stock prior to use or shipment.

Receipt Verification from S1.3 Verify Product Acknowledgement that the product received conforms to specified requirements and criteria. Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date

Any signal that indicates when to produce or transport Items in a pull replenishment system.

WIP Inventory Location from EM.6 Manage Transportation

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

Outputs: Daily Replenishment Requirements to D4.1 Resources needed to meet Item stocking schedule requirement. Generate Stocking Schedule © Copyright 2006 Supply-Chain Council, Inc.

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Existing Inventory Data to ES.4 Manage Product Inventory

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

Inventory Availability to P2.2 Identify, Those stocks or items on hand used to support production (raw materials Assess, And Aggregate Product Resources and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to ES.4 Manage Product Inventory

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D4.2 Receive Product at Store

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D1.8 Receive Product from Source or Make

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D1.3 Reserve Inventory & Determine Delivery Date

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to M1.2 Issue Material Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to M2.2 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Loaded Retail Cart or Pallet to D4.4 Stock Shelf Transferred Product to S1.5 Authorize Supplier Payment

Customer selected retail finished goods transferred to the point of sale.

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Product being transferred to the appropriate stocking location within the supply chain.

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S1.5 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment

The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices: Pay on Receipt

Electronic Invoice Processing

Inputs: Payment Terms from ES.9 Manage Supplier The process of authorizing payments and paying suppliers for product or Agreements services. This process includes invoice collection, invoice matching and the issuance of checks. Transferred Product from S1.4 Transfer Product

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Product being transferred to the appropriate stocking location within the supply chain.

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S2 Source Make-to-Order Product The procurement and delivery of product that is built to a specific design or configured based on the requirements of a particular customer order. The Category S2 includes five Level 3 Elements: S2.1 Schedule Product Deliveries

S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product

S2.5 Authorize Supplier Payment

Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

Metrics (see Appendix A for metrics attributes): Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Perfect Order Fulfillment

Product Acquisition Costs

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

The sum of the costs associated with Source. Value of raw materials ÷ (COGS ÷ 365). The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Best Practices: Automated Statistical Process Control (SPC)None identified Joint Service Agreements (JSA) Collaborative Planning Systems Postponement Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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S2.1 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. Metrics (see Appendix A for metrics attributes): % Schedules Changed within Supplier’s Lead Time Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time

The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices: Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs

Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs: Logistics Selection from ES.6 Manage Incoming Product

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

Production Schedule from M3.2 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from D2.3 Reserve Resources & Determine Delivery Date

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Source Execution Data from M2.2 Issue Sourced/In-Process Product

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Supplier Performance from ES.2 Assess The results of measuring the actual supplier performance on cost, quality, Supplier Performance engineering, purchasing, and so on, based on an agreed set of measurements.

Outputs: Procurement Signal (Supplier) to Supplier

Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

Product On Order to P2.2 Identify, Assess, Product on order with a selected source. And Aggregate Product Resources Product On Order to ES.9 Manage Supplier Product on order with a selected source. Agreements Scheduled Receipts to S2.2 Receive Product Product due to arrive. Scheduled Receipts to M1.1 Schedule Product due to arrive. Production Activities Scheduled Receipts to M3.2 Schedule Product due to arrive. Production Activities Scheduled Receipts to M2.1 Schedule Product due to arrive. Production Activities

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S2.2 Receive Product The process and associated activities of receiving product to contract requirements. Metrics (see Appendix A for metrics attributes): % Orders/ Lines Processed Complete % Orders/ Lines Received On-Time To Demand Requirement % Orders/ Lines Received with Correct Shipping Documents Cost to Receive Product Receiving Product Cycle Time

The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices: Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy Carrier Agreement

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use - Electronic Tag tracking to Point of Use (POU) destination (Dock to Line or End Destination) Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Defective Products from DR1.4 Transfer Defective Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Excess Products from DR3.4 Transfer Excess Product MRO Products from DR2.4 Transfer MRO Product

Material in excess of the current requirements.

Product from Source: Supplier

The end object of a transformation process that includes physical objects, information or services.

Scheduled Receipts from S2.1 Schedule Product Deliveries

Product due to arrive.

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Outputs: Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria.

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Receipt Verification to ES.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.6 Manage Incoming Product

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ES.1 Manage Sourcing Business Rules

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to ED.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

Receipt Verification to S2.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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S2.3 Verify Product The process and actions required determining product conformance to requirements and criteria. Metrics (see Appendix A for metrics attributes): % Orders/ Lines Received Defect Free Cost to Verify Product Verify Product Cycle Time

The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices: Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Skip lot/sampling inspection logic Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Electronic Tag tracking to Point of Use (POU) destination Electronic Tag tracking to Point of Use (POU) destination Supplier Replaces Defective Material at Customer’s Facility with Good Product as Required

Inputs: Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs: Receipt Verification to S2.4 Transfer Product Acknowledgement that the product received conforms to specified requirements and criteria. Receipt Verification to ES.2 Assess Supplier Acknowledgement that the product received conforms to specified Performance requirements and criteria. Receipt Verification to ES.1 Manage Sourcing Business Rules

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Acknowledgement that the product received conforms to specified requirements and criteria.

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S2.4 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. Metrics (see Appendix A for metrics attributes): % Product Transferred On-Time to Demand The number of product orders / lines that are transferred on-time to Requirement demand requirements divided by the total orders / lines transferred in the measurement period % Product Transferred without Transaction The number of transactions processed without error divided by the total Errors transactions processed in the measurement period Cost to Transfer Product The sum of the costs associated with transferring product to Make or Deliver processes Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Transfer Product Cycle Time The average time associated transfer until product is moved to the next process.

Best Practices: Capability Transfer to Customer Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time

None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs: Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

Product Inventory Location from ES.4 Manage Product Inventory

The physical storage location where product inventory is held in stock prior to use or shipment.

Receipt Verification from S2.3 Verify Product Acknowledgement that the product received conforms to specified requirements and criteria. Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

WIP Inventory Location from EM.6 Manage Transportation

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

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Outputs: Existing Inventory Data to ES.4 Manage Product Inventory

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

Inventory Availability to M2.2 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D2.3 Reserve Resources & Determine Delivery Date

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to D2.9 Pick Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to M1.2 Issue Material Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Inventory Availability to ES.4 Manage Product Inventory

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Inventory Availability to P2.2 Identify, Those stocks or items on hand used to support production (raw materials Assess, And Aggregate Product Resources and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Transferred Product to S2.5 Authorize Supplier Payment

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Product being tranferred to the appropriate stocking location within the supply chain.

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S2.5 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Metrics (see Appendix A for metrics attributes): Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment

The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices: Pay on Receipt

Electronic Invoice Processing

Inputs: Payment Terms from ES.9 Manage Supplier The process of authorizing payments and paying suppliers for product or Agreements services. This process includes invoice collection, invoice matching and the issuance of checks. Transferred Product from S2.4 Transfer Product

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Product being tranferred to the appropriate stocking location within the supply chain.

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S3 Source Engineer-to-Order Product The negotiation, procurement and delivery of engineer-to-order assemblies or specialized product or services that are designed and built based on the requirements or specifications of a particular customer order or contract. The Category S3 includes seven Level 3 Elements: S3.1 Identify Sources of Supply

The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. S3.2 Select Final Supplier(s) and Negotiate The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. S3.3 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. S3.4 Receive Product The process and associated activities of receiving product to contract requirements. S3.5 Verify Product The process and actions required determining product conformance to requirements and criteria. S3.6 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. S3.7 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

Metrics (see Appendix A for metrics attributes): Cost to Source Inventory Days of Supply (Raw Material ) Order Fulfillment Cycle Time Product Acquisition Costs

Return on Supply Chain Fixed Assets

Return on Working Capital

Source Cycle Time

The sum of the costs associated with Source. Value of raw materials ÷ (COGS ÷ 365). The average actual cycle time consistently achieved to fulfill customer orders. Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Processes

Best Practices: Joint Service Agreements (JSA)

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Collaborative Planning Systems

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S3.1 Identify Sources of Supply The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. Metrics (see Appendix A for metrics attributes): . .

Cost to Identify Sources of Supply Identify Sources of Supply Cycle Time

The sum of the costs associated with identifying sources of supply. The average time associated with the identification of sources of supply

Best Practices: .

. . .

.

Concurrent Engineering is Used to Tightly Link Sourcing into the Product Development Process Make/Buy Decision Process (Outsourcing vs. In Sourcing) Electronic Data Interchange is Used to Send Technical Information to and from Potential Suppliers On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs Product Data Management & Electronic Document Management Are Used to Manage Technical Documents and Requirements for Engineer to Order Product Supplier Development Programs Are Used to Get Local Suppliers to Invest in Developing New Technologies

None identified

None identified None identified None identified

None identified

Inputs: .

Business Rules for Source Processes from ES.1 Manage Sourcing Business Rules

.

Current Inventory Source Data from ES.3 Maintain Source Data

.

ETO Spec or Design from Source: Company

A clear, complete and accurate statement or drawing of the technical requirements of a material, item or service, and of the procedure to determine if the requirements are met.

.

Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Data from ES.7 Manage Supplier Network

An aggregate material requirements plan used to schedule material deliveries to meet production plan. Data or information about the supplier. This data can be organizational, product, information, financial. Structured supplier data is needed to set up and implement ERP or similar systems.

.

Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

Outputs: . .

Workflow to S3.2 Select Final Supplier(s) and Negotiate ETO Request for Proposal to Supplier A document used to solicit vendor responses when the functional requirements and features are known.

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S3.2 Select Final Supplier(s) and Negotiate The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. Metrics (see Appendix A for metrics attributes): . .

Cost to Select Final Supplier(s) and Negotiate Select Final Supplier(s) and Negotiate Cycle Time

The sum of the costs associated with selecting final suppliers and negotiating supplier agreements. The average time associated with scheduling the shipment of the return of MRO product

Best Practices: .

.

. . . .

Electronic Data Interchange Can Be Used To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network On Line Document Management and Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs On-Line Availability to Supplier Financials to Determine Potential Supplier Viability to be Added to Supplier Network Supplier Certification Programs Can Reduce the Cycle Time for Certifying Existing Suppliers to Provide New Technologies Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data

Electronic Data Interchange

ERP

None identified Internet web sites for financial evaluation None identified None identified

Inputs: . .

.

Workflow from S3.1 Identify Sources of Supply Business Rules for Source Processes from Rules that are translated into guidelines and policies for conducting ES.1 Manage Sourcing Business Rules business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Current Inventory Source Data from ES.3 Data which will provide measurement of actual supplier Maintain Source Data performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

.

ETO Proposal from Source: Supplier

A proposal that may contain final drawings, specifications, formulas, part programs, etc., that describe requirements of a product

.

Supplier Data from ES.7 Manage Supplier Network

Data or information about the supplier. This data can be organizational, product, information, financial. Structured supplier data is needed to set up and implement ERP or similar systems.

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Outputs: .

Procurement Signal (Supplier) to Supplier

Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

.

Supplier Agreement to ES.9 Manage Supplier Agreements

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

.

Supplier Agreement to EM.6 Manage Transportation

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

.

Supplier Agreement to S3.3 Schedule Product Deliveries

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

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S3.3 Schedule Product Deliveries Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. Metrics (see Appendix A for metrics attributes): .

% Schedules Changed within Supplier’s Lead Time

.

Average Days per Engineering Change

.

Average Days per Schedule Change

.

Average Release Cycle of Changes

. .

Cost to Schedule Product Deliveries Schedule Product Deliveries Cycle Time

The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period # of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The sum of the costs associated with scheduling product deliveries. The average time associated with scheduling the shipment of the return of MRO product

Best Practices: . . . .

Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product Utilize EDI Transactions to Reduce Cycle Time and Costs

Blanket order support with scheduling interfaces to external supplier systems Consignment inventory management Electronic Kanban support EDI interface for 830, 850, 856 & 862 transactions

Inputs: .

Logistics Selection from ES.6 Manage Incoming Product

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule from M3.2 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from D3.3 Enter Order, Commit Resources & Launch Program Return Inventory Transfer Data from DR3.4

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

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The process of receipt and verification of the returned item against 90

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Transfer Excess Product

the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data from DR1.4 Transfer Defective Product

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data from DR2.4 Transfer MRO Product

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate

An aggregate material requirements plan used to schedule material deliveries to meet production plan. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

Supplier Performance from ES.2 Assess Supplier Performance

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

.

.

Outputs: .

Procurement Signal (Supplier) to Supplier

Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier.

.

Product On Order to ES.9 Manage Supplier Agreements Product On Order to P2.2 Identify, Assess, And Aggregate Product Resources Scheduled Receipts to M1.1 Schedule Production Activities Scheduled Receipts to M3.2 Schedule Production Activities Scheduled Receipts to M2.1 Schedule Production Activities Scheduled Receipts to S3.4 Receive Product

Product on order with a selected source.

. . . . .

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Product on order with a selected source. Product due to arrive. Product due to arrive. Product due to arrive. Product due to arrive.

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S3.4 Receive Product The process and associated activities of receiving product to contract requirements. Metrics (see Appendix A for metrics attributes): .

% Orders/ Lines Processed Complete

.

% Orders/ Lines Received On-Time To Demand Requirement

.

% Orders/ Lines Received with Correct Shipping Documents

. .

Cost to Receive Product Receiving Product Cycle Time

The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period The sum of the costs associated with receiving product. Total elapsed time from time product is received to time it is passed to next process

Best Practices: .

Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

.

Carrier Agreement

.

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use (Dock to Line or End Destination) Vendor Managed Inventory

. . .

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. None identified Skip lot/sampling inspection logic Electronic Tag tracking to Point of Use (POU) destination VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: .

Product from Source: Supplier

The end object of a transformation process that includes physical objects, information or services.

.

Scheduled Receipts from S3.3 Schedule Product Deliveries

Product due to arrive.

Outputs: .

Receipt Verification to ES.2 Assess Supplier Performance

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ES.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ES.1 Manage Sourcing Business Rules

Acknowledgement that the product received conforms to specified requirements and criteria.

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.

Receipt Verification to S3.5 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ED.8 Manage Import/Export Requirements

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ES.6 Manage Incoming Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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S3.5 Verify Product The process and actions required determining product conformance to requirements and criteria. Metrics (see Appendix A for metrics attributes): .

% Orders/ Lines Received Defect Free

. .

Cost to Verify Product Verify Product Cycle Time

The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The sum of the costs associated with raw material verification. The average time associated with verifying raw material product

Best Practices: .

Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

.

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection Supplier Delivers Directly to Point of Use Supplier Replaces Defective Material at Customer’s Facility with Good Product as Required

. . .

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID None identified Skip lot/sampling inspection logic Electronic Tag tracking to Point of Use (POU) destination Electronic Tag tracking to Point of Use (POU) destination

Inputs: .

Receipt Verification from S3.4 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

Outputs: .

Receipt Verification to S3.6 Transfer Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ES.2 Assess Supplier Performance

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification to ES.1 Manage Sourcing Business Rules

Acknowledgement that the product received conforms to specified requirements and criteria.

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S3.6 Transfer Product The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. Metrics (see Appendix A for metrics attributes): .

% Product Transferred On-Time to Demand Requirement

. .

% Product Transferred without Transaction Errors Cost to Transfer Product

.

Inventory Days of Supply

.

Transfer Product Cycle Time

The number of product orders / lines that are transferred on-time to demand requirements divided by the total orders / lines transferred in the measurement period The number of transactions processed without error divided by the total transactions processed in the measurement period The sum of the costs associated with transferring product to Make or Deliver processes Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated transfer until product is moved to the next process.

Best Practices: . .

Capability Transfer to Organization Drive Deliveries Directly to Stock or PointOf-Use in Manufacturing to Reduce Costs and Cycle Time

None identified Pay on receipt Specify delivery location and time (to the minute) Specify delivery sequence

Inputs: .

Finished Goods Inventory Location from ED.4 Manage Finished Goods Inventories

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

.

Product Inventory Location from ES.4 Manage Product Inventory

The physical storage location where product inventory is held in stock prior to use or shipment.

.

Receipt Verification from S3.5 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Replenishment Signal from M3.3 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from M2.2 Issue Sourced/In-Process Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from D1.3 Reserve Inventory & Determine Delivery Date

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal from M1.2 Issue Material

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

WIP Inventory Location from EM.6 Manage Transportation

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

Outputs:

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.

Existing Inventory Data to ES.4 Manage Product Inventory

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

.

Inventory Availability to D3.9 Pick Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to P2.2 Identify, Assess, And Aggregate Product Resources

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to M2.2 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to M1.2 Issue Material

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to M3.3 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Transferred Product to S3.7 Authorize Supplier Payment

Product being tranferred to the appropriate stocking location within the supply chain.

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S3.7 Authorize Supplier Payment The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Metrics (see Appendix A for metrics attributes): . .

Authorize Supplier Payment Cycle Time Cost to Authorize Supplier Payment

The average time associated with authorizing payment to suppliers. The sum of the costs associated with authorizing supplier payment.

Best Practices: .

Pay on Receipt

Electronic Invoice Processing

Inputs: .

Payment Terms from ES.9 Manage Supplier Agreements

The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

.

Transferred Product from S3.6 Transfer Product

Product being tranferred to the appropriate stocking location within the supply chain.

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ES Enable SOURCE Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ES includes nine Level 3 Elements: ES.1 Manage Sourcing Business Rules

ES.2 Assess Supplier Performance

ES.3 Maintain Source Data

ES.4 Manage Product Inventory

ES.5 Manage Capital Assets ES.6 Manage Incoming Product

ES.7 Manage Supplier Network

ES.8 Manage Import/Export Requirements ES.9 Manage Supplier Agreements

© Copyright 2006 Supply-Chain Council, Inc.

The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time. The process of acquiring, maintaining and dispositioning an organization’s located at a supplier’s facility and/or outside source, which are used to operate the supply chain. The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers.

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ES.1 Manage Sourcing Business Rules The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Sourcing Business Rules Manage Sourcing Business Rules Cycle Time

The sum of the costs associated with Source business rules. The average time associated with managing source business rules

Best Practices: . . . . . .

Collaborative Review and Agreement of Business Rules Prior to Contract Execution Electronic Sourcing and Negotiation Enterprise Level Policies/Rules with Local Execution Enterprise Level Spend Analysis Long Term Supplier Agreements/Partnerships

Web based access to current spend data available from enterprise to part level Business Rules for electronic sourcing process and hierarchy Web based access to enterprise level business rules

Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization

None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type

Inputs: .

Receipt Verification from S3.5 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S1.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S2.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S3.4 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Supplier Data from ES.7 Manage Supplier Network

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

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Outputs: .

Business Rules for Return Processes to ES.7 Manage Supplier Network

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Business Rules for Source Processes to ES.4 Manage Product Inventory

.

Business Rules for Source Processes to S3.2 Select Final Supplier(s) and Negotiate

.

Business Rules for Source Processes to S3.1 Identify Sources of Supply

Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership.

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ES.2 Assess Supplier Performance The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. Metrics (see Appendix A for metrics attributes): .

Assess Supplier Performance Cycle Time

.

Cost to Assess Supplier Performance

The average time associated with assessing the performance of supplier processes. The sum of the costs associated with assessing supplier performance.

Best Practices: .

Carrier Agreement

.

Comparative Analysis of Supplier Performance is Used in Sourcing Decisions Continuous Improvement and Development is Driven and Measured through the Performance Review Process Cost Reduction and or Cost Avoidance Are Opportunities Are Identified, Implemented and Measured on a Periodic Basis Performance Expectations and Business Rules Are Clearly Communicated Prior to the Initiation of Business with the Supplier Supplier “Cost of Nonconformance“ Data is Collected, Analyzed and Used in Performance Reporting Supplier Performance Assessment System

. . . . .

. .

Supplier Performance Data is Collected, Analyzed and Reported to Suppliers Online and Real-Time through Extranet Applications Suppliers Are Evaluated, Selected and Qualified with Criteria Matched to Business Requirements and Competitive Needs

Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Software application with data analysis capability None identified None identified Web based access / availability to business rules and performance criteria Software application to automate data collection and reporting “Assess Supplier Performance” is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. Web based relational database / management application None identified

Inputs: .

Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S3.5 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S1.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S3.4 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Receipt Verification from S2.3 Verify Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Supplier Data from ES.7 Manage Supplier Network

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Outputs: .

Quality and Delivery Performance to ES.3 Maintain Source Data

“The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one.“

.

Supplier Performance to S3.3 Schedule Product Deliveries

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

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Supplier Performance to ES.7 Manage Supplier Network

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

.

Supplier Performance to S1.1 Schedule Product Deliveries

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

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Supplier Performance to S2.1 Schedule Product Deliveries

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

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ES.3 Maintain Source Data The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. Metrics (see Appendix A for metrics attributes): . .

Cost to Maintain Source Data Maintain Source Data Cycle Time

The sum of the costs associated with maintaining supplier data. The average time associated with maintaining source data

Best Practices: . . . .

Automated Update of Supplier Performance Information Data Accessibility across the Enterprise for Visibility by Discrete Business Units On Demand Access of Supplier/Source Data Supplier and Material Rationalization

None identified Web based access to various levels of enterprise data Web based access to current supplier/source data Web based access to supplier/source data

Inputs: .

Quality and Delivery Performance from ES.2 Assess Supplier Performance

“The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one.“

.

Sourcing Plans from P2.4 Establish Sourcing Plans Supplier Data from ES.7 Manage Supplier Network

An aggregate material requirements plan used to schedule material deliveries to meet production plan. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

.

Outputs: .

Current Inventory Source Data to ES.7 Manage Supplier Network

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

.

Current Inventory Source Data to S3.2 Select Final Supplier(s) and Negotiate

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

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Current Inventory Source Data to S3.1 Identify Sources of Supply

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

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Current Inventory Source Data to ED.7 Manage Product Life Cycle

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

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ES.4 Manage Product Inventory The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Product Inventory Inventory Days of Supply

.

Manage Product Inventory Cycle Time

The sum of the Cost to Manage Product Inventory Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated with managing raw material inventory

Best Practices: . . .

Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks Real Time Data on Current Status Statistical Test Count

.

Vendor Managed Inventory

Real time view of data. Dynamic calculation of safety stock based on actual sales. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: .

Business Rules for Source Processes from ES.1 Manage Sourcing Business Rules

.

Existing Inventory Data from S2.4 Transfer Product

Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

.

Existing Inventory Data from S3.6 Transfer Product

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

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Existing Inventory Data from S1.4 Transfer Product

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

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Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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Inventory Availability from S2.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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. .

Parts and Services Consumed from EM.5 Manage Equipment and Facilities Sourcing Plans from P2.4 Establish Sourcing Plans

The items and services utilized to manufacture a product. An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

MRO Parts Availability to EM.5 Manage Equipment and Facilities

The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems.

.

Product Inventory Location to S2.4 Transfer Product

The physical storage location where product inventory is held in stock prior to use or shipment.

.

Product Inventory Location to S1.4 Transfer Product

The physical storage location where product inventory is held in stock prior to use or shipment.

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Product Inventory Location to S3.6 Transfer Product

The physical storage location where product inventory is held in stock prior to use or shipment.

.

Product Inventory Target Levels to P2.2 Identify, Assess, And Aggregate Product Resources Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain

The target for the total product inventory, including e.g. raw material, work in progress and finished goods.

.

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Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

June 2006

ES.5 Manage Capital Assets The process of acquiring, maintaining and dispositioning an organization’s located at a supplier’s facility and/or outside source, which are used to operate the supply chain. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Source Capital Assets Manage Capital Assets Cycle Time

The sum of the Costs to Manage Source Capital Assets The average time associated with managing capital assets

Best Practices: .

Changeover Reduction / Continuous Improvement Program

.

Facility & Equipment Environmental / Safety Audit System Removal of Obsolete Capital Assets Total Preventative Maintenance Program

. .

Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. System software to list checklist items, report results of audit & forward actions to be taken Automated Calculation of ABC Velocity Movement Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists.

Inputs: .

Import/Export Requirements from ES.8 Manage Import/Export Requirements

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

.

Parts and Services Consumed from EM.5 Manage Equipment and Facilities Supplier Agreement from ES.9 Manage Supplier Agreements

The items and services utilized to manufacture a product.

.

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

Outputs: .

Capital Assets to ES.8 Manage Import/Export Requirements

© Copyright 2006 Supply-Chain Council, Inc.

Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS)

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ES.6 Manage Incoming Product The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Incoming Product Manage Incoming Product Cycle Time

The sum of the costs associated with managing incoming product. The average time associated with managing inbound raw material

Best Practices: .

. .

Appointment Scheduling for Pickup and Delivery of Customer Shipments Automated Documentation for International Shipments Backhaul Trading Exchange Capture and Maintain Mode Specific Data

.

Electronic Manifest and Electronic Billing

.

Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Shipments) Manage Information Across 100% of Shipments Measurement of Carrier Performance for On-time Delivery and Completeness Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet)

.

. . . .

.

Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Pooling Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

Rating & Routing Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

Inputs: .

Contract Carrier Rates from ES.8 Manage Import/Export Requirements

The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

.

Import/Export Requirements from ES.8 Manage Import/Export Requirements

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

.

Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S3.4 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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.

Logistics Selection to S2.1 Schedule Product Deliveries

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

.

Logistics Selection to S3.3 Schedule Product Deliveries

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

.

Logistics Selection to S1.1 Schedule Product Deliveries

Carrier selection and management for inbound or outbound shipments (linked to terms of delivery)

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ES.7 Manage Supplier Network The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Metrics (see Appendix A for metrics attributes): Cost to Manage Supplier Network Manage Supplier Network Cycle Time

The sum of the costs associated with managing the supplier network. The average time associated with managing the supplier network

Best Practices: Carrier Agreement

Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Create and Maintain Multiple Suppliers and None Identified Multiple Supplier Sites to Record Information about Individuals and Companies from Whom You Want to Purchase Catalogue Goods and Services Electronic Data Interchange Can Be Used Electronic Data Interchange To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network Establishment of Criteria to Rank Suppliers Utilize supplier delivery, quality, price performance as well as any other criteria such as terms and conditions Evaluate Supplier Network for Duplicates Supplier Merge Programs for duplicates Consignment Inventory Management Identification of Suppliers Who Will Participate in Consignment Inventory Programs Identification of Suppliers Who Will Electronic Kanban Support Participate in Kanban Programs Identification of Suppliers Who Will None identified Participate in Procurement Split (Two or More Suppliers Sharing Purchase Requirements) Programs Supplier managed inventories with scheduling interfaces to external Identification of Suppliers Who Will supplier systems to replenish Participate in Vendor Managed Inventory (VMI) Programs Internet Exchanges Internet Exchanges are a hosted, business-to-business trading network. Exchanges are an open procurement network, accessible to any buyer and focused on new Internet-enabled purchasing models like spot buys or reverse, buyer-driven auctions. Exchanges will also support more traditional catalog-based sales. On Line Document Management and ERP Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster On-Line Availability to Supplier Financials to Internet web sites for financial evaluation Determine Potential Supplier Viability to be Added to Supplier Network Supplier Certification Programs Can Reduce None identified the Cycle Time for Certifying Existing Suppliers to Provide New Technologies

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Supplier Certification Programs Can Reduce None identified the Cycle Time for Initial Certification of New Suppliers or Certifying Existing Suppliers that Wish to Provide New Technologies Utilize Concurrent Engineering with Internet, EDI, FAX Suppliers to Allow Them to Provide Engineering and Product Performance Test Data to Qualify as Part of Potential Supplier Network

Inputs: Business Rules for Return Processes from ES.1 Manage Sourcing Business Rules

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Current Inventory Source Data from ES.3 Maintain Source Data

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

Supplier Agreement from ES.9 Manage Supplier Agreements

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

Supplier Performance from ES.2 Assess Supplier Performance

The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements.

Outputs: Supplier Data to ES.1 Manage Sourcing Business Rules

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Supplier Data to S3.2 Select Final Supplier(s) and Negotiate

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Supplier Data to ES.3 Maintain Source Data Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. Supplier Data to ES.2 Assess Supplier Performance

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Supplier Data to ES.9 Manage Supplier Agreements

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Supplier Data to S3.1 Identify Sources of Supply

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

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ES.8 Manage Import/Export Requirements The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). Metrics (see Appendix A for metrics attributes): . . .

Cost to Manage Import/Export Requirements Customs Clearance Cycle Time Manage Import/Export Requirements Cycle Time

The sum of the costs associated with the management of import/export requirements The average time associated with clearing an order through customs The average time associated with managing import/export requirements

Best Practices: . . . . .

Ability to Track Component/Sub-Component Manufacturing Country of Origin Assessing Export/Import Requirements during Time of Product Development/Manufacture Direct Connection to Customs Clearance Direct Transfer of Documents to Recipient and Forwarder Documents Generated Automatically During Shipment Preparation.

Component/lot tracking (lot trace-ability) Multi-country Export/Import documentation compliance Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet.

Inputs: .

Capital Assets from ES.5 Manage Capital Assets

Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS)

.

Parts and Services Consumed from EM.5 Manage Equipment and Facilities Receipt Verification from S3.4 Receive Product

The items and services utilized to manufacture a product. Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

.

Outputs: .

Contract Carrier Rates to ES.6 Manage Incoming Product

The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

.

Contract Carrier Rates to ED.6 Manage Transportation

The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

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Import/Export Requirements to ES.5 Manage Capital Assets

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

.

Import/Export Requirements to ES.9 Manage Supplier Agreements

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

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Import/Export Requirements to ES.6 Manage Incoming Product

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Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

June 2006

ES.9 Manage Supplier Agreements The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Metrics (see Appendix A for metrics attributes): .

Cost to Manage Supplier Agreements

.

Manage Supplier Agreements Cycle Time

The sum of the costs associated with managing supplier agreements. The average time associated with managing supplier agreements

Best Practices: .

Carrier Agreement

. .

Electronic Sourcing and Negotiation Enterprise Level Policies/Rules with Local Execution Enterprise Level Spend Analysis Long Term Supplier Agreements/Partnerships

. . .

Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Business Rules for electronic sourcing process and hierarchy Web based access to enterprise level business rules

Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization

None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type

Inputs: .

Import/Export Requirements from ES.8 Manage Import/Export Requirements

Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries.

.

Product On Order from S2.1 Schedule Product Deliveries Product On Order from S3.3 Schedule Product Deliveries Product On Order from S1.1 Schedule Product Deliveries Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate

Product on order with a selected source.

. . .

.

Product on order with a selected source. Product on order with a selected source. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

Supplier Data from ES.7 Manage Supplier Network

Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems.

Outputs: .

Payment Terms to S2.5 Authorize Supplier Payment

The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

.

Payment Terms to S3.7 Authorize Supplier Payment

The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

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Payment Terms to S1.5 Authorize Supplier Payment

The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks.

.

Supplier Agreement to ES.5 Manage Capital Assets

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

.

Supplier Agreement to ES.7 Manage Supplier Network

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

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M1 Make-to-Stock The process of manufacturing in a make to stock environment adds value to products through mixing, separating, forming, machining, and chemical processes. Make to stock products are intended to be shipped from finished goods or “off the shelf,“ are completed prior to receipt of a customer order, and are generally produced in accordance with a sales forecast. The Category M1 includes six Level 3 Elements: M1.1 Schedule Production Activities

M1.2 Issue Material

M1.3 Produce and Test

M1.4 Package M1.5 Stage Product

M1.6 Release Product to Deliver

Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Cost of Goods Sold Cost to Make Downside Make Adaptability Make Cycle Time © Copyright 2006 Supply-Chain Council, Inc.

The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. The average time associated with Make Processes 115

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Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices: Accurate and Approved Work Instructions/Process Plans Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Cellular Manufacturing Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Lean Manufacturing Link Individual Performance to Organizational and Divisional Goals Migrate From Build to Stock to Configure to Order; Build Subassemblies to Forecast at the Highest Generic Level in the Bill of Material/Recipe/Formula Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Paperless Production Order and Inventory Tracking

Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch recording/configuration Manufacturing is broken into work cells Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points Use a team based systematic approach to identifying and eliminating wasteful, or non-value adding activities within your manufacturing organization None identified None identified

Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet.

Electronic dispatch and data collection. Allow customer access to production status and inventories using internet technologies and web site features. Performance Results that Are Compared to Data warehouse, report writing, real time database and Executive Benchmarks (ie Capacity, Scheduling) and Information systems that are easily accessible. Use of web-based Readily Available to Employees technologies for dissemination of information. Posted Performance Results Data warehouse, report writing, real time data base and EI systems Postponement Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. Production Level Loading Capacity planning Provide Continuous Formal Training to Examples would be TQM, Six Sigma. Employees

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Vendor Managed Inventory

© Copyright 2006 Supply-Chain Council, Inc.

VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

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M1.1 Schedule Production Activities Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes): .

Capacity Utilization

.

Cost to Schedule Production Activities

.

Schedule Achievement

.

Schedule Production Activities Cycle Time

A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

Best Practices: .

Additional Capacity for Overflow Demand

. .

Cross Training/Certification Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Drum-Buffer-Rope Scheduling Technique

. .

. . . . . . .

Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate Produce Products to Unique Customer Specification Provide Scheduling Output Back to Material and Labor Planning Systems Real Time Feedback from Production, Raw Materials, and Finished Goods Inventory and Test Activities Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line

Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. HR/certification support Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. Detailed production model that synchronizes PLAN and MAKE activities in real time. Order entry, engineering, and product specifications linked to production order Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler. Interface between maintenance management system and scheduling system Detailed production scheduling model and simulation capabilities Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

Inputs:

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Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time.

.

Information Feedback from M1.5 Stage Product

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M1.4 Package

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M1.3 Produce and Test

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M1.2 Issue Material

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M1.6 Release Product to Deliver

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

.

Scheduled Receipts from S1.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries Scheduled Receipts from S2.1 Schedule Product Deliveries

. .

Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

Outputs: .

Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to S2.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S3.3 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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Production Schedule to S1.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to D4.2 Receive Product at Store

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to D1.3 Reserve Inventory & Determine Delivery Date

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to M1.2 Issue Material

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

© Copyright 2006 Supply-Chain Council, Inc.

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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Production Schedule to D1.8 Receive Product from Source or Make

© Copyright 2006 Supply-Chain Council, Inc.

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M1.2 Issue Material The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Metrics (see Appendix A for metrics attributes): . .

Cost to Issue Material Issue Material Cycle Time

The sum of the costs associated with issuing material. The average time associated with the issuance of material to production

Best Practices: . .

Back Flush Material at Order Completion Complete Lot History

.

Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use

. .

.

Flexible back flush logic Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

EDI link to supplier’s sales order and inventory systems

Inputs: .

Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S3.6 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S2.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP)

The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory.

.

WIP Location Rules from EM.6 Manage Transportation

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

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Outputs: . .

Workflow to M1.3 Produce and Test Information Feedback to M1.1 Schedule Production Activities

.

Inventory Availability to D1.3 Reserve Inventory & Determine Delivery Date

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Product Location Information to EM.6 Manage Transportation Replenishment Signal to S3.3 Schedule Product Deliveries

Attributes of the product’s storage location.

.

Replenishment Signal to S1.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S3.6 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S2.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S2.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S1.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

© Copyright 2006 Supply-Chain Council, Inc.

The flow of information back into the control system so that actual performance can be compared with planned performance.

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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M1.3 Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. .

Cost to Produce and Test Fill Rate

. .

Produce and Test Cycle Time Warranty and Returns

.

Warranty Costs

. .

Yield Yield Variability

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with production and test Number of returns within the warranty period. Warranty is a commitment, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

Best Practices: . . . . . . . . . . . . . . .

Accurate and Approved Process Plans/Specifications Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Just-In-Time Demand Flow Techniques Maintain Accurate Lot/Batch History Information Measuring Process Metrics and Feedback to Operators Paperless Production Control Provide Continuous Formal Training to Employees Real Time quality control techniques Real Time Statistical Control Techniques Reduce Chances of Operator Error Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications

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Electronic document management Electronic batch recording/configuration None identified Machine productivity and downtime monitoring Demand-pull mechanisms Electronic data collection of employee actions and sourced/inprocess product lot used Electronic data collection of completion, quality, scrap, labor and equipment data and dissemination of information on factory floor Electronic dispatch of operations Examples would be TQM, Six Sigma. Electronic collection of quality data and on-line SPC. Electronic collection of defect data and on-line SPC. Automatic download of production equipment with batch recipes/part programs Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

June 2006

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Inputs: .

Workflow from M1.2 Issue Material

Outputs: . .

Workflow to M1.4 Package Information Feedback to M1.1 Schedule Production Activities

© Copyright 2006 Supply-Chain Council, Inc.

The flow of information back into the control system so that actual performance can be compared with planned performance.

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M1.4 Package The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. . .

Cost to Package Package Cycle Time Warranty and Returns

.

Warranty Costs

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Number of returns within the warranty period. Warranty is a commitment, either expressed or implied, that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects.

Best Practices: . . . . . . . . . .

Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand

Electronic document management Electronic batch recording/configuration Automatic interface to inspection systems Machine productivity and downtime monitoring Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs: .

Workflow from M1.3 Produce and Test

Outputs: . .

Workflow to M1.5 Stage Product Information Feedback to M1.1 Schedule Production Activities

© Copyright 2006 Supply-Chain Council, Inc.

The flow of information back into the control system so that actual performance can be compared with planned performance.

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M1.5 Stage Product The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes): . .

Cost to Stage Finished Product Stage Finished Product Cycle Time

The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices: .

Direct Ship from Factory to Customer/Channel

.

Electronic Material Move Transactions

Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs: . .

Workflow from M1.4 Package Delivery Plans from P4.4 Establish Delivery Plans

.

Production Plans from P3.4 Establish Production Plans

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs: . .

Workflow to M1.6 Release Product to Deliver Information Feedback to M1.1 Schedule Production Activities

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The flow of information back into the control system so that actual performance can be compared with planned performance.

June 2006

M1.6 Release Product to Deliver Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes): .

Cost to Release Finished Product to Deliver

.

Release Finished Product to Deliver Cycle Time

The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices: . . .

Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception

Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs: .

Workflow from M1.5 Stage Product

Outputs: . . .

Finished Product Release to D4.2 Receive Product at Store Finished Product Release to D1.8 Receive Product from Source or Make Information Feedback to M1.1 Schedule Production Activities

© Copyright 2006 Supply-Chain Council, Inc.

The authorization to ship a finished product that has been ordered. The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2 Make-to-Order The process of manufacturing in a make to order environment adds value to products through mixing, separating, forming, machining, and chemical processes. A make to order environment is one in which products are completed after receipt of a customer order and are built or configured only in response to a customer order. The Category M2 includes six Level 3 Elements: M2.1 Schedule Production Activities

M2.2 Issue Sourced/In-Process Product

M2.3 Produce and Test

M2.4 Package M2.5 Stage Finished Product

M2.6 Release Finished Product to Deliver

Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Cost of Goods Sold Cost to Make Downside Make Adaptability Inventory Days of Supply (WIP) © Copyright 2006 Supply-Chain Council, Inc.

The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Total value of Work in Process ÷ (COGS ÷ 365). 129

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Make Cycle Time Order Fulfillment Cycle Time Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The average time associated with Make Processes The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices: Accurate and Approved Work Instructions/Process Plans Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Build Subassemblies/Products to Forecast at Highest Generic Level to Minimize Make Cycle Time Cellular and Demand Pull Manufacturing Delivery Schedules Are Collaboratively Developed with Customers Link Individual Performance to Organizational and Divisional Goals Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Posted Performance Results Postponement

Produce Products to Unique Customer Requirements Production Level Loading Provide Continuous Formal Training to Employees

© Copyright 2006 Supply-Chain Council, Inc.

Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch recording/configuration None identified Support for cellular and demand pull manufacturing execution Web-based access to plant scheduling status, collaborative data-sharing environment. None identified Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet. Data warehouse, report writing, real time data base and EI systems Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. Order entry specifications linked to manufacturing order Capacity planning Examples would be TQM, Six Sigma.

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M2.1 Schedule Production Activities Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes): .

Capacity Utilization

.

Cost to Schedule Production Activities

.

Schedule Achievement

.

Schedule Production Activities Cycle Time

A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

Best Practices: .

Additional Capacity for Overflow Demand

. . .

Cross Training/Certification Demand Pull Mechanisms Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Drum-Buffer-Rope Scheduling Technique

. .

. . . . .

Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate Produce Products to Unique Customer Specification Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line

Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. HR/certification support Repetitive scheduling and sequencing Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. Detailed production model that synchronizes PLAN and MAKE activities in real time. Order entry, engineering, and product specifications linked to production order Interface between maintenance management system and scheduling system Detailed production scheduling model and simulation capabilities Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

Inputs: .

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time.

Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities

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Information Feedback from M2.2 Issue Sourced/In-Process Product

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M2.5 Stage Finished Product

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M2.4 Package

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M2.3 Produce and Test

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M2.6 Release Finished Product to Deliver

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

.

Scheduled Receipts from S1.1 Schedule Product Deliveries Scheduled Receipts from S2.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries

. .

Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

Outputs: .

Production Schedule to D2.9 Pick Product

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to M2.2 Issue Sourced/In-Process Product

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to S1.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to D2.3 Reserve Resources & Determine Delivery Date

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S3.3 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S2.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

© Copyright 2006 Supply-Chain Council, Inc.

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M2.2 Issue Sourced/In-Process Product The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Metrics (see Appendix A for metrics attributes): .

Cost to Issue Sourced/In-Process Product

.

Issue Sourced/In-Process Product Cycle Time

The sum of the costs associated with issuing sourced or in-process material. The average time associated with the issuance of material to production

Best Practices: . .

Back Flush Material at Order Completion Complete Lot History

.

Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use

. .

.

Flexible back flush logic Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

EDI link to supplier’s sales order and inventory systems

Inputs: .

Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S2.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S3.6 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP)

The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory.

.

WIP Location Rules from EM.6 Manage Transportation

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

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Outputs: .

Information Feedback to M2.1 Schedule Production Activities

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Inventory Availability to D2.9 Pick Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Product Location Information to EM.6 Manage Transportation Production Schedule to M2.3 Produce and Test

Attributes of the product’s storage location.

.

Replenishment Signal to S1.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S2.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S3.6 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S3.3 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S2.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S1.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Source Execution Data to S2.1 Schedule Product Deliveries

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

.

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A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M2.3 Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. . .

Cost to Produce and Test Produce and Test Cycle Time Warranty Costs

. .

Yield Yield Variability

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The average time associated with production and test Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

Best Practices: . . . . . . . . . . . . .

Accurate and Approved Process Plans/Specifications Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Just-In-Time Demand Flow Techniques Maintain Accurate Lot/Batch History Information Paperless Production Control Real Time quality control techniques Real Time Statistical Control Techniques Reduce Chances of Operator Error Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications

Electronic document management Electronic batch recording/configuration None identified Machine productivity and downtime monitoring Demand-pull mechanisms Electronic data collection of employee actions and sourced/inprocess product lot used Electronic dispatch of operations Electronic collection of qualityt data and on-line SPC. Electronic collection of defect data and on-line SPC. Automatic download of production equipment with batch recipes/part programs Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

Outputs: . .

Workflow to M2.4 Package Information Feedback to M2.1 Schedule Production Activities

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The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2.4 Package The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. . .

Cost to Package Package Cycle Time Warranty Costs

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Warranty costs include materials, labor and problem diagnosis for product defects.

Best Practices: . . . . . . . . . .

Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand

Electronic document management Electronic batch recording/configuration Automatic interface to inspection systems Machine productivity and downtime monitoring Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs: .

Workflow from M2.3 Produce and Test

Outputs: . .

Workflow to M2.5 Stage Finished Product Information Feedback to M2.1 Schedule Production Activities

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The flow of information back into the control system so that actual performance can be compared with planned performance.

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M2.5 Stage Finished Product The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes): . .

Cost to Stage Finished Product Stage Finished Product Cycle Time

The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices: .

Direct Ship from Factory to Customer/Channel

.

Electronic Material Move Transactions

Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs: . .

Workflow from M2.4 Package Delivery Plans from P4.4 Establish Delivery Plans

.

Production Plans from P3.4 Establish Production Plans

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs: . .

Workflow to M2.6 Release Finished Product to Deliver Information Feedback to M2.1 Schedule The flow of information back into the control system so that actual Production Activities performance can be compared with planned performance.

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M2.6 Release Finished Product to Deliver Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes): .

Cost to Release Finished Product to Deliver

.

Release Finished Product to Deliver Cycle Time

The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices: . . .

Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception

Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs: .

Workflow from M2.5 Stage Finished Product

Outputs: . .

Finished Product Release to D2.9 Pick Product Information Feedback to M2.1 Schedule Production Activities

© Copyright 2006 Supply-Chain Council, Inc.

The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3 Engineer-to-Order The process of manufacturing distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order. While Make to Order includes standard products built only in response to a customer order or products configured in response to a customer order, Engineer to Order includes custom products that are designed, developed, and manufactured in response to a specific customer request. The Category M3 includes seven Level 3 Elements: M3.1 Finalize Production Engineering

M3.2 Schedule Production Activities

M3.3 Issue Sourced/In-Process Product

M3.4 Produce and Test

M3.5 Package M3.6 Stage Finished Product

M3.7 Release Product to Deliver

Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and sign-off by the quality organization.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

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Cost of Goods Sold Cost to Make Downside Make Adaptability Inventory Days of Supply (WIP) Make Cycle Time Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Make Adaptability Upside Make Flexibility Yield

The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with make. The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Total value of Work in Process ÷ (COGS ÷ 365). The average time associated with Make Processes The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. The ratio of usable output from a process to its input.

Best Practices: Cellular Manufacturing Delivery Schedules Are Collaboratively Developed with Customers Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of DemandPull Mechanisms and Visual Controls Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, CrossFunctional Work Teams Paperless Order Tracking and Customer Visibility of Orders Posted Performance Results Product Design Collaboration with Customers

© Copyright 2006 Supply-Chain Council, Inc.

Manufacturing is broken into work cells Web-based access to plant scheduling status, collaborative data-sharing environment. Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points Support for modular skills inventory with links to training databases, compensations systems, and operator instructions Electronic dispatch and data collection with external interface to internet. Data warehouse, report writing, real time data base and EI systems On-line design tools facilitated by internet connections.

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M3.1 Finalize Production Engineering Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Metrics (see Appendix A for metrics attributes): .

Cost to Finalize Production Engineering

The sum of the costs associated with finalizing production engineering.

. .

ECO Cost Finalize Production Engineering Cycle Time

The average time associated with the finalization of production engineering

Best Practices: . .

Automated Configuration Management Automated Conversion of Engineering Drawings into Product Specifications

Configuration None identified

Inputs: .

Engineering Design from Source: Company

Final drawings, specifications, formulas, part programs, etc.that describe requirements of a product. The design process consists of translating a set of functional requirements into an operational product, process, or service.

.

Order Information from D3.3 Enter Order, Commit Resources & Launch Program

The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system.

Outputs: .

Methods, Procedures, Processes to M3.2 Schedule Production Activities

© Copyright 2006 Supply-Chain Council, Inc.

Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request.

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M3.2 Schedule Production Activities Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. Metrics (see Appendix A for metrics attributes): .

Capacity Utilization

.

Cost to Schedule Production Activities

.

Schedule Achievement

.

Schedule Production Activities Cycle Time

A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with scheduling production activities. The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: overshipments do not make up for under-shipments. The average time associated with scheduling production activities

Best Practices: .

Additional Capacity for Overflow Demand

.

Build Subassemblies to Forecast at Highest Generic Level in Bill of Material; Maintain Flexibility While Minimizing Cycle Time and Inventory Position Cellular Manufacturing Cross Training/Certification Demand Pull Mechanisms Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Drum-Buffer-Rope Scheduling Technique

. . . . . .

. . . .

Maximize Data Integrity and System Accuracy by Ensuring 99%+ Accuracy of BOM Configuration, Inventory Levels, and Schedule Requirements Schedule Includes Preventative Maintenance Program Schedule Minimizes Changeover Costs between Products Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line

Outsource manufacturing and work force augmentation providers connected to production schedules via the internet. None identified

Manufacturing is broken into work cells HR/certification support Repetitive scheduling and sequencing Machine productivity and downtime monitoring (DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput. None identified

Interface between maintenance management system and scheduling system Algorithms that manage set up times/costs, cleaning times, and ideal job sequences (eg, color sequencing light to dark) Scheduling utilizing optimization techniques. Required production resources included in routing/process instructions Schedule undated by on line reporting and status systems and resequence activities

Inputs:

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Equipment and Facilities Schedules and Plans from EM.5 Manage Equipment and Facilities

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time.

.

Information Feedback from M3.5 Package

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M3.4 Produce and Test

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M3.3 Issue Sourced/In-Process Product

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M3.7 Release Product to Deliver

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Information Feedback from M3.6 Stage Finished Product

The flow of information back into the control system so that actual performance can be compared with planned performance.

.

Methods, Procedures, Processes from M3.1 Finalize Production Engineering

Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request.

.

Preventative Maintenance and Calibration Schedule from EM.5 Manage Equipment and Facilities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

.

Scheduled Receipts from S2.1 Schedule Product Deliveries Scheduled Receipts from S3.3 Schedule Product Deliveries Scheduled Receipts from S1.1 Schedule Product Deliveries

. .

Production Plan includes production capability. Product due to arrive. Product due to arrive. Product due to arrive.

Outputs: .

Production Schedule to D3.9 Pick Product

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S2.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S1.1 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to S3.3 Schedule Product Deliveries

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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.

Production Schedule to M3.3 Issue Sourced/In-Process Product

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Production Schedule to P3.2 Identify, Assess, and Aggregate Production Resources Production Schedule to D3.3 Enter Order, Commit Resources & Launch Program

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

© Copyright 2006 Supply-Chain Council, Inc.

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

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M3.3 Issue Sourced/In-Process Product The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). Activity Usage Type: Metrics (see Appendix A for metrics attributes): .

Cost to Issue Sourced/In-Process Product

.

Issue Sourced/In-Process Product Cycle Time

The sum of the costs associated with issuing sourced or in-process material. The average time associated with the issuance of material to production

Best Practices: . . . .

. .

Back Flush Material at Order Completion Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area Electronic Material Move Transactions Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Supplier Delivery to Production Process at Point of Use Two-Bin Floor Stock Located at Work Center for “B“ And “C“ Components Controlled by Operators and Replenished When One Bin is Empty

Flexible back flush logic None identified Automated process control and/or barcode data collection Use of safety stock algorithms to minimize stock levels.

EDI link to supplier’s sales order and inventory systems None identified

Inputs: .

Inventory Availability from S3.6 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S2.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Schedule from M3.2 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

WIP Handling Rules, Move Information and Methods from EM.4 Manage In-Process Products (WIP)

The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for inprocess items between work locations, in inventory, and movement inventory.

.

WIP Location Rules from EM.6 Manage Transportation

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

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Outputs: . .

Workflow to M3.4 Produce and Test Information Feedback to M3.2 Schedule Production Activities

.

Inventory Availability to D3.9 Pick Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability to P3.2 Identify, Assess, and Aggregate Production Resources

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Product Location Information to EM.6 Manage Transportation Replenishment Signal to S3.6 Transfer Product

Attributes of the product’s storage location.

.

Replenishment Signal to S1.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S1.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

.

Replenishment Signal to S2.4 Transfer Product

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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Replenishment Signal to S3.3 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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Replenishment Signal to S2.1 Schedule Product Deliveries

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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The flow of information back into the control system so that actual performance can be compared with planned performance.

Any signal that indicates when to produce or transport Items in a pull replenishment system.

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M3.4 Produce and Test The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. . .

Cost to Produce and Test Produce and Test Cycle Time Warranty Costs

. .

Yield Yield Variability

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with production and test. The average time associated with production and test Warranty costs include materials, labor and problem diagnosis for product defects. The ratio of usable output from a process to its input. The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

Best Practices: . . . . . . . . . . . . .

Authorize Each Operation to Assess the Quality of the Previous Operations Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Implement Employee Involvement Programs Just-In-Time Demand Flow Techniques Link Individual Performance to Organizational and Divisional Goals Maintain Accurate Lot/Batch History Information Paperless Production Control Provide Continuous Formal Training to Employees Real Time quality control techniques Real Time Statistical Control Techniques Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specifications

None identified Machine productivity and downtime monitoring

Demand-pull mechanisms None identified Electronic data collection of employee actions and sourced/inprocess product lot used Electronic dispatch of operations Examples would be TQM, Six Sigma. Electronic collection of qualityt data and on-line SPC. Electronic collection of defect data and on-line SPC. Use principals of Lean Manufacturing. Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic work instructions

Inputs: .

Workflow from M3.3 Issue Sourced/In-Process Product

Outputs: . .

Workflow to M3.5 Package Information Feedback to M3.2 Schedule Production Activities

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The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3.5 Package The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. Metrics (see Appendix A for metrics attributes): . .

Asset Turns Capacity Utilization

. . .

Cost to Package Package Cycle Time Warranty Costs

Total gross product revenue ÷ Total net assets A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. The sum of the costs associated with product packaging. Warranty costs include materials, labor and problem diagnosis for product defects.

Best Practices: . . . . . . . .

Automatic Label and Seal Verification Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Minimize Operator Induced Errors

Automatic interface to inspection systems Machine productivity and downtime monitoring

Packaging Operation is an Integral Part of the Overall Production Process Paperless Production Control Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Reduce Non-Value Added Paperwork While Still Measuring Process Metrics Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand

Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout None identified Electronic dispatch of operations None identified Electronic data collection of completion, quality, lot tractability, scrap, and labor data Electronic Work Instructions

Inputs: .

Workflow from M3.4 Produce and Test

Outputs: . .

Workflow to M3.6 Stage Finished Product Information Feedback to M3.2 Schedule Production Activities

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The flow of information back into the control system so that actual performance can be compared with planned performance.

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M3.6 Stage Finished Product The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Metrics (see Appendix A for metrics attributes): . .

Cost to Stage Finished Product Stage Finished Product Cycle Time

The sum of the costs associated with staging finished goods. The average time associated with staging finished product

Best Practices: .

Direct Ship from Factory to Customer/Channel

.

Electronic Material Move Transactions

Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols. Automated process control and/or barcode data collection

Inputs: . .

Workflow from M3.5 Package Delivery Plans from P4.4 Establish Delivery Plans

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Production Plans from P3.4 Establish Production Plans

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

Outputs: . .

Workflow to M3.7 Release Product to Deliver Information Feedback to M3.2 Schedule Production Activities

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M3.7 Release Product to Deliver Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Metrics (see Appendix A for metrics attributes): .

Cost to Release Finished Product to Deliver

.

Release Finished Product to Deliver Cycle Time

The sum of the costs associated with releasing finished goods to deliver processes. The average time associated with releasing finished product to deliver

Best Practices: . . .

Accurate and Low Cost Batch Records for Regulatory Compliance Automated Notification of Laboratory Regarding Sample Availability Review Batch Records by Exception

Electronic batch records Interface between production system and LIMS Electronic batch records linked to process plans/recipes and exceptions flagged

Inputs: .

Workflow from M3.6 Stage Finished Product

Outputs: . .

Finished Product Release to D3.9 Pick Product Information Feedback to M3.2 Schedule Production Activities

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The authorization to ship a finished product that has been ordered. The flow of information back into the control system so that actual performance can be compared with planned performance.

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EM Enable MAKE Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category EM includes eight Level 3 Elements: EM.1 Manage Production Rules

EM.2 Manage Production Performance

EM.3 Manage MAKE Information

EM.4 Manage In-Process Products (WIP)

EM.5 Manage Equipment and Facilities

EM.6 Manage Transportation EM.7 Manage Production Network EM.8 Manage Regulatory Compliance

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The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. The process of specifying maintaining and dispositioning MAKE’s capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government)

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EM.1 Manage Production Rules The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. Metrics (see Appendix A for metrics attributes): Cost to Manage Production Rules Manage Production Rules Cycle Time

The sum of the costs to manage production rules. The average time associated with managing production rules

Best Practices: Attribute-Based Process Planning Automated Engineering Specifications

Computer aided process planning / recipe management Automated Intelligence (Heuristic) - based engineering specifications system Automated Links To Existing CAD & CAM Electronic hypertext or links to existing database of detail/parts/setup Information sketches/drawings Automatic Generation / Configuration Of Parametric driven (Group Technology - based) manufacturing design Tooling / Set-Up Instructions system Automatic Link to Recipe Management, PLC Seamless application interface to manufacturing planning documentation Program, CNC Program Systems, Etc., to and CAM systems Deliver New Manufacturing Documentation Automatic Notification When to Begin and Workflow/Groupware When to Complete Design For Production Table of manufacturing capacities or design envelops (capacities; envelop sizes; tank, vessel or batch sizes) Document Control Control who can create, revise and access information Electronic Documentation and Imaging Graphical display of drawings, diagrams, recipes/formulas, specifications, instructions, etc., to all users Genealogy Tracking Where-used listing of as-planned vs. as-built documentation On Line Access and Notification of Tooling Delivery of tooling and equipment details drawings and Equipment Information Pre-Defined Manufacturing Design Rules Libraries of manufacturing capabilities or design envelopes Storage and Configuration Management for Product data management (PDM) or Electronic Data Management (EDM) feature set Release and Revision Control of Final Documents

Inputs: Business Plan from Source: Company

Corporate Objectives and Strategies from Source: Company Inventory Capacity from EP.4 Manage Integrated Supply Chain Inventory

A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Corporate objectives are the goals and mission of an organization. Maximum rate of output for the inventory management and warehouse process

Product Design from Source: Company

The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations.

Production Capacity from EP.5 Manage Integrated Supply Chain Capital Assets

The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment.

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Transportation Capacity from EP.6 Manage The capability of a trasportation system to perform it’s function. Integrated Supply Chain Transportation

Outputs: Production Rules to Deliver

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Make

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Source

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Plan

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

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EM.2 Manage Production Performance The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. Metrics (see Appendix A for metrics attributes): Cost to Manage Production Performance Manage Production Performance Cycle Time

The sum of the costs to manage production performance. The average time associated with managing production performance

Best Practices: Periodic Review of Standards Real Time Performance Measurement Reporting Systems Standards and Measurements Aligned to Maximize Supply Chain Performance

Process for establishing and maintaining review schedules Systems to collect production information online generate reports upon request by operators, and track progress against schedule and standards. Internal/external benchmarking, industry standards, customer/supplier alignment agreements, visibility of key performance indicators

Inputs: Business Plan from Source: Company

Corporate Objectives and Strategies from Source: Company Inventory Capacity from EP.4 Manage Integrated Supply Chain Inventory

A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Corporate objectives are the goals and mission of an organization. Maximum rate of output for the inventory management and warehouse process

Product Design/Quality from Source: Company

A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost.

Production Capacity from EP.5 Manage Integrated Supply Chain Capital Assets

The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Plan includes production capability. Transportation Capacity from EP.6 Manage The capability of a trasportation system to perform it’s function. Integrated Supply Chain Transportation

Outputs: Production Quality and Policies to EM.5 Manage Equipment and Facilities

The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured.

Production Rules to Deliver

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

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Production Rules to Source

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Make

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Production Rules to Plan

The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products.

Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain

Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

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EM.3 Manage MAKE Information The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. Metrics (see Appendix A for metrics attributes): Cost to Manage MAKE Information Manage MAKE Information Cycle Time

The sum of the Cost to Manage MAKE Information The average time associated with managing production information

Best Practices: Continuous Improvement

Historical trending, cause and effect analysis, and Key Performance Indicators Scheduling reviews of processes for possible improvements On-Demand Access of Production Data Collection and Display Systems designed for efficient performance of Information value-added operations in production. This could include using PLC, Machine Interface, bar code, Radio Frequency Communication, Radio Frequency Identification, Magnetic Stripe, Smart Cards, etc., to enable data collection On-Demand Access to Available to Promise None identified (ATP), Production Schedules and Inventory Status by Internal Operations and Customers Utilize Enterprise Information Systems Enter, Process, and Deliver information about the manufacturing process to management using information systems that span the enterprise

Inputs: Information from Business Processes from Source: Make

Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Information from Business Processes from Source: Plan

Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Information from Business Processes from Source: Source

Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Information from Business Processes from Source: Deliver

Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

Information Needed to Create and Maintain Interrelated computer hardware and software along with people and IT from Source: Company processes designed for the collection, processing, and dissemination of information for planning, decision making, and control. Information Needs Analysis from Source: Make

Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details.

Information Needs Analysis from Source: Source

Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details.

Information Needs Analysis from Source: Deliver

Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details.

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Information Needs Analysis from Source: Plan

Specifying the inputs, files, processing, business rules and outputs for a new system, but without expressing computer alternatives and technical details.

Systems Capability from Source: Make

The capability of a system to perform its expected function

Systems Capability from Source: Source

The capability of a system to perform its expected function

Outputs: Information Infrastructure Plan to Plan

A plan outlining the processes required for managing, collecting, maintaining, and communicating information and master data to support planning and execution processes.

Information Infrastructure Plan to Source

A plan outlining the processes required for managing, collecting, maintaining, and communicating information and master data to support planning and execution processes.

Reports, Information, and Documents to Make

Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.

Reports, Information, and Documents to Plan

Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.

Reports, Information, and Documents to Deliver

Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.

Reports, Information, and Documents to Source

Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element.

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EM.4 Manage In-Process Products (WIP) The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. Metrics (see Appendix A for metrics attributes): Cost to Manage In-Process Products (WIP) The sum of the costs associated with managing in-process products (WIP). Inventory Days of Supply Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included Manage In-Process Products (WIP) Cycle The average time associated with managing WIP inventory Time

Best Practices: Dunnage Control

First In - First Out In-Process Product (WIP) Handling Rules Minimizing In-Process Product (WIP) Minimum Product Handling

Optimize Packing Statistical Test Count

Vendor Managed Inventory

System data field to specify where the part / product shipping container should be removed. Best practice is to remove the dunnage as soon as possible unless part / product damage will result. Reuse of intermediate WIP containers for finished goods. Part / WIP location by date received for those parts that must be stocked or staged in a holding area Tracking, genealogy WIP Storage Management System Efficient Space Utilization Implementing Pull Systems Move high frequency used inventory close to point of use. For example, the system should provide the frequency of picks by part number so that high frequency picks can be moved to convenient locations or part pick quantities increased. No packing and unpacking time required. Recyclable or no containers where appropriate. No discarded material. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Capacity Requirements from Source: Plan

The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production.

Incoming Product Information from Source: Source

Data concerning product on order and due to be delivered to location agreed in the order.

Production Orders Planned & Actual Reports A statement of the output of a production facility for a specified period, from Source: Plan comparing planned to actual production.

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Returned Product Information from Source: Deliver

Data concerning the return and disposition of defective products, excess inventory and/or serviceable or obsolete products, or MRO product.

Outputs: WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M1.2 Issue Material These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Deliver These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Source These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M2.2 Issue Sourced/In-Process These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. Product WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to M3.3 Issue Sourced/In-Process These rules include the movement and accounting for in-process items Product between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to Plan These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods to EM.6 Manage Transportation These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory.

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EM.5 Manage Equipment and Facilities The process of specifying maintaining and dispositioning MAKE’s capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. Metrics (see Appendix A for metrics attributes): Actual Asset Life Maintenance Cost as % of Measure of total lifecycle maintenance cost of an asset compared to its Replacement Value replacement cost. This ratio is based maintenance cost to-date so that that replacement or upgrade cost can be evaluated as the asset ages on an ongoing basis. Cost to Manage MAKE Equipment and The sum of the costs associated with managing Make equipment and Facilities facilities. Manage MAKE Equipment and Facilities The average time associated with managing production equipment and Cycle Time facilities

Best Practices: Changeover Reduction / Continuous Improvement Program

Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. Facility & Equipment Environmental / Safety System software to list checklist items, report results of audit & forward Audit System actions to be taken Factory Floor Electronic Decision Making Software to capture actual performance history / costs of operations with Information System capability of predicting “best cost action plans“ relating to maintaining equipment and facilities. Minimize Capital Assets Required and Outsourcing strategies including the use of Application Service Providers Maintenance Costs (ASPs), web-based maintenance/diagnostic assistance and MRO parts. Predictive Maintenance Monitoring (Heat, Database for equipment to contain expected results of analysis, allow entry Noise, Lubrication Composition & Vibration) of test readings, and have capability of generating desired reports, which could highlight suggested actions based upon readings obtained, track maintenance completed, contain a help-file to be consulted Supplier Managed Inventory of Parts E.D.I. linkage of Inventory Information Systematic Disposition Of Equipment Rules for deciding appropriate disposition. Total Preventative Maintenance Program Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists.

Inputs: Budgets from Source: Make

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

Equipment and Facilities Monitoring Information from Source: Company

Data gathered by measuring, examining, testing, or gauging one or more characteristics of equipment and facilities and comparing it to planned.

Manufacturer’s Recommended Maintenance The scheduled activities, including adjustments, replacements, and basic cleanliness, that are recommended by the manufacturer to forestall Schedules & Specifications from Source: machine breakdowns. Company

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MRO Parts Availability from ES.4 Manage Product Inventory

The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

Production Quality and Policies from EM.2 Manage Production Performance

Production Plan includes production capability. The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured.

Outputs: Equipment and Facilities Maintenance History to Source

The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base

Equipment and Facilities Maintenance History to Make

The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base

Equipment and Facilities Replacement and Disposition Plans to P3.2 Identify, Assess, and Aggregate Production Resources

Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Equipment and Facilities Replacement and Disposition Plans to EM.6 Manage Transportation

Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M2.1 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M3.2 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Equipment and Facilities Schedules and Time-phased plans of present and future load (capacity required) on all Plans to M1.1 Schedule Production Activities resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time. Parts and Services Consumed to ES.4 Manage Product Inventory Parts and Services Consumed to ES.5 Manage Capital Assets Parts and Services Consumed to ES.8 Manage Import/Export Requirements Preventative Maintenance and Calibration Schedule to Source

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The items and services utilized to manufacture a product. The items and services utilized to manufacture a product. The items and services utilized to manufacture a product. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

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Preventative Maintenance and Calibration Schedule to M3.2 Schedule Production Activities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

Preventative Maintenance and Calibration Schedule to M1.1 Schedule Production Activities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

Preventative Maintenance and Calibration Schedule to Plan

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

Preventative Maintenance and Calibration Schedule to M2.1 Schedule Production Activities

Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.)

Production Status to EM.7 Manage Production Network

Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed

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EM.6 Manage Transportation The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): Cost to Manage Transportation (WIP) Manage Transportation (WIP) Cycle Time

The sum of the costs associated with managing WIP Transportation The average time associated with managing (WIP) transportation

Best Practices: Reduce In-Process Product (WIP) Handling Reduction of WIP handling through automation (i.e. AGVs and ASRS) and process improvement (i.e. reduction of handling steps, shorter move paths) Short Move Paths Software that allows for input of the distance that particular parts/WIP need to be moved. This software then needs to provide a report based on the cubic feet of material times distance moved by part number.

Inputs: Capacity Requirements from Source: Plan

The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production.

Equipment and Facilities Replacement and Disposition Plans from EM.5 Manage Equipment and Facilities

Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Product Location Information from M2.2 Issue Sourced/In-Process Product Product Location Information from M1.2 Issue Material Product Location Information from M3.3 Issue Sourced/In-Process Product Product Location Information from Source: Deliver Production Orders Planned & Actual Reports from Source: Company

Attributes of the product’s storage location. Attributes of the product’s storage location. Attributes of the product’s storage location. Attributes of the product’s storage location. A statement of the output of a production facility for a specified period, comparing planned to actual production.

Projected Delivery Requirements from EM.7 The company’s goal for the time to ship the product after the receipt of a Manage Production Network customer’s order. The policy is sometimes stated as “our quoted delivery time,“ or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. Supplier Agreement from S3.2 Select Final Supplier(s) and Negotiate

An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract.

WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Source These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Plan These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory.

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WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Deliver These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. Methods from Source: Make These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. WIP Handling Rules, Move Information and The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for in-process items Methods from EM.4 Manage In-Process between work locations, in inventory, and movement inventory. Products (WIP)

Outputs: WIP Inventory Location to S2.4 Transfer Product

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

WIP Inventory Location to S1.4 Transfer Product

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

WIP Inventory Location to S3.6 Transfer Product

Location of inventory that is specified as “work in progress“. This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products.

WIP Location Rules to D2.9 Pick Product

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

WIP Location Rules to M3.3 Issue Sourced/In-Process Product

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

WIP Location Rules to M2.2 Issue Sourced/In-Process Product

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

WIP Location Rules to M1.2 Issue Material

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

WIP Move Information and Methods to MakeThe process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. WIP Move Information and Methods to Source

The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements.

WIP Move Information and Methods to Plan The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. WIP Move Information and Methods to Deliver

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The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements.

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EM.7 Manage Production Network The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. Metrics (see Appendix A for metrics attributes): Cost to Manage Production Network Manage Production Network Cycle Time

The sum of the costs to manage the production network The average time associated with managing the production network

Best Practices: Collaborative Planning/Scheduling JIT Environment Production Reporting/Status

Interactive, on-line planning/scheduling systems. Capacity planning systems with accurate production capability data. Schedule visibility, on-line communications between source and demand Real time monitoring of production status and In-Process Product (WIP)

Inputs: Planning Data from Source: Plan Production Status from EM.5 Manage Equipment and Facilities Supply Chain Plans from Source: Plan

Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements.

Outputs: Cost to Produce to Plan

The cost to produce and item during a given period of time. Includes: the amount of direct materials, direct labor, and allocated overhead.

Internal Capacity to Source

The organic capability of an organization to produce output per time period.

Internal Capacity to Plan

The organic capability of an organization to produce output per time period.

Projected Delivery Requirements to Plan

The company’s goal for the time to ship the product after the receipt of a customer’s order. The policy is sometimes stated as “our quoted delivery time,“ or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

Projected Delivery Requirements to EM.6 Manage Transportation

The company’s goal for the time to ship the product after the receipt of a customer’s order. The policy is sometimes stated as “our quoted delivery time,“ or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

Projected Delivery Requirements to Deliver The company’s goal for the time to ship the product after the receipt of a customer’s order. The policy is sometimes stated as “our quoted delivery time,“ or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

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EM.8 Manage Regulatory Compliance The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government) Metrics (see Appendix A for metrics attributes): Cost to Manage MAKE Regulatory Compliance Manage MAKE Regulatory Compliance Cycle Time

The sum of the Cost to Manage MAKE Regulatory Compliance The average time associated with managing compliance to the make regulatory environment

Best Practices: Automated Conformance Monitoring And Control Automatic Generation And Submission Of Conformance Documents Maintaining Repository of Current Regulatory Requirements

Internal automatic notification of conformance, including holding of product until requirements are met Software specific to industry regulations and standards (e.g. may be software to produce MSDS documents, or FDA requirements, etc.) Electronic subscription and publication of conformance documentation. Electronic Document Management System features.

Inputs: Corporate Objectives and Strategies from Corporate objectives are the goals and mission of an organization. Source: Company Equipment and Facilities Characteristics from Equipment and facility traits and specifications required to meet external Source: Company entities requirements. External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Source government, trade officials, etc.) External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Plan government, trade officials, etc.) External Regulatory Information from Source: Documentation and process standards set by external entities (i.e. Make government, trade officials, etc.) Product Design/Claims from Source: Company

The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. Claims are marketing information provided as to performance, etc. Claims from the users of the product indicate a need to change the product design

Outputs: Conformance Plan to Source

Courses of action and processes that are established to meet the requirements placed on production by external entities.

Conformance Plan to Make

Courses of action and processes that are established to meet the requirements placed on production by external entities.

Conformance Rules to Make

An affirmative indication or judgment that a product or service has met criteria translated into rules for meeting external regulatory requirements

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D1 Deliver Stocked Product The process of delivering product that is maintained in a finished goods state prior to the receipt of a firm customer order. The Category D1 includes fifteen Level 3 Elements: D1.1 Process Inquiry & Quote

Receive and respond to general customer inquiries and requests for quotes. D1.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. D1.11 Load Vehicle & Generate Shipping The series of tasks including placing/loading product onto modes of Documentation transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. D1.12 Ship Product The process of shipping the product to the customer site. D1.13 Receive & Verify Product by Customer The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. D1.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. D1.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. D1.2 Receive, Enter & Validate Order

Receive orders from the customer and enter them into a company’s order processing system. Orders can be received through phone, fax, or electronic media. “Technically“ examine orders to ensure an orderable configuration and provide accurate price. Check the customer’s credit. Optionally accept payment. D1.3 Reserve Inventory & Determine Inventory and/or planned capacity (both on hand and scheduled) is Delivery Date identified and reserved for specific orders and a delivery date is committed and scheduled. D1.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. D1.5 Build Loads Transportation modes are selected and efficient loads are built. D1.6 Route Shipments Loads are consolidated and routed by mode, lane and location. D1.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. D1.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. D1.9 Pick Product The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

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Return on Working Capital

Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Finished Goods Inventory Days of Supply Order Fulfillment Cycle Time Order Management Costs Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Upside Deliver Adaptability Upside Deliver Flexibility

Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory ÷ (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The aggregation of the following cost elements (contained in this glossary): The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Best Practices: Efficient Consumer Response (ECR); Quick Response Electronic Catalogues/Malls Internet Ordering Postponement

Rapid Replenishment, VMI, EDI

© Copyright 2006 Supply-Chain Council, Inc.

Demand Planning, Deployment, Scheduling None identified None identified Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. None identified

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D1.1 Process Inquiry & Quote Receive and respond to general customer inquiries and requests for quotes. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): Cost to Process Inquiry & Quote Process Inquiry & Quote Cycle Time

The sum of the costs associated with processing inquiry and quotes. The average time associated with processing inquiries and quotes

It is associated with deliverables: Deliverable: Customer Inquiry

General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Deliverable: Order Quote (Customer)

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

Best Practices: Quote Capability, without Reserving None identified Inventory, Which Can Be Converted into an Order in a Single Step Single Point of Contact for All Order None identified Inquiries (Including Order Entry)

Inputs: Customer Inquiry from Source: Customer

General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Outputs: Customer Quote to D1.2 Receive, Enter & Validate Order

© Copyright 2006 Supply-Chain Council, Inc.

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

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D1.2 Receive, Enter & Validate Order Receive orders from the customer and enter them into a company’s order processing system. Orders can be received through phone, fax, or electronic media. “Technically“ examine orders to ensure an orderable configuration and provide accurate price. Check the customer’s credit. Optionally accept payment. Metrics (see Appendix A for metrics attributes): Cost to Receive, Enter & Validate Order

The sum of the costs associated with receiving, entering and validating a customer order. Order Fulfillment Dwell Time Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. Receive, Enter & Validate Order Cycle Time The average time associated with receiving and verifying an order at the customer site

Best Practices: Automatic Multi-level Credit Checking: Dollar Integrated Order/Financial Management Limits; Days Sales Outstanding; Margin Testing Integrated demand/deployment planning to customer location driven by Continuous Replenishment Programs; POS; Customer movement data Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals Electronic Commerce (Customer Visibility of EDI applications and integrated order management Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory None identified Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions Remote (Sales, Customers) Order Entry None identified Capability Value Pricing Based on “Cost to Serve“; Activity Based Costing; Integrated Order Management by Customer by EDLP; Cost Plus Pricing Line Item

Inputs: Customer Order from Source: Customer

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand. Customer Quote from D1.1 Process Inquiry A statement of price, terms of sale, and description of goods or services & Quote offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. Customer Replenish Signal from Source: A requirement for product from a distribution location to a source location. Customer Deliver Contract Terms from Source: The process of making a delivery commitment. For make-to-order Customer products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise. Order Rules from ED.1 Manage Deliver Business Rules

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Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Outputs: Actual Sales History to P5.1 Assess, and Aggregate Return Requirements

Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Contract Status to ED.3 Manage Deliver Customer profile, which include address data, credit and purchase Information histories, customer preferences including shipping, status, and delivery requirements, etc. Credit History to ED.3 Manage Deliver Report that portrays a potential customer’s payment history and debt, Information indicating the ability to pay in a timely manner in the future. Customer Address Data to ED.3 Manage Customer profile, which include address data, credit and purchase Deliver Information histories, customer preferences including shipping, status, and delivery requirements, etc. Customer Order to ED.2 Assess Delivery An order from a customer for a particular product or a number of products. Performance It is often referred to as an actual demand to distinguish it from a forecasted demand. Customer Order Size, Weight, and Freight Coupled with cube and route, these criteria determine type of carrier and Class to ED.6 Manage Transportation cost of shipment Location of Customers to ED.7 Manage Customer profile, which includes address and location data, credit and Product Life Cycle purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Optional Payment to Company Payment at the time of order, maybe partial or in full. Purchase History to ED.3 Manage Deliver The amount of purchased products for a certain time in history per specific Information intervals Shipping Preferences to ED.3 Manage Customer preferences including shipping, status, and delivery Deliver Information requirements, etc., and customer profile, which includes address data, credit and purchase histories, Validated Order to D1.3 Reserve Inventory & An order that has had the instructions / requirements validated i.e. the Determine Delivery Date information that the order contains is accurate , consistent with previous information and does not violate business policies or rules. Note 1 - this does not make the order ““committed““ there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal , purchase or production.

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D1.3 Reserve Inventory & Determine Delivery Date Inventory and/or planned capacity (both on hand and scheduled) is identified and reserved for specific orders and a delivery date is committed and scheduled. Metrics (see Appendix A for metrics attributes): % of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Reserve Resources & Determine The sum of the costs associated with reserving resources and determining Delivery Date a delivery date. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customer’s original Date commit date Fill Rate The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours Order Fulfillment Dwell Time Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. Reserve Inventory & Determine Delivery The average time associated with reserving inventory and determining a Date Cycle Time delivery date

Best Practices: Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer Available-to-Promise (ATP)

Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order. None identified

EDI Links between Manufacturing and Distributor to Achieve Visibility of Complete Finished Goods Inventory and Expected Shipments None identified Inventory Allocation Exception Process is Clearly Defined and Jointly Owned by Manufacturing and Sales Priority-Based Inventory Reservations, for None identified Key Customers, with FIFO Allocation for All Others

Inputs: Delivery Plans from P4.4 Establish Delivery Plans Inventory Availability from M1.2 Issue Material Inventory Availability from S1.4 Transfer Product

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A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability. Production Schedule from M1.1 Schedule A plan that authorizes the factory to manufacture or repair a certain Production Activities quantity of a specific item. Sourcing Plans from P2.4 Establish Sourcing An aggregate material requirements plan used to schedule material Plans deliveries to meet production plan. Validated Order from D1.2 Receive, Enter & An order that has had the instructions / requirements validated i.e. the information that the order contains is accurate , consistent with previous Validate Order information and does not violate business policies or rules. Note 1 - this does not make the order ““committed““ there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal , purchase or production.

Outputs: Delivery Date to D1.4 Consolidate Orders

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Inventory Availability/Delivery Date to P4.2 Those stocks or items on hand used to support production (raw materials Identify, Assess, and Aggregate Delivery and work in process items), supporting activities (maintenance, repairs and Resources and Capabilities operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Order Backlog to P1.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Supply Chain Requirements system and are in a queue waiting to be processed and shipped. Order Backlog to P4.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Delivery Requirements system and are in a queue waiting to be processed and shipped. Replenishment Signal to S1.1 Schedule Any signal that indicates when to produce or transport Items in a pull Product Deliveries replenishment system. Replenishment Signal to S2.4 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Replenishment Signal to S3.6 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Replenishment Signal to S1.4 Transfer Any signal that indicates when to produce or transport Items in a pull Product replenishment system. Shipments to P1.1 Identify, Prioritize, and Transactions related to sending the product to the customer. Aggregate Supply Chain Requirements

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D1.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Metrics (see Appendix A for metrics attributes): Consolidate Orders Cycle Time Cost to Consolidate Orders

The average time required for customer order consolidation. The sum of the costs associated with consolidating customer orders.

Best Practices: Combine Consolidation Needs with Other Products/Divisions/Companies Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc.

None identified Integrated load planning and building with warehouse management

Inputs: Delivery Date from D1.3 Reserve Inventory & Those stocks or items on hand used to support production (raw materials Determine Delivery Date and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Outputs: Daily Shipment Volume to Carrier

Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc. Daily Shipment Volume to D1.5 Build Loads Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc.

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D1.5 Build Loads Transportation modes are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes): Build Loads Cycle Time Cost to Build Loads

The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices: Build Load in Stop Sequence

Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning

Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization Integration with CRP/VMI vendor systems Vendor Managed Inventory VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Daily Shipment Volume from D1.4 Consolidate Orders

Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc.

Outputs: Load Information to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities Load Information to D1.6 Route Shipments Plan and Build Loads Information to SR2.4 Schedule MRO Shipment Plan and Build Loads Information to SR3.4 Schedule Excess Product Shipment Plan and Build Loads Information to SR1.4 Schedule Defective Product Shipment

© Copyright 2006 Supply-Chain Council, Inc.

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc Transportation modes are selected and efficient loads are built. Transportation modes are selected and efficient loads are built. Transportation modes are selected and efficient loads are built.

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D1.6 Route Shipments Loads are consolidated and routed by mode, lane and location. Metrics (see Appendix A for metrics attributes): Cost to Route Shipments Route Shipments Cycle Time

The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices: Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI Shipment Tracking and Tracing Vendor Managed Inventory

Route scheduling, carrier selection, and rating Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Satellite communications, GPS, RFID VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: Load Information from D1.5 Build Loads

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

Rated Carrier Data from Source: Carrier

Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Routing Guide from Source: Carrier

Outputs: Shipment Routes to D1.7 Select Carriers & Rate Shipments

© Copyright 2006 Supply-Chain Council, Inc.

Routes for shipping by consolidating loads.

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D1.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes): Cost to Select Carriers & Rate Shipments Select Carriers & Rate Shipments Cycle Time

The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices: Select Carriers by Least Cost per Shipment Rules based carrier selection and actual rate database and Rate Using Actual Rates Prior to Release to Billing

Inputs: Shipment Routes from D1.6 Route Shipments

Routes for shipping by consolidating loads.

Outputs: Scheduled Deliveries to Plan

The required or agreed time or rate of delivery of goods or services purchased for a future period.

Scheduled Deliveries to D1.9 Pick Product

The required or agreed time or rate of delivery of goods or services purchased for a future period.

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D1.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes): Cost to Receive Product from Source or The sum of the costs associated with transferring product from source or Make make activities. Receive Product from Source or Make Cycle The average time associated with receiving a transfer of product to deliver Time processes from source or make

Best Practices: Automatic Identification Cross-Docking

Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

Download P.O. & Advanced Ship Notices for Integration with Procurement Systems & Electronic Commerce with Automated Receiving and Put Away Vendors Dynamic Location Assignment Including Lot Real time inventory control, stock locator, and rules based put away logic Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access Merge-in-Transit Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shipper’s distribution center (DC) or in a carrier’s terminal.

Inputs: Authorization to Return to Service from SR2.2 Disposition MRO Product

Permission to return to service an item that has been repaired and found to be within specifications and operable.

Authorization to Return to Service from SR1.2 Disposition Defective Product

Permission to return to service an item that has been repaired and found to be within specifications and operable.

Authorization to Return to Service from SR3.2 Disposition Excess Product

Permission to return to service an item that has been repaired and found to be within specifications and operable.

Authorization to Scrap from SR3.2 Disposition Excess Product

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

Authorization to Scrap from SR1.2 Disposition Defective Product

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

Authorization to Scrap from SR2.2 Disposition MRO Product

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

Finished Product Release from M1.6 Release Product to Deliver

The authorization to ship a finished product that has been ordered.

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Inventory Availability from S1.4 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Scheduled Receipts from S1.1 Schedule Product Deliveries

Product due to arrive.

Outputs: Existing Inventory Data to ED.4 Manage Finished Goods Inventories

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

Inventory Availability to D1.9 Pick Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

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D1.9 Pick Product The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order. Metrics (see Appendix A for metrics attributes): Cost to Pick Product Fill Rate Pick Product Cycle Time

The sum of the costs associated with picking product. The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with product pick

Best Practices: Dynamic Location Assignment Including Lot Real time inventory control, stock locator, and rules based picking logic Control, Zoned Picking, Quality Assurance Rules based picking logic and simulation Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time Merge-in-Transit Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shipper’s distribution center (DC) or in a carrier’s terminal. Use of Speed Racks for Automated Material None identified Handling Wave picking A practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DC’s, orders are scheduled to be picked when they are received. Wave picking consolidates orders into “waves“ where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation.

Inputs: Scheduled Deliveries from D1.7 Select Carriers & Rate Shipments Inventory Availability from D1.8 Receive Product from Source or Make

The required or agreed time or rate of delivery of goods or services purchased for a future period. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Outputs: Workflow to D1.10 Pack Product

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D1.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes): Cost to Pack Product Pack Product Cycle Time

The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs: Workflow from D1.9 Pick Product

Outputs: Workflow to D1.11 Load Vehicle & Generate Shipping Documentation

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D1.11 Load Vehicle & Generate Shipping Documentation The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes): Cost to Load Product & Generate Shipping Documentation Delivery Performance to Customer Commit Date Documentation Accuracy

Load Product & Generate Shipping Documentation Cycle Time

The sum of the costs associated with loading product & generating shipping documentation. The percentage of orders that are fulfilled on the customer’s original commit date Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Best Practices: Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement Cross-Docking

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking Shipment Tracking

Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to supplier’s shipping system to financials None identified

Inputs: Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

Shipping Parameters and Documentation from ED.6 Manage Transportation

Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs: Delivered End Items to Customer Load, Shipping, Verify, and Credit Information to SR1.5 Return Defective Product

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Products that have been acknowledged as received by the customer. The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information.

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Load, Shipping, Verify, and Credit Information to SR2.5 Return MRO Product

The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information.

Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information to SR3.5 Return Excess Product components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information. Order Backlog to P1.1 Identify, Prioritize, and Orders that have been received and entered into the order processing Aggregate Supply Chain Requirements system and are in a queue waiting to be processed and shipped. Shipments to P1.1 Identify, Prioritize, and Transactions related to sending the product to the customer. Aggregate Supply Chain Requirements Shipping Documents to Government Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping Documents to Customer Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping Documents to Carrier Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping History to ED.8 Manage The transaction history of the physical shipment of an item to another Import/Export Requirements internal location or to a customer.

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D1.12 Ship Product The process of shipping the product to the customer site. Metrics (see Appendix A for metrics attributes): % of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Ship Product The sum of the costs associated with shipping products. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customer’s original Date commit date Ship Product Cycle Time The average time associated with shipping product

Best Practices: Cross-Docking

Shipment Tracking

Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified

Inputs: Workflow from D1.11 Load Vehicle & Generate Shipping Documentation

Outputs: Workflow to D1.13 Receive & Verify Product by Customer

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D1.13 Receive & Verify Product by Customer The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes): % of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% Cost to Receive & Verify Product by The sum of the costs associated with receipt and verification at customer Customer site. Delivery Performance to Customer Commit The percentage of orders that are fulfilled on the customer’s original Date commit date Perfect Condition Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% Receive & Verify Product by Customer The average time associated with receiving and verifying an order at the Cycle Time customer site

Best Practices: Advanced Shipping Notices & UCC128 Container Labeling

Bar coding; EDI; integrated transportation/warehouse management

Inputs: Workflow from D1.12 Ship Product

Outputs: Product to D1.14 Install Product

© Copyright 2006 Supply-Chain Council, Inc.

The end object of a transformation process that includes physical objects, information or services.

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D1.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): % of Faultless Installations Cost to Install Product Install Product Cycle Time Perfect Condition

Number of Faultless Installations divided by Total Number of Units Installed. The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Best Practices: Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc.

Collaborative planning tools with the Source suppliers (This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management)

Inputs: Product from D1.13 Receive & Verify Product The end object of a transformation process that includes physical objects, by Customer information or services.

Outputs: Installed Product to D1.15 Invoice

© Copyright 2006 Supply-Chain Council, Inc.

The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

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D1.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes): % of Faultless Invoices

The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date

Cost to Invoice Documentation Accuracy

The sum of the costs associated with invoicing. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with the the generation and issuance of an invoice

Invoice Cycle Time

Best Practices: Electronic Transfer of Shipment Information None identified to Finance Provide Visibility to and Quickly Escalate Integrated accounts receivables Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed EDI transaction and network services Closing of Receivables and to Reduce Processing Costs

Inputs: Installed Product from D1.14 Install Product The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

Outputs: Payment to Company

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Receipt of payment for goods and services per contract or purchase order.

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D2 Deliver Make-to-Order Product The process of delivering product that is manufactured, assembled or configured from standard parts or subassemblies. Manufacture, assembly or configuration will begins only after the receipt and validation of a firm customer order. The Category D2 includes fifteen Level 3 Elements: D2.1 Process Inquiry & Quote

Receive and respond to general customer inquiries and requests for quotes. D2.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. D2.11 Load Product & Generate Shipping The series of tasks including placing/loading product onto modes of Documentation transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. D2.12 Ship Product The process of shipping the product to the customer site. D2.13 Receive & Verify Product by Customer The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. D2.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. D2.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. D2.2 Receive, Configure, Enter and Validate Receive orders from the customer and enter them into a company’s order Order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customer’s specific needs, based on standard available parts or options. “Technically“ examine order to ensure an orderable configuration and provide accurate price. Check the customer’s credit. Optionally accept payment. D2.3 Reserve Resources & Determine Inventory and/or planned capacity is identified and reserved for specific Delivery Date orders, and a delivery date is committed and scheduled. D2.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. D2.5 Build Loads Transportation modes are selected and efficient loads are built. D2.6 Route Shipments Loads are consolidated and routed by mode, lane and location. D2.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. D2.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. D2.9 Pick Product The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

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Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Finished Goods Inventory Days of Supply Order Fulfillment Cycle Time Perfect Order Fulfillment

Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Deliver Adaptability Upside Deliver Flexibility

The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory ÷ (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Best Practices: Postponement

© Copyright 2006 Supply-Chain Council, Inc.

Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location.

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D2.1 Process Inquiry & Quote Receive and respond to general customer inquiries and requests for quotes. Metrics (see Appendix A for metrics attributes): .

Cost to Process Inquiry & Quote

.

Process Inquiry & Quote Cycle Time

The sum of the costs associated with processing inquiry and quotes. The average time associated with processing inquiries and quotes

Best Practices: . .

.

Quote Capability, without Reserving Inventory, Which Can Be Converted into an Order in a Single Step Quote Capability, without Reserving Inventory, Which Can be Converted into an Order, But Does Not Generate Build Signal or Reserve Inventory Capacity Single Point of Contact for All Order Inquiries (Including Order Entry)

None identified None identified

None identified

Inputs: .

Customer Inquiry from Source: Customer

General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Outputs: .

Order Quote (Customer) to Customer

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

.

Order Quote (Customer) to D2.2 Receive, Configure, Enter and Validate Order

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

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D2.2 Receive, Configure, Enter and Validate Order Receive orders from the customer and enter them into a company’s order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customer’s specific needs, based on standard available parts or options. “Technically“ examine order to ensure an orderable configuration and provide accurate price. Check the customer’s credit. Optionally accept payment. Metrics (see Appendix A for metrics attributes): .

Cost to Receive, Enter & Validate Order

.

Order Fulfillment Dwell Time

.

Receive, Configure, Enter & Validate Order Cycle Time

The sum of the costs associated with receiving, entering and validating a customer order. Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The average time associated with receiving and verifying an order at the customer site

Best Practices: . . .

.

.

.

. .

Automated Configuration Management Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals Electronic Commerce (Customer Visibility of Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions Order Entry is Organized by Customer Segment Customers Receive Differentiated Service Based on Volume of Business Customer Team is Empowered to Fully Service Customer Requests, Including Formal Orders and Ad Hoc Requests Customers Have One Point of Contact for All Products Remote (Sales, Customers) Order Entry Capability Value Pricing Based on “Cost to Serve“; EDLP; Cost Plus Pricing

Configuration Integrated Order/Financial Management Integrated demand/deployment planning to customer location driven by POS; Customer movement data EDI applications and integrated order management

None identified

None identified

None identified Activity Based Costing; Integrated Order Management by Customer by Line Item

Inputs: .

Configuration Rules from ED.1 Manage Deliver Business Rules

© Copyright 2006 Supply-Chain Council, Inc.

The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials.

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.

Contract Terms from Source: Customer

All the provisions and agreements of a contract.

.

Credit History from Source: Customer

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

.

Order Quote (Customer) from D2.1 Process Inquiry & Quote

A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

.

Order Rules from ED.1 Manage Deliver Business Rules

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

Outputs: .

Actual Sales History to P5.1 Assess, and Aggregate Return Requirements

Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.)

.

Booked Order to D2.3 Reserve Resources & Determine Delivery Date

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products

.

Booked Order to ED.3 Manage Deliver Information

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products

.

Contract Status to ED.3 Manage Deliver Information

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Credit History to ED.3 Manage Deliver Information

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

.

Customer Address Data to ED.3 Manage Deliver Information

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Customer Order Size, Weight, and Freight Class to ED.6 Manage Transportation

Coupled with cube and route, these criteria determine type of carrier and cost of shipment

.

Location of Customers to ED.7 Manage Product Life Cycle

Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Optional Payment to Company

Payment at the time of order, maybe partial or in full.

.

Purchase History to ED.3 Manage Deliver Information

The amount of purchased products for a certain time in history per specific intervals

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.

Shipping Preferences to ED.3 Manage Deliver Information

© Copyright 2006 Supply-Chain Council, Inc.

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

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D2.3 Reserve Resources & Determine Delivery Date Inventory and/or planned capacity is identified and reserved for specific orders, and a delivery date is committed and scheduled. Metrics (see Appendix A for metrics attributes): .

. . .

.

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

Cost to Reserve Resources & Determine Delivery Date Delivery Performance to Customer Commit Date Order Fulfillment Dwell Time

Reserve Resources & Determine Delivery Date Cycle Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with reserving resources and determining a delivery date. The percentage of orders that are fulfilled on the customer’s original commit date Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The average time associated with reserving resources and determining a delivery date

Best Practices: . . .

Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer Available-to-Promise (ATP) Dynamic Deployment Based on Constraint Based Planning and Optimal Scheduling

Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order. Advanced planning and scheduling logic with constraint, cost, and resource optimization

Inputs: .

Booked Order from D2.2 Receive, Configure, Enter and Validate Order

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products

.

Delivery Plans from P4.4 Establish Delivery Plans

.

Inventory Availability from S2.4 Transfer Product

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Plans from P3.4 Establish Production Plans

A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

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.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Sourcing Plans from P2.4 Establish Sourcing Plans

An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

Available to Promise Date to Make

The uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customerorder promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue

.

Customer Order to ED.2 Assess Delivery Performance

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

.

Delivery Date to D2.4 Consolidate Orders

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

.

Inventory Availability/Delivery Date to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

.

Inventory Status to Deliver

A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report.

.

Inventory Status to Plan

A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report.

.

Inventory Status to Make

A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report.

.

Inventory Status to Source

A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report.

.

Order Backlog to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

.

Order Signal to P3.1 Identify, Prioritize, and Aggregate Production Requirements Order Signal to P2.1 Identify, Prioritize, and Aggregate Product Requirements Replenishment Signal to S2.1 Schedule Product Deliveries

Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. Reserved inventory and/or planned capacity and delivery date for a specific order. Reserved inventory and/or planned capacity and delivery date for a specific order. Any signal that indicates when to produce or transport Items in a pull replenishment system.

. .

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D2.4 Consolidate Orders The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Metrics (see Appendix A for metrics attributes): . .

Consolidate Orders Cycle Time Cost to Consolidate Orders

The average time required for customer order consolidation. The sum of the costs associated with consolidating customer orders.

Best Practices: .

Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc.

Integrated load planning and building with warehouse management

Inputs: .

Delivery Date from D2.3 Reserve Resources & Determine Delivery Date

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Outputs: .

Consolidated Orders to D2.5 Build Loads

© Copyright 2006 Supply-Chain Council, Inc.

The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation.

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D2.5 Build Loads Transportation modes are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes): . .

Build Loads Cycle Time Cost to Build Loads

The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices: .

Build Load in Stop Sequence

.

Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization

.

Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning Integration with CRP/VMI vendor systems

Inputs: .

Consolidated Orders from D2.4 Consolidate Orders

The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation.

Outputs: .

Load Information to D2.6 Route Shipments

© Copyright 2006 Supply-Chain Council, Inc.

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

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D2.6 Route Shipments Loads are consolidated and routed by mode, lane and location. Metrics (see Appendix A for metrics attributes): . .

Cost to Route Shipments Route Shipments Cycle Time

The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices: . . .

Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI

. .

Shipment Tracking and Tracing Vendor Managed Inventory

Route scheduling, carrier selection, and rating Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Satellite communications, GPS, RFID VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: .

Load Information from D2.5 Build Loads

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

.

Rated Carrier Data from Source: Company

.

Routing Guide from Source: Company

Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Outputs: .

Scheduled Deliveries to Plan

The required or agreed time or rate of delivery of goods or services purchased for a future period.

.

Shipment Routes to D2.7 Select Carriers & Rate Shipments

Routes for shipping by consolidating loads.

© Copyright 2006 Supply-Chain Council, Inc.

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D2.7 Select Carriers & Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes): .

Cost to Select Carriers & Rate Shipments

.

Select Carriers & Rate Shipments Cycle Time

The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices: .

Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing

Rules based carrier selection and actual rate database

Inputs: .

Shipment Routes from D2.6 Route Shipments

Routes for shipping by consolidating loads.

Outputs: .

Workflow to D2.9 Pick Product

© Copyright 2006 Supply-Chain Council, Inc.

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D2.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes): . .

Cost to Receive Product from Source or Make Receive Product from Source or Make Cycle Time

The sum of the costs associated with transferring product from source or make activities. The average time associated with receiving a transfer of product to deliver processes from source or make

Best Practices: . .

Automatic Identification Cross-Docking

Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

.

Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance

Integration with Procurement Systems & Electronic Commerce with Vendors Real time inventory control, stock locator, and rules based picking logic

.

Outputs: .

Workflow to D2.9 Pick Product

© Copyright 2006 Supply-Chain Council, Inc.

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D2.9 Pick Product The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Metrics (see Appendix A for metrics attributes): . .

Cost to Pick Product Pick Product Cycle Time

The sum of the costs associated with picking product. The average time associated with product pick

Best Practices: . . .

Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time Use of Speed Racks for Automated Material Handling

Real time inventory control, stock locator, and rules based picking logic Rules based picking logic and simulation None identified

Inputs: . . . .

Workflow from D2.7 Select Carriers & Rate Shipments Workflow from D2.8 Receive Product from Source or Make Finished Product Release from M2.6 The authorization to ship a finished product that has been ordered. Release Finished Product to Deliver Inventory Availability from S2.4 Transfer Those stocks or items on hand used to support production (raw Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from M2.2 Issue Sourced/In-Process Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Schedule from M2.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

WIP Location Rules from EM.6 Manage Transportation

The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations.

Outputs: .

Workflow to D2.10 Pack Product

© Copyright 2006 Supply-Chain Council, Inc.

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D2.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes): . .

Cost to Pack Product Pack Product Cycle Time

The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs: .

Workflow from D2.9 Pick Product

Outputs: .

Workflow to D2.11 Load Product & Generate Shipping Documentation

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

D2.11 Load Product & Generate Shipping Documentation The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes): . . .

.

Cost to Load Product & Generate Shipping Documentation Delivery Performance to Customer Commit Date Documentation Accuracy

Load Product & Generate Shipping Documentation Cycle Time

The sum of the costs associated with loading product & generating shipping documentation. The percentage of orders that are fulfilled on the customer’s original commit date Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Best Practices: . .

Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement

.

Cross-Docking

.

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking

. .

Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to supplier’s shipping system to financials

Inputs: . .

Workflow from D2.10 Pack Product Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements

.

Shipping Parameters and Documentation from ED.6 Manage Transportation

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs: . . .

Workflow to D2.12 Ship Product Advanced Ship Notice to D2.13 Receive & Verify Product by Customer Delivered End Items to Customer

© Copyright 2006 Supply-Chain Council, Inc.

An EDI notification of shipment of product. Products that have been acknowledged as received by the customer.

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.

Shipping Documents to Carrier

.

Shipping History to ED.8 Manage Import/Export Requirements

© Copyright 2006 Supply-Chain Council, Inc.

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). The transaction history of the physical shipment of an item to another internal location or to a customer.

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D2.12 Ship Product The process of shipping the product to the customer site. Metrics (see Appendix A for metrics attributes): .

. . .

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

Cost to Ship Product Delivery Performance to Customer Commit Date Ship Product Cycle Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with shipping products. The percentage of orders that are fulfilled on the customer’s original commit date The average time associated with shipping product

Best Practices: .

Cross-Docking

Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

.

Shipment Tracking

None identified

Inputs: .

Workflow from D2.11 Load Product & Generate Shipping Documentation

Outputs: .

Workflow to D2.13 Receive & Verify Product by Customer

© Copyright 2006 Supply-Chain Council, Inc.

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D2.13 Receive & Verify Product by Customer The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes): . . .

.

Cost to Receive & Verify Product by Customer Delivery Performance to Customer Commit Date Perfect Condition

Receive & Verify Product by Customer Cycle Time

The sum of the costs associated with receipt and verification at customer site. The percentage of orders that are fulfilled on the customer’s original commit date Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The average time associated with receiving and verifying an order at the customer site

Best Practices: . .

Advanced Shipping Notices & UCC128 Container Labeling Shipment Tracking

Bar coding; EDI; integrated transportation/warehouse management None identified

Inputs: . .

Workflow from D2.12 Ship Product Advanced Ship Notice from D2.11 Load Product & Generate Shipping Documentation

An EDI notification of shipment of product.

Outputs: .

Product to D2.14 Install Product

© Copyright 2006 Supply-Chain Council, Inc.

The end object of a transformation process that includes physical objects, information or services.

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D2.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes): .

% of Faultless Installations

. . .

Cost to Install Product Install Product Cycle Time Perfect Condition

Number of Faultless Installations divided by Total Number of Units Installed. The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Best Practices: .

Collaborative planning tools with the Source suppliers

Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc.

(This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management)

Inputs: .

Product from D2.13 Receive & Verify Product by Customer

The end object of a transformation process that includes physical objects, information or services.

Outputs: .

Installed Product to D2.15 Invoice

The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

.

Installed Product to Customer

The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

© Copyright 2006 Supply-Chain Council, Inc.

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D2.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes): .

% of Faultless Invoices

. .

Customer Invoicing/ Accounting Costs Days Sales Outstanding

. .

Deliver Cycle Time Documentation Accuracy

The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date 5 point annual average of gross accounts receivable ÷ (total gross annual sales ÷ 365) The average time associated with Deliver Processes Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100%

Best Practices: . . .

Electronic Transfer of Shipment Information to Finance Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs

None identified Integrated accounts receivables EDI transaction and network services

Inputs: .

Installed Product from D2.14 Install Product

The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

Outputs: .

Payment to Company

© Copyright 2006 Supply-Chain Council, Inc.

Receipt of payment for goods and services per contract or purchase order.

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D3 Deliver Engineer-to-Order Product The process of delivering a product that is designed, manufactured, and assembled from a bill of materials that includes one or more custom parts. Design will begin only after the receipt and validation of a firm customer order. The Category D3 includes fifteen Level 3 Elements: .

D3.1 Obtain and Respond to RFP/RFQ

.

D3.10 Pack Product

.

D3.11 Load Product & Generate Ship Documents

. .

D3.12 Ship Product D3.13 Receive & Verify Product by Customer

.

D3.14 Install Product

.

D3.15 Invoice

.

D3.2 Negotiate & Receive Contract

.

D3.3 Enter Order, Commit Resources & Launch Program

.

D3.4 Schedule Installation

. .

D3.5 Build Loads D3.6 Route Shipments

.

D3.7 Select Carriers and Rate Shipments

.

D3.8 Receive Product from Source or Make

.

D3.9 Pick Product

© Copyright 2006 Supply-Chain Council, Inc.

The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. The process of shipping the product to the customer site The process of receiving the shipment (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice.

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The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Transportation loads are selected and efficient loads are built. The process of consolidating and routing shipments by mode, lane, and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order.

June 2006

Metrics (see Appendix A for metrics attributes): .

Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

. .

Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability

.

Finished Goods Inventory Days of Supply

.

Order Fulfillment Cycle Time

.

Order Management Costs

.

Perfect Order Fulfillment

.

Return on Supply Chain Fixed Assets

.

Return on Working Capital

.

Upside Deliver Adaptability

.

Upside Deliver Flexibility

© Copyright 2006 Supply-Chain Council, Inc.

The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory ÷ (value of transfers/365 days). The average actual cycle time consistently achieved to fulfill customer orders. The aggregation of the following cost elements (contained in this glossary): The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

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D3.1 Obtain and Respond to RFP/RFQ The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. Metrics (see Appendix A for metrics attributes): . .

Cost to Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cycle Time

The sum of the costs associated with obtaining and responding to Request for Quote (RFQ) / Request for Proposal (RFP). The average time associated with obtaining and responding to RFQs/RFPs

Best Practices: . .

Partnership with Outside Design Firms to Provide Skills and Capacity, as Needed Use of CAD/CAE Applications to Simulate Design, Cost and Manufacturing Process

None identified None identified

Inputs: .

RFQ/RFP from Source: Customer

Request for Quote - A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors. Request for Proposal - A document used to solicit vendor responses when the functional requirements and features are known but no specific product is in mind.

Outputs: .

Completed Proposal to Customer

A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service

.

Completed Proposal to D3.2 Negotiate & Receive Contract

A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service

.

Contract Status to ED.3 Manage Deliver Information

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Credit History to ED.3 Manage Deliver Information

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

.

Customer Address Data to ED.3 Manage Deliver Information

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Purchase History to ED.3 Manage Deliver Information

The amount of purchased products for a certain time in history per specific intervals

.

Shipping Preferences to ED.3 Manage Deliver Information

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

© Copyright 2006 Supply-Chain Council, Inc.

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D3.2 Negotiate & Receive Contract The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. Metrics (see Appendix A for metrics attributes): .

Cost to Negotiate & Receive Contract

.

Negotiate & Receive Contract Cycle Time

The sum of the costs associated with negotiating and receiving contracts The average time associated with negotiating and receiving a contract

Inputs: .

Completed Proposal from D3.1 Obtain and Respond to RFP/RFQ

A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service

.

Order Rules from ED.1 Manage Deliver Business Rules

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

Outputs: .

Approved Contract to D3.3 Enter Order, Commit Resources & Launch Program

Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written.

.

Customer Order to ED.2 Assess Delivery Performance

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

.

Customer Order Size, Weight, and Freight Class to ED.6 Manage Transportation

Coupled with cube and route, these criteria determine type of carrier and cost of shipment

.

Location of Customers to ED.7 Manage Product Life Cycle

Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

.

Optional Payment to Company

Payment at the time of order, maybe partial or in full.

© Copyright 2006 Supply-Chain Council, Inc.

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D3.3 Enter Order, Commit Resources & Launch Program The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. Metrics (see Appendix A for metrics attributes): .

. . . .

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

Cost to Enter Order, Commit Resources & Launch Program Delivery Performance to Customer Commit Date Enter Order, Commit Resources & Launch Program Cycle Time Order Fulfillment Dwell Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with entering the order, committing resources & launching a program. The percentage of orders that are fulfilled on the customer’s original commit date The average time associated with entering an order, committing resources and program launch Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time.

Inputs: .

Approved Contract from D3.2 Negotiate & Receive Contract

Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written.

.

Delivery Plans from P4.4 Establish Delivery Plans

.

Production Plans from P3.4 Establish Production Plans

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service.

.

Production Schedule from M3.2 Schedule Production Activities

Production Plan includes production capability. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Sourcing Plans from P2.4 Establish Sourcing Plans

An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

Actual Sales History to P5.1 Assess, and Aggregate Return Requirements

Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.)

.

Customer Order to D3.4 Schedule Installation

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

.

Order Backlog to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped.

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.

Order Information to M3.1 Finalize Production Engineering

The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system.

.

Order Signal to P2.1 Identify, Prioritize, and Aggregate Product Requirements Order Signal to P3.1 Identify, Prioritize, and Aggregate Production Requirements Replenishment Signal to S3.3 Schedule Product Deliveries

Reserved inventory and/or planned capacity and delivery date for a specific order. Reserved inventory and/or planned capacity and delivery date for a specific order. Any signal that indicates when to produce or transport Items in a pull replenishment system.

Resource Availability to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output.

. . .

© Copyright 2006 Supply-Chain Council, Inc.

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D3.4 Schedule Installation The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Metrics (see Appendix A for metrics attributes): .

Cost to Schedule Installation

.

Schedule Installation Cycle Time

The sum of the costs associated with scheduling product installation. The average time associated with scheduling the installation of product

Inputs: .

Customer Order from D3.3 Enter Order, Commit Resources & Launch Program

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

Outputs: .

Scheduled Installation to Customer

The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule.

.

Scheduled Installation to D3.5 Build Loads

The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

D3.5 Build Loads Transportation loads are selected and efficient loads are built. Metrics (see Appendix A for metrics attributes): . .

Build Loads Cycle Time Cost to Build Loads

The average time associated with building shipment loads. The sum of the costs associated with building transportation loads.

Best Practices: .

Build Load in Stop Sequence

.

Consolidation of Inbound and Outbound Requirements CRP & VMI Loads Optimized for Utilization Vendor Managed Inventory

. .

Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). Integrated inbound/outbound transportation planning Integration with CRP/VMI vendor systems VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

Inputs: .

Scheduled Installation from D3.4 Schedule Installation

The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule.

Outputs: .

Load Information to D3.6 Route Shipments

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

.

Scheduled Deliveries to Plan

The required or agreed time or rate of delivery of goods or services purchased for a future period.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

D3.6 Route Shipments The process of consolidating and routing shipments by mode, lane, and location. Metrics (see Appendix A for metrics attributes): . .

Cost to Route Shipments Route Shipments Cycle Time

The sum of the costs associated with routing shipments. The average time associated with routing shipments

Best Practices: . . . . .

Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling Consolidation of Carriers CRP/VMI

Route scheduling, carrier selection, and rating

Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing Shipment Tracking and Tracing

Transportation modeling and rate analysis Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN) Rules based carrier selection and actual rate database Satellite communications, GPS, RFID

Inputs: .

Load Information from D3.5 Build Loads

Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

.

Rated Carrier Data from Source: Company

.

Routing Guide from Source: Company

Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates.

Outputs: .

Workflow to D3.7 Select Carriers and Rate Shipments

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D3.7 Select Carriers and Rate Shipments Specific carriers are selected by lowest cost per route and shipments are rated and tendered. Metrics (see Appendix A for metrics attributes): .

Cost to Select Carriers & Rate Shipments

.

Select Carriers & Rate Shipments Cycle Time

The sum of the costs associated with selecting carriers and rating shipments. The average time associated with selecting carriers and rating shipments

Best Practices: .

Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing

Rules based carrier selection and actual rate database

Inputs: .

Workflow from D3.6 Route Shipments

Outputs: .

Workflow to D3.9 Pick Product

© Copyright 2006 Supply-Chain Council, Inc.

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D3.8 Receive Product from Source or Make The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. Metrics (see Appendix A for metrics attributes): . .

Cost to Receive Product from Source or Make Receive Product from Source or Make Cycle Time

The sum of the costs associated with transferring product from source or make activities. The average time associated with receiving a transfer of product to deliver processes from source or make

Best Practices: . .

Automatic Identification Cross-Docking

Bar Coding & Radio Frequency Communications Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

.

Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away Dynamic Location Assignment Including Lot Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access

Integration with Procurement Systems & Electronic Commerce with Vendors Real time inventory control, stock locator, and rules based put away logic

.

Outputs: .

Workflow to D3.9 Pick Product

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D3.9 Pick Product The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Metrics (see Appendix A for metrics attributes): . .

Cost to Pick Product Pick Product Cycle Time

The sum of the costs associated with picking product. The average time associated with product pick

Best Practices: . .

Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time

Real time inventory control, stock locator, and rules based picking logic Rules based picking logic and simulation

Inputs: . . . .

Workflow from D3.7 Select Carriers and Rate Shipments Workflow from D3.8 Receive Product from Source or Make Finished Product Release from M3.7 The authorization to ship a finished product that has been ordered. Release Product to Deliver Inventory Availability from M3.3 Issue Those stocks or items on hand used to support production (raw Sourced/In-Process Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Inventory Availability from S3.6 Transfer Product

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Production Schedule from M3.2 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

Outputs: .

Workflow to D3.10 Pack Product

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D3.10 Pack Product The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. Metrics (see Appendix A for metrics attributes): . .

Cost to Pack Product Pack Product Cycle Time

The sum of the costs associated with product packaging. The average time associated with packing a product for shipment.

Inputs: .

Workflow from D3.9 Pick Product

Outputs: .

Workflow to D3.11 Load Product & Generate Ship Documents

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D3.11 Load Product & Generate Ship Documents The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. Metrics (see Appendix A for metrics attributes): . .

.

Cost to Load Product & Generate Shipping Documentation Documentation Accuracy

Load Product & Generate Shipping Documentation Cycle Time

The sum of the costs associated with loading product & generating shipping documentation. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with product loading and the generation of shipping documentation

Best Practices: . .

Advanced Shipping Notices & UCC128 Container Labeling Carrier Agreement

.

Cross-Docking

.

Electronic Generation and Download of Shipping Documents Full Visibility of Credit History by Shipping Personnel Integrated Credit Checking

. .

Bar coding; EDI; integrated transportation/warehouse management Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. None identified None identified Interface to supplier’s shipping system to financials

Inputs: . .

Workflow from D3.10 Pack Product Shipping Export Parameters and Documentation from ED.8 Manage Import/Export Requirements

.

Shipping Parameters and Documentation from ED.6 Manage Transportation

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

Outputs: . .

Workflow to D3.12 Ship Product Shipping Documents to Carrier

.

Shipping History to ED.8 Manage Import/Export Requirements

© Copyright 2006 Supply-Chain Council, Inc.

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). The transaction history of the physical shipment of an item to another internal location or to a customer.

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D3.12 Ship Product The process of shipping the product to the customer site Metrics (see Appendix A for metrics attributes): .

. . .

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

Cost to Ship Product Delivery Performance to Customer Commit Date Ship Product Cycle Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with shipping products. The percentage of orders that are fulfilled on the customer’s original commit date The average time associated with shipping product

Best Practices: .

Cross-Docking

Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

.

Shipment Tracking

None identified

Inputs: .

Workflow from D3.11 Load Product & Generate Ship Documents

Outputs: .

Workflow to D3.13 Receive & Verify Product by Customer

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D3.13 Receive & Verify Product by Customer The process of receiving the shipment (either at customer site or at shipping area in case of selfcollection) and verifying that the order was shipped complete and that the product meets delivery terms. Metrics (see Appendix A for metrics attributes): .

. . .

.

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

Cost to Receive & Verify Product by Customer Delivery Performance to Customer Commit Date Perfect Condition

Receive & Verify Product by Customer Cycle Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the costs associated with receipt and verification at customer site. The percentage of orders that are fulfilled on the customer’s original commit date Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The average time associated with receiving and verifying an order at the customer site

Best Practices: . .

Advanced Shipping Notices & UCC128 Container Labeling Shipment Tracking

Bar coding; EDI; integrated transportation/warehouse management None identified

Inputs: .

Workflow from D3.12 Ship Product

Outputs: .

Product to D3.14 Install Product

© Copyright 2006 Supply-Chain Council, Inc.

The end object of a transformation process that includes physical objects, information or services.

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D3.14 Install Product When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes): . . .

Cost to Install Product Install Product Cycle Time Perfect Condition

The sum of the costs associated with product installation. The average time associated with product installation Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

It initiates event: .

Product Installed for D3.15 Invoice

Inputs: .

Product from D3.13 Receive & Verify Product by Customer

The end object of a transformation process that includes physical objects, information or services.

Outputs: . .

Workflow to D3.15 Invoice Installed Product to Customer

© Copyright 2006 Supply-Chain Council, Inc.

The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirement for subsequent integration.

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D3.15 Invoice A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Metrics (see Appendix A for metrics attributes): .

% of Faultless Invoices

The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date

. .

Cost to Invoice Documentation Accuracy

.

Invoice Cycle Time

The sum of the costs associated with invoicing. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The average time associated with the the generation and issuance of an invoice

Best Practices: . . .

Electronic Transfer of Shipment Information to Finance Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs

None identified Integrated accounts receivables EDI transaction and network services

It is initiated by event: .

Product Installed from D3.14 Install Product

Inputs: .

Workflow from D3.14 Install Product

Outputs: .

Payment to Company

© Copyright 2006 Supply-Chain Council, Inc.

Receipt of payment for goods and services per contract or purchase order.

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D4 Deliver Retail Product Deliver Retail Products are the processes used to acquire, merchandise, and sell finished goods at a retail store. A retail store is a physical location that sells products (and services) direct to the consumer using a point of sale process (manual or automated) to collect payment. Merchandising at a store level is the stocking and restocking of products in designated storage locations to generate sales in a retail store. The Category D4 includes seven Level 3 Elements: D4.1 Generate Stocking Schedule D4.2 Receive Product at Store D4.3 Pick Product from Backroom

D4.4 Stock Shelf

D4.5 Fill Shopping Cart D4.6 Checkout D4.7 Deliver and/or Install

The process of scheduling resources to support item-stocking requirements. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Typical set of tasks associated with product selection, storage and movement through to checkout. The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. The process of preparing and installing the product at the customer site. The product is fully functional upon completion.

Metrics (see Appendix A for metrics attributes): Cash-To-Cash Cycle Time

[Inventory Days of Supply + Days Sales Outstanding - Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Cost to Deliver Deliver Cycle Time Downside Deliver Adaptability Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

© Copyright 2006 Supply-Chain Council, Inc.

The sum of the costs associated with deliver The average time associated with Deliver Processes The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

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Upside Deliver Adaptability Upside Deliver Flexibility

© Copyright 2006 Supply-Chain Council, Inc.

The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

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D4.1 Generate Stocking Schedule The process of scheduling resources to support item-stocking requirements. Metrics (see Appendix A for metrics attributes): Cost to Generate Stocking Schedule Generate Stocking Schedule Cycle Time

The sum of the costs associated with generating a stocking schedule. The average time associated with the generating a stocking schedule

Best Practices: . . .

Automated Pick List Labor Scheduling that Matches Product Flow Push Product on Trailer Arrival

System generated pick-lists based on picking / batching rules. Workforce management solution with flexible rules. System prioritization of items coming off trucks vs. picked from back room.

It initiates event: .

Item Stocking Resources Scheduled for D4.2 Receive Product at Store

Inputs: . .

Daily Replenishment Requirements from S1.4 Transfer Product On-demand Replenishment Requirements from Source: Company

Resources needed to meet Item stocking schedule requirement. Requirements for the triggering of material movement to a work center only when that work center is ready to begin the next job.

.

Resource Availability from Source: Company

The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output.

.

Shipping Schedules (internal or 3PL) from Source: Company

Scheduling of direct deliveries of material to a specified location on a plant floor near the operation where it is to be used.

.

Stocking Requirements from P4.4 Establish Delivery Plans

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts.

. .

Store Allocation Instructions from P4.1 Identify, Prioritize, and Aggregate Delivery Requirements Vendor/DC inventory availability from Vendor/DC inventory available to a customer to supply demands. Source: Company (Where the customer has access to the supplier’s inventory and the supplier has access to the customer’s requirements and inventory or vendor managed inventory).

Outputs: . .

Workflow to D4.2 Receive Product at Store Stocking Schedule to D4.4 Stock Shelf

© Copyright 2006 Supply-Chain Council, Inc.

A timetable for the planned movement of material from a bulk storage area to an order pick storage area.

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D4.2 Receive Product at Store The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. Metrics (see Appendix A for metrics attributes): . .

Cost to Receive Product at Store Receive Product at Store Cycle Time

The sum of the costs associated with receiving product at the store. The average time associated with receiving product at the customer store

Best Practices: . . .

Automated Pick List Labor Scheduling that Matches Product Flow Push Product on Trailer Arrival

System generated pick-lists based on picking / batching rules. Workforce management solution with flexible rules. System prioritization of items coming off trucks vs. picked from back room.

It is initiated by event: .

Item Stocking Resources Scheduled from D4.1 Generate Stocking Schedule

Inputs: . . .

Workflow from D4.1 Generate Stocking Schedule Finished Product Release from M1.6 The authorization to ship a finished product that has been ordered. Release Product to Deliver Inventory Availability from S1.4 Transfer Those stocks or items on hand used to support production (raw Product materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Item Stocking Requirements from P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts.

.

Production Schedule from M1.1 Schedule Production Activities

A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item.

.

Scheduled Receipts from S1.1 Schedule Product Deliveries

Product due to arrive.

Outputs: .

Inventory Availability to D4.3 Pick Product from Backroom

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

.

Item Pick Sheet for Stocking Schedule to D4.3 Pick Product from Backroom

A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area.

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D4.3 Pick Product from Backroom The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock Metrics (see Appendix A for metrics attributes): .

Cost to Pick Product from Backroom

.

Pick Product from Backroom Cycle Time

The sum of the costs associated with picking product from backroom. The average time associated with product pick from backroom

Best Practices: .

Automated Directed Picking

.

Automated Replenishment of Back Stock Based on Minimum Stocking Levels Defined Stocking Levels and Criteria Staging Based on In-store Zones

. .

A pick list displayed on a handheld device that directs picks and relieves inventory from backroom locations None identified None identified Items are staged for re-stocking based on zones within the store. This minimizes restocking effort.

Inputs: . .

Workflow from Source: Company Inventory Availability from D4.2 Receive Product at Store

.

Inventory in Stock from Source: Company

Stored products or service parts ready for sale, as distinguished from stores, which are usually components or raw materials.

.

Item Pick Sheet for Stocking Schedule from D4.2 Receive Product at Store

A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area.

.

On-Order/Backorder from Source: Company

An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand.

.

Replenishment Quantities from Source: Company

In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (onhand plus on-order) falls to or below the reorder point.

Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts).

Outputs: .

Assorted by Shelf Order to Company

The function of physically separating a homogeneous subgroup from a heterogeneous population of items

.

Loaded Retail Cart or Pallet to D4.4 Stock Shelf

Customer selected retail finished goods transferred to the point of sale.

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D4.4 Stock Shelf For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Metrics (see Appendix A for metrics attributes): . .

Cost to Stock Shelf In-Stock %

.

Stock Shelf Cycle Time

The sum of the costs associated with stocking shelves. Percentage of materials, components, or finished goods that are there when needed. The average time associate with stocking shelves

Best Practices: . .

Item/Shelf Scanning Upon Put-A-Way Off Peak Stocking

.

Proof of Performance (Promotion Management) Scan Displays for Promotion Conformance Stocking is Completed in Zones

. .

Scan store shelves / bar codes to confirm put-a-way. The majority of stocking is completed with minimal impact to or visibility from the customer. Scan store shelves / bar codes to confirm put-a-way. Scan using handheld and match with ad. None identified Each area of the store has its own stocking plan and items are routed specifically to that area.

Inputs: .

Loaded Retail Cart or Pallet from D4.3 Pick Product from Backroom

Customer selected retail finished goods transferred to the point of sale.

.

Loaded Retail Cart or Pallet from S1.4 Transfer Product

Customer selected retail finished goods transferred to the point of sale.

.

Plan-o-gram Data from Source: Company

Data required to develop and build a Plan-O-Gram display to help minimize setup time by showing specific placement of all items, by product number, on the display.

.

Stocking Schedule from D4.1 Generate Stocking Schedule

A timetable for the planned movement of material from a bulk storage area to an order pick storage area.

.

Vendor Merchandising / Co-op advertising agreements from Source: Company

The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering.

Outputs: .

Full Shelf Locations to D4.5 Fill Shopping Cart

Determination of the best retail locations for implementation of full shelf equipment.

.

Store Shelf Inventory Counts to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis.

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D4.5 Fill Shopping Cart Typical set of tasks associated with product selection, storage and movement through to checkout. Metrics (see Appendix A for metrics attributes): . . .

% Item Location Accuracy Cost to Fill Shopping Cart Fill Shopping Cart Cycle Time

The sum of the costs associated with filling a shopping cart. The average time associated with “filling the shopping cart“

Best Practices: . .

Items Are Relieved from Inventory When Item is Removed from Shelf Loyalty Card Data

.

Measured and Compared with Same Activity Previous Period

.

Multiple Locations Throughout Store

.

Substitution

.

Up and Cross Selling and/or Substitution

RFID, smart cart or customer self-service reduces system inventory upon item pick. Use for comparison to previous sales activity/track new consumers, etc. DSS or portal tool that shows previous period performance and comparison for store management (whether it is a year ago, period ago, etc.). Planned and tracked via a plan-o-gram system; Location specific product labeling. Trained staff or automated systems (Internet) that recommend upsell, cross-sell, and/or substitution See Up and cross selling Trained staff or automated systems (Internet) that recommend upsell, cross-sell, and/or substitution.

Inputs: .

Customer Data (preference) from Source: Company

Customer profile, which includes history, customer preferences, status, and delivery requirements, etc.

.

Full Shelf Locations from D4.4 Stock Shelf

Determination of the best retail locations for implementation of full shelf equipment.

.

Lost or Dropped Shopping Carts from Source: Company

On-line orders that are missing due to internet, software, or hardware malfunctions.

.

Merchandising Plan (Supplier) from Source: Company

The merchandising plan includes the current market position, opportunity and issue analysis, merchandising objectives and strategies, action plans, programs, projects, budgets, and pro forma profit and loss statement and management controls.

.

Product Data (linked/related SKU’s) from Source: Company

The properties and characteristics of a product (e.g. the part number and a text description of the product) and the relationships to other items in the product family and linked / related SKU’s.

.

Promotional Plan from Source: Company

The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering

Outputs: .

Full Cart Ready for Checkout to D4.6 Checkout

© Copyright 2006 Supply-Chain Council, Inc.

Customer selected goods transferred to the point of sale.

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D4.6 Checkout The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. Metrics (see Appendix A for metrics attributes): . .

Checkout Cycle Time Cost to Checkout

The average time required for customer checkout. The sum of the costs associated with product checkout.

Best Practices: .

Automatic Customer Payment

.

Customer Profile Drive Recognition Upon Checkout Notification of Existing/Future Event or Promotions

.

RFID, smart cart or customer self-service charges goods to card upon store departure. None identified None identified

It initiates event: .

Checkout Completed for D4.7 Deliver and/or Install

Inputs: .

Customer Profile/Data from Source: Company

Customer profile, which includes history, customer preferences, status, and delivery requirements, etc.

.

Full Cart Ready for Checkout from D4.5 Fill Shopping Cart Promotion Event Calendar from Source: Company

Customer selected goods transferred to the point of sale.

.

Time phased promotion / event tasks where the product offering is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering during the year.

Outputs: . .

Workflow to D4.7 Deliver and/or Install Customer Loyalty / Recurring Visits to Company

.

Full Cart (Empty Cart) to Company

Completion of customer checkout, sale of the selected goods, cart transitions from full to empty.

.

More units, higher average ring, etc.

.

Loyalty Customer Profile Changes to Company Point of Sale Data (Daily) to P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

.

Satisfied Customer to Company

© Copyright 2006 Supply-Chain Council, Inc.

Input to customer profile, frequency of visits, recurring, time frame, what purchased, numbers and rings. Measure of customer satisfaction with products and service.

The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment. Customers who are satisfied with the product or service delivered by the suppliers, including the aspects such as time, quality, cost, etc.

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D4.7 Deliver and/or Install The process of preparing and installing the product at the customer site. The product is fully functional upon completion. Metrics (see Appendix A for metrics attributes): . .

Cost to Deliver and/or Install Deliver and/or Install Cycle Time

The sum of the costs associated with deliver and/or install The average time required to deliver and install product.

Best Practices: . . . .

Goals / Performance Plans Measurement, Monitoring and Adjustment of Service or Product Installation Provide Product or Service Training to Employees or FAQ’s Online Stage Product or Service Adoption

None identified None identified None identified None identified

It is initiated by event: .

Checkout Completed from D4.6 Checkout

Inputs: .

Workflow from D4.6 Checkout

Outputs: . . . .

Consistently High Adoption Rates to Company High Customer Services Satisfaction Levels to Company Low Rates of Failure to Company

Indication of quality in workmanship and design.

Successful Installation / Live System to Company

The installation of product is completed at the customer site, and the product is fully functional.

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Indication of product and service quality, i.e. customer satisfaction. Indication of product and service quality.

June 2006

ED Enable DELIVER Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ED includes eight Level 3 Elements: ED.1 Manage Deliver Business Rules ED.2 Assess Delivery Performance

ED.3 Manage Deliver Information

ED.4 Manage Finished Goods Inventories ED.5 Manage Deliver Capital Assets ED.6 Manage Transportation

ED.7 Manage Product Life Cycle ED.8 Manage Import/Export Requirements

© Copyright 2006 Supply-Chain Council, Inc.

The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is outsourced the performance is passed on to source for contract administration. The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment - CAPITAL ASSETS) and 2) the management of transporters. The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc.

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ED.1 Manage Deliver Business Rules The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Deliver Business Rules Manage Deliver Business Rules Cycle Time

The sum of the Costs to Manage Deliver Business Rules The average time associated with managing deliver business rules

Best Practices: . .

Integrated Edit at Order Entry Time On-Line Rule Base

Customer Master Record None identified

Inputs: .

Configuration Rules from Source: Company

The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials.

.

Management Process Reports from ED.2 Assess Delivery Performance

Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved.

.

Planning Decision Policies from Source: Plan

.

Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance

Any company policies that affect how a planning process is defined, approved, and performed. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Outputs: .

Configuration Rules to D2.2 Receive, Configure, Enter and Validate Order

The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials.

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Order Rules to ED.5 Manage Deliver Capital Assets

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

.

Order Rules to ED.4 Manage Finished Goods Inventories

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Order Rules to D2.2 Receive, Configure, Enter and Validate Order

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Order Rules to D1.2 Receive, Enter & Validate Order

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Order Rules to D3.2 Negotiate & Receive Contract

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

© Copyright 2006 Supply-Chain Council, Inc.

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ED.2 Assess Delivery Performance The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is out-sourced the performance is passed on to source for contract administration. Metrics (see Appendix A for metrics attributes): .

Assess Delivery Performance Cycle Time

.

Cost to Assess Delivery Performance

.

Documentation Accuracy

.

Perfect Condition

The average time associated with assessing the performance of deliver processes. The sum of the costs associated with assessing delivery performance. Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Best Practices: . .

Customer Initiated Package Tracking Real Time Package Tracking

WEB based Shared systems Tracking and tracing

Inputs: .

Benchmark Data from Source: Company

A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on Benchmark measures are often derived from other firms that display “best in class“ achievement

.

Carrier Contracts (Customer) from Source: Source

Contracts that customers have with specific freight carriers through which suppliers have to work for the delivery of products. Customer manages carrier selection, shipment of purchased product, and payment of carrier.

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Customer Order from D1.2 Receive, Enter & Validate Order

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

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Customer Order from D2.3 Reserve Resources & Determine Delivery Date

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

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Customer Order from D3.2 Negotiate & Receive Contract

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

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Delivery Performance from ED.5 Manage Deliver Capital Assets

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

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Delivery Performance from ED.6 Manage Transportation

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

© Copyright 2006 Supply-Chain Council, Inc.

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Delivery Performance from ED.4 Manage Finished Goods Inventories

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

Outputs: .

Customer Service Requirements to ED.6 Manage Transportation

Supply chain requirements related to the customer’s needs, including service requirements, sales forecasts and actual orders/backorders.

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Customer Service Requirements to Plan

Supply chain requirements related to the customer’s needs, including service requirements, sales forecasts and actual orders/backorders.

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Management Process Reports to ED.1 Manage Deliver Business Rules

Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved.

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Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain

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Supply-Chain Performance Metrics to ED.1 Manage Deliver Business Rules

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Supply-Chain Performance Metrics to ED.5 Manage Deliver Capital Assets

Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

ED.3 Manage Deliver Information The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Deliver Information Manage Deliver Information Cycle Time

The sum of the Cost to Manage Deliver Information The average time associated with managing deliver information

Best Practices: . . . .

.

Comprehensive History of Customer Interactions Including Order History, Claims, Problems, Etc. Customer Access to Online Tracking of Order Status and Shipping Information Customer Service Data Validation Including Geo-Coding Online Real-Time Customer Entry and Edit

Provide Single Source of Information on the Customer (Single Group / Owner Responsible for Accuracy / Quality of Customer Data)

None identified Internet-enabled package/shipment tracking None identified On-line Customer Service Module CRM (Customer resource Management) software is getting a big push in the E-Commerce/EBusiness areas and generally provides a means to fulfill this requirement Secure E-Commerce Server and integrated Order Management System (OMS) Warehouse Management System (WMS) and Transportation Management System (TMS)

Inputs: .

Booked Order from D2.2 Receive, Configure, Enter and Validate Order

The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-to-stock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products

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Contract Status from D3.1 Obtain and Respond to RFP/RFQ

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Contract Status from D2.2 Receive, Configure, Enter and Validate Order

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Contract Status from D1.2 Receive, Enter & Validate Order

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Credit History from D3.1 Obtain and Respond to RFP/RFQ

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

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Credit History from D2.2 Receive, Configure, Enter and Validate Order

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

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Credit History from D1.2 Receive, Enter & Validate Order

Report that portrays a potential customer’s payment history and debt, indicating the ability to pay in a timely manner in the future.

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Customer Address Data from D1.2 Receive, Enter & Validate Order

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Customer Address Data from D3.1 Obtain and Respond to RFP/RFQ

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Customer Address Data from D2.2 Receive, Configure, Enter and Validate Order

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Purchase History from D1.2 Receive, Enter & Validate Order

The amount of purchased products for a certain time in history per specific intervals

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Purchase History from D3.1 Obtain and Respond to RFP/RFQ

The amount of purchased products for a certain time in history per specific intervals

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Purchase History from D2.2 Receive, Configure, Enter and Validate Order

The amount of purchased products for a certain time in history per specific intervals

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Shipping Preferences from D3.1 Obtain and Respond to RFP/RFQ

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

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Shipping Preferences from D2.2 Receive, Configure, Enter and Validate Order

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

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Shipping Preferences from D1.2 Receive, Enter & Validate Order

Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories,

Outputs: .

Customer Master Database/Up to Date to ED.4 Manage Finished Goods Inventories

© Copyright 2006 Supply-Chain Council, Inc.

This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles.

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ED.4 Manage Finished Goods Inventories The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Metrics (see Appendix A for metrics attributes): .

% of Orders Delivered in Full

Percentage of orders which all of the items are received by customer in the quantities committed

. .

Cost to Manage Finished Goods Inventories Finished Goods Inventory Days of Supply

.

Inventory Days of Supply

.

Manage Finished Goods Inventories Cycle Time

The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The sum of the Costs to Manage Finished Good Inventory Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory ÷ (value of transfers/365 days). Five point annual average of the sum of all gross inventories (raw materials & WIP, plant FG, field FG, field samples, other) ÷ (COGS ÷ 365). Total gross value of inventory at standard cost before reserves for excess and obsolescence. Only includes inventory on company books, future liabilities should not be included The average time associated with managing finished good inventory

Best Practices: . . .

Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks Real Time Data on Current Status Statistical Test Count

Real time view of data. Dynamic calculation of safety stock based on actual sales. The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined.

Inputs: .

Customer Master Database/Up to Date from ED.3 Manage Deliver Information

This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles.

.

Existing Inventory Data from D1.8 Receive Product from Source or Make

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories

.

Integrated Supply Chain Plan from Source: Plan

Communication of courses of action over the appropriate timedefined planning horizon and interval, representing a projected appropriation of supply chain resource to meet supply-chain requirements as they affect the customer.

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Inventory Rules from Source: Plan

The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

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Order Rules from ED.1 Manage Deliver Business Rules

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

© Copyright 2006 Supply-Chain Council, Inc.

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Product Mix and Plans from Source: Plan

The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio.

.

Returns Data from ED.8 Manage Import/Export Requirements

The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc.

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Scrap Authorization from ED.8 Manage Import/Export Requirements

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

Outputs: .

Delivery Performance to ED.2 Assess Delivery Performance

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

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Finish Goods Inventory Target Levels to P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities

In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.

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Finished Goods Inventory Location to S3.6 Transfer Product

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

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Finished Goods Inventory Location to S2.4 Transfer Product

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

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Finished Goods Inventory Location to S1.4 Transfer Product

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

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Inventory Rules to ED.5 Manage Deliver Capital Assets

The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

© Copyright 2006 Supply-Chain Council, Inc.

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ED.5 Manage Deliver Capital Assets Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Deliver Capital Assets Manage Deliver Capital Assets Cycle Time

The sum of the Costs to Manage Deliver Capital Assets The average time associated with managing deliver capital assets

Best Practices: . . .

Automated Data Entry Facility Master Plan Measure Customer Service

. .

Removal of Obsolete Stock Standard Operating Procedures and Methodology Storage Location Zoning

.

Scanning with RFID/Bar-codes systems Automated Item Cubing and Weighting systems Advanced Shipping Notices (ASN)Parcel and Container Routing and Rating Compliance Labeling Real time shipment tracking Automated Calculation of ABC Velocity Movement None identified Automated or Optimized Slotting (Storage Location) Systems

Inputs: .

Approved Item Master from Source: Plan

The “master“ record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.) and may contain data on inventory status, requirements, planned orders, and costs. Item records are linked by bill of material records (or product structure records), thus defining the bill of material.

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Budgets from Source: Plan

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

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Inventory Rules from ED.4 Manage Finished Goods Inventories

The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

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Inventory Rules from Source: Plan

The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels.

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Order Rules from ED.1 Manage Deliver Business Rules

Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations.

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Supply-Chain Performance Metrics from ED.2 Assess Delivery Performance

Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

Outputs: .

Delivery Performance to ED.2 Assess Delivery Performance

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

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Warehouse Operating Constraints to Plan

Warehouse constraints are those storage items that impact on the supply chain efficiency, including material handling equipment and personnel, equipment maintenance, building maintenance, and security personnel.

© Copyright 2006 Supply-Chain Council, Inc.

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© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

ED.6 Manage Transportation The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment - CAPITAL ASSETS) and 2) the management of transporters. Metrics (see Appendix A for metrics attributes): .

Cost to Manage Transportation

.

Manage Transportation Cycle Time

The sum of the costs associated with managing Finished Good Transportation The average time associated with managing transportation

Best Practices: .

. .

Appointment Scheduling for Pickup and Delivery of Customer Shipments Automated Documentation for International Shipments Backhaul Trading Exchange Capture and Maintain Mode Specific Data

.

Electronic Manifest and Electronic Billing

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Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Shipments) Manage Information Across 100% of Shipments Measurement of Carrier Performance for On-time Delivery and Completeness Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet)

.

. . . .

. .

View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging

Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Pooling Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

Rating & Routing Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management Transportation Management System (TMS) Maintenance Management

Inputs: . .

. . .

Air, Ground....Carrier Rate Tables from Source: Company Contract Carrier Rates from ES.8 Manage Import/Export Requirements

Rates charged by common carriers to move goods, or freight. The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract. Coupled with cube and route, these criteria determine type of carrier and cost of shipment

Customer Order Size, Weight, and Freight Class from D3.2 Negotiate & Receive Contract Customer Order Size, Weight, and Freight Class from D1.2 Receive, Enter & Validate Order Customer Order Size, Weight, and Freight Class from D2.2 Receive, Configure, Enter

© Copyright 2006 Supply-Chain Council, Inc.

Coupled with cube and route, these criteria determine type of carrier and cost of shipment Coupled with cube and route, these criteria determine type of carrier and cost of shipment 247

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and Validate Order Customer Service Requirements from ED.2 Assess Delivery Performance

Supply chain requirements related to the customer’s needs, including service requirements, sales forecasts and actual orders/backorders.

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Projected Delivery Requirements from Source: Make

The company’s goal for the time to ship the product after the receipt of a customer’s order. The policy is sometimes stated as “our quoted delivery time,“ or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc.

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Standard Practices/Rules from Source: Plan

Industry established common practices, rules, and methods of doing business.

Outputs: .

Delivery Performance to ED.2 Assess Delivery Performance

The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

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Shipping Parameters and Documentation to D2.11 Load Product & Generate Shipping Documentation

Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

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Shipping Parameters and Documentation to D1.11 Load Vehicle & Generate Shipping Documentation

Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

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Shipping Parameters and Documentation to D3.11 Load Product & Generate Ship Documents

Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

ED.7 Manage Product Life Cycle The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). Metrics (see Appendix A for metrics attributes): . .

Cost to Manage Product Life Cycle Manage Product Life Cycle Time

The sum of the Cost to Manage Product Life Cycle The average time associated with managing the product life cycle

Best Practices: . . .

Integrated Facility Management Operations and Network Analysis Standard Operating Procedures and Methodology

None identified None identified None identified

Inputs: .

Budgets from Source: Plan

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

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Current Inventory Source Data from ES.3 Maintain Source Data

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer’s needs.

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Government Constraints from ED.8 Manage Import/Export Requirements

Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item.

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Location of Customers from D2.2 Receive, Configure, Enter and Validate Order

Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Location of Customers from D3.2 Negotiate & Receive Contract

Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Location of Customers from D1.2 Receive, Enter & Validate Order

Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

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Product Mix and Plans from Source: Plan

The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio.

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Revised Business Assumptions from Source: Plan

An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect.

Outputs: .

Enterprise Distribution Model to Plan

© Copyright 2006 Supply-Chain Council, Inc.

Model of the distribution enterprise including the flows, processes, inputs, outputs, metrics, and best business practices.

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June 2006

ED.8 Manage Import/Export Requirements The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc. Metrics (see Appendix A for metrics attributes): . . .

Cost to Manage Import/Export Requirements Customs Clearance Cycle Time Manage Import/Export Requirements Cycle Time

The sum of the costs associated with the management of import/export requirements The average time associated with clearing an order through customs The average time associated with managing import/export requirements

Best Practices: . . . . . .

Ability to Track Component/Sub-Component Manufacturing Country of Origin Assessing Export/Import Requirements during Time of Product Development/Manufacture Direct Connection to Customs Clearance Direct Transfer of Documents to Recipient and Forwarder Documents Generated Automatically During Shipment Preparation. Multi-country Export/Import documentation compliance

Component/lot tracking (lot trace-ability) Multi-country Export/Import documentation compliance Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. Electronic documentation submission via EDI and/or internet. None identified

Inputs: .

Government Regulations from Source: Government

Documents the implement law and requirements concerning the import and export of items and the manufacture of item.

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Receipt Verification from S1.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Receipt Verification from S2.2 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Receipt Verification from S3.4 Receive Product

Acknowledgement that the product received conforms to specified requirements and criteria.

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Shipping History from D1.11 Load Vehicle & Generate Shipping Documentation

The transaction history of the physical shipment of an item to another internal location or to a customer.

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Shipping History from D3.11 Load Product & Generate Ship Documents

The transaction history of the physical shipment of an item to another internal location or to a customer.

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Shipping History from D2.11 Load Product & Generate Shipping Documentation

The transaction history of the physical shipment of an item to another internal location or to a customer.

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Tariffs and Duties from Source: Company

Charges established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

Outputs:

© Copyright 2006 Supply-Chain Council, Inc.

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Duty Drawback Claims to Company

Claims for the refund of duties as a result of a ruling by a government agency.

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Government Constraints to Plan

Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item.

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Government Constraints to ED.7 Manage Product Life Cycle

Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item.

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Returns Data to ED.4 Manage Finished Goods Inventories

The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc.

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Scrap Authorization to ED.4 Manage Finished Goods Inventories

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

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Shipping Export Parameters and Documentation to D2.11 Load Product & Generate Shipping Documentation

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

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Shipping Export Parameters and Documentation to D1.11 Load Vehicle & Generate Shipping Documentation

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

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Shipping Export Parameters and Documentation to D3.11 Load Product & Generate Ship Documents

Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries.

© Copyright 2006 Supply-Chain Council, Inc.

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SR1 Source Return Defective Product The process, initiated by the customer, of returning material deemed defective by to the last known holder or designated return center. Process includes: customer identification that an action is required and determining what that action should be, communicating with the last known holder, generating return documentation, and physically returning of the excess product. The Category SR1 includes five Level 3 Elements: SR1.1 Identify Defective Product Condition

The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. SR1.2 Disposition Defective Product The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. SR1.3 Request Defective Return The process of a customer requesting and obtaining authorization, from Authorization last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. SR1.4 Schedule Defective Product Shipment The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. SR1.5 Return Defective Product The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

Metrics (see Appendix A for metrics attributes): Cost to Source Return Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Source Return Cycle Time

© Copyright 2006 Supply-Chain Council, Inc.

The sum of the costs associated with Source Return. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with Source Return Processes

252

June 2006

SR1.1 Identify Defective Product Condition The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. Metrics (see Appendix A for metrics attributes): . .

Cost of Identifying the Defective Condition as a % of Total Source Return Cost Value of Defective Inventory in Identification Stage/ Total Inventory Value

Best Practices: .

Enterprise Level Policies/Rules with Local Execution

Web based access to enterprise level business rules

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

.

Warranty Data from ER.8 Manage Return Regulatory Requirements

All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

Outputs: .

Returned Defective Product to SR1.2 Disposition Defective Product

© Copyright 2006 Supply-Chain Council, Inc.

Product being returned that is in a defective condition.

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June 2006

SR1.2 Disposition Defective Product The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. Metrics (see Appendix A for metrics attributes): . .

Defective Product Disposition Costs as % Total Source Return Cost Value of Defective Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value

Best Practices: .

. .

Confirm Asset Return Condition Codes Are Clearly Understood by All Employees, Especially Those Who Are New to the Process Confirm Changes in Condition Code Policies Are Promptly Communicated to All Employees and Supply-Chain Partners. Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time

None identified

None identified Specify return disposition location and time.

Inputs: .

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

.

Returned Defective Product from SR1.1 Identify Defective Product Condition

Product being returned that is in a defective condition.

Outputs: .

Authorization to Return to Service to D1.8 Receive Product from Source or Make

Permission to return to service an item that has been repaired and found to be within specifications and operable.

.

Authorization to Scrap to D1.8 Receive Product from Source or Make

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

.

Return Inventory Availability to ER.4 Manage Return Inventory Return Product Location to ER.4 Manage Return Inventory

Inventory relative to return process available for use.

. .

Returned Defective Product to SR1.3 Request Defective Return Authorization

© Copyright 2006 Supply-Chain Council, Inc.

The physical location where the returned product inventory is held prior to disposition Product being returned that is in a defective condition.

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June 2006

SR1.3 Request Defective Return Authorization The process of a customer requesting and obtaining authorization, from last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. Metrics (see Appendix A for metrics attributes): . . .

Cost per Request Authorization Ratio of Authorization Cost to Total Source Return cost Value of Defective Product Inventory in Inventory awaiting return authorization. Request Return Authorization Stage/ Total Defective Product Inventory Value

Best Practices: . . .

.

Clarify Point of Contact and Return Location Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Long-Term Return Agreements / Partnerships

Electronic rules for business relationships and transactions. Clarification as to who will pay in-bound and out-bound freight cost. Clarification of policy if authorizations are not processed within the expected cycle time.

None identified

Inputs: .

Defective Product Return Authorization Response from DR1.1 Authorize Defective Product Return

The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract.

.

Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR1.2 Schedule Defective Return Receipt

Inventory relative to return process available for use.

. .

A list of operations and procedures for scheduling the return of product.

Returned Defective Product from SR1.2 Disposition Defective Product

Product being returned that is in a defective condition.

Outputs: .

Credit/ Exchange Options to SR1.4 Schedule Defective Product Shipment

The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock.

.

Defective Product Disposition Request to DR1.1 Authorize Defective Product Return

The customer request for disposition instructions for a defective product from the appropriate source.

.

Defective Product Return Authorization Request to DR1.1 Authorize Defective Product Return Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

The customer request for disposition instructions for a defective product from the appropriate source.

.

© Copyright 2006 Supply-Chain Council, Inc.

255

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

June 2006

. . .

Returned Defective Product to SR1.4 Schedule Defective Product Shipment Ship-to Data to SR1.4 Schedule Defective Product Shipment Validated Return Material Authorization to SR1.4 Schedule Defective Product Shipment

© Copyright 2006 Supply-Chain Council, Inc.

256

Product being returned that is in a defective condition. Data about the destination of a retun delivery. A validated and approved Return Product Authorization (RPA).

June 2006

SR1.4 Schedule Defective Product Shipment The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes): . . .

% Defective Product Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Defective Product Inventory in Scheduling Stage/ Total Defective Product Inventory Value

Best Practices: . . .

Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis

Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs: . . . . . . .

Validated Return Material Authorization from SR1.3 Request Defective Return Authorization Credit/ Exchange Options from SR1.3 Request Defective Return Authorization Returned Defective Product from SR1.3 Request Defective Return Authorization Ship-to Data from SR1.3 Request Defective Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR1.1 Authorize Defective Data about the destination of a retun delivery. Product Return

Outputs: . .

Returned Defective Product to SR1.5 Return Defective Product Scheduled Defective Product Return to SR1.5 Return Defective Product

© Copyright 2006 Supply-Chain Council, Inc.

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Product being returned that is in a defective condition. Planned or scheduled returning of material deemed defective for some certain time or times

June 2006

SR1.5 Return Defective Product The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. Metrics (see Appendix A for metrics attributes): . . . . .

% Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Defective Product Inventory in Physical Return and Transportation Stage/ Total Defective Inventory Value

Best Practices: . .

Advanced Shipping Notice Shipment Tracking and Tracing

Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs: . . .

Scheduled Defective Product Return from SR1.4 Schedule Defective Product Shipment Returned Defective Product from SR1.4 Schedule Defective Product Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information.

.

Return Inventory Availability from ER.4 Manage Return Inventory

Inventory relative to return process available for use.

Outputs: . .

Returned Defective Product to DR1.3 Receive Defective Product Shipment Documents to Government

.

Shipment Documents to Customer

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

.

Shipment Documents to Carrier

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

© Copyright 2006 Supply-Chain Council, Inc.

Product being returned that is in a defective condition. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

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June 2006

DR1 Deliver Return Defective Product The processes of the last known holder or designated return center authorizing and scheduling the defective product return and the physical receipt of the item by the last known holder or known return center and their transfer of the item for final disposition determination. The process includes communication between the customer and last known holder or known return center and the generation of associated documentation. The Category DR1 includes four Level 3 Elements: .

DR1.1 Authorize Defective Product Return

.

DR1.2 Schedule Defective Return Receipt

.

DR1.3 Receive Defective Product

.

DR1.4 Transfer Defective Product

The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer. The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision.

Metrics (see Appendix A for metrics attributes): . . .

Cost to Deliver Return Deliver Return Cycle Time Order Fulfillment Cycle Time

.

Return on Supply Chain Fixed Assets

.

Return on Working Capital

.

Value of Defective Product Inventory in Deliver Return Process/ Total Defective Product Inventory Value

© Copyright 2006 Supply-Chain Council, Inc.

The average time associated with returns. The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

259

June 2006

DR1.1 Authorize Defective Product Return The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes): . . .

Authorize Defective Product Return Cycle Time Cost to Authorize Defective Product Return

The average time associated with authorizing the return of defective product. The sum of the costs associated with authorizing the return of defective product. Value of Defective Product Inventory in Authorization Stage/ Total Defective Product Inventory Value

Best Practices: . . .

Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item

None identified None identified None identified

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Defective Product Disposition Request from SR1.3 Request Defective Return Authorization Defective Product Return Authorization Request from SR1.3 Request Defective Return Authorization Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory Product Return Capabilities from P5.4 Establish and Communicate Return Plans

The customer request for disposition instructions for a defective product from the appropriate source.

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

. . .

.

The customer request for disposition instructions for a defective product from the appropriate source. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

Outputs: .

Defective Product Return Authorization Response to SR1.3 Request Defective Return Authorization

© Copyright 2006 Supply-Chain Council, Inc.

The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract.

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June 2006

.

Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

.

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory Ship-to Data to SR1.4 Schedule Defective Product Shipment Valid Returns Request to DR1.2 Schedule Defective Return Receipt

Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

. .

© Copyright 2006 Supply-Chain Council, Inc.

Data about the destination of a retun delivery. Requests for returns that are valid.

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June 2006

DR1.2 Schedule Defective Return Receipt The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. Metrics (see Appendix A for metrics attributes): .

Cost to Schedule Defective Product Receipt

.

Schedule Defective Return Receipt Cycle Time

The sum of the costs associated with scheduling defective product receipt. The average time associated with scheduling the receipt of the return of defective product

Best Practices: .

Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System

Both customer and Service Provider departments are alerted at the same time and viewing the same information.

It is initiated by event: .

Fault Found from DR1.1 Authorize Defective Product Return

Inputs: .

Valid Returns Request from DR1.1 Authorize Defective Product Return

Requests for returns that are valid.

Outputs: .

Return Schedule Instructions to SR1.3 Request Defective Return Authorization

A list of operations and procedures for scheduling the return of product.

.

Return Schedule Instructions to DR1.3 Receive Defective Product

A list of operations and procedures for scheduling the return of product.

© Copyright 2006 Supply-Chain Council, Inc.

262

June 2006

DR1.3 Receive Defective Product The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer. Metrics (see Appendix A for metrics attributes): .

Cost to Receive Defective Product

.

Receive Defective Product Cycle Time

The sum of the costs associated with receiving defective product returns. The average time associated with receiving defective product returns from the customer

Best Practices: .

Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

.

Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies

. . . .

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyer’s name for every receipt is clearly visible on Receiver.

Inputs: .

Receipt Data from ER.4 Manage Return Inventory

A collection of related receipt data records organized in a specific manner.

.

Receipt Data from ER.3 Manage Return Data Collection

A collection of related receipt data records organized in a specific manner.

.

Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR1.2 Schedule Defective Return Receipt

Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product.

Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned Defective Product from SR1.5 Return Defective Product

Guidelines, policies and agreements for the transportation activities around return process.

. . .

Product being returned that is in a defective condition.

Outputs: .

Receipt Discrepancy Notification to Enable Return

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

.

Receipt Discrepancy Notification to Plan

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

.

Receipt Discrepancy Notification to Source

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

.

Return Inventory Transfer Data to ER.4 Manage Return Inventory

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Returned Defective Product to DR1.4 Transfer Defective Product

Product being returned that is in a defective condition.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

DR1.4 Transfer Defective Product The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes): .

Cost to Transfer Defective Product

.

Transfer Defective Product Cycle Time

The sum of the costs associated transferring defective product for disposition The average time associated transfer until product is moved to the next process.

Best Practices: . .

. .

Defective Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage

Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

Inputs: .

Return Inventory for Transfer from ER.4 Manage Return Inventory

Inventory relative to return process available for transfer to other destination.

.

Returned Defective Product from DR1.3 Receive Defective Product Sourcing Plans from P2.4 Establish Sourcing Plans

Product being returned that is in a defective condition.

.

An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

Defective Products to S1.2 Receive Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

.

Defective Products to S2.2 Receive Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

.

Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to S1.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to S3.3 Schedule Product Deliveries

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Return Inventory Transfer Data to ER.4 Manage Return Inventory

.

Return Inventory Transfer Data to S2.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

© Copyright 2006 Supply-Chain Council, Inc.

265

June 2006

SR2 Source Return MRO Product The process, initiated by the customer, of returning maintenance, repair, and overhaul items to a service provider. Process includes: customer identification that an action is required and determining what that action should be, communicating with the service provider, generating return documentation, and physically returning or disposing of the product. The Category SR2 includes five Level 3 Elements: SR2.1 Identify MRO Product Condition

SR2.2 Disposition MRO Product

SR2.3 Request MRO Return Authorization

SR2.4 Schedule MRO Shipment

SR2.5 Return MRO Product

The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider.

Metrics (see Appendix A for metrics attributes): Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Total Source Return Costs

© Copyright 2006 Supply-Chain Council, Inc.

The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the return of raw materials to the supplier.

266

June 2006

SR2.1 Identify MRO Product Condition The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. Metrics (see Appendix A for metrics attributes): . . .

Cost of Identifying the MRO Condition as a % of Total Source Return Cost Total Number of Confirmed MRO Conditions / Total Number of MRO Service Requests Initiated Value of Unserviceable MRO Inventory In Identification Stage/Total MRO Inventory Value

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

.

Warranty Data from ER.8 Manage Return Regulatory Requirements

All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

Outputs: .

Returned MRO Product to SR2.2 Disposition MRO Product

© Copyright 2006 Supply-Chain Council, Inc.

267

Product being returned for maintenance, repair, or overhaul.

June 2006

SR2.2 Disposition MRO Product The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. Metrics (see Appendix A for metrics attributes): . . . .

% Identified MRO Products Returned to Service MRO Disposition Costs as % Total Source Return Cost Value of Defective Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value Inventory awaiting disposition Value of Unserviceable MRO Inventory In Disposition Stage/ Total MRO Inventory Value

Inputs: .

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

.

Returned MRO Product from SR2.1 Identify MRO Product Condition

Product being returned for maintenance, repair, or overhaul.

Outputs: .

Authorization to Return to Service to D1.8 Receive Product from Source or Make

Permission to return to service an item that has been repaired and found to be within specifications and operable.

.

Authorization to Scrap to D1.8 Receive Product from Source or Make

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

.

Return Inventory Availability to ER.4 Manage Return Inventory Returned MRO Product to SR2.3 Request MRO Return Authorization Returned Product Location to ER.4 Manage Return Inventory

Inventory relative to return process available for use.

. .

© Copyright 2006 Supply-Chain Council, Inc.

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Product being returned for maintenance, repair, or overhaul. The storage location of those items being returned.

June 2006

SR2.3 Request MRO Return Authorization The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. Metrics (see Appendix A for metrics attributes): . . . .

% Authorization Requests Transmitted Error-Free / Total Authorizations Requested Cost per Request Authorization Ratio of Authorization Cost To Total Source Return Cost Inventory awaiting return authorization Value of Unserviceable MRO Inventory in Request Return Authorization Stage/ Total MRO Inventory Value

Inputs: .

MRO Return Authorization Response from DR2.1 Authorize MRO Product Return

The process of a customer obtaining authorization, from a service provider, for the return of an MRO product

.

Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR2.2 Schedule MRO Return Receipt

Inventory relative to return process available for use.

. .

A list of operations and procedures for scheduling the return of product.

Returned MRO Product from SR2.2 Disposition MRO Product

Product being returned for maintenance, repair, or overhaul.

Outputs: . .

Workflow to SR2.4 Schedule MRO Shipment Credit Exchange Options to SR2.4 Schedule MRO Shipment

.

Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

.

MRO Disposition Request to DR2.1 Authorize MRO Product Return MRO Return Authorization Request to DR2.1 Authorize MRO Product Return

Request disposition instructions for an MRO item from the Supplier.

.

. .

Returned MRO Product to SR2.4 Schedule MRO Shipment Ship-to Data to SR2.4 Schedule MRO Shipment

© Copyright 2006 Supply-Chain Council, Inc.

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The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock.

The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. Product being returned for maintenance, repair, or overhaul. Data about the destination of a return delivery.

June 2006

SR2.4 Schedule MRO Shipment The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes): . . .

% MRO Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Unserviceable MRO inventory in Scheduling Stage/ Total MRO Inventory Value

Best Practices: . . .

Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis

Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs: . . . . . . .

Workflow from SR2.3 Request MRO Return Authorization Returned MRO Product from SR2.3 Request MRO Return Authorization Ship-to Data from SR2.3 Request MRO Return Authorization Credit Exchange Options from SR2.3 Request MRO Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR2.1 Authorize MRO Data about the destination of a return delivery. Product Return

Outputs: . .

Returned MRO Product to SR2.5 Return MRO Product Scheduled MRO Return to SR2.5 Return MRO Product

© Copyright 2006 Supply-Chain Council, Inc.

Product being returned for maintenance, repair, or overhaul. Planned or scheduled act of installing something for some certain time or times.

270

June 2006

SR2.5 Return MRO Product The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider. Metrics (see Appendix A for metrics attributes): . . . . .

% Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Unserviceable MRO Inventory in Physical Return and Transportation Stage/ Total MRO Inventory Value

Best Practices: . .

Advanced Shipping Notice Shipment Tracking and Tracing

Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs: . . .

Returned MRO Product from SR2.4 Schedule MRO Shipment Scheduled MRO Return from SR2.4 Schedule MRO Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information.

.

Return Inventory Availability from ER.4 Manage Return Inventory

Inventory relative to return process available for use.

Outputs: . .

Returned MRO Product to DR2.3 Receive MRO Product Shipment Documents to Government

.

Shipment Documents to Carrier

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

.

Shipment Documents to Customer

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

© Copyright 2006 Supply-Chain Council, Inc.

Product being returned for maintenance, repair, or overhaul. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

271

June 2006

DR2 Deliver Return MRO Product The processes of the service provider authorizing and scheduling the MRO return product and the physical receipt of the item by the service provider and their transfer of the item for final disposition determination. The process includes communication between the customer and service provider and the generation of associated documentation. The Category DR2 includes four Level 3 Elements: DR2.1 Authorize MRO Product Return

DR2.2 Schedule MRO Return Receipt

DR2.3 Receive MRO Product DR2.4 Transfer MRO Product

The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision.

Metrics (see Appendix A for metrics attributes): % of MRO Returns Delivered to the Correct Service Provider Location, within Schedule, with the Correct Part and Documentation Cost to Deliver Return Deliver Return Cycle Time The average time associated with returns. Order Fulfillment Cycle Time The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on Working Capital Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. Upside Deliver Return Adaptability The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days. Upside Deliver Return Flexibility The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers. Value of Unserviceable MRO Inventory in Deliver Return Process/ Total MRO Inventory Value

© Copyright 2006 Supply-Chain Council, Inc.

272

June 2006

DR2.1 Authorize MRO Product Return The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes): .

Authorize MRO Product Return Cycle Time

.

Cost to Authorize MRO Product Return

The average time associated with authorizing the return of MRO product. The sum of the costs associated with authorizing the return of product to be maintained, repaired, or overhauled.

Best Practices: . . .

Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item

None identified None identified None identified

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory MRO Disposition Request from SR2.3 Request MRO Return Authorization MRO Return Authorization Request from SR2.3 Request MRO Return Authorization

Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

. .

Request disposition instructions for an MRO item from the Supplier. The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received.

.

Product Return Capabilities from P5.4 Establish and Communicate Return Plans

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

.

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

© Copyright 2006 Supply-Chain Council, Inc.

273

June 2006

Outputs: .

Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

.

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory MRO Return Authorization Response to SR2.3 Request MRO Return Authorization

Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

Ship-to Data to SR2.4 Schedule MRO Shipment Valid Returns Request to DR2.2 Schedule MRO Return Receipt

Data about the destination of a retun delivery.

. . .

© Copyright 2006 Supply-Chain Council, Inc.

The process of a customer obtaining authorization, from a service provider, for the return of an MRO product

Requests for returns that are valid.

274

June 2006

DR2.2 Schedule MRO Return Receipt The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. Metrics (see Appendix A for metrics attributes): .

Cost to Schedule MRO Product Receipt

.

Schedule MRO Return Receipt Cycle Time

The sum of the costs associated with scheduling MRO product receipt. The average time associated with scheduling the receipt of the return of MRO product

Best Practices: .

Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System

Both customer and Service Provider departments are alerted at the same time and viewing the same information.

Inputs: .

Valid Returns Request from DR2.1 Authorize MRO Product Return

Requests for returns that are valid.

Outputs: .

Return Schedule Instructions to SR2.3 Request MRO Return Authorization

A list of operations and procedures for scheduling the return of product.

.

Return Schedule Instructions to DR2.3 Receive MRO Product

A list of operations and procedures for scheduling the return of product.

© Copyright 2006 Supply-Chain Council, Inc.

275

June 2006

DR2.3 Receive MRO Product The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). Metrics (see Appendix A for metrics attributes): .

Cost to Receive MRO Product

.

Receive MRO Product Cycle Time

The sum of the costs associated with receiving MRO product returns. The average time associated with receiving MRO product returns from the customer

Best Practices: .

Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

.

Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies

. . . .

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyer’s name for every receipt is clearly visible on Receiver.

Inputs: .

Receipt Data from ER.4 Manage Return Inventory

A collection of related receipt data records organized in a specific manner.

.

Receipt Data from ER.3 Manage Return Data Collection

A collection of related receipt data records organized in a specific manner.

.

Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR2.2 Schedule MRO Return Receipt

Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product.

Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned MRO Product from SR2.5 Return MRO Product

Guidelines, policies and agreements for the transportation activities around return process.

. . .

Product being returned for maintenance, repair, or overhaul.

Outputs: .

Receipt Discrepancy Notification to Enable Return

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

.

Receipt Discrepancy Notification to Plan

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

.

Receipt Discrepancy Notification to Source

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

© Copyright 2006 Supply-Chain Council, Inc.

276

June 2006

.

Return Inventory Transfer Data to ER.4 Manage Return Inventory

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Returned MRO Product to DR2.4 Transfer MRO Product

Product being returned for maintenance, repair, or overhaul.

© Copyright 2006 Supply-Chain Council, Inc.

277

June 2006

DR2.4 Transfer MRO Product The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes): .

Cost to Transfer MRO Product

.

Transfer MRO Product Cycle Time

The sum of the costs associated transferring MRO product for disposition The average time associated transfer until product is moved to the next process.

Best Practices: . .

. .

MRO Scheduling Identifies Next Destination (Stores or Repair Station) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage

Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

Inputs: .

Return Inventory for Transfer from ER.4 Manage Return Inventory

Inventory relative to return process available for transfer to other destination.

.

Returned MRO Product from DR2.3 Receive MRO Product Sourcing Plans from P2.4 Establish Sourcing Plans

Product being returned for maintenance, repair, or overhaul.

.

An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

MRO Products to S2.2 Receive Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

.

MRO Products to S1.2 Receive Product

Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

.

Return Inventory Transfer Data to S2.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to S1.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to ER.4 Manage Return Inventory

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

.

Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

© Copyright 2006 Supply-Chain Council, Inc.

278

June 2006

.

Return Inventory Transfer Data to S3.3 Schedule Product Deliveries

© Copyright 2006 Supply-Chain Council, Inc.

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

279

June 2006

SR3 Source Return Excess Product The process, initiated by the customer, of returning material deemed in excess of current requirements to the designated return center. Process includes: customer identification that an action is required, determining what that action should be, requesting authorization from the designated return center, generating return documentation, and physically returning the excess product. The Category SR3 includes five Level 3 Elements: SR3.1 Identify Excess Product Condition

The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. SR3.2 Disposition Excess Product The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. SR3.3 Request Excess Return Authorization The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. SR3.4 Schedule Excess Product Shipment The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. SR3.5 Return Excess Product The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

Metrics (see Appendix A for metrics attributes): % of Excess Product Returns Delivered Complete to the Designated Return Center Average Age of Excess Inventory Cost to Source Return Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Source Return Cycle Time Total Excess Material Return Costs

Correct destination, according to the schedule, with the correct part and documentation The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The sum of the costs associated with the receipt of returned excess products from the customer

Value of Excess Inventory/ Total Inventory Value

© Copyright 2006 Supply-Chain Council, Inc.

280

June 2006

SR3.1 Identify Excess Product Condition The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. Metrics (see Appendix A for metrics attributes): . . .

.

Cost of Identifying the Excess Condition as a % of Total Source Return Cost Number of Occurrences Where Excess Inventory is Returned and Subsequently Followed by an Expedite Request Return on Working Capital Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. Value of Excess Inventory in Identification Stage/ Total Inventory Value

Best Practices: . .

Automated Inventory Visibility and Planning System to Highlight Inventory in Excess of Requirements Enterprise Level Policies/Rules with Local Execution

Automated inventory planning package linked to real time demand data and inventory business rules. Web based access to enterprise level business rules

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Manage Regulatory Return Policy from ER.8 Manage Return Regulatory Requirements

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

Outputs: .

Returned Excess Product to SR3.2 Disposition Excess Product

© Copyright 2006 Supply-Chain Council, Inc.

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

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June 2006

SR3.2 Disposition Excess Product The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. Metrics (see Appendix A for metrics attributes): . . .

Excess Product Disposition Costs as % Total Source Return Cost Number of Occurrences of Incorrect Designated Return Center Value of Excess Inventory in Disposition Inventory Awaiting Return Stage/ Total Inventory Value

Best Practices: . .

Automated Registry of Inventory Return Locations by Item to Speed Identification of Proper Return Location Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time

None identified Specify return disposition location and time.

Inputs: .

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

.

Returned Excess Product from SR3.1 Identify Excess Product Condition

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Outputs: .

Authorization to Return to Service to D1.8 Receive Product from Source or Make

Permission to return to service an item that has been repaired and found to be within specifications and operable.

.

Authorization to Scrap to D1.8 Receive Product from Source or Make

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

.

Return Inventory Availability to ER.4 Manage Return Inventory Return Product Location to ER.4 Manage Return Inventory

Inventory relative to return process available for use.

. .

Returned Excess Product to SR3.3 Request Excess Return Authorization

© Copyright 2006 Supply-Chain Council, Inc.

282

The physical location where the returned product inventory is held prior to disposition Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

June 2006

SR3.3 Request Excess Return Authorization The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. Metrics (see Appendix A for metrics attributes): . . . .

% Authorization Requests Transmitted Error-Free / Total Authorizations Requested Cost per Request Authorization Ratio of Authorization Cost to Total Source Return cost Value of Excess Product Inventory in Inventory Awaiting Return Authorization Request Return Authorization Stage/ Total Excess Product Inventory Value

Best Practices: . . .

.

Clarify Point of Contact and Return Location Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Long-Term Return Agreements / Partnerships

Electronic rules for business relationships and transactions. Clarification as to who will pay in-bound and out-bound freight cost. Clarification of policy if authorizations are not processed within the expected cycle time.

None identified

Inputs: . . . .

Excess Product Return Authorization Response from DR3.1 Authorize Excess Product Return Return Inventory Availability from ER.4 Manage Return Inventory Return Schedule Instructions from DR3.2 Schedule Excess Return Receipt

The process of a customer obtaining authorization, from a service provider, for the return of excess product

Returned Excess Product from SR3.2 Disposition Excess Product

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Inventory relative to return process available for use. A list of operations and procedures for scheduling the return of product.

Outputs: .

Credit/ Exchange Options to SR3.4 Schedule Excess Product Shipment

The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock.

.

Excess Product Disposition Request to DR3.1 Authorize Excess Product Return

Request disposition instructions for an excess item from the Supplier.

© Copyright 2006 Supply-Chain Council, Inc.

283

June 2006

.

Excess Product Return Authorization Request to DR3.1 Authorize Excess Product Return

The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received.

.

Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

.

Returned Excess Product to SR3.4 Schedule Excess Product Shipment

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

.

Ship-to Data to SR3.4 Schedule Excess Product Shipment Validated Return Material Authorization to SR3.4 Schedule Excess Product Shipment

Data about the destination of a return delivery.

.

© Copyright 2006 Supply-Chain Council, Inc.

A validated and approved Return Product Authorization (RPA).

284

June 2006

SR3.4 Schedule Excess Product Shipment The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. Metrics (see Appendix A for metrics attributes): . . .

% Excess Product Scheduling Cost to Total Source Return Cost % Shipping Schedules that Support Customer Required Return by Date Value of Excess Product Inventory in Scheduling Stage/ Total Excess Product Inventory Value

Best Practices: . . . .

Arrange for Shipping Insurance in Case Of In-Transit Loss or Damage Carrier Selection Based on Performance Criteria at Least Cost Consolidation of Return Carriers Transportation Modeling and Rate Analysis

Preventative management Scheduling, carrier selection, and rating Outbound logistics software to assist with route. None identified

Inputs: . . . . . . .

Validated Return Material Authorization from SR3.3 Request Excess Return Authorization Returned Excess Product from SR3.3 Request Excess Return Authorization Credit/ Exchange Options from SR3.3 Request Excess Return Authorization Ship-to Data from SR3.3 Request Excess Return Authorization Plan and Build Loads Information from D1.5 Transportation modes are selected and efficient loads are built. Build Loads Return Inventory Availability from ER.4 Inventory relative to return process available for use. Manage Return Inventory Ship-to Data from DR3.1 Authorize Excess Data about the destination of a retun delivery. Product Return

Outputs: .

Returned Excess Product to SR3.5 Return Excess Product

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

.

Scheduled Excess Product Return to SR3.5 Return Excess Product

Planned or scheduled returning of material deemed in excess of current requirements for some certain time or times.

© Copyright 2006 Supply-Chain Council, Inc.

285

June 2006

SR3.5 Return Excess Product The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. Metrics (see Appendix A for metrics attributes): . . . . .

% Error-Free Returns Shipped Cost per Request Authorization Return Shipments Shipped on Time Return Transportation Costs Value of Excess Product Inventory in Physical Return and Transportation Stage/ Total Excess Inventory Value

Best Practices: . .

Advanced Shipping Notice Shipment Tracking and Tracing

Integrated data sharing with repair facility. Satellite communications, GPS, RFID

Inputs: . . .

Scheduled Excess Product Return from SR3.4 Schedule Excess Product Shipment Returned Excess Product from SR3.4 Schedule Excess Product Shipment Load, Shipping, Verify, and Credit The function that performs tasks for the outgoing shipment of parts, Information from D1.11 Load Vehicle & components, and products. It includes packaging, marking, Generate Shipping Documentation weighing, and loading for shipment. Also, verify the shipment and customer credit information.

.

Return Inventory Availability from ER.4 Manage Return Inventory

Inventory relative to return process available for use.

Outputs: .

Returned Excess Product to DR3.3 Receive Excess Product

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

.

Shipment Documents to Government

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

.

Shipment Documents to Carrier

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

.

Shipment Documents to Customer

Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....).

© Copyright 2006 Supply-Chain Council, Inc.

286

June 2006

DR3 Deliver Return Excess Product The processes of the designated return center authorizing and scheduling the excess product return, the physical receipt of the item by the designated return center and transfer of the item for final disposition The process includes communication between the customer and designated return center and the generation of associated documentation. The Category DR3 includes four Level 3 Elements: DR3.1 Authorize Excess Product Return

DR3.2 Schedule Excess Return Receipt

DR3.3 Receive Excess Product

DR3.4 Transfer Excess Product

The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Center’s Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision.

Metrics (see Appendix A for metrics attributes): % of Excess Product Returns Delivered Complete to the Designated Return Center Order Fulfillment Cycle Time Return on Supply Chain Fixed Assets

Return on Working Capital

Upside Deliver Return Adaptability Upside Deliver Return Flexibility

© Copyright 2006 Supply-Chain Council, Inc.

Correct destination, according to the schedule, with the correct part and documentation The average actual cycle time consistently achieved to fulfill customer orders. Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. The levels of aggregation can be at any element associated with a supply chain asset. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days. The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.

287

June 2006

DR3.1 Authorize Excess Product Return The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. Metrics (see Appendix A for metrics attributes): . .

Authorize Excess Product Return Cycle Time Cost to Authorize Excess Product Return

The average time associated with authorizing the return of excess product. The sum of the costs associated with authorizing the return of excess product.

Best Practices: . .

Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable Set Up Electronic or Pre-authorized Returns

None identified None identified

Inputs: .

Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

.

Excess Product Disposition Request from SR3.3 Request Excess Return Authorization

Request disposition instructions for an excess item from the Supplier.

.

Excess Product Return Authorization Request from SR3.3 Request Excess Return Authorization

The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received.

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Manage Integrated Supply Chain Inventory Information from EP.4 Manage Integrated Supply Chain Inventory Product Return Capabilities from P5.4 Establish and Communicate Return Plans

Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

.

.

The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way.

Return Plans from P5.4 Establish and Communicate Return Plans

© Copyright 2006 Supply-Chain Council, Inc.

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

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Outputs: . .

. . .

Excess Product Return Authorization Response to SR3.3 Request Excess Return Authorization Historical Return Rates to P5.1 Assess, and Aggregate Return Requirements

The process of a customer obtaining authorization, from a service provider, for the return of excess product

Manage Integrated Supply Chain Inventory Information to EP.4 Manage Integrated Supply Chain Inventory Return Product Authorization to DR3.2 Schedule Excess Return Receipt

Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products

Ship-to Data to SR3.4 Schedule Excess Product Shipment

Data about the destination of a retun delivery.

© Copyright 2006 Supply-Chain Council, Inc.

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns.

Permission to accept an excess product return for the designated return center, after communicating with the customer.

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DR3.2 Schedule Excess Return Receipt The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Center’s Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. Metrics (see Appendix A for metrics attributes): .

Cost to Schedule Excess Product Receipt

.

Schedule Excess Return Receipt Cycle Time

The sum of the costs associated with scheduling excess product receipt. The average time associated with scheduling the receipt of the return of excess product

Best Practices: .

Establish Designated Processes for Scheduling and Receiving Excess Inventory

None Identified

Inputs: .

Return Product Authorization from DR3.1 Authorize Excess Product Return

Permission to accept an excess product return for the designated return center, after communicating with the customer.

Outputs: .

Return Schedule Instructions to SR3.3 Request Excess Return Authorization

A list of operations and procedures for scheduling the return of product.

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Return Schedule Instructions to DR3.3 Receive Excess Product

A list of operations and procedures for scheduling the return of product.

© Copyright 2006 Supply-Chain Council, Inc.

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DR3.3 Receive Excess Product The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. Metrics (see Appendix A for metrics attributes): . .

Cost to Receive Excess Product Receive Excess Product Cycle Time

The sum of the costs associated with receiving excess returns. The average time associated with receiving excess product returns from the customer

Best Practices: .

Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

.

Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Develop Local Receiving Process Close to Repair Electronically Track Shipment from Customer to Service Provider Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies

. . . .

- Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID Electronically link Return authorization, Return schedule and shipping documents. . Minimize time spent in product movement. None Identified - Push inspection to SOURCE - Receiving quality criteria connected to ISO 9000 practices Buyer’s name for every receipt is clearly visible on Receiver.

Inputs: .

Receipt Data from ER.3 Manage Return Data Collection

A collection of related receipt data records organized in a specific manner.

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Receipt Data from ER.4 Manage Return Inventory

A collection of related receipt data records organized in a specific manner.

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Return Regulatory Requirements from ER.8 Manage Return Regulatory Requirements Return Schedule Instructions from DR3.2 Schedule Excess Return Receipt

Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). A list of operations and procedures for scheduling the return of product.

Return Transportation Guidelines, Policies, & Agreements from ER.6 Manage Return Transportation Returned Excess Product from SR3.5 Return Excess Product

Guidelines, policies and agreements for the transportation activities around return process.

. . .

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

Outputs: .

Receipt Discrepancy Notification to Plan

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

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Receipt Discrepancy Notification to Source

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

© Copyright 2006 Supply-Chain Council, Inc.

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Receipt Discrepancy Notification to Enable Return

Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc.

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Return Inventory Transfer Data to ER.4 Manage Return Inventory

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Returned Excess Product to DR3.4 Transfer Excess Product

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

© Copyright 2006 Supply-Chain Council, Inc.

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DR3.4 Transfer Excess Product The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision. Metrics (see Appendix A for metrics attributes): .

Cost to Transfer Excess Product

.

Transfer Excess Product Cycle Time

The sum of the costs associated transferring excess product for disposition The average time associated transfer until product is moved to the next process.

Best Practices: . .

. .

Excess Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed Return Process Electronically Tracks Transfer from Station to Station Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage

Utilize electronic links Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out. Utilize Bar coding Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

Inputs: .

Return Inventory for Transfer from ER.4 Manage Return Inventory

Inventory relative to return process available for transfer to other destination.

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Returned Excess Product from DR3.3 Receive Excess Product

Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale.

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Sourcing Plans from P2.4 Establish Sourcing Plans

An aggregate material requirements plan used to schedule material deliveries to meet production plan.

Outputs: .

Excess Products to S2.2 Receive Product

Material in excess of the current requirements.

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Excess Products to S1.2 Receive Product

Material in excess of the current requirements.

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Return Inventory Transfer Data to S2.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to S3.3 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to P5.2 Identify, Assess, and Aggregate Return Resources

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data to S1.1 Schedule Product Deliveries

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

© Copyright 2006 Supply-Chain Council, Inc.

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Return Inventory Transfer Data to ER.4 Manage Return Inventory

© Copyright 2006 Supply-Chain Council, Inc.

The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

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ER Enable RETURN Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The Category ER includes eight Level 3 Elements: ER.1 Manage Business Rules for Return Processes

The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations. ER.2 Manage Performance of Return The process of measuring actual Return Process performance against Processes internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. ER.3 Manage Return Data Collection The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. ER.4 Manage Return Inventory The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. ER.5 Manage Return Capital Assets The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. ER.6 Manage Return Transportation The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. ER.7 Manage Return Network Configuration The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chain’s business rules. (See ER1) ER.8 Manage Return Regulatory The process of identifying and complying with regulatory documentation Requirements and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls.

© Copyright 2006 Supply-Chain Council, Inc.

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ER.1 Manage Business Rules for Return Processes The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations. Metrics (see Appendix A for metrics attributes): Cost to Manage Business Rules for Return The sum of the Cost to Manage Business Rules for Return Processes Processes Manage Business Rules for Return The average time associated with managing rules for returns Processes Cycle Time

Best Practices: Electronic Reminders of Possible Scheduled Pull signals. Maintenance Evaluate the Benefits of Out-Sourcing the Enables customer to focus on core competencies. Excess Material Return Process Publish Return Policy Easy access to return business rules. Standard Inventory Policy to Determine None Identified Excess Utilize Real-World Cases in Employee None Identified Training

Inputs: Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Return Rules and Policies from P5.4 Establish and Communicate Return Plans

Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organization’s business strategy, goals and objectives.

Outputs: Business Rules for Return Processes to DR3.1 Authorize Excess Product Return

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to ER.4 Manage Return Inventory

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

© Copyright 2006 Supply-Chain Council, Inc.

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Business Rules for Return Processes to ER.5 Manage Return Capital Assets

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to P5.2 Rules for conducting business, i.e. developing and maintaining customer Identify, Assess, and Aggregate Return and channel performance standards of an return processes such as Resources service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to DR1.1 Authorize Defective Product Return

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to SR2.1 Identify MRO Product Condition

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to Rules for conducting business, i.e. developing and maintaining customer ER.7 Manage Return Network Configuration and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to DR2.1 Authorize MRO Product Return

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to ER.8 Manage Return Regulatory Requirements

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to SR1.1 Identify Defective Product Condition

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Business Rules for Return Processes to P5.1 Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as Assess, and Aggregate Return service levels, given service requirements by supply chain Requirements stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Business Rules for Return Processes to SR3.1 Identify Excess Product Condition

© Copyright 2006 Supply-Chain Council, Inc.

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

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ER.2 Manage Performance of Return Processes The process of measuring actual Return Process performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Each occurrence consumes time: Metrics (see Appendix A for metrics attributes): Cost to Manage Performance of Return The sum of the costs to Manage Performance of Return Processes. Processes Manage Performance of Return Processes The average time associated with managing the performance of supply Cycle Time chain activities

Best Practices: Business Rules Are Clearly Communicated Convenient availability to business rules and return criteria. with the Customer Continuous Improvement is Planned through Avenue to receive customer comments. Process Reviews and Customer Feedback

Inputs: MRO Product Return Capabilities from ER.5 See “Product Return Capabilities“ Manage Return Capital Assets Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Receipt Data from ER.3 Manage Return Data Collection Receipt Data from ER.4 Manage Return Inventory Return Benchmark Data from Source: Company

A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Data relative to the return process utilized to compare the company’s actual results to selected values identified as reference.

Outputs: See “Product Return Capabilities“ MRO Product Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources Return Performance to ER.5 Manage Return Performance measurement information for the Return Process (the actual Capital Assets value of measured for the criterion). Return Performance to ER.6 Manage Return Performance measurement information for the Return Process (the actual Transportation value of measured for the criterion). Return Product History to ER.3 Manage Return Data Collection Supply-Chain Performance Metrics to EP.2 Manage Performance of Supply Chain

© Copyright 2006 Supply-Chain Council, Inc.

The return history of product including failure rates, failure causes, etc. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management.

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ER.3 Manage Return Data Collection The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. Metrics (see Appendix A for metrics attributes): Cost to Manage Return Data Collection

The sum of the costs to manage the capital assets associated with returns data collection. Manage Return Data Collection Cycle Time The average time associated with managing return data collection

Best Practices: Automated Update of Customer Excess Material Return Transaction History

- Use trend analysis to influence inventory level decisions. - Web-based alerts to identify update occurred and when pre-determined thresholds are exceeded. Data Accessibility across the Enterprise for Web based access to various levels of enterprise data Visibility by Discrete Business Units

Inputs: Data Cleansing Procedure from Source: Company

The procedure that outlines the cleansing of return data to insure its validity and accuracy during the return process.

Data System Requirements from Source: Company

List of requirements of the data system that insure cleansed data is compatible and usable, or the data system requirements to fully automate the return process.

Return Product History from ER.2 Manage Performance of Return Processes

The return history of product including failure rates, failure causes, etc.

Outputs: Data About Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources Receipt Data to DR1.3 Receive Defective Product Receipt Data to ER.2 Manage Performance of Return Processes Receipt Data to DR2.3 Receive MRO Product Receipt Data to DR3.3 Receive Excess Product

© Copyright 2006 Supply-Chain Council, Inc.

Information required in the process of integrating and maintaining the accuracy of return execution. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner.

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ER.4 Manage Return Inventory The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. Metrics (see Appendix A for metrics attributes): Cost to Manage Return Inventory Manage Return Inventory Cycle Time

The sum of the costs to manage the capital assets associated with return inventory. The average time associated with managing return inventory

Best Practices: Periodic Review of Metrics and Strategy with Real time view of data. Comparisons to Industry Benchmarks Real Time Data on Current Status Dynamic calculation of safety stock based on actual sales. Statistical Test Count The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. Unique Identifier Tag for Each Repairable Asset management software using bar code, RFI tag, etc. Asset

Inputs: Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Return Inventory Availability from SR1.2 Disposition Defective Product Return Inventory Availability from SR3.2 Disposition Excess Product Return Inventory Availability from SR2.2 Disposition MRO Product Return Inventory Transfer Data from DR3.3 Receive Excess Product

Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer.

Return Inventory Transfer Data from DR2.3 The process of receipt and verification of the returned item against the Receive MRO Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR3.4 The process of receipt and verification of the returned item against the Transfer Excess Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR1.4 The process of receipt and verification of the returned item against the Transfer Defective Product return authorization and other documentation and prepares the item for transfer. Return Inventory Transfer Data from DR2.4 The process of receipt and verification of the returned item against the Transfer MRO Product return authorization and other documentation and prepares the item for transfer.

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Return Inventory Transfer Data from DR1.3 The process of receipt and verification of the returned item against the Receive Defective Product return authorization and other documentation and prepares the item for transfer. Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Return Product Location from SR3.2 Disposition Excess Product

The physical location where the returned product inventory is held prior to disposition

Return Product Location from SR1.2 Disposition Defective Product

The physical location where the returned product inventory is held prior to disposition

Returned Product Location from SR2.2 Disposition MRO Product

The storage location of those items being returned.

Outputs: Receipt Data to DR1.3 Receive Defective Product Receipt Data to DR2.3 Receive MRO Product Receipt Data to ER.2 Manage Performance of Return Processes Receipt Data to DR3.3 Receive Excess Product Return Inventory Availability to SR2.3 Request MRO Return Authorization Return Inventory Availability to SR3.3 Request Excess Return Authorization Return Inventory Availability to SR3.5 Return Excess Product Return Inventory Availability to SR1.4 Schedule Defective Product Shipment Return Inventory Availability to SR3.4 Schedule Excess Product Shipment Return Inventory Availability to SR1.5 Return Defective Product Return Inventory Availability to SR2.5 Return MRO Product Return Inventory Availability to SR1.3 Request Defective Return Authorization Return Inventory Availability to SR2.4 Schedule MRO Shipment Return Inventory for Transfer to DR2.4 Transfer MRO Product

A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. A collection of related receipt data records organized in a specific manner. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for use. Inventory relative to return process available for transfer to other destination.

Return Inventory for Transfer to DR3.4 Transfer Excess Product

Inventory relative to return process available for transfer to other destination.

Return Inventory for Transfer to DR1.4 Transfer Defective Product

Inventory relative to return process available for transfer to other destination.

Return Inventory Targets to P5.2 Identify, Assess, and Aggregate Return Resources

The goals and approach to the management of return inventories.

© Copyright 2006 Supply-Chain Council, Inc.

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ER.5 Manage Return Capital Assets The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. Metrics (see Appendix A for metrics attributes): Cost to Manage Return Capital Assets Manage Return Capital Assets Cycle Time

The sum of the costs to manage the capital assets associated with returns. The average time associated with managing return capital assets

Best Practices: Automated Data Entry Automated Disposition Instructions for Returns Based on Data Interchange with Strategic Providers Integrated Transportation Visibility Outsource If Not a Core Competency

Scanning with RFID/Bar-codes systems Advanced planning and scheduling capability coupled with decision support logic. - Advanced shipping notices - Real time shipping tracking Use 4PL to manage and move.

Inputs: Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Return Performance from ER.2 Manage Performance of Return Processes

Performance measurement information for the Return Process (the actual value of measured for the criterion).

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Outputs: MRO Product Return Capabilities to ER.2 Manage Performance of Return Processes MRO Product Return Capabilities to P5.2 Identify, Assess, and Aggregate Return Resources

© Copyright 2006 Supply-Chain Council, Inc.

See “Product Return Capabilities“ See “Product Return Capabilities“

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ER.6 Manage Return Transportation The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. Metrics (see Appendix A for metrics attributes): Cost to Manage Return Transportation The sum of the costs associated with managing return transportation. Manage Return Transportation Cycle Time The average time associated with managing return transportation

Best Practices: Appointment Scheduling for Pickup and Transportation Management System (TMS) Maintenance Management Delivery of Customer Shipments Automated Documentation for International Transportation Management System (TMS) Maintenance Management Shipments Backhaul Trading Exchange Pooling Capture and Maintain Mode Specific Data Transportation Management System (TMS) Maintenance Management Consolidate Shipments Through Cross None Identified Docking - Coordinate with Other Shipments Develop Proactive Transit Damage None Identified Programs Electronic Manifest and Electronic Billing Transportation Management System (TMS) Maintenance Management Integrated Order Management, Warehouse Transportation Management System (TMS) Maintenance Management Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Internet Pooling (Electronic Brokerage of Rating & Routing Shipments) Involve Your Other Supply-Chain Partners If Utilization of transportation management system (TMS) to manage returns. Possible to Leverage Transportation Maximization of TMS use, both intra and inter-company within the supply throughout the Chain chain. Limit the Number of Carriers, Treat Them as Utilization of transportation management system (TMS) to manage returns. Partners and Build a Strong Relationship Maximization of TMS use, both intra and inter-company within the supply with Each One Geared Toward Continually chain. Improving Service and Lowering Cost Manage Information Across 100% of Transportation Management System (TMS) Maintenance Management Shipments Measurement of Carrier Performance for Transportation Management System (TMS) Maintenance Management On-time Delivery and Completeness Transportation Management System (TMS) Maintenance Management Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements Real-Time Shipment Tracking, (via internet) Transportation Management System (TMS) Maintenance Management Segregate In-Bound Carcass Return Cost None Identified from Other Transportation Costs Utilize Internet-Based Freight Bidding Built None Identified Around Shared Shipping Volume Projections Utilize Invoice-less Freight Payment None Identified Transportation Management System (TMS) Maintenance Management View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging

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Inputs: Return Performance from ER.2 Manage Performance of Return Processes

Performance measurement information for the Return Process (the actual value of measured for the criterion).

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Outputs: Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to DR3.3 Receive Excess Product Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to DR1.3 Receive Defective Product Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around return process. Agreements to P5.2 Identify, Assess, and Aggregate Return Resources Return Transportation Guidelines, Policies, & Guidelines, policies and agreements for the transportation activities around Agreements to DR2.3 Receive MRO Product return process.

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ER.7 Manage Return Network Configuration The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chain’s business rules. (See ER1) Metrics (see Appendix A for metrics attributes): Cost to Manage Return Network Configuration Manage Return Network Configuration Cycle Time

The sum of the costs to manage the capital assets associated with configuring the return network. The average time associated with managing the return network configuration

Best Practices: Service Provider Utilizes Web-Based Communicate to Identify New and Discontinued Repair Sites to Customers Utilize Web-Based Collaboration between Asset Manager and Repair Sites Regarding Capacity and Scheduling Utilize Web-Based Collaboration between Customer and Service Provider on In-Bound Return Forecasts and Asset Tracking Utilize Web-Based Collaboration to Identify Potential New Repair Sites Prior to Their Selection

Continuously updated authorized repair sites Total return asset visibility throughout the network Shared return forecasts Shared knowledge of resource availability and bottlenecks

Inputs: Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Return Plans from P5.4 Establish and Communicate Return Plans

Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements.

Outputs: Return Network Configuration to ER.8 Manage Return Regulatory Requirements

The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration.

Return Process Workflow Definition and Policies to P5.2 Identify, Assess, and Aggregate Return Resources

Definition and maintenance of the information flow about the Returns supply chain network for a group of similar or complimentary items through out their life cycle

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ER.8 Manage Return Regulatory Requirements The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls. Metrics (see Appendix A for metrics attributes): Cost to Manage Return Regulatory Requirements and Compliance Manage Return Regulatory Requirements and Compliance Cycle Time

The sum of the costs associated with managing compliance to return regulatory requirements. The average time associated with compliance and regulatory requirements for return products

Best Practices: Clarify in Advance Hazardous Material Packaging, Labeling and Shipping Requirements Clarify in Advance If the Product to be Returned Requires Specific, Formal Authorization from the Service Provider per Federal, State or Local Regulation, Prior to Returning Compare Local Customs Requirements to Your Process Procedures to Ensure All Requirements Are Accounted for Before Shipping Confirm All Documentation and Inspection Requirements Before Shipping Note and Communicate Shelf Life Requirements Carefully Before Shipping

Overseas packaging, labeling and shipping regulatory requirements are given specific attention. Participants at all customer and service provider locations involved clearly understand all regulatory requirements at each step in the return process .

None Identified

None Identified Hazardous material regulations are given specific attention.

Inputs: Business Rules for Return Processes from ER.1 Manage Business Rules for Return Processes

Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives.

Process Procedures from P5.4 Establish and A planned series of actions or operations that advances returns from one Communicate Return Plans stage to another, or established procedures to manage and execute all activities in the process. Return Network Configuration from ER.7 Manage Return Network Configuration

The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration.

Outputs: Manage Regulatory Return Policy to SR2.1 Identify MRO Product Condition

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

Manage Regulatory Return Policy to SR1.1 Identify Defective Product Condition

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

Manage Regulatory Return Policy to SR3.1 Identify Excess Product Condition

The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets.

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Return Regulatory Requirements to DR3.3 Receive Excess Product Return Regulatory Requirements to DR1.3 Receive Defective Product Return Regulatory Requirements to P5.1 Assess, and Aggregate Return Requirements Return Regulatory Requirements to P5.2 Identify, Assess, and Aggregate Return Resources Return Regulatory Requirements to DR2.3 Receive MRO Product Warranty Data to SR2.1 Identify MRO Product Condition

Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.).

Warranty Data to SR1.1 Identify Defective Product Condition

All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

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Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product

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Workflow Graphics

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GLOSSARY PROCESS TERMS PROCESS TERM NAME D Deliver D1 Deliver Stocked Product D1.1 Process Inquiry & Quote D1.10 Pack Product D1.11 Load Vehicle & Generate Shipping Documentation D1.12 Ship Product D1.13 Receive & Verify Product by Customer D1.14 Install Product

D1.15 Invoice

D1.2 Receive, Enter & Validate Order D1.3 Reserve Inventory & Determine Delivery Date D1.4 Consolidate Orders D1.5 Build Loads D1.6 Route Shipments D1.7 Select Carriers & Rate Shipments D1.8 Receive Product from Source or Make D1.9 Pick Product

D2 Deliver Make-to-Order Product D2.1 Process Inquiry & Quote D2.10 Pack Product D2.11 Load Product & Generate Shipping Documentation D2.12 Ship Product

DEFINITION Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management. The process of delivering product that is maintained in a finished goods state prior to the receipt of a firm customer order. Receive and respond to general customer inquiries and requests for quotes. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. and delivering the products to the shipping area for loading. The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. The process of shipping the product to the customer site. The process of receiving the shipment by the customer site (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Receive orders from the customer and enter them into a company's order processing system. Orders can be received through phone, fax, or electronic media. "Technically" examine orders to ensure an orderable configuration and provide accurate price. Check the customer's credit. Optionally accept payment. Inventory and/or planned capacity (both on hand and scheduled) is identified and reserved for specific orders and a delivery date is committed and scheduled. The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Transportation modes are selected and efficient loads are built. Loads are consolidated and routed by mode, lane and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, determining inventory availability, building the pick wave, picking the product, recording the pick and delivering product to shipping in response to an order. The process of delivering product that is manufactured, assembled or configured from standard parts or subassemblies. Manufacture, assembly or configuration will begins only after the receipt and validation of a firm customer order. Receive and respond to general customer inquiries and requests for quotes. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing/loading product onto modes of transportation and generating the documentation necessary to meet internal, customer, carrier and government needs.. The process of shipping the product to the customer site.

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PROCESS TERM NAME D2.13 Receive & Verify Product by Customer D2.14 Install Product

D2.15 Invoice

D2.2 Receive, Configure, Enter and Validate Order D2.3 Reserve Resources & Determine Delivery Date D2.4 Consolidate Orders D2.5 Build Loads D2.6 Route Shipments D2.7 Select Carriers & Rate Shipments D2.8 Receive Product from Source or Make D2.9 Pick Product D3 Deliver Engineer-to-Order Product D3.1 Obtain and Respond to RFP/RFQ D3.10 Pack Product D3.11 Load Product & Generate Ship Documents D3.12 Ship Product D3.13 Receive & Verify Product by Customer D3.14 Install Product

D3.15 Invoice D3.2 Negotiate & Receive Contract D3.3 Enter Order, Commit Resources & Launch Program D3.4 Schedule Installation D3.5 Build Loads

DEFINITION The process of receiving the shipment at the customer (either at customer site or at shipping area in case of self-collection) site and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. Receive orders from the customer and enter them into a company's order processing system. Orders can be received through phone, fax, or through electronic media. Configure your product to the customer's specific needs, based on standard available parts or options. "Technically" examine order to ensure an orderable configuration and provide accurate price. Check the customer's credit. Optionally accept payment. Inventory and/or planned capacity is identified and reserved for specific orders, and a delivery date is committed and scheduled. The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation. Transportation modes are selected and efficient loads are built. Loads are consolidated and routed by mode, lane and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. The process of delivering a product that is designed, manufactured, and assembled from a bill of materials that includes one or more custom parts. Design will begin only after the receipt and validation of a firm customer order. The process of receiving a request for proposal or request for quote, evaluating the request (estimating the schedule, developing costs estimates, establishing price), and responding to the potential customer. The activities such as sorting / combining the products, packing / kitting the products, paste labels, barcodes etc. ande delivering the products to the shipping area for loading. The series of tasks including placing product onto vehicles, generating the documentation necessary to meet internal, customer, carrier and government needs. The process of shipping the product to the customer site The process of receiving the shipment (either at customer site or at shipping area in case of self-collection) and verifying that the order was shipped complete and that the product meets delivery terms. When necessary, the process of preparing, testing and installing the product at the customer site. The product is fully functional upon completion. A signal is sent to the financial organization that the order has been shipped and that the billing process should begin and payment be received or be closed out if payment has already been received. Payment is received from the customer within the payment terms of the invoice. The process of negotiating order details with customer (e.g., price, schedule, product performance) and finalizing the contract. Optionally accept payment. The process of entering/finalizing the customers order, approving the planned resources (e.g., engineering, manufacturing, etc.) and officially launching the program. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Transportation loads are selected and efficient loads are built.

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PROCESS TERM NAME D3.6 Route Shipments D3.7 Select Carriers and Rate Shipments D3.8 Receive Product from Source or Make D3.9 Pick Product

D4 Deliver Retail Product D4.1 Generate Stocking Schedule D4.2 Receive Product at Store

D4.3 Pick Product from Backroom

D4.4 Stock Shelf D4.5 Fill Shopping Cart D4.6 Checkout D4.7 Deliver and/or Install DR Deliver Return

DR1 Deliver Return Defective Product

DR1.1 Authorize Defective Product Return

DR1.2 Schedule Defective Return Receipt DR1.3 Receive Defective Product

DEFINITION The process of consolidating and routing shipments by mode, lane, and location. Specific carriers are selected by lowest cost per route and shipments are rated and tendered. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own warehouses. May include quality inspection. The series of activities including retrieving orders to pick, verifying inventory availability, building the pick wave, picking the product, recording the pick and delivering product to packing area in response to an order. Deliver Retail Products are the processes used to acquire, merchandise, and sell finished goods at a retail store. A retail store is a physical location that sells products (and services) direct to the consumer using a point of sale process (manual or automated) to collect payment. Merchandising at a store level is the stocking and restocking of products in designated storage locations to generate sales in a retail store. The process of scheduling resources to support item-stocking requirements. The activities such as receiving product, verifying, recording product receipt, determining put-away location, putting away and recording location that a company performs at its own stores. May include quality inspection. The process of retrieving restocking orders to pick, determining inventory availability, building a pick wave, picking item and quantity from a designated backroom warehouse location, recording the resulting inventory transaction, and delivering the product to point of stock For restocks, the tasks associated with identifying the item location, stocking the shelf according to merchandise plans, and recording the appropriate inventory transaction. For promotional items and stock repositioning the tasks associated with shelf and point of sale preparation, stock placement, and end of sale activities. Typical set of tasks associated with product selection, storage and movement through to checkout. The processes and tasks associated with product checkout including scanning, method of payment, credit application and approval, service agreement, order confirmation, and/or invoice or receipt. The process of preparing and installing the product at the customer site. The product is fully functional upon completion. Processes associated with receiving returned products for any reason. These processes extend into post-delivery customer support. The processes of the last known holder or designated return center authorizing and scheduling the defective product return and the physical receipt of the item by the last known holder or known return center and their transfer of the item for final disposition determination. The process includes communication between the customer and last known holder or known return center and the generation of associated documentation. The process where the last known holder or designated return center receives a defective product return authorization request from a customer, determines if the item can be accepted and communicates decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the last known holder or designated return center evaluates the defective product handling requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the product. The scheduling activity would also inform Receiving when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the last known holder or designated return center receives and verifies the returned defective product against the return authorization and other documentation and prepares the item for transfer.

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PROCESS TERM NAME DR1.4 Transfer Defective Product

DR2 Deliver Return MRO Product

DR2.1 Authorize MRO Product Return

DR2.2 Schedule MRO Return Receipt DR2.3 Receive MRO Product DR2.4 Transfer MRO Product

DR3 Deliver Return Excess Product

DR3.1 Authorize Excess Product Return

DR3.2 Schedule Excess Return Receipt

DR3.3 Receive Excess Product DR3.4 Transfer Excess Product ED Enable Deliver ED.1 Manage Deliver Business Rules ED.2 Assess Delivery Performance

DEFINITION The process where the last known holder or designated return center transfers the defective product to the appropriate process to implement the disposition decision. The processes of the service provider authorizing and scheduling the MRO return product and the physical receipt of the item by the service provider and their transfer of the item for final disposition determination. The process includes communication between the customer and service provider and the generation of associated documentation. The process where a service provider receives an MRO product return authorization request from a customer, determines if the item can be accepted for MRO and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing return replacement or credit. Rejecting the request would include providing a reason for the rejection to the customer. The process where the service provider evaluates the MRO service requirements including negotiated conditions and develops a schedule that tells the Customer when to ship the part. The scheduling activity would also inform Receiving when to expect the shipment and where to send the part, for induction or storage, upon receipt. The process where the service provider receives and verifies the returned MRO item against the return authorization and other documentation and prepares the item for transfer (includes verify). The process where the service provider transfers the MRO product to the appropriate process to implement the disposition decision. The processes of the designated return center authorizing and scheduling the excess product return, the physical receipt of the item by the designated return center and transfer of the item for final disposition The process includes communication between the customer and designated return center and the generation of associated documentation. The process where the designated return center receives an excess product return authorization request from a customer, determines if the item can be accepted and communicates their decision to the customer. Accepting the request would include negotiating the conditions of the return with the customer, including authorizing credit or cash discount. Rejecting the request would include providing a reason for the rejection to the customer. The process where the designated return center evaluates an authorized excess material return to determine packaging and handling requirements. This assessment will lead to the development of a return disposition decision and a return schedule with terms and conditions that will tell the Customer how and when to ship the product. The scheduling activity would also inform the Return Center's Receiving department when to expect the shipment and where to send the product, for disposition, upon receipt. The process where the designated return center receives and verifies the returned excess product and associated documentation against the return authorization and other documentation and prepares the item for transfer. Administrate any discrepancies that arise. The process where the designated return center transfers the excess product to the appropriate process to implement the disposition decision. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of defining and maintaining rules which affect the acceptance of an order, based on quantity, method of delivery, credit, customer experience, etc. (Include distribution channel rules) The process of defining the requirement and monitoring the performance of the delivery of product to a customer. When physical delivery is out-sourced the performance is passed on to source for contract administration.

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PROCESS TERM NAME

ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.5 Manage Deliver Capital Assets

ED.6 Manage Transportation ED.7 Manage Product Life Cycle ED.8 Manage Import/Export Requirements EM Enable Make

EM.1 Manage Production Rules EM.2 Manage Production Performance EM.3 Manage MAKE Information

EM.4 Manage In-Process Products (WIP)

EM.5 Manage Equipment and Facilities EM.6 Manage Transportation EM.7 Manage Production Network EM.8 Manage Regulatory Compliance

EP Enable PLAN

DEFINITION The process of collecting, maintaining, and communicating information to support deliver planning and execution processes. The information to be managed includes: order data - (customer preference, history, status, and delivery requirements, etc.), warehouse data, transportation data, and deliver data. The process of establishing and maintaining finished goods, inventory limits or levels, replenishment models, ownership, product mix, stocking locations. Acquisition, maintenance, and disposition of order management, warehouse, and transportation capital assets. Determine material handling (inventory) pick pack & ship methods (inventory), and equipment. The process of 1) defining and maintaining the information which characterizes product, containerization, vehicle, route, terminals, regulations, rates/tariffs and backhaul opportunity (Characterization include information necessary to support maintenance of internal Outbound Transportation equipment CAPITAL ASSETS) and 2) the management of transporters. The process of defining and maintaining the distribution channel/ network for a specific product line (no capital asset or transportation management). The process of recording and maintaining regulations and rates, which constrain the ordering and delivering of product. Determine customs requirements, establish letters of credit terms and conditions, etc. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of establishing, maintaining, and enforcing rules for managing production details in line with business strategy, goals, and objectives. Production details include part/item master, bills of materials/formulas, routings, processes, equipment requirements, tooling, and other information specifying the method of production for a particular product. The process of developing and maintaining performance standards and analysis methods to compare actual production performance against the established standards. This process allows the development and implementation of a course of action to achieve targeted performance. The process of managing, collecting, maintaining, and communicating information to support MAKE planning and execution processes. The information to be managed includes production, order and process data. The process of establishing and maintaining limits or levels, replenishment models, ownership, product mix and stocking locations for In-Process Product (WIP). Management of the activities associated with handling/storage/movement of materials used to support production. The process of specifying maintaining and dispositioning MAKE's capital assets to operate the supply chain production processes. This process element includes repairs, alterations, calibration and other miscellaneous items to maintain production capabilities of the manufacturing fixed asset base. The ongoing management of the activities associated with ensuring equipment and facilities are kept in proper order. The process of transporting In-Process Product (WIP). This includes management of the activities associated with in transit handling and movement of In-Process Product (WIP). The process of identifying and maintaining a network of intra-company production units that deliver specific semi-finished materials or product sets to the final production site. The process of identifying and complying with regulatory documentation and process standards set by external entities (e.g. government) A plan for the development and establishment of courses of action over specified time periods to appropriate delivery resources to meet projected delivery requirements. The plan contains necessary business requirements for information and relationships to effectively and efficiently PLAN the Supply Chain.

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PROCESS TERM NAME

EP.1 Manage Business Rules for PLAN Processes

EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.4 Manage Integrated Supply Chain Inventory EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation

EP.7 Manage Planning Configuration EP.8 Manage PLAN Regulatory Requirements and Compliance EP.9 Align Supply Chain Unit Plan with Financial Plan ER Enable Return

ER.1 Manage Business Rules for Return Processes

DEFINITION The process of establishing, maintaining, and enforcing decision support criteria for Supply Chain Planning which translate to rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an entire supply chain such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align PLAN process policies with business strategy, goals, and objectives. The process of measuring actual integrated Supply Chain performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. Performance targets established for the execution of supply chain processes are reflected in the process elements for PLAN, i.e. cost, delivery reliability, cycle time, responsiveness, and assets. The process of collecting, integrating and maintaining the accuracy of supply chain execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. The process of establishing total supply chain inventory strategy and planning the total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The process of defining capacity strategy (i.e. internal versus contract manufacturing or internal versus 3rd Party Logistics) and then acquiring, maintaining and dispositioning an organization's capital assets to operate the integrated supply chain. The process of defining an integrated supply chain transportation strategy and maintaining the information which characterizes total supply chain transportation requirements, and the management of transporters both inter and intra company. The process of defining and maintaining the information about a unique supply chain network for a group of similar or complimentary products through their full life cycle, including the evaluation of market need, product realization (development, introduction and production), product discontinuation, and aftermarket support. This element also includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, event planning (promotions, etc.), ABC classification, rationalization, and bill of materials. The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the integrated supply chain network. The process of revising the long-term supply chain capacity and resource plans, given the inputs from the strategic and business plans. This includes revision of not only aggregate forecast and projections related to supply chain, source, make, and delivery plans, but also business assumptions. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of establishing, maintaining, and enforcing decision support criteria for Return Planning that are translated into rules for conducting business. These rules align Return process policies with business strategy, goals, and objectives. Examples of business rules include those that (1) Enable customers to identify when scheduled and unscheduled conditions occur that require a return authorization request, (2) Enable a service provider to confirm a part is authorized to be returned, (3) Identify the waiting period to confirm a return item has been shipped and received before following up (4) Develop and maintain customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners.(5) Communicate to customers the allowable amount of elapsed time from purchase and condition in which excess material must be received in order for it to be accepted as a return (6) Negotiate any restocking charge stipulations.

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PROCESS TERM NAME ER.2 Manage Performance of Return Processes ER.3 Manage Return Data Collection

ER.4 Manage Return Inventory

ER.5 Manage Return Capital Assets

ER.6 Manage Return Transportation

ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ES Enable Source

ES.1 Manage Sourcing Business Rules

ES.2 Assess Supplier Performance

ES.3 Maintain Source Data

ES.4 Manage Product Inventory

DEFINITION The process of measuring actual Return Process performance against internal and/or external standards to develop and implement a course of action to achieve targeted performance levels. The process of collecting, cleansing, integrating and maintaining the accuracy of return execution information necessary to plan the recovery of supply chain resources. The process of establishing a return process inventory strategy and planning the recovery process inventory limits or levels (unserviceable carcasses ready for teardown/evaluation and those carcasses already evaluated and ready for repair) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. The process of acquiring, maintaining and dispositioning capital assets such as fork lift trucks, information systems and equipment in receiving docks that are utilized in support of Return. Management activities would include defining asset requirements, determining resource availability and conducting gap analysis and resolution. The process includes lease-buy and outsourcing decisions. The process of providing the least cost transportation of a returned product from a customer location to the appropriate service provider location within specified time frames. Can include interim transportation activities conducted within more than one service provider locations. Includes defining and implementing a Return transportation strategy throughout the supply chain, maintaining transportation-related information (rates, lead times) and managing transportation performance. The process where customer and service provider locations involved in the flow of returns are defined and maintained throughout the supply chain. Locations include retail and wholesale customer and supplier sites, manufacturing facilities, distribution centers, warehouses, repair depots and military bases. How unserviceable material flow throughout the network is governed by the specific supply chain's business rules. (See ER1) The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return of Assets. Includes Customs requirements and Import / Export Controls. Enable Processes prepare, maintain, or manage information or relationships on which planning and execution processes rely. The process of defining requirements and establishing, maintaining and enforcing decision support criteria, in alignment with business strategy, goals and objectives. The business strategy defines the criteria for sourcing business rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs. The process of collecting, sorting, defining hierarchy and managing configuration control of supplier information and source data that are required to make sourcing and related planning and manufacturing decisions. Source data to be maintained includes supplier profile data, financials, quality and delivery performance, spend analysis at various levels of the enterprise, from major business units to material part number. The process of establishing and maintaining physical inventories and inventory information. This includes warehouse management, cycle counting, physical inventories and inventory reconciliation. For Services, this may include tracking the number of service providers and the financial resources committed at any given point in time.

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PROCESS TERM NAME ES.5 Manage Capital Assets

ES.6 Manage Incoming Product

ES.7 Manage Supplier Network ES.8 Manage Import/Export Requirements

ES.9 Manage Supplier Agreements M Make

M1 Make-to-Stock

M1.1 Schedule Production Activities

M1.2 Issue Material

M1.3 Produce and Test M1.4 Package

M1.5 Stage Product

M1.6 Release Product to Deliver

DEFINITION The process of acquiring, maintaining and dispositioning an organization's located at a supplier's facility and/or outside source, which are used to operate the supply chain. The process of defining and maintaining the information that characterizes inbound logistics management of all supplier deliveries, including both physical and electronic goods and services. This includes carrier selection and management, tracking deliveries and import. The process of defining and maintaining a unique network of suppliers to deliver a specific product set. This includes establishment of a new supplier or maintaining an existing supplier and all the tasks and activities associated with identifying and qualifying the supplier and finalizing on the sourcing terms and conditions. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. The process of identifying and complying with import/export regulatory documentation and process standards set by external entities (e.g., government). The management of existing purchase orders or supplier contracts. This includes managing volume/step pricing, resolving issues, enforcing terms and conditions and maintaining an accurate status for existing purchase orders or contracts. Also, the management of a supplier certification process, which includes certifying new suppliers and maintaining the current status of existing suppliers. Processes that transform product to a finished state to meet planned or actual demand. The process of manufacturing in a make to stock environment adds value to products through mixing, separating, forming, machining, and chemical processes. Make to stock products are intended to be shipped from finished goods or "off the shelf," are completed prior to receipt of a customer order, and are generally produced in accordance with a sales forecast. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization.

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PROCESS TERM NAME

M2 Make-to-Order

M2.1 Schedule Production Activities

M2.2 Issue Sourced/In-Process Product

M2.3 Produce and Test M2.4 Package

M2.5 Stage Finished Product

M2.6 Release Finished Product to Deliver

M3 Engineer-to-Order

M3.1 Finalize Production Engineering

M3.2 Schedule Production Activities

DEFINITION The process of manufacturing in a make to order environment adds value to products through mixing, separating, forming, machining, and chemical processes. A make to order environment is one in which products are completed after receipt of a customer order and are built or configured only in response to a customer order. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product. The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. The process of manufacturing distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order. While Make to Order includes standard products built only in response to a customer order or products configured in response to a customer order, Engineer to Order includes custom products that are designed, developed, and manufactured in response to a specific customer request. Engineering activities required after acceptance of order, but before product can be produced. May include generation and delivery of final drawings, specifications, formulas, part programs, etc. In general, the last step in the completion of any preliminary engineering work done as part of the quotation process. Given plans for the production of specific parts, products, or formulations in specified quantities and planned availability of required sourced products, the scheduling of the operations to be performed in accordance with these plans. Scheduling includes sequencing, and, depending on the factory layout, any standards for setup and run. In general, intermediate production activities are coordinated prior to the scheduling of the operations to be performed in producing a finished product.

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PROCESS TERM NAME

M3.3 Issue Sourced/In-Process Product

M3.4 Produce and Test M3.5 Package

M3.6 Stage Finished Product

M3.7 Release Product to Deliver P Plan

P1 Plan Supply Chain

P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P1.2 Identify, Assess, and Aggregate Supply Chain Resources P1.2 Identify, Assess, And Aggregate Supply Chain Resources

P1.3 Balance Supply Chain Resources with Supply Chain Requirements

DEFINITION The selection and physical movement of sourced/in-process product (e.g., raw materials, fabricated components, subassemblies, required ingredients or intermediate formulations) from a stocking location (e.g., stockroom, a location on the production floor, a supplier) to a specific point of use location. Issuing product includes the corresponding system transaction. The Bill of Materials/routing information or recipe/production instructions will determine the products to be issued to support the production operation(s). The series of activities performed upon sourced/in-process product to convert it from the raw or semi-finished state to a state of completion and greater value. The processes associated with the validation of product performance to ensure conformance to defined specifications and requirements. The series of activities that containerize completed products for storage or sale to end-users. Within certain industries, packaging may include cleaning or sterilization. The movement of packaged products into a temporary holding location to await movement to a finished goods location. Products that are made to order may remain in the holding location to await shipment per the associated customer order. The movement to finished goods is part of the Deliver process. Activities associated with post-production documentation, testing, or certification required prior to delivery of finished product to customer. Examples include assembly of batch records for regulatory agencies, laboratory tests for potency or purity, creating certificate of analysis, and signoff by the quality organization. Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production and delivery requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of supply chain resources to meet supply chain requirements for the longest time fence constraints of supply resources. The process of identifying, aggregating, and prioritizing, all sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. The sales forecast is comprised of the following concepts: sales forecasting level, time horizon, and time interval. The sales forecasting level is the focal point in the corporate hierarchy where the forecast is needed at the most generic level. i.e. Corporate forecast, Divisional forecast, Product Line forecast, SKU, SKU by Location. The sales forecasting time horizon generally coincides with the time frame of the plan for which it was developed i.e. Annual, 1-5 years, 1- 6 months, Daily, Weekly, Monthly. The sales forecasting time interval generally coincides with how often the plan is updated, i.e. Daily, Weekly, Monthly, and Quarterly. The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. The process of identifying, prioritizing, and aggregating, as a whole with constituent parts, all sources of supply that are required and add value in the supply chain of a product or service at the appropriate level, horizon and interval. The process of identifying and measuring the gaps and imbalances between demand and resources in order to determine how to best resolve the variances through marketing, pricing, packaging, warehousing, outsource plans or some other action that will optimize service, flexibility, costs, assets, (or other supply chain inconsistencies) in an iterative and collaborative environment. The process of developing a time-phased course of action that commits supplychain resources to meet supply-chain requirements.

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PROCESS TERM NAME

P1.4 Establish Supply Chain Plans P2 Plan Source P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources P2.3 Balance Product Resources with Product Requirements P2.4 Establish Sourcing Plans P3 Plan Make P3.1 Identify, Prioritize, and Aggregate Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P3.3 Balance Production Resources with Production Requirements P3.4 Establish Production Plans P4 Plan Deliver P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P4.4 Establish Delivery Plans

P5 Plan Return P5.1 Assess, and Aggregate Return Requirements P5.2 Identify, Assess, and Aggregate Return Resources P5.3 Balance Return Resources with Return Requirements

DEFINITION The establishment and communication of courses of action over the appropriate time-defined (long-term, annual, monthly, weekly) planning horizon and interval, representing a projected appropriation of supply-chain resources to meet supply-chain requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of material resources to meet supply chain requirements. The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand for a product or service in the supply chain. The process of identifying, evaluating, and considering, as a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The process of developing a time-phased course of action that commits resources to meet requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet sourcing plan requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of production resources to meet production requirements. The process of identifying, prioritizing, and considering as a whole with constituent parts, all sources of demand in the creation of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The process of developing a time-phased course of action that commits creation and operation resources to meet creation and operation requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of supply resources to meet production and operating plan requirements. The development and establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. The process of identifying, prioritizing, and considering, as a whole with constituent parts, all sources of demand in the delivery of a product or service. The process of identifying, evaluating, and considering, as a whole with constituent parts, all things that add value in the delivery of a product or service. The process of developing a time-phased course of action that commits delivery resources to meet delivery requirements. The establishment of courses of action over specified time periods that represent a projected appropriation of delivery resources to meet delivery requirements. A strategic or tactical process to establish and adjust courses of action or tasks over specified time periods that represent a projected appropriation of return resources and assets to meet anticipated as well as unanticipated return requirements. The scope includes unplanned returns of sold merchandise as well as planned returns of "rotable" products that are refurbished for reissue to customers. The process of identifying, evaluating, and considering, as a whole with constituent parts, all sources of demand for the return of a product. The process of identifying, evaluating, and consideration for all resources that add value to, execute, or constrain the processes for the return of a product. The process of developing courses of action that make feasible the commitment the appropriate return resources and or assets to satisfy return requirements.

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PROCESS TERM NAME P5.4 Establish and Communicate Return Plans R1 Return Defective Product R2 Return MRO Product R3 Return Excess Product S Source S1 Source Stocked Product

S1.1 Schedule Product Deliveries S1.2 Receive Product S1.3 Verify Product

S1.4 Transfer Product S1.5 Authorize Supplier Payment S2 Source Make-to-Order Product

S2.1 Schedule Product Deliveries S2.2 Receive Product S2.3 Verify Product S2.4 Transfer Product S2.5 Authorize Supplier Payment S3 Source Engineer-to-Order Product S3.1 Identify Sources of Supply S3.2 Select Final Supplier(s) and Negotiate

S3.3 Schedule Product Deliveries S3.4 Receive Product S3.5 Verify Product

DEFINITION The establishment and communication of courses of action over specified time periods that represent a projected appropriation of required return resources and or assets to meet return process requirements. The return and disposition of defective products as defined by the warranty claims, product recall, non-conforming product and/or other similar policies including appropriate replacement. The return of MRO products as defined by the planned and unplanned Capital Maintenance Plan. The return of excess inventory and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract. Processes that procure goods and services to meet planned or actual demand. The procurement, delivery, receipt and transfer of raw material items, subassemblies, product and or services. Scheduling and managing the execution of the individual deliveries of product against an existing contract or purchase order. The requirements for product releases are determined based on the detailed sourcing plan or other types of product pull signals. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring and stocking product. For service this is the transfer or application of service to the final customer or end user. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. The procurement and delivery of product that is built to a specific design or configured based on the requirements of a particular customer order. Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes, qualifications or service deployment. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria. The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product and or application of service. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. The negotiation, procurement and delivery of engineer-to-order assemblies or specialized product or services that are designed and built based on the requirements or specifications of a particular customer order or contract. The identification and qualification of potential suppliers capable of designing and delivering product that will meet all of the required product specifications. The identification of the final supplier(s) based on the evaluation of RFQs, supplier qualifications and the generation of a contract defining the costs and terms and conditions of product availability. Scheduling and managing the execution of the individual deliveries of product against the contract. The requirements for product deliveries are determined based on the detailed sourcing plan. This includes all aspects of managing the contract schedule including prototypes and qualifications. The process and associated activities of receiving product to contract requirements. The process and actions required determining product conformance to requirements and criteria.

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PROCESS TERM NAME S3.6 Transfer Product S3.7 Authorize Supplier Payment SR Source Return

SR1 Source Return Defective Product SR1.1 Identify Defective Product Condition SR1.2 Disposition Defective Product

SR1.3 Request Defective Return Authorization SR1.4 Schedule Defective Product Shipment

SR1.5 Return Defective Product

SR2 Source Return MRO Product SR2.1 Identify MRO Product Condition

SR2.2 Disposition MRO Product

SR2.3 Request MRO Return Authorization

SR2.4 Schedule MRO Shipment

DEFINITION The transfer of accepted product to the appropriate stocking location within the supply chain. This includes all of the activities associated with repackaging, staging, transferring, and stocking product. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Processes associated with returning products for any reason. These processes extend into post-delivery customer support. The process, initiated by the customer, of returning material deemed defective by to the last known holder or designated return center. Process includes: customer identification that an action is required and determining what that action should be, communicating with the last known holder, generating return documentation, and physically returning of the excess product. The process where the customer utilizes planned policies, business rules and product operating conditions inspection as criteria to identify and confirm that material is excess to requirements defective. The process of the customer determining whether to return the defective item and the appropriate source contact for a return authorization. The process of a customer requesting and obtaining authorization, from last known holder or designated return center, for the return of defective product. Additionally, the customer and last known holder or designated return center would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the defective product. The process where the customer develops the schedule for a carrier to pick-up for delivery of the defective product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the defective product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center. The process, initiated by the customer, of returning maintenance, repair, and overhaul items to a service provider. Process includes: customer identification that an action is required and determining what that action should be, communicating with the service provider, generating return documentation, and physically returning or disposing of the product. The process where the customer utilizes pre-determined MRO policies, business rules and product operating conditions as criteria to identify and confirm that an item requires maintenance, repair, overhaul or disposal. Includes operating failures and planned maintenance requirements. The process of the customer determining whether to service the item, what service is required, and who the appropriate service provider would be to service the item. Outputs include a decision to: (1) send a return authorization request to a service provider, (2) send the product back into service without requiring a return authorization request, or (3) discard the item. The process of a customer requesting and obtaining authorization, from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received. The process where the customer develops the schedule for a carrier to pick-up and deliver the MRO product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration.

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PROCESS TERM NAME

SR2.5 Return MRO Product

SR3 Source Return Excess Product SR3.1 Identify Excess Product Condition SR3.2 Disposition Excess Product

SR3.3 Request Excess Return Authorization SR3.4 Schedule Excess Product Shipment

SR3.5 Return Excess Product

DEFINITION The process where the customer packages, and handles the MRO product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the service provider. The process, initiated by the customer, of returning material deemed in excess of current requirements to the designated return center. Process includes: customer identification that an action is required, determining what that action should be, requesting authorization from the designated return center, generating return documentation, and physically returning the excess product. The process where the customer utilizes planned policies, business rules and product inspection as criteria to identify and confirm that material is in excess of the current requirements. The process of the customer determining whether to return the excess material and identification of a designated return center a return authorization. The process of a customer requesting and obtaining authorization, from the designated return center, for the return of excess product. Additionally, the customer and designated return center would negotiate enabling conditions such as return credit or cash discount, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the excess product. The process where the customer develops the schedule for a carrier to pick-up the excess product. Activities include selecting the carrier and rates, preparing the item for transfer, preparing scheduling documentation and managing overall scheduling administration. The process where the customer packages, and handles the excess product in preparation for shipping in accord with pre-determined conditions. The product is then provided by the customer to the carrier who physically transports the product and its associated documentation to the last known holder or designated return center.

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METRICS METRIC % In-Stock % of Excess Product Returns Delivered Complete to the Designated Return Center

DEFINITION Percentage of materials, components, or finished goods that are there when needed. Correct destination, according to the schedule, with the correct part and documentation

% of Faultless Invoices

The number of invoices processed without issues and or errors divided by the total number of invoices. Examples of potential invoice defects are: Change from customer purchase order without proper customer involvement Wrong Customer Information (e.g., name, address, telephone number) Wrong Product Information (e.g., part number, product description) Wrong Price (e.g., discounts not applied) Wrong Quantity or Wrong Terms or Wrong Date

% Orders/ Lines Processed Complete

The number of orders / lines that are processed complete divided by the total orders / lines processed within the measurement period The number of orders / lines that are received defect free divided by the total orders / lines processed in the measurement period. The number of orders / lines that are received on-time to the demand requirements divided by the total orders / lines for the demand requirements in the measurement period The number of orders / lines that are received on-time with correct shipping documents divided by the total orders / lines processed in the measurement period Percentage of orders which all of the items are received by customer in the quantities committed

% Orders/ Lines Received Defect Free % Orders/ Lines Received On-Time To Demand Requirement

% Orders/ Lines Received with Correct Shipping Documents % of Orders Delivered In Full

% Product Transferred On-Time to Demand Requirement % Product Transferred without Transaction Errors % Return % Schedules Changed within Supplier's Lead Time

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The number of orders that are received by the customer in the quantities committed divided by the total orders [Total number of orders delivered in full] / [Total number of orders delivered] x 100% The number of product orders / lines that are transferred on-time to demand requirements divided by the total orders / lines transferred in the measurement period The number of transactions processed without error divided by the total transactions processed in the measurement period. % Return to sales at any level of merchandise hierarchy The number of schedules that are changed within the suppliers lead-time divided by the total number of schedules generated within the measurement period 368

PROCESS D4.4 Stock Shelf DR3 Deliver Return Excess Product SR3 Source Return Excess Product D2.14 Install Product D1.14 Install Product D3.15 Invoice D2.15 Invoice D1.15 Invoice

S1.2, S2.2, S3.4

S1.3, S2.3, S3.5

S1.2, S2.2, S3.4

S1.2, S2.2, S3.4

M1.1, M2.1, M3.1, D1.3, D1.12, D1.13, D2.3, D2.12, D2.13, D3.3, D3.12, D3.13, ED

S1.4, S2.4, S3.6 S1.4, S2.4, S3.6 R1 Return Defective Product R2 Return MRO Product S1.1, S2.1, S3.3

June 2006

METRIC Actual Asset Life Maintenance Cost as % of Replacement Value

Align Supply Chain Unit Plan with Financial Plan Cycle Time Assess Delivery Performance Cycle Time Assess Supplier Performance Cycle Time Asset Turns Authorize Defective Product Return Cycle Time Authorize Excess Product Return Cycle Time Authorize MRO Product Return Cycle Time Authorize Supplier Payment Cycle Time

Average Days per Engineering Change Average Days per Schedule Change Average Release Cycle of Changes Balance Delivery Resources with Delivery Requirements Cycle Time Balance Product Resources with Product Requirements Cycle Time Balance Production Resources with Product Creation Requirements Cycle Time Balance Return Resources with Return Requirements Cycle Time Balance Supply Chain Resources with Supply Chain Requirements Cycle Time Build Loads Cycle Time

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DEFINITION Measure of total lifecycle maintenance cost of an asset compared to its replacement cost. This ratio is based maintenance cost to-date so that that replacement or upgrade cost can be evaluated as the asset ages on an on-going basis. The average time associated with aligning the supply chain unit plan with the financial plan The average time associated with assessing the performance of deliver processes. The average time associated with assessing the performance of supplier processes. Total gross product revenue ÷ Total net assets The average time associated with authorizing the return of defective product. The average time associated with authorizing the return of excess product. The average time associated with authorizing the return of MRO product. The average time associated with authorizing payment to suppliers.

# of days each engineering change impacts the delivery date divided by the total # of changes. # of days each schedule change impacts the delivery date divided by the total # of changes. Cycle time for implementing change notices divided by total number of changes. The average time associated with balancing deliver resources and deliver requirements. The average time associated with balancing product resources and product requirements. The average time associated with balancing production resources with production creation requirements. The average time associated with balancing return resources and return requirements. The average time associated with balancing supply chain resources and supply chain requirements. The average time associated with building shipment loads.

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PROCESS EM.5

EP.9 Align Supply Chain Unit Plan with Financial Plan ED.2 Assess Delivery Performance ES.2 Assess Supplier Performance M1.3, M1.4, M2.3, M2.4, M3.4, M3.5 DR1.1 Authorize Defective Product Return DR3.1 Authorize Excess Product Return DR2.1 Authorize MRO Product Return S3.7 Authorize Supplier Payment S2.5 Authorize Supplier Payment S1.5 Authorize Supplier Payment S1.1, S2.1, S3.3 S1.1, S2.1, S3.3 S1.1, S2.1, S3.3 P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P2.3 Balance Product Resources with Product Requirements P3.3 Balance Production Resources with Production Requirements P5.3 Balance Return Resources with Return Requirements P1.3 Balance Supply Chain Resources with Supply Chain Requirements D1.5 Build Loads D2.5 Build Loads D3.5 Build Loads

June 2006

METRIC Capacity Utilization

Cash-To-Cash Cycle Time

Checkout Cycle Time Consolidate Orders Cycle Time Cost of Compliance Including Administrative Costs Cost of Goods Sold

Cost to Align Supply Chain Unit Plan with Financial Plan Cost to Assess Delivery Performance Cost to Assess Supplier Performance Cost to Authorize Defective Product Return Cost to Authorize Excess Product Return Cost to Authorize MRO Product Return Cost to Authorize Supplier Payment

Cost to Balance Delivery Resources with Delivery Requirements Cost to Balance Product Resources with Product Requirements Cost to Balance Production Resources with Product Creation Requirements Cost to Balance Return Resources with Return Requirements

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DEFINITION A measure of how intensively a resource is being used to produce a good or service. Some factors that should be considered are internal manufacturing capacity, constraining processes, direct labor availability and key components/materials availability. [Inventory Days of Supply + Days Sales Outstanding – Days Payable Outstanding] The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services. The average time required for customer checkout. The average time required for customer order consolidation. Total MAKE cost to comply with regulatory requirements. The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). The sum of the costs associated with aligning supply chain performance plans with financial plans. The sum of the costs associated with assessing delivery performance. The sum of the costs associated with assessing supplier performance. The sum of the costs associated with authorizing the return of defective product. The sum of the costs associated with authorizing the return of excess product. The sum of the costs associated with authorizing the return of product to be maintained, repaired, or overhauled. The sum of the costs associated with authorizing supplier payment.

The sum of the costs associated with balance of delivery resources with delivery requirements. The sum of the costs associated with balance of product resources with product requirements. The sum of the costs associated with balance of production resources with product creation requirements. The sum of the costs associated with balance of return resources with return requirements. 370

PROCESS M1.1, M1.3, M1.4, M2.1, M2.3, M2.4, M3.2, M3.4, M3.5

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4

D4.6 Checkout D1.4 Consolidate Orders D2.4 Consolidate Orders EM.8 M2 Make-to-Order M1 Make-to-Stock M3 Engineer-to-Order EP.9 Align Supply Chain Unit Plan with Financial Plan ED.2 Assess Delivery Performance ES.2 Assess Supplier Performance DR1.1 Authorize Defective Product Return DR3.1 Authorize Excess Product Return DR2.1 Authorize MRO Product Return S3.7 Authorize Supplier Payment S2.5 Authorize Supplier Payment S1.5 Authorize Supplier Payment P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements P2.3 Balance Product Resources with Product Requirements P3.3 Balance Production Resources with Production Requirements P5.3 Balance Return Resources with Return Requirements June 2006

METRIC Cost to Balance Supply Chain Resources with Supply Chain Requirements Cost to Build Loads

DEFINITION The sum of the costs associated with balance of supply chain resources with supply chain requirements. The sum of the costs associated with building transportation loads.

Cost to Checkout

The sum of the costs associated with product checkout. The sum of the costs associated with consolidating customer orders. The sum of the costs associated with deliver

Cost to Consolidate Orders Cost to Deliver

Cost to Deliver and/or Install Cost to Enter Order, Commit Resources & Launch Program Cost to Establish and Communicate Return Plans Cost to Establish and Communicate Supply Chain Plans Cost to Establish Delivery Plans Cost to Establish Production Plans Cost to Establish Sourcing Plans Cost to Fill Shopping Cart Cost to Finalize Production Engineering Cost to Generate Stocking Schedule Cost to Identify Sources of Supply Cost to Identify, Assess, and Aggregate Product Resources Cost to Identify, Assess, and Aggregate Production Resources

Cost to Identify, Assess, and Aggregate Return Resources Cost to Identify, Assess, and Aggregate Supply Chain Resources

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The sum of the costs associated with deliver and/or install The sum of the costs associated with entering the order, committing resources & launching a program. The sum of the costs associated with establishing and communicating return plans. The sum of the costs associated with establishing and communicating supply chain plans. The sum of the costs associated with establishing and communicating deliver plans. The sum of the costs associated with establishing and communicating production plans. The sum of the costs associated with establishing and communicating source plans. The sum of the costs associated with filling a shopping cart. The sum of the costs associated with finalizing production engineering. The sum of the costs associated with generating a stocking schedule. The sum of the costs associated with identifying sources of supply. The sum of the costs associated with identifying, assessing and aggregating product resources. The sum of the costs associated with identifying, assessing and aggregating production resources.

The sum of the costs associated with identifying, assessing and aggregating return resources. The sum of the costs associated with identifying, assessing and aggregating supply chain resources.

371

PROCESS P1.3 Balance Supply Chain Resources with Supply Chain Requirements D1.5 Build Loads D2.5 Build Loads D3.5 Build Loads D4.6 Checkout D1.4 Consolidate Orders D2.4 Consolidate Orders D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4.7 Deliver and/or Install D3.3 Enter Order, Commit Resources & Launch Program P5.4 Establish and Communicate Return Plans P1.4 Establish Supply Chain Plans P4.4 Establish Delivery Plans P3.4 Establish Production Plans P2.4 Establish Sourcing Plans D4.5 Fill Shopping Cart M3.1 Finalize Production Engineering D4.1 Generate Stocking Schedule S3.1 Identify Sources of Supply P2.2 Identify, Assess, And Aggregate Product Resources P3.2 Identify, Assess, and Aggregate Production Resources P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P5.2 Identify, Assess, and Aggregate Return Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources

June 2006

METRIC Cost to Identify, Prioritize, and Aggregate Delivery Requirements Cost to Identify, Prioritize, and Aggregate Product Requirements Cost to Identify, Prioritize, and Aggregate Production Requirements Cost to Identify, Prioritize, and Aggregate Return Requirements Cost to Identify, Prioritize, and Aggregate Supply Chain Requirements Cost to Install Product Cost to Invoice Cost to Issue Material Cost to Issue Sourced/In-Process Product

DEFINITION The sum of the costs associated with identifying, assessing and aggregating deliver requirements The sum of the costs associated with identifying, assessing and aggregating deliver requirements. The sum of the costs associated with identifying, assessing and aggregating production requirements The sum of the costs associated with identifying, assessing and aggregating return requirements. The sum of the costs associated with identifying, assessing and aggregating supply chain requirements. The sum of the costs associated with product installation. The sum of the costs associated with invoicing. The sum of the costs associated with issuing material. The sum of the costs associated with issuing sourced or in-process material.

Cost to Load Product & Generate Shipping Documentation

The sum of the costs associated with loading product & generating shipping documentation.

Cost to Maintain Source Data

The sum of the costs associated with maintaining supplier data. The sum of the costs associated with make. The sum of the .Costs to Manage Business Rules for PLAN Processes The sum of the Cost to Manage Business Rules for Return Processes The sum of the Costs to Manage Deliver Business Rules The sum of the Costs to Manage Deliver Capital Assets The sum of the Cost to Manage Deliver Information The sum of the Costs to Manage Finished Good Inventory The sum of the costs associated with the management of import/export requirements

Cost to Make Cost to Manage Business Rules for PLAN Processes Cost to Manage Business Rules for Return Processes Cost to Manage Deliver Business Rules Cost to Manage Deliver Capital Assets Cost to Manage Deliver Information Cost to Manage Finished Goods Inventories Cost to Manage Import/Export Requirements Cost to Manage Incoming Product Cost to Manage In-Process Products (WIP) Cost to Manage Integrated Supply Chain Capital Assets

© Copyright 2006 Supply-Chain Council, Inc.

The sum of the costs associated with managing incoming product. The sum of the costs associated with managing in-process products (WIP). The sum of the costs associated with managing integrated supply chain assets.

372

PROCESS P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements P3.1 Identify, Prioritize, and Aggregate Production Requirements P5.1 Assess, and Aggregate Return Requirements P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D1.14 Install Product D2.14 Install Product D3.14 Install Product D1.15 Invoice D3.15 Invoice M1.2 Issue Material M3.3 Issue Sourced/InProcess Product M2.2 Issue Sourced/InProcess Product D1.11 Load Vehicle & Generate Shipping Documentation D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents ES.3 Maintain Source Data M1, M2, M3 EP.1 Manage Business Rules for PLAN Processes ER.1 Manage Business Rules for Return Processes ED.1 Manage Deliver Business Rules ED.5 Manage Deliver Capital Assets ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements ES.6 Manage Incoming Product EM.4 Manage In-Process Products (WIP) EP.5 Manage Integrated Supply Chain Capital Assets

June 2006

METRIC Cost to Manage Integrated Supply Chain Inventory Cost to Manage Integrated Supply Chain Transportation Cost to Manage MAKE Equipment and Facilities Cost to Manage MAKE Information Cost to Manage MAKE Regulatory Compliance Cost to Manage Performance of Return Processes Cost to Manage Performance of Supply Chain Cost to Manage PLAN Data Collection Cost to Manage Plan Regulatory Requirements and Compliance Cost to Manage Planning Configuration Cost to Manage Product Inventory Cost to Manage Product Life Cycle Cost to Manage Production Network Cost to Manage Production Performance Cost to Manage Production Rules Cost to Manage Return Capital Assets Cost to Manage Return Data Collection Cost to Manage Return Inventory Cost to Manage Return Network Configuration Cost to Manage Return Regulatory Requirements and Compliance Cost to Manage Return Transportation Cost to Manage Source Capital Assets Cost to Manage Sourcing Business Rules Cost to Manage Supplier Agreements Cost to Manage Supplier Network Cost to Manage Transportation

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION The sum of the costs associated with managing the integrated supply chain inventory. The sum of the costs associated with managing integrated supply chain transportation. The sum of the costs associated with managing Make equipment and facilities. The sum of the Cost to Manage MAKE Information The sum of the Cost to Manage MAKE Regulatory Compliance The sum of the costs to Manage Performance of Return Processes. The sum of the costs associated with assessing supplier performance. The sum of the costs to Manage PLAN Data Collection. The sum of the costs to Manage Plan Regulatory Requirements and Compliance. The sum of the Cost to Manage Planning Configuration The sum of the Cost to Manage Product Inventory The sum of the Cost to Manage Product Life Cycle The sum of the costs to manage the production network The sum of the costs to manage production performance. The sum of the costs to manage production rules. The sum of the costs to manage the capital assets associated with returns. The sum of the costs to manage the capital assets associated with returns data collection. The sum of the costs to manage the capital assets associated with return inventory. The sum of the costs to manage the capital assets associated with configuring the return network. The sum of the costs associated with managing compliance to return regulatory requirements. The sum of the costs associated with managing return transportation. The sum of the Costs to Manage Source Capital Assets The sum of the costs associated with Source business rules. The sum of the costs associated with managing supplier agreements. The sum of the costs associated with managing the supplier network. The sum of the costs associated with managing Finished Good Transportation

373

PROCESS EP.4 Manage Integrated Supply Chain Inventory EP.6 Manage Integrated Supply Chain Transportation EM.5 Manage Equipment and Facilities EM.3 Manage MAKE Information EM.8 Manage Regulatory Compliance ER.2 Manage Performance of Return Processes EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.8 Manage PLAN Regulatory Requirements and Compliance EP.7 Manage Planning Configuration ES.4 Manage Product Inventory ED.7 Manage Product Life Cycle EM.7 Manage Production Network EM.2 Manage Production Performance EM.1 Manage Production Rules ER.5 Manage Return Capital Assets ER.3 Manage Return Data Collection ER.4 Manage Return Inventory ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ER.6 Manage Return Transportation ES.5 Manage Capital Assets ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network ED.6 Manage Transportation

June 2006

METRIC Cost to Manage Transportation (WIP) Cost to Negotiate & Receive Contract Cost to Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cost to Pack Product

DEFINITION The sum of the costs associated with managing WIP Transportation The sum of the costs associated with negotiating and receiving contracts The sum of the costs associated with obtaining and responding to Request for Quote (RFQ) / Request for Proposal (RFP). The sum of the costs associated with product packaging.

Cost to Package

The sum of the costs associated with product packaging.

Cost to Pick Product

The sum of the costs associated with picking product.

Cost to Pick Product from Backroom

The sum of the costs associated with picking product from backroom. The sum of the costs associated with planning the delivery of product. The sum of the costs associated with planning the making of product. The sum of the costs associated with planning the returning of product. The sum of the costs associated with planning source activities. The sum of the costs associated with planning supply chain activities. The sum of the costs associated with processing inquiry and quotes. The sum of the costs associated with production and test.

Cost to Plan Deliver Cost to Plan Make Cost to Plan Return Cost to Plan Source Cost to Plan Supply Chain Cost to Process Inquiry & Quote Cost to Produce and Test Cost to Receive & Verify Product by Customer

The sum of the costs associated with receipt and verification at customer site.

Cost to Receive Defective Product

The sum of the costs associated with receiving defective product returns. The sum of the costs associated with receiving excess returns. The sum of the costs associated with receiving MRO product returns. The sum of the costs associated with receiving product.

Cost to Receive Excess Product Cost to Receive MRO Product Cost to Receive Product Cost to Receive Product at Store Cost to Receive Product from Source or Make

Cost to Receive, Enter & Validate Order

© Copyright 2006 Supply-Chain Council, Inc.

The sum of the costs associated with receiving product at the store. The sum of the costs associated with transferring product from source or make activities.

The sum of the costs associated with receiving, entering and validating a customer order.

374

PROCESS EM.6 Manage Transportation D3.2 Negotiate & Receive Contract D3.1 Obtain and Respond to RFP/RFQ D1.10 Pack Product D2.10 Pack Product D3.10 Pack Product M3.5 Package M2.4 Package M1.4 Package D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product D4.3 Pick Product from Backroom P4 P3 P5 P2 Plan Source P1 Plan Supply Chain D1.1 Process Inquiry & Quote D2.1 Process Inquiry & Quote M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test D1.13 Receive & Verify Product by Customer D2.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer DR1.3 Receive Defective Product DR3.3 Receive Excess Product DR2.3 Receive MRO Product S3.4 Receive Product S2.2 Receive Product S1.2 Receive Product D4.2 Receive Product at Store D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product from Source or Make D1.2 Receive, Enter & Validate Order D2.2 Receive, Configure, Enter and Validate Order June 2006

METRIC Cost to Release Finished Product to Deliver

DEFINITION The sum of the costs associated with releasing finished goods to deliver processes.

Cost to Reserve Resources & Determine Delivery Date

The sum of the costs associated with reserving resources and determining a delivery date.

Cost to Route Shipments

The sum of the costs associated with routing shipments.

Cost to Schedule Excess Product Receipt Cost to Schedule Installation

The sum of the costs associated with scheduling excess product receipt. The sum of the costs associated with scheduling product installation. The sum of the costs associated with scheduling MRO product receipt. The sum of the costs associated with scheduling product deliveries.

Cost to Schedule MRO Product Receipt Cost to Schedule Product Deliveries

Cost to Schedule Production Activities

The sum of the costs associated with scheduling production activities.

Cost to Select Carriers & Rate Shipments

The sum of the costs associated with selecting carriers and rating shipments.

Cost to Select Final Supplier(s) and Negotiate

The sum of the costs associated with selecting final suppliers and negotiating supplier agreements. The sum of the costs associated with shipping products.

Cost to Ship Product Cost to Source

The sum of the costs associated with Source.

Cost to Source Return

The sum of the costs associated with Source Return

Cost to Stage Finished Product

The sum of the costs associated with staging finished goods.

Cost to Stock Shelf

The sum of the costs associated with stocking shelves.

© Copyright 2006 Supply-Chain Council, Inc.

375

PROCESS M3.7 Release Product to Deliver M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments DR3.2 Schedule Excess Return Receipt D3.4 Schedule Installation DR2.2 Schedule MRO Return Receipt S3.3 Schedule Product Deliveries S2.1 Schedule Product Deliveries S1.1 Schedule Product Deliveries M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities D2.7 Select Carriers & Rate Shipments D1.7 Select Carriers & Rate Shipments D3.7 Select Carriers and Rate Shipments S3.2 Select Final Supplier(s) and Negotiate D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product S1 Source Stocked Product S2 Source Make-to-Order Product S3 Source Engineer-to-Order Product SR3 Source Return Excess Product SR2 Source Return MRO Product SR1 Source Return Defective Product M3.6 Stage Finished Product M2.5 Stage Finished Product M1.5 Stage Product D4.4 Stock Shelf

June 2006

METRIC Cost to Transfer Defective Product Cost to Transfer Excess Product Cost to Transfer MRO Product Cost to Transfer Product Cost to Verify Product Costs Associated with Managing Production Performance as a % Manufacturing Controllable Cost Customs Clearance Cycle Time

Days of Supply (See Inventory Days of Supply) Days Payable Outstanding

DEFINITION The sum of the costs associated transferring defective product for disposition The sum of the costs associated transferring excess product for disposition The sum of the costs associated transferring MRO product for disposition The sum of the costs associated with transferring product to Make or Deliver processes The sum of the costs associated with raw material verification. Ratio of Cost for Managing Production Performance to Manufacturing Controllable Cost. The average time associated with clearing an order through customs

[Sum of the 4 previous quarters + projection for next quarter) / 5]

PROCESS DR1.4 Transfer Defective Product DR3.4 Transfer Excess Product DR2.4 Transfer MRO Product S3.6 Transfer Product S2.4 Transfer Product S1.4 Transfer Product S2.3 Verify Product S1.3 Verify Product S3.5 Verify Product EM.2 ES.8 Manage Import/Export Requirements ED.8 Manage Import/Export Requirements D1.15, D2.15 Invoice, D3.15

The length of time from purchasing materials, labor and/or conversion resources until cash payments must be made expressed in days. The [5 point rolling average of gross accounts payable (AP)] / [total gross annual material purchases / 365]. (Other names: Average payment period for materials, Days purchases in accounts payable, Days’ outstanding in accounts payable)

Days Sales Outstanding

Deliver and/or Install Cycle Time Deliver Cycle Time

© Copyright 2006 Supply-Chain Council, Inc.

The “5 point rolling average” calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. 5 point annual average of gross accounts receivable ÷ (total gross annual sales ÷ 365) The length of time from when a sale is made until cash for it is received from customers. The amount of sales outstanding expressed in days. The average time required to deliver and install product. The average time associated with Deliver Processes

376

D1.15, D2.15 Invoice, D3.15

D4.7 Deliver and/or Install D3 Deliver Engineer-to-Order Product D2.15 Invoice D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D4 Deliver Retail Product

June 2006

METRIC Deliver Return Cycle Time

DEFINITION The average time associated with returns.

Delivery Performance to Customer Commit Date

The percentage of orders that are fulfilled on the customer's original commit date

Documentation Accuracy

Percentage of orders with on time and accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc. [Total number of orders delivered with correct and timely documentation] / [Total number of orders delivered] x 100% The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

Downside Deliver Adaptability

Downside Make Adaptability Enter Order, Commit Resources & Launch Program Cycle Time Establish and Communicate Return Plans Cycle Time Establish and Communicate Supply Chain Plans Cycle Time Establish Delivery Plans Cycle Time Establish Production Plans Cycle Time Establish Sourcing Plans Cycle Time Fill Rate

Fill Shopping Cart Cycle Time Finalize Production Engineering Cycle Time

© Copyright 2006 Supply-Chain Council, Inc.

The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. The average time associated with entering an order, committing resources and program launch The average time associated with establishing and communicating return plans The average time associated with establishing and communicating supply chain plans The average time associated with establishing and communicating deliver plans The average time associated with establishing and communicating production plans The average time associated with establishing and communicating source plans The percentage of ship-from-stock orders shipped within 24 hours of order receipt. For services, this metric is the proportion for services that are filled so that the service is completed within 24 hours The average time associated with "filling the shopping cart" The average time associated with the finalization of production engineering

377

PROCESS DR1 Deliver Return Defective Product DR Deliver Return DR2 Deliver Return MRO Product D1.3, D1.12, D1.13, D2.3, D2.12, D2.13, D3.3, D3.12, D3.13 D1.11, D1.15, D2.11, D2.15, D3.11, D3.15, ED.2

D2 Deliver Make-to-Order Product D1 Deliver Stocked Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order D3.3 Enter Order, Commit Resources & Launch Program P5.4 Establish and Communicate Return Plans P1.4 Establish Supply Chain Plans P4.4 Establish Delivery Plans P3.4 Establish Production Plans P2.4 Establish Sourcing Plans P1.3, P4.4, M1.3, D1.3, D1.9

D4.5 Fill Shopping Cart M3.1 Finalize Production Engineering

June 2006

METRIC Forecast Accuracy

Generate Stocking Schedule Cycle Time Identify Sources of Supply Cycle Time Identify, Assess, and Aggregate Delivery Resources Cycle Time Identify, Assess, and Aggregate Product Resources Cycle Time Identify, Assess, and Aggregate Production Resources Cycle Time Identify, Assess, and Aggregate Return Resources Cycle Time Identify, Assess, and Aggregate Supply Chain Resources Cycle Time Identify, Prioritize, and Aggregate Delivery Requirements Cycle Time Identify, Prioritize, and Aggregate Product Requirements Cycle Time Identify, Prioritize, and Aggregate Production Requirements Cycle Time Identify, Prioritize, and Aggregate Return Requirements Cycle Time Identify, Prioritize, and Aggregate Supply Chain Requirements Cycle Time Install Product Cycle Time Inventory Days of Supply

Inventory Days of Supply (Finished Goods)

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION Forecast accuracy is calculated for products and/or families for markets/distribution channels, in unit measurement. Common calculation (Sum Actuals - Sum of Variance) / Sum Actuals to determine percentage error. *monitoring the delta of Forecast Accuracy over measured time periods can determine success rates. The average time associated with the generating a stocking schedule The average time associated with the identification of sources of supply The average time associated with the identifying, assessing, and aggregating delivery resource availability The average time associated with the identifying, assessing, and aggregating product resource availability The average time associated with the identifying, assessing, and aggregating production resource availability The average time associated with the identifying, assessing, and aggregating return resource availability The average time associated with the identifying, assessing, and aggregating supply chain resource availability The average time associated with the identifying, prioritizing, and aggregating delivery requirements The average time associated with the identifying, prioritizing, and aggregating product requirements The average time associated with the identifying, prioritizing, and aggregating production requirements The average time associated with the identifying, prioritizing, and aggregating return requirements The average time associated with the identifying, prioritizing, and aggregating supply chain requirements The average time associated with product installation The amount of inventory (stock) expressed in days of sales. The [5 point rolling average of gross value of inventory at standard cost] / [annual cost of goods sold (COGS) / 365]. Example: If 2 items a day are sold and 20 items are held in inventory, this represents 10 days’ (20/2) sales in inventory. (Other names: Days cost-of-sales in inventory, Days’ sales in inventory). Plant finished goods inventory days of supply are calculated as gross plant finished goods inventory ÷ (value of transfers/365 days). 378

PROCESS EP.4, EP.5, EP.6, EP.7, P1, P1.1, P2.1, P3.1, P4, P4.1, P4.2

D4.1 Generate Stocking Schedule S3.1 Identify Sources of Supply P4.2 Identify, Assess, and Aggregate Delivery Resources and Capabilities P2.2 Identify, Assess, And Aggregate Product Resources P3.2 Identify, Assess, and Aggregate Production Resources P5.2 Identify, Assess, and Aggregate Return Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements P3.1 Identify, Prioritize, and Aggregate Production Requirements P5.1 Assess, and Aggregate Return Requirements P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D1.14 Install Product D2.14 Install Product D3.14 Install Product P1.2, P1.3, P1.4, S1.4, S2.4, S3.6, ES.4, EM.4, ED.4

D1.3, D1.8, D1.11, D1.14, D2.3, D2.8, D2.11, D2.14, D3.3, D3.8, D3.11, D3.14

June 2006

METRIC Inventory Days of Supply (Raw Material)

DEFINITION Value of raw materials ÷ (COGS ÷ 365).

Inventory Days of Supply (WIP)

Total value of Work in Process ÷ (COGS ÷ 365). The average time associated with the generation and issuance of an invoice The average time associated with the issuance of material to production The average time associated with the issuance of material to production

Invoice Cycle Time Issue Material Cycle Time Issue Sourced/In-Process Product Cycle Time Load Product & Generate Shipping Documentation Cycle Time

The average time associated with product loading and the generation of shipping documentation

Maintain Source Data Cycle Time

The average time associated with maintaining source data The average time associated with Make Processes

Make Cycle Time Manage Business Rules for PLAN Processes Cycle Time Manage Business Rules for Return Processes Cycle Time Manage Capital Assets Cycle Time Manage Deliver Business Rules Cycle Time Manage Deliver Capital Assets Cycle Time Manage Deliver Information Cycle Time Manage Finished Goods Inventories Cycle Time Manage Import/Export Requirements Cycle Time Manage Incoming Product Cycle Time Manage In-Process Products (WIP) Cycle Time Manage Integrated Supply Chain Capital Assets Cycle Time Manage Integrated Supply Chain Inventory Cycle Time Manage Integrated Supply Chain Transportation Cycle Time Manage MAKE Equipment and Facilities Cycle Time Manage MAKE Information Cycle Time © Copyright 2006 Supply-Chain Council, Inc.

The average time associated with managing plan business rules The average time associated with managing rules for returns The average time associated with managing capital assets The average time associated with managing deliver business rules The average time associated with managing deliver capital assets The average time associated with managing deliver information The average time associated with managing finished good inventory The average time associated with managing import/export requirements The average time associated with managing inbound raw material The average time associated with managing WIP inventory The average time associated with managing integrated supply chain capital assets The average time associated with managing integrated supply chain inventory The average time associated with managing integrated supply chain transportation The average time associated with managing production equipment and facilities The average time associated with managing production information 379

PROCESS S2 Source Make-to-Order Product S1 Source Stocked Product S3 Source Engineer-to-Order Product P3.3, P3.4, M1.1, M1.5, M2.1, M2.5, M3.2, M3.6 D1.15 Invoice D3.15 Invoice M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product D1.11 Load Vehicle & Generate Shipping Documentation D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents ES.3 Maintain Source Data M1 Make-to-Stock M3 Engineer-to-Order M2 Make-to-Order EP.1 Manage Business Rules for PLAN Processes ER.1 Manage Business Rules for Return Processes ES.5 Manage Capital Assets ED.1 Manage Deliver Business Rules ED.5 Manage Deliver Capital Assets ED.3 Manage Deliver Information ED.4 Manage Finished Goods Inventories ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements ES.6 Manage Incoming Product EM.4 Manage In-Process Products (WIP) EP.5 Manage Integrated Supply Chain Capital Assets EP.4 Manage Integrated Supply Chain Inventory EP.6 Manage Integrated Supply Chain Transportation EM.5 Manage Equipment and Facilities EM.3 Manage MAKE Information June 2006

METRIC Manage MAKE Regulatory Compliance Cycle Time Manage Performance of Return Processes Cycle Time Manage Performance of Supply Chain Cycle Time Manage PLAN Data Collection Cycle Time Manage Plan Regulatory Requirements and Compliance Cycle Time Manage Planning Configuration Cycle Time Manage Product Inventory Cycle Time Manage Product Life Cycle Time Manage Production Network Cycle Time Manage Production Performance Cycle Time Manage Production Rules Cycle Time Manage Return Capital Assets Cycle Time Manage Return Data Collection Cycle Time Manage Return Inventory Cycle Time Manage Return Network Configuration Cycle Time Manage Return Regulatory Requirements and Compliance Cycle Time Manage Return Transportation Cycle Time Manage Sourcing Business Rules Cycle Time Manage Supplier Agreements Cycle Time Manage Supplier Network Cycle Time Manage Transportation (WIP) Cycle Time Manage Transportation Cycle Time Negotiate & Receive Contract Cycle Time Obtain & Respond to Request for Quote (RFQ) / Request for Proposal (RFP) Cycle Time Order Entry and Maintenance Costs

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION The average time associated with managing compliance to the make regulatory environment The average time associated with managing the performance of supply chain activities The average time associated with managing the performance of return activities The average time associated with collecting plan data The average time associated with managing the planning of regulatory requirements and compliance The average time associated with managing the planning of the supply chain configuration The average time associated with managing raw material inventory The average time associated with managing the product life cycle The average time associated with managing the production network The average time associated with managing production performance The average time associated with managing production rules The average time associated with managing return capital assets The average time associated with managing return data collection The average time associated with managing return inventory The average time associated with managing the return network configuration The average time associated with compliance and regulatory requirements for return products The average time associated with managing return transportation The average time associated with managing source business rules The average time associated with managing supplier agreements The average time associated with managing the supplier network The average time associated with managing (WIP) transportation The average time associated with managing transportation The average time associated with negotiating and receiving a contract The average time associated with obtaining and responding to RFQs/RFPs

PROCESS EM.8 Manage Regulatory Compliance

Includes costs for maintaining the customer database, credit check, accepting new orders and adding them to the order system as well as later order modifications.

D1.2, D2.2

380

ER.2 Manage Performance of Return Processes EP.2 Manage Performance of Supply Chain EP.3 Manage PLAN Data Collection EP.8 Manage PLAN Regulatory Requirements and Compliance EP.7 Manage Planning Configuration ES.4 Manage Product Inventory ED.7 Manage Product Life Cycle EM.7 Manage Production Network EM.2 Manage Production Performance EM.1 Manage Production Rules ER.5 Manage Return Capital Assets ER.3 Manage Return Data Collection ER.4 Manage Return Inventory ER.7 Manage Return Network Configuration ER.8 Manage Return Regulatory Requirements ER.6 Manage Return Transportation ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network EM.6 Manage Transportation ED.6 Manage Transportation D3.2 Negotiate & Receive Contract D3.1 Obtain and Respond to RFP/RFQ

June 2006

METRIC Order Fulfillment Costs

Order Fulfillment Cycle Time

Order Fulfillment Dwell Time

Order Management Costs

DEFINITION Includes costs for processing the order, allocating inventory, ordering from the internal or external supplier, scheduling the shipment, reporting order status and initiating shipment. The average actual cycle time consistently achieved to fulfill customer orders. Any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organization. This kind of idle time should not be deducted from Order Fulfillment Cycle Time. The aggregation of the following cost elements (contained in this glossary):

Pack Product Cycle Times

The average time associated with packing a product for shipment.

Perfect Condition

Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100% The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer's definition of on-time, and documentation - packing slips, bills of lading, invoices, etc. The average time associated with product pick

Perfect Order Fulfillment

Pick Product Cycle Time Pick Product from Backroom Cycle Time Plan Cycle Time Plan Source Cycle Time Process Inquiry & Quote Cycle Time Produce and Test Cycle Time

© Copyright 2006 Supply-Chain Council, Inc.

The average time associated with product pick from backroom The average time associated with Plan Processes The average time associated with planning source activities The average time associated with processing inquiries and quotes The average time associated with production and test

381

PROCESS D1.3, D2.3, D3.3, D3.4

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3 D1.2, D1.3, D2.2, D2.3, D3.3

D3 Deliver Engineer-to-Order Product D1 Deliver Stocked Product D1.10 Pack Product D2.10 Pack Product D3.10 Pack Product D1.13, D1.14, D2.13, D2.14, D3.13, D3.14, ED.2

S2, M2 D3 Deliver Engineer-to-Order Product D2 Deliver Make-to-Order Product D1 Deliver Stocked Product D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product D4.3 Pick Product from Backroom P1 Plan Supply Chain P2 Plan Source D1.1 Process Inquiry & Quote D2.1 Process Inquiry & Quote M1.3 Produce and Test M3.4 Produce and Test M2.3 Produce and Test

June 2006

METRIC Product Acquisition Costs

Receive & Verify Product by Customer Cycle Time

Receive Defective Product Cycle Time Receive Excess Product Cycle Time Receive MRO Product Cycle Time Receive Product at Store Cycle Time Receive Product from Source or Make Cycle Time

DEFINITION Product acquisition costs include costs incurred for the production of product: sum of product management and planning, supplier quality engineering, inbound freight and duties, receiving and product storage, incoming inspection, product process engineering and tooling costs. The average time associated with receiving and verifying an order at the customer site

The average time associated with receiving defective product returns from the customer The average time associated with receiving excess product returns from the customer The average time associated with receiving MRO product returns from the customer The average time associated with receiving product at the customer store The average time associated with receiving a transfer of product to deliver processes from source or make

Receive, Configure, Enter & Validate Order Cycle Time Receive, Enter & Validate Order Cycle Time Receiving Product Cycle Time

The average time associated with receiving and verifying an order at the customer site The average time associated with receiving and verifying an order at the customer site Total elapsed time from time product is received to time it is passed to next process

Release Finished Product to Deliver Cycle Time

The average time associated with releasing finished product to deliver

Reserve Inventory & Determine Delivery Date Cycle Time Return on Supply Chain Fixed Assets

The average time associated with reserving inventory and determining a delivery date Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return. Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs. The average time associated with routing shipments

Return on Working Capital

Route Shipments Cycle Time

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PROCESS S3 Source Engineer-to-Order Product S2 Source Make-to-Order Product S1 Source Stocked Product D1.13 Receive & Verify Product by Customer D2.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer DR1.3 Receive Defective Product DR3.3 Receive Excess Product DR2.3 Receive MRO Product D4.2 Receive Product at Store D1.8 Receive Product from Source or Make D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order S3.4 Receive Product S2.2 Receive Product S1.2 Receive Product M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver M3.7 Release Product to Deliver D1.3 Reserve Inventory & Determine Delivery Date P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3 P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4, SR1, DR1, SR2, DR2, SR3, DR3

D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments June 2006

METRIC Schedule Achievement

Schedule Defective Return Receipt Cycle Time Schedule Excess Return Receipt Cycle Time Schedule Installation Cycle Time Schedule MRO Return Receipt Cycle Time Schedule Product Deliveries Cycle Time

DEFINITION The percentage of time that a plant achieves its production schedule. This calculation is based on the number of scheduled end-items or total volume for a specific period. Note: over-shipments do not make up for under-shipments. The average time associated with scheduling the receipt of the return of defective product The average time associated with scheduling the receipt of the return of excess product The average time associated with scheduling the installation of product The average time associated with scheduling the receipt of the return of MRO product The average time associated with scheduling the shipment of the return of MRO product

Schedule Production Activities Cycle Time

The average time associated with scheduling production activities

Select Carriers & Rate Shipments Cycle Time

The average time associated with selecting carriers and rating shipments

Select Final Supplier(s) and Negotiate Cycle Time

The average time associated with scheduling the shipment of the return of MRO product The average time associated with shipping product

Ship Product Cycle Time Source Cycle Time

The average time associated with Source Processes

Stage Finished Product Cycle Time

The average time associated with staging finished product

Stock Shelf Cycle Time

The average time associate with stocking shelves The sum of the costs associated with the Deliver processes. The sum of the costs associated with the receipt of returned excess products from the customer The sum of the costs associated with the return of raw materials to the supplier. The average time associated transfer until product is moved to the next process.

Total Deliver Costs Total Excess Material Return Costs Total Source Return Costs Transfer Defective Product Cycle Time © Copyright 2006 Supply-Chain Council, Inc.

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PROCESS M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities DR1.2 Schedule Defective Return Receipt DR3.2 Schedule Excess Return Receipt D3.4 Schedule Installation DR2.2 Schedule MRO Return Receipt S3.3 Schedule Product Deliveries S2.1 Schedule Product Deliveries S1.1 Schedule Product Deliveries M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities D1.7 Select Carriers & Rate Shipments D2.7 Select Carriers & Rate Shipments D3.7 Select Carriers and Rate Shipments S3.2 Select Final Supplier(s) and Negotiate D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product S1 Source Stocked Product S2 Source Make-to-Order Product S3 Source Engineer-to-Order Product M1.5 Stage Product M2.5 Stage Finished Product M3.6 Stage Finished Product D4.4 Stock Shelf P4 Plan Deliver SR3 Source Return Excess Product SR2 Source Return MRO Product DR1.4 Transfer Defective Product June 2006

METRIC Transfer Excess Product Cycle Time Transfer MRO Product Cycle Time Transfer Product Cycle Time

DEFINITION The average time associated transfer until product is moved to the next process. The average time associated transfer until product is moved to the next process. The average time associated transfer until product is moved to the next process.

Upside Deliver Adaptability

The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability.

Upside Deliver Flexibility

The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints.

Upside Deliver Return Adaptability

The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days.

Upside Deliver Return Flexibility

The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.

Upside Make Adaptability

The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. Inventory Awaiting Return

Upside Make Flexibility

Value of Defective Inventory in Disposition Stage/ Total Inventory Value Value of Defective Product Inventory in Request Return Authorization Stage/ Total Defective Product Inventory Value Value of Excess Inventory in Disposition Stage/ Total Inventory Value Value of Excess Product Inventory in Request Return Authorization Stage/ Total Excess Product Inventory Value Value of Unserviceable MRO Inventory In Disposition Stage/ Total MRO Inventory Value Value of Unserviceable MRO Inventory in Request Return Authorization Stage/ Total MRO Inventory Value

© Copyright 2006 Supply-Chain Council, Inc.

Inventory awaiting return authorization.

PROCESS DR3.4 Transfer Excess Product DR2.4 Transfer MRO Product S1.4 Transfer Product S3.6 Transfer Product S2.4 Transfer Product D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product D1 Deliver Stocked Product D2 Deliver Make-to-Order Product D3 Deliver Engineer-to-Order Product D4 Deliver Retail Product DR Deliver Return DR2 Deliver Return MRO Product DR3 Deliver Return Excess Product DR Deliver Return DR2 Deliver Return MRO Product DR3 Deliver Return Excess Product M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order SR1.2 Disposition Defective Product SR2.2 Disposition MRO Product SR1.3 Request Defective Return Authorization

Inventory Awaiting Return

SR3.2 Disposition Excess Product

Inventory Awaiting Return Authorization

SR3.3 Request Excess Return Authorization

Inventory awaiting disposition

SR2.2 Disposition MRO Product

Inventory awaiting return authorization

SR2.3 Request MRO Return Authorization

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June 2006

METRIC Verify Product Cycle Time

DEFINITION The average time associated with verifying raw material product

Warranty and Returns

Number of returns within the warranty period. Warranty is a commitment, either expressed or implied that a certain fact regarding the subject matter of a contract is presently true or will be true. Warranty costs include materials, labor and problem diagnosis for product defects.

Warranty Costs Yield

The ratio of usable output from a process to its input.

Yield Variability

The condition that occurs when the output of a process is not consistently repeatable either in quantity, quality, or combination of these.

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PROCESS S3.5 Verify Product S2.3 Verify Product S1.3 Verify Product M1.3, M1.4

M1, M1.3, M1.4, M2, M2.3, M2.4, M3, M3.4, M3.5 M2 Make-to-Order M2.3 Produce and Test M1.3 Produce and Test M3.4 Produce and Test M1 Make-to-Stock M3 Engineer-to-Order M1.3 Produce and Test M3.4 Produce and Test M2.3 Produce and Test

June 2006

BEST PRACTICES BEST PRACTICE ABC Classification

DEFINITION None identified

Ability to Track Component/SubComponent Manufacturing Country of Origin

Component/lot tracking (lot trace-ability)

Accurate and Approved Process Plans, Routings, Specifications and Procedures Accurate and Approved Process Plans/Specifications Accurate and Approved Work Instructions/Process Plans

Electronic document management

Accurate and Low Cost Batch Records for Regulatory Compliance

Electronic document management Electronic document management that maintains current Standard Operating Procedures (SOP) Electronic batch records

Accurate and Low Cost Batch/Configuration Records for Warranty and Regulatory Tracking

Electronic batch recording/configuration

Additional Capacity for Overflow Demand

Outsource manufacturing and work force augmentation providers connected to production schedules via the internet.

Advance Planning Engines Applied to Returns

Advanced math model "solvers" that optimize / minimize constraints, routing, restocking priorities and costs. Blanket order support with scheduling interfaces to external supplier systems

Advanced Ship Notices Allow for Tight Synchronization between Source and Make Processes

Advanced Shipping Notice

© Copyright 2006 Supply-Chain Council, Inc.

Integrated data sharing with repair facility.

386

PROCESS EP.7 Manage Planning Configuration ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements M1.4 Package M2.4 Package M1.3 Produce and Test M2.3 Produce and Test M2 Make-to-Order M1 Make-to-Stock M2.6 Release Product to Deliver M3.7 Release Product to Deliver M1.6 Release Product to Deliver M2.6 Release Finished Product to Deliver M2 Make-to-Order M1 Make-to-Stock M2.3 Produce and Test M1.3 Produce and Test M1.4 Package M2.4 Package M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities P5.3 Balance Return Resources with Return Requirements S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries SR2.5 Return MRO Product SR1.5 Return Defective Product SR3.5 Return Excess Product

June 2006

BEST PRACTICE Advanced Shipping Notices & UCC128 Container Labeling

DEFINITION Bar coding; EDI; integrated transportation/warehouse management

Alignment of Strategic and Business Plans with Long-Term Capacity and Resource Planning

None identified

All Functions and Organizations Understand Their Impact on Supply/Demand Balancing, Including Sales, Marketing, Product Management, Manufacturing, Customer, Suppliers, Materials Management, and Product Development All Key Participants in the Supply Chain, Including Strategic Partners, Have Full Visibility of the Demand/Supply Plan Alliance and Leverage Agreements Allow Source Suppliers Full Visibility into the Current Return Situations and the Forecasted Return Activity Appointment Scheduling for Pickup and Delivery of Customer Shipments

None identified

PROCESS D2.10 Receive & Verify Product at Customer Site D1.11 Receive & Verify Product at Customer Site D3.9 Receive & Verify Product at Customer Site D2.11 Load Product & Generate Shipping Documentation D2.13 Receive & Verify Product by Customer D1.11 Load Vehicle & Generate Shipping Documentation D1.13 Receive & Verify Product by Customer D3.13 Receive & Verify Product by Customer D3.11 Load Product & Generate Ship Documents EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation P1 Plan Supply Chain

Supply Chain Event Management Systems

P2 Plan Source

None identified Shared supply chain forecasting and event management functionality with Source suppliers Transportation Management System (TMS) Maintenance Management

S1 Source Stocked Product P5.2 Identify, Assess, and Aggregate Return Resources

Arrange for Shipping Insurance in Case Of In-Transit Loss or Damage Assessing Export/Import Requirements during Time of Product Development/Manufacture

Preventative management

Attribute-Based Process Planning

Computer aided process planning / recipe management None identified

Authorize Each Operation to Assess the Quality of the Previous Operations

© Copyright 2006 Supply-Chain Council, Inc.

Multi-country Export/Import documentation compliance

387

ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation SR3.4 Schedule Excess Product Shipment ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements EM.1 Manage Production Rules M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test

June 2006

BEST PRACTICE Automated Configuration Management

DEFINITION Configuration

Automated Conformance Monitoring And Control

Internal automatic notification of conformance, including holding of product until requirements are met None identified

Automated Conversion of Engineering Drawings into Product Specifications Automated Data Entry

Scanning with RFID/Bar-codes systems

Automated Directed Picking

A pick list displayed on a handheld device that directs picks and relieves inventory from backroom locations Advanced planning and scheduling capability coupled with decision support logic. Transportation Management System (TMS) Maintenance Management

Automated Disposition Instructions for Returns Based on Data Interchange with Strategic Providers Automated Documentation for International Shipments

Automated Engineering Specifications Automated Inventory Visibility and Planning System to Highlight Inventory in Excess of Requirements Automated Links To Existing CAD & CAM Information Automated Notification of Laboratory Regarding Sample Availability

Automated Intelligence (Heuristic) - based engineering specifications system Automated inventory planning package linked to real time demand data and inventory business rules. Electronic hypertext or links to existing database of detail/parts/setup sketches/drawings Interface between production system and LIMS

Automated Pick List

System generated pick-lists based on picking / batching rules.

Automated Registry of Inventory Return Locations by Item to Speed Identification of Proper Return Location Automated Replenishment of Back Stock Based on Minimum Stocking Levels Automated Statistical Process Control (SPC)

None identified

© Copyright 2006 Supply-Chain Council, Inc.

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PROCESS M3.1 Finalize Engineering D2.2 Receive, Configure, Enter and Validate Order M3.1 Finalize Production Engineering EM.8 Manage Regulatory Compliance M3.1 Finalize Engineering M3.1 Finalize Production Engineering ED.5 Manage Deliver Capital Assets ER.5 Manage Return Capital Assets D4.3 Pick Product from Backroom ER.5 Manage Return Capital Assets ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation EM.1 Manage Production Rules SR3.1 Identify Excess Product Condition EM.1 Manage Production Rules M2.6 Release Product to Deliver M3.7 Release Product to Deliver M1.6 Release Product to Deliver M2.6 Release Finished Product to Deliver D4.2 Receive Product at Store D4.1 Generate Stocking Schedule SR3.2 Disposition Excess Product

None identified

D4.3 Pick Product from Backroom

None identified

S2 Source Make-to-Order Product

June 2006

BEST PRACTICE Automated Update of Customer Excess Material Return Transaction History

Automated Update of Supplier Performance Information Automatic Customer Payment Automatic Generation / Configuration Of Tooling / Set-Up Instructions Automatic Generation And Submission Of Conformance Documents Automatic Identification

DEFINITION - Use trend analysis to influence inventory level decisions.

PROCESS ER.3 Manage Return Data Collection

- Web-based alerts to identify update occurred and when pre-determined thresholds are exceeded. None identified

ES.3 Maintain Source Data

RFID, smart cart or customer self-service charges goods to card upon store departure. Parametric driven (Group Technology based) manufacturing design system Software specific to industry regulations and standards (e.g. may be software to produce MSDS documents, or FDA requirements, etc.) Bar Coding & Radio Frequency Communications

Automatic Label and Seal Verification

Automatic interface to inspection systems

Automatic Link to Recipe Management, PLC Program, CNC Program Systems, Etc., to Deliver New Manufacturing Documentation Automatic Multi-level Credit Checking: Dollar Limits; Days Sales Outstanding; Margin Testing

Seamless application interface to manufacturing planning documentation and CAM systems

Automatic Notification When to Begin and When to Complete Automatic Reservation of Inventory and Dynamic Sourcing of Product for Single Shipment to Customer

Workflow/Groupware

Available-to-Promise (ATP)

Integrated Order/Financial Management

Integrated order management system that treats each order line as a separate order with integration to inventory source and status; Real-time inventory management Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order.

Back Flush Material at Order Completion

Flexible back flush logic

Backhaul Trading Exchange

Pooling

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D4.6 Checkout EM.1 Manage Production Rules EM.8 Manage Regulatory Compliance D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make M3.5 Package M2.4 Package M1.4 Package EM.1 Manage Production Rules D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order EM.1 Manage Production Rules D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date D1.3 Reserve Inventory & Determine Delivery Date D2.3 Reserve Resources & Determine Delivery Date M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation

June 2006

BEST PRACTICE Bar Coding is Used to Minimize Handling Time and Maximize Data Accuracy

DEFINITION - Bar code interface for data collection devices - Generate bar coded receiving documents - Product serial number used as identifier - RFID

Blanket Purchase Orders Cover Period Requirements Build Load in Stop Sequence

Build Subassemblies to Forecast at Highest Generic Level in Bill of Material; Maintain Flexibility While Minimizing Cycle Time and Inventory Position Build Subassemblies/Products to Forecast at Highest Generic Level to Minimize Make Cycle Time Business Intelligence (BI)

Business Rules Are Clearly Communicated with the Customer Capability to Run "Simulated" FullStream Supply/Demand Balancing for "What-If" Scenarios Capability to Run Multiple "Simulated" Full-Stream Supply/Demand Balancing Against Long-Term Capacity Plans and Scenarios Capability Transfer to Customer Capability Transfer to Organization

None identified Integrated inbound/outbound transportation planning (i.e. 1st truck destination loaded last, etc.). None identified

PROCESS S3.4 Receive Product S3.5 Verify Product S2.3 Verify Product DR1.3 Receive Defective Product S2.2 Receive Product S1.2 Receive Product S1.3 Verify Product DR2.3 Receive MRO Product DR3.3 Receive Excess Product P2.4 Establish Sourcing Plans D3.5 Build Loads D1.5 Plan & Build Loads D2.5 Plan & Build Loads D1.5 Build Loads D2.5 Build Loads M3.2 Schedule Production Activities

None identified

M2 Make-to-Order

A data warehouse / data mart is the source of all planning (master) data, business rules and transaction data. Analytical tools enable the ongoing maintenance and improvement of the business rules based on actual data. Convenient availability to business rules and return criteria. Supply chain modeling and visualization system

P1.3 Balance Supply Chain Resources with Supply Chain Requirements

Supply Chain modeling capabilities, i.e. Advanced Planning Systems. None identified None identified

Capacity and Supply Constraints Are Balanced Against Demand during the Planning Cycle Capacity and Supply Constraints Identified During MPS Schedule Process Are Balanced Against Demand during the Planning Cycle Capture and Maintain Mode Specific Data

None identified

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None identified

Transportation Management System (TMS) Maintenance Management

ER.2 Manage Performance of Return Processes P1 Plan Supply Chain EP.6 Manage Integrated Supply Chain Transportation EP.5 Manage Integrated Supply Chain Capital Assets EP.4 Manage Integrated Supply Chain Inventory S2.4 Transfer Product S1.4 Transfer Product S3.6 Transfer Product P2.1 Identify, Prioritize, and Aggregate Product Requirements P2.2 Identify, Assess, And Aggregate Product Resources ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation

June 2006

BEST PRACTICE Carrier Agreement

DEFINITION Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions.

Carrier Selection Based on Performance Criteria at Least Cost

Scheduling, carrier selection, and rating

Carrier/Route Optimization Based on Continuous Movement and Consolidation/Pooling

Route scheduling, carrier selection, and rating

Categorize 100% of Total Inventory (Active, Usable, Excess, Obsolete) for Appropriate Action

None identified

Cellular and Demand Pull Manufacturing Cellular Manufacturing

Support for cellular and demand pull manufacturing execution Manufacturing is broken into work cells

Change in the Demand Signal Instantaneously "Reconfigures" the Production and Supply Plans Changeover Reduction / Continuous Improvement Program

Event-driven supply chain re-planning

Clarify in Advance Hazardous Material Packaging, Labeling and Shipping Requirements Clarify in Advance If the Product to be Returned Requires Specific, Formal Authorization from the Service Provider per Federal, State or Local Regulation, Prior to Returning © Copyright 2006 Supply-Chain Council, Inc.

Changeover process flow element identification, instructional directions to conduct changeover, and measurement tool, which can be used to prioritize and track results of improvement efforts. Software to identify operational constraints to the MAKE processes to assist in directing resources toward bottleneck functional areas. Overseas packaging, labeling and shipping regulatory requirements are given specific attention. Participants at all customer and service provider locations involved clearly understand all regulatory requirements at each step in the return process .

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PROCESS D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents S3.4 Receive Product S2.2 Receive Product ES.2 Assess Supplier Performance ES.9 Manage Supplier Agreements ES.7 Manage Supplier Network S1.2 Receive Product D1.11 Load Vehicle & Generate Shipping Documentation SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments P2.2 Identify, Assess, And Aggregate Product Resources P2.1 Identify, Prioritize, and Aggregate Product Requirements M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock M3.2 Schedule Production Activities P1 Plan Supply Chain EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets

ER.8 Manage Return Regulatory Requirements ER.8 Manage Return Regulatory Requirements

June 2006

BEST PRACTICE Clarify Point of Contact and Return Location

DEFINITION Electronic rules for business relationships and transactions.

Collaboration among Operations Strategy Team

Supply Chain Advanced Planning Systems Supply Chain Integration Systems Integration between supply chain advanced planning and ERP execution systems

Collaborative Planning, Forecasting, Replenishment (CPFR)

Collaborative Planning/Scheduling Collaborative Review and Agreement of Business Rules Prior to Contract Execution Combine Consolidation Needs with Other Products/Divisions/Companies Communicate with Customer before the Return to Establish What Types of Returns Are Acceptable

Comparative Analysis of Supplier Performance is Used in Sourcing Decisions Compare Local Customs Requirements to Your Process Procedures to Ensure All Requirements Are Accounted for Before Shipping Complete Lot History

Supply Chain Capacity Planning Systems Collaborative Planning, Forecasting and Replenishment is a concept that allows collaborative processes across the supply chain, using a set of process and technology models.... (From www.cpfr.org/intro.html) Interactive, on-line planning/scheduling systems. Capacity planning systems with accurate production capability data. Web based access to current spend data available from enterprise to part level

PROCESS SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements

P1 Plan Supply Chain

EM.7 Manage Production Network ES.1 Manage Sourcing Business Rules

None identified

D1.4 Consolidate Orders

None identified

DR3.1 Authorize Excess Product Return DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return

Software application with data analysis capability

ES.2 Assess Supplier Performance

None Identified

ER.8 Manage Return Regulatory Requirements

Inventory by lot of sourced/in-process or discrete order /usage reporting by lot or discrete order

M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product ED.3 Manage Deliver Information

Comprehensive History of Customer Interactions Including Order History, Claims, Problems, Etc. Concurrent Engineering is Used to Tightly Link Sourcing into the Product Development Process Make/Buy Decision Process (Outsourcing vs. In Sourcing) Confirm All Documentation and Inspection Requirements Before Shipping

None identified

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None identified

S3.1 Identify Sources of Supply

None Identified

ER.8 Manage Return Regulatory Requirements

June 2006

BEST PRACTICE Confirm Asset Return Condition Codes Are Clearly Understood by All Employees, Especially Those Who Are New to the Process Confirm Changes in Condition Code Policies Are Promptly Communicated to All Employees and Supply-Chain Partners. Consideration of Supplier's Material Availability in Company's Supply Resources (Including Supplier's Production Plans & Capability, Inventory, and Delivery Plans) Consignment Agreements Are Used to Reduce Assets and Cycle Time While Increasing the Availability of Critical Items

DEFINITION None identified

PROCESS SR1.2 Disposition Defective Product

None identified

SR1.2 Disposition Defective Product

Digital linkage to supplier quoting, planning, configuration and customer service applications

P3.1 Identify, Prioritize, and Aggregate Production Requirements

Consignment inventory management

Consolidate Orders by Customer, Source, Traffic Lane, Carrier, Etc. Consolidate Shipments Through Cross Docking - Coordinate with Other Shipments Consolidation of Carriers

Integrated load planning and building with warehouse management None Identified

S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries D2.4 Consolidate Orders D1.4 Consolidate Orders ER.6 Manage Return Transportation

Transportation modeling and rate analysis

Consolidation of Inbound and Outbound Requirements

Integrated inbound/outbound transportation planning

Consolidation of Return Carriers

Outbound logistics software to assist with route.

Continuous Improvement

Historical trending, cause and effect analysis, and Key Performance Indicators Scheduling reviews of processes for possible improvements None identified

Continuous Improvement and Development is Driven and Measured through the Performance Review Process Continuous Improvement is Planned through Process Reviews and Customer Feedback Continuous Replenishment Programs; Vendor Managed Inventory, Telemetry to Automatically Communicate Replenishment of Chemicals

© Copyright 2006 Supply-Chain Council, Inc.

D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D2.6 Route Shipments D1.6 Route Shipments D1.5 Plan & Build Loads D3.5 Plan & Build Loads and Shipments D2.5 Plan & Build Loads D1.5 Build Loads D3.5 Build Loads D2.5 Build Loads SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment EM.3 Manage MAKE Information ES.2 Assess Supplier Performance

Avenue to receive customer comments.

ER.2 Manage Performance of Return Processes

Integrated demand/deployment planning to customer location driven by POS; Customer movement data

D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order

393

June 2006

BEST PRACTICE Cost Accounting System to Determine the Best Return Process to Follow from a Cost of Business Perspective Cost Reduction and or Cost Avoidance Are Opportunities Are Identified, Implemented and Measured on a Periodic Basis Create and Maintain Multiple Suppliers and Multiple Supplier Sites to Record Information about Individuals and Companies from Whom You Want to Purchase Catalogue Goods and Services Cross Training/Certification

DEFINITION ABC costing system

Cross-Docking

Used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place.

CRP & VMI Loads Optimized for Utilization

Integration with CRP/VMI vendor systems

CRP/VMI

Integrated Load Building; Routing & Scheduling with Advanced Ship Notice (ASN)

Customer Access to Online Tracking of Order Status and Shipping Information Customer Initiated Package Tracking

Internet-enabled package/shipment tracking

Customer Profile Drive Recognition Upon Checkout

None identified

© Copyright 2006 Supply-Chain Council, Inc.

None identified

PROCESS P5.3 Balance Return Resources with Return Requirements ES.2 Assess Supplier Performance

None Identified

ES.7 Manage Supplier Network

HR/certification support

M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities D1.8 Receive Product from Source or Make D1.11 Load Vehicle & Generate Shipping Documentation D1.12 Ship Product D2.8 Receive Product from Source or Make D2.12 Ship Product D2.11 Load Product & Generate Shipping Documentation D3.8 Receive Product from Source or Make D3.12 Ship Product D3.11 Load Product & Generate Ship Documents D3.5 Build Loads D1.5 Plan & Build Loads D2.5 Plan & Build Loads D1.5 Build Loads D2.5 Build Loads D3.6 Route Shipments & Select Carriers D2.6 Route Shipments D3.6 Route Shipments D1.6 Route Shipments ED.3 Manage Deliver Information

WEB based Shared systems

394

ED.2 Access Delivery Performance ED.2 Assess Delivery Performance D4.6 Checkout

June 2006

BEST PRACTICE Customer Relationship and Digital Linkages (XML, EDI, Etc.) Provide Accurate Visibility into Actual Demand via Customer Forecasts, Product Plans, Production Plans, and Inventory Positions Customer Relationship Management (CRM)

Customer Sends Receiving Advanced Shipment Notification Prior to Shipment Customer Service Data Validation Including Geo-Coding Data Accessibility across the Enterprise for Visibility by Discrete Business Units Defective Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Defined Stocking Levels and Criteria

DEFINITION Tightly integrated supply chain or demand planning with point of sale and customer inventory systems

PROCESS P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Software that provides customer input and keeps the customer informed about the planning of the production and delivery process by managing all contacts and communication with the customer thorough all channels including internet and traditional sales and customer service channels. Electronically link Return authorization, Return schedule and shipping documents. .

P1.3 Balance Supply Chain Resources with Supply Chain Requirements

None identified Web based access to various levels of enterprise data Utilize electronic links

None identified

Deliveries Are Balanced Throughout Each Working Day and Throughout the Week

None identified

Delivery Schedules Are Collaboratively Developed with Customers Demand Planning, Demand Flow Leadership

Web-based access to plant scheduling status, collaborative data-sharing environment. Software that provides multiple data models including the business rules and metrics for the entire supply chain planning process. Algorithms use the business rules and metrics as the drivers for the planning engine. Rules-based distribution planning system

Demand Priorities Reflecting Strategic Customer Relationships as Business Policies Are Automatically Followed in Allocating Resources; First-In-FirstOut (FIFO) is Utilized as the Default Scheduling Priority Demand Pull Mechanisms

© Copyright 2006 Supply-Chain Council, Inc.

Trading partner agreements

Repetitive scheduling and sequencing

395

DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product ED.3 Manage Deliver Information ES.3 Maintain Source Data ER.3 Manage Return Data Collection DR1.4 Transfer Defective Product D4.3 Pick Product from Backroom S3.5 Verify Product S3.4 Receive Product S2.3 Verify Product S1.2 Receive Product S2.2 Receive Product S1.3 Verify Product M2 Make-to-Order M3 Engineer-to-Order P1.3 Balance Supply Chain Resources with Supply Chain Requirements

P4.3 Balance Delivery Resources and Capabilities with Delivery Requirements

M2.1 Schedule Production Activities M3.2 Schedule Production Activities

June 2006

BEST PRACTICE Demand-Pull Manufacturing, Including Active Reduction of Manufacturing Systems Time and WIP Through the Use of Demand-Pull Mechanisms and Visual Controls

DEFINITION Support of demand-pull mechanisms (Kanban, replenishment signals, etc.) based on rate schedules and user-defined minimum/maximum trigger points

Demand-Pull Mechanisms; Kanban Replenishment Signals from Stockroom, Intermediate Products, or Subassembly Area

None identified

Design For Production

Table of manufacturing capacities or design envelops (capacities; envelop sizes; tank, vessel or batch sizes) Machine productivity and downtime monitoring

Design/Upgrade Production Equipment to Maximize Flexibility and Avoid Line Stoppages Develop and Clarify Mutually Understood Cycle Times to Process Return Authorizations

Clarification as to who will pay in-bound and out-bound freight cost.

Develop Local Receiving Process Close to Repair

Minimize time spent in product movement.

Develop Proactive Transit Damage Programs Digital Linkage (EDI, XML, Etc.) is Used to Provide Real-Time Demand Information and Handle Routine Transactions Digital Links (XML Based, EDI. Etc.) Among Supply Chain Members

None Identified

Direct Connection to Customs Clearance

Electronic documentation submission via EDI and/or internet.

Direct Ship from Factory to Customer/Channel

Share production status with customers and transportation providers via web-based tools. Auto-Tendering for direct ship utilizing EDI/XML protocols.

Direct Transfer of Documents to Recipient and Forwarder Direct Transfer of Documents to Recipient and Forwarder

Electronic documentation submission via EDI and/or internet.

© Copyright 2006 Supply-Chain Council, Inc.

None identified

Real-time exchange of supply chain information between supply chain members collaborative planning systems, Internet Trading Exchanges, B2B Integration and Application Server Systems

396

PROCESS M1.1 Schedule Production Activities M3 Engineer-to-Order M1 Make-to-Stock M2.1 Schedule Production Activities M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product EM.1 Manage Production Rules M3.4 Produce and Test SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product ER.6 Manage Return Transportation P2.4 Establish Sourcing Plans P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P1.2 Identify, Assess, and Aggregate Supply Chain Resources ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements M3.6 Stage Product M2.5 Stage Product M3.6 Stage Finished Product M1.5 Stage Product M2.5 Stage Finished Product ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements

June 2006

BEST PRACTICE Distinct and Consistent Linkages Exist to Ensure Disruptions and Opportunities in Material Resources Are Quickly and Accurately Communicated and Acted Upon Distinct and Consistent Linkages Exist to Ensure that Disruptions and Opportunities in Production Are Quickly and Accurately Communicated and Responses Made Document Control Documents Generated Automatically During Shipment Preparation.

DEFINITION Bi-directional Digital Links (XML, EDI, etc) or Internet procurement networks to customer service linkage

PROCESS P2 Plan Source P4 Plan Deliver

Multi-plant supply/demand planning and execution

P3 Plan Make

Control who can create, revise and access information Electronic documentation submission via EDI and/or internet.

EM.1 Manage Production Rules ED.8 Manage Import/Export Requirements ES.8 Manage Import/Export Requirements D2.8 Receive Product from Source or Make D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make S2.4 Transfer Product S1.4 Transfer Product S3.6 Transfer Product

Download P.O. & Advanced Ship Notices for Automated Receiving and Put Away

Integration with Procurement Systems & Electronic Commerce with Vendors

Drive Deliveries Directly to Stock or Point-Of-Use in Manufacturing to Reduce Costs and Cycle Time

Pay on receipt

Drive Returns Directly to Return Stock Point of Disposition to Reduce Cost and Cycle Time

Specify delivery location and time (to the minute) Specify delivery sequence Specify return disposition location and time.

Drum-Buffer-Rope Scheduling Technique

(DBR, also referred to as Synchronous Manufacturing or Constraint Management) A technique used to manage resources to maximize throughput.

Dunnage Control

System data field to specify where the part / product shipping container should be removed. Best practice is to remove the dunnage as soon as possible unless part / product damage will result. Reuse of intermediate WIP containers for finished goods. Advanced planning and scheduling logic with constraint, cost, and resource optimization Real time inventory control, stock locator, and rules based picking logic

Dynamic Deployment Based on Constraint Based Planning and Optimal Scheduling Dynamic Location Assignment Including Lot Control, Zoned Picking, Quality Assurance

© Copyright 2006 Supply-Chain Council, Inc.

397

SR1.2 Disposition Defective Product SR3.2 Disposition Excess Product M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities EM.4 Manage In-Process Products (WIP)

D2.3 Reserve Resources & Determine Delivery Date D2.8 Receive Product from Source or Make D2.8 Pick Staged Product D3.7 Pick Staged Product D1.9 Pick Product D2.9 Pick Product D3.9 Pick Product

June 2006

BEST PRACTICE Dynamic Location Assignment Including Lot Control, Zoned Put Away, Quality Assurance, ABC Frequency of Access

DEFINITION Real time inventory control, stock locator, and rules based put away logic

Dynamic Return Restocking Management

Dynamic prioritization of restocking plans in order to rapidly re-sell products that are in demand thus reducing new inventory demand. Rules based picking logic and simulation

Dynamic Simulation of Picking Requirements Optimized for Labor, Cost, and Time EDI Links between Manufacturing and Distributor to Achieve Visibility of Complete Finished Goods Inventory and Expected Shipments EDI Links Integrate Supplier Resource Information (Inventory, Capacity Availability, Etc.) with Own Resources Efficient and Effective Benchmarking Process Leveraging Cross Industry Metrics and Definitions Efficient Consumer Response (ECR); Quick Response Electronic Catalogues/Malls Electronic Commerce (Customer Visibility of Stock Availability, Use of Hand-Held Terminals for Direct Order Entry, Confirmation, Credit Approval), On-Line Stock Check and Reservation of Inventory Electronic Data Interchange Can Be Used To Send Rfqs and Technical Information to and from Potential Suppliers to Determine Supplier Capability to Fulfill Requirements So that They May Be Added to Supplier Network Electronic Data Interchange is Used to Send Technical Information to and from Potential Suppliers Electronic Documentation and Imaging Electronic Generation and Download of Shipping Documents

© Copyright 2006 Supply-Chain Council, Inc.

None identified

PROCESS D3.8 Receive Product from Source or Make D1.8 Receive Product at Warehouse D1.8 Receive Product from Source or Make P5.3 Balance Return Resources with Return Requirements D3.7 Pick Staged Product D2.8 Pick Staged Product D1.9 Pick Product D3.9 Pick Product D2.9 Pick Product D1.3 Reserve Inventory & Determine Delivery Date

Inter-company resource planning with EDI/Internet communication

P2 Plan Source

None identified

EP.2 Manage Performance of Supply Chain

Demand Planning, Deployment, Scheduling

D1 Deliver Stocked Product

None identified EDI applications and integrated order management

D1 Deliver Stocked Product D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order

Electronic Data Interchange

ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate

None identified

S3.1 Identify Sources of Supply

Graphical display of drawings, diagrams, recipes/formulas, specifications, instructions, etc., to all users None identified

EM.1 Manage Production Rules

398

D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents D1.11 Load Vehicle & Generate Shipping Documentation

June 2006

BEST PRACTICE Electronic Manifest and Electronic Billing

DEFINITION Transportation Management System (TMS) Maintenance Management

Electronic Matching Between POS Data and Store Inventory (Shelves and Back Room) Electronic Material Move Transactions

Integrated Software Systems

Electronic Reminders of Possible Scheduled Maintenance Electronic Sourcing and Negotiation

Pull signals.

Automated process control and/or barcode data collection

Business Rules for electronic sourcing process and hierarchy

Electronic Transfer of Shipment Information to Finance

None identified

Electronically Track Shipment from Customer to Service Provider

None Identified

Eliminate "Special Deals" Sales to Reduce Returns and Improve Forecast Accuracy (Reduces Uncertainty, Lowers Safety Stock Requirements, Cheaper to Administer) Enable Customer-Service Representatives to Complete the Bill Of Lading for the Customer Including Carrier Routing, Weight, Description and Class to Minimize Guesswork & Wrong Estimates Enable Real-Time Visibility into Backlog, Order Status, Shipments, Scheduled Material Receipts, Customer Credit History, and Current Inventory Positions

None identified

© Copyright 2006 Supply-Chain Council, Inc.

399

PROCESS ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P4.1 Identify, Prioritize, and Aggregate Delivery Requirements M1.2 Issue Product M3.6 Stage Product M2.5 Stage Product M1.2 Issue Material M3.6 Stage Finished Product M2.5 Stage Finished Product M3.3 Issue Sourced/InProcess Product M2.2 Issue Sourced/InProcess Product M1.5 Stage Product ER.1 Manage Business Rules for Return Processes ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements D3.11 Invoice & Receive Payment D1.13, Invoice & Receive Payment D2.12 Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product P4.1 Identify, Prioritize, and Aggregate Delivery Requirements

Clarification of policy if authorizations are not processed within the expected cycle time.

SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization

None identified

D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order

June 2006

BEST PRACTICE Enterprise Level Policies/Rules with Local Execution

DEFINITION Web based access to enterprise level business rules

Enterprise Level Spend Analysis

None identified

Establish Designated Processes for Scheduling and Receiving Excess Inventory Establishment of Criteria to Rank Suppliers

None Identified

Evaluate Supplier Network for Duplicates Evaluate the Benefits of Out-Sourcing the Excess Material Return Process Excess Products Scheduling Identifies Next Destination (Source, Make, or Deliver) on Return Authorization Facility & Equipment Environmental / Safety Audit System Facility Master Plan Factory Floor Electronic Decision Making Information System

First In - First Out Forecasts Are Replaced with Actual Customer Replenishment Signals and Orders Where Possible Full Internal (And External If Source Suppliers Share in the Return Process Responsibilities) Visibility to Return Plans Full Visibility of Credit History by Shipping Personnel

Genealogy Tracking Goals / Performance Plans Ideal Stock Position Based on Days/Weeks of Supply

© Copyright 2006 Supply-Chain Council, Inc.

Utilize supplier delivery, quality, price performance as well as any other criteria such as terms and conditions Supplier Merge Programs for duplicates Enables customer to focus on core competencies. Utilize electronic links

System software to list checklist items, report results of audit & forward actions to be taken Automated Item Cubing and Weighting systems Software to capture actual performance history / costs of operations with capability of predicting "best cost action plans" relating to maintaining equipment and facilities. Part / WIP location by date received for those parts that must be stocked or staged in a holding area B2B Integration and Application Server Systems Intranet and Extranet communications tools

None identified

Where-used listing of as-planned vs. asbuilt documentation None identified Pilot by Wal-Mart. IT

400

PROCESS ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements SR1.1 Identify Defective Product Condition SR3.1 Identify Excess Product Condition ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements DR3.2 Schedule Excess Return Receipt ES.7 Manage Supplier Network ES.7 Manage Supplier Network ER.1 Manage Business Rules for Return Processes DR3.4 Transfer Excess Product EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets ED.5 Manage Deliver Capital Assets EM.5 Manage Equipment and Facilities

EM.4 Manage In-Process Products (WIP) P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P5.4 Establish and Communicate Return Plans D2.11 Load Product & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents D1.11 Load Vehicle & Generate Shipping Documentation EM.1 Manage Production Rules D4.7 Deliver and/or Install P4.1 Identify, Prioritize, and Aggregate Delivery Requirements June 2006

BEST PRACTICE Identification of Suppliers Who Will Participate in Consignment Inventory Programs Identification of Suppliers Who Will Participate in Kanban Programs Identification of Suppliers Who Will Participate in Procurement Split (Two or More Suppliers Sharing Purchase Requirements) Programs Identification of Suppliers Who Will Participate in Vendor Managed Inventory (VMI) Programs Implement Employee Involvement Programs

DEFINITION Consignment Inventory Management

PROCESS ES.7 Manage Supplier Network

Electronic Kanban Support

ES.7 Manage Supplier Network ES.7 Manage Supplier Network

Incorporates leading practices such as Efficient Consumer Response, Collaborative Planning, Forecasting, and Replenishment, Vendor Managed Inventory, and real time point of consumption reporting. In-Process Product (WIP) Handling Rules Integrate Return Planning with Maintenance and Inventory Planning to Optimize the System

None Identified

Integrated Business and SupplyChain Planning Processes Where Cross-Functional Input is Leveraged to Set Business Rules Integrated Credit Checking

Supply Chain performance dashboard capability.

None identified

Supplier managed inventories with scheduling interfaces to external supplier systems to replenish None Identified

Tracking, genealogy Both customer and Service Provider departments are alerted at the same time and viewing the same information.

Interface to supplier's shipping system to financials

Memory based planning systems provide one single data model and data mart (including the business rules) for the entire supply chain planning and execution process. Algorithms use the business rules as the driver for the planning engine.

Integrated Demand and Supply Planning - Demand Planning, Supply Planning and especially the Supply Plan Execution Are no longer disconnected. All required planning and execution data is integrated and shared in between all functional areas within an organization. Integrated Edit at Order Entry Time

Customer Master Record

Integrated Facility Management

None identified

Integrated Order Management, Warehouse Management, and Transportation Management Systems View for analysis for all orders and shipments the following data: Logistics, Product, Cost, GL Charging Integrated Transportation Visibility

Transportation Management System (TMS) Maintenance Management

- Advanced shipping notices

ES.7 Manage Supplier Network M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test EP.7 Manage Planning Configuration

EM.4 Manage In-Process Products (WIP) DR1.2 Schedule Defective Return Receipt DR2.2 Schedule MRO Return Receipt EP.1 Manage Business Rules for PLAN Processes D2.11 Load Product & Generate Shipping Documentation D1.11 Load Vehicle & Generate Shipping Documentation D3.11 Load Product & Generate Ship Documents EP.3 Manage PLAN Data Collection

ED.1 Manage Deliver Business Rules ED.7 Manage Product Life Cycle ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation ER.5 Manage Return Capital Assets

- Real time shipping tracking © Copyright 2006 Supply-Chain Council, Inc.

401

June 2006

BEST PRACTICE Internet Exchanges

Internet Ordering Inventory Allocation Exception Process is Clearly Defined and Jointly Owned by Manufacturing and Sales Inventory is Planned at the Part Level, Based on Supply and Demand Variability Inventory Performance is Measured at the Dollar and Unit Levels

DEFINITION Internet Exchanges are a hosted, businessto-business trading network. Exchanges are an open procurement network, accessible to any buyer and focused on new Internet-enabled purchasing models like spot buys or reverse, buyer-driven auctions. Exchanges will also support more traditional catalog-based sales. None identified None identified None identified None identified

Inventory targets Are Reviewed and Adjusted Frequently

Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query inventory levels.

Involve Your Other Supply-Chain Partners If Possible to Leverage Transportation throughout the Chain

Utilization of transportation management system (TMS) to manage returns. Maximization of TMS use, both intra and inter-company within the supply chain. Scan store shelves / bar codes to confirm put-a-way. RFID, smart cart or customer self-service reduces system inventory upon item pick. Schedule visibility, on-line communications between source and demand Collaborative Planning Systems

Item/Shelf Scanning Upon Put-A-Way Items Are Relieved from Inventory When Item is Removed from Shelf JIT Environment Joint Service Agreements (JSA)

© Copyright 2006 Supply-Chain Council, Inc.

402

PROCESS ES.7 Manage Supplier Network

D1 Deliver Stocked Product D1.3 Reserve Inventory & Determine Delivery Date P2.2 Identify, Assess, And Aggregate Product Resources P2.2 Identify, Assess, And Aggregate Product Resources P3.3 Balance Production Resources with Production Requirements P3.2 Identify, Assess, and Aggregate Production Resources P2.2 Identify, Assess, And Aggregate Product Resources ER.6 Manage Return Transportation D4.4 Stock Shelf D4.5 Fill Shopping Cart EM.7 Manage Production Network P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements S3 Source Engineer-to-Order Product S2 Source Make-to-Order Product S1 Source Stocked Product P1.2 Identify, Assess, and Aggregate Supply Chain Resources

June 2006

BEST PRACTICE Joint Service Agreements to Document Acceptable Service Levels in Terms of Installation Costs, Installation Cycle Time, Etc.

Joint Service Agreements with Source Suppliers to Share Responsibilities and Costs of Returns Joint Service Agreements with Suppliers Define the Levels of "Flexibility" or Resource Upside Available Within Stated Lead Times and Agreed Upon Conditions Just-In-Time Demand Flow Techniques

DEFINITION Collaborative planning tools with the Source suppliers

(This would be effective between customer and supplier, and between internal functions such as Field Service, Manufacturing, Marketing and Order Management) Collaborative planning tools with the Source suppliers

P5.2 Identify, Assess, and Aggregate Return Resources

None identified

P2 Plan Source

Demand-pull mechanisms

M3.4 Produce and Test M1.3 Produce and Test M2.3 Produce and Test D4.2 Receive Product at Store D4.1 Generate Stocking Schedule P1.2 Identify, Assess, And Aggregate Supply Chain Resources P1.2 Identify, Assess, and Aggregate Supply Chain Resources M1 Make-to-Stock

Labor Scheduling that Matches Product Flow

Workforce management solution with flexible rules.

Lead Times Updated Monthly

None identified

Lean Manufacturing

Use a team based systematic approach to identifying and eliminating wasteful, or nonvalue adding activities within your manufacturing organization Utilization of transportation management system (TMS) to manage returns. Maximization of TMS use, both intra and inter-company within the supply chain.

Limit the Number of Carriers, Treat Them as Partners and Build a Strong Relationship with Each One Geared Toward Continually Improving Service and Lowering Cost Link Individual Performance to Organizational and Divisional Goals Long Term Supplier Agreements/Partnerships Long-Term Return Agreements / Partnerships Loyalty Card Data Maintain Accurate Lot/Batch History Information Maintain Data and System Integrity by Ensuring Production Data, Inventory Levels, and Schedule Requirements Are 99+% Accurate © Copyright 2006 Supply-Chain Council, Inc.

PROCESS D1.14 Install Product D2.11 Test & Install Product D2.14 Install Product

None identified Electronic rules for business relationships and transactions: Vendor-managed Inventory Agreements, Fab & Hold Agreements, Just-In-Time Agreements. None identified

Use for comparison to previous sales activity/track new consumers, etc. Electronic data collection of employee actions and sourced/in-process product lot used Detailed production model that synchronizes PLAN and MAKE activities in real time.

403

ER.6 Manage Return Transportation

M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements SR1.3 Request Defective Return Authorization SR3.3 Request Excess Return Authorization D4.5 Fill Shopping Cart M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test M1.1 Schedule Production Activities M2.1 Schedule Production Activities June 2006

BEST PRACTICE Maintaining Repository of Current Regulatory Requirements Manage Information Across 100% of Shipments

Master Production Scheduling Reflects Management of Capacity and/or Supply Constraints Matching Shelf Stock to Expectations

Maximize Data Integrity and System Accuracy by Ensuring 99%+ Accuracy of BOM Configuration, Inventory Levels, and Schedule Requirements Measure Customer Service

Measured and Compared with Same Activity Previous Period Measurement of Carrier Performance for On-time Delivery and Completeness Measurement, Monitoring and Adjustment of Service or Product Installation Measuring Process Metrics and Feedback to Operators Mechanical (Kanban) Pull Signals Are Used to Notify Suppliers of the Need to Deliver Product

Merge-in-Transit

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION Electronic subscription and publication of conformance documentation. Electronic Document Management System features. Transportation Management System (TMS) Maintenance Management

None identified A software based system that corrects shelf inventory levels based on actual product present (possible RFID solution). Identifies stock-outs from shrinkage or item misplacement. None identified

Advanced Shipping Notices (ASN)Parcel and Container Routing and Rating Compliance Labeling Real time shipment tracking DSS or portal tool that shows previous period performance and comparison for store management (whether it is a year ago, period ago, etc.). Transportation Management System (TMS) Maintenance Management

None identified Electronic data collection of completion, quality, scrap, labor and equipment data and dissemination of information on factory floor Electronic Kanban support

Merge-in-Transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping. Merging is usually performed in a shipper's distribution center (DC) or in a carrier's terminal.

404

PROCESS EM.8 Manage Regulatory Compliance ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P2.1 Identify, Prioritize, and Aggregate Product Requirements P4.1 Identify, Prioritize, and Aggregate Delivery Requirements M3.2 Schedule Production Activities

ED.5 Manage Deliver Capital Assets D4.5 Fill Shopping Cart

ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation D4.7 Deliver and/or Install M1.3 Produce and Test

S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries D1.8 Receive Product from Source or Make D1.9 Pick Product

June 2006

BEST PRACTICE Migrate From Build to Stock to Configure to Order; Build Subassemblies to Forecast at the Highest Generic Level in the Bill of Material/Recipe/Formula Minimize Capital Assets Required and Maintenance Costs Minimize Operator Induced Errors Minimizing In-Process Product (WIP) Minimum Product Handling

MRO Scheduling Identifies Next Destination (Stores or Repair Station) on Return Authorization Multi-country Export/Import documentation compliance Multiple Locations Throughout Store

New Items Introductions Are part of the Sales and Operations Planning Process at the General Management Business Team Level Note and Communicate Shelf Life Requirements Carefully Before Shipping Notification of Existing/Future Event or Promotions Obsolete Inventory is Reviewed at the Part Number Level

Off Peak Stocking On Demand Access of Supplier/Source Data On Line Access and Notification of Tooling and Equipment Information On Line Document Management and Automated Supplier Approval Processes Can Reduce the Cycle Time and Costs Associated With Managing Supplier Evaluations and Get Them into the Supplier Network Faster

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION None identified

PROCESS M1 Make-to-Stock

Outsourcing strategies including the use of Application Service Providers (ASPs), webbased maintenance/diagnostic assistance and MRO parts. Automatic download of production equipment with setup parameters Graphical display of setup, changeover, or layout WIP Storage Management System Efficient Space Utilization Implementing Pull Systems Move high frequency used inventory close to point of use. For example, the system should provide the frequency of picks by part number so that high frequency picks can be moved to convenient locations or part pick quantities increased. Utilize electronic links

EM.5 Manage Equipment and Facilities

None identified Planned and tracked via a plan-o-gram system; Location specific product labeling. None identified

M3.5 Package M2.4 Package M1.4 Package EM.4 Manage In-Process Products (WIP) EM.4 Manage In-Process Products (WIP)

DR2.4 Transfer MRO Product ED.8 Manage Import/Export Requirements D4.5 Fill Shopping Cart

EP.7 Manage Planning Configuration

Hazardous material regulations are given specific attention.

ER.8 Manage Return Regulatory Requirements

None identified

D4.6 Checkout

None identified

P3.2 Identify, Assess, and Aggregate Production Resources P2.2 Identify, Assess, And Aggregate Product Resources D4.4 Stock Shelf

The majority of stocking is completed with minimal impact to or visibility from the customer. Web based access to current supplier/source data Delivery of tooling and equipment details drawings ERP

405

ES.3 Maintain Source Data EM.1 Manage Production Rules ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate

June 2006

BEST PRACTICE On Line RFQ Processes Linked into the Document Management Process Reduces Cycle Time and Product Management Costs On-Demand Access of Production Information

On-Demand Access to Available to Promise (ATP), Production Schedules and Inventory Status by Internal Operations and Customers On-Line Availability to Supplier Financials to Determine Potential Supplier Viability to be Added to Supplier Network Online Real-Time Customer Entry and Edit

On-Line Rule Base On-Line Visibility of All Supply-Chain Demand Requirements and Resources, both Currently Available and Committed (Pegged) Operations and Network Analysis Optimize Packing Optimized Supply-Chain Processes, Optimized Supplier Count, Supplier and Part Rationalization Order Entry is Organized by Customer Segment Customers Receive Differentiated Service Based on Volume of Business Customer Team is Empowered to Fully Service Customer Requests, Including Formal Orders and Ad Hoc Requests Customers Have One Point of Contact for All Products Organize to Enhance Flexibility: Few Job Classifications, Self-Directed Work Force, Flat Management Structure, Cross-Functional Work Teams Outsource If Not a Core Competency Packaging Operation is an Integral Part of the Overall Production Process © Copyright 2006 Supply-Chain Council, Inc.

DEFINITION None identified

Data Collection and Display Systems designed for efficient performance of valueadded operations in production. This could include using PLC, Machine Interface, bar code, Radio Frequency Communication, Radio Frequency Identification, Magnetic Stripe, Smart Cards, etc., to enable data collection None identified

Internet web sites for financial evaluation

On-line Customer Service Module CRM (Customer resource Management) software is getting a big push in the E-Commerce/EBusiness areas and generally provides a means to fulfill this requirement None identified Enterprise resource planning system Customer relationship management system None identified No packing and unpacking time required. Recyclable or no containers where appropriate. No discarded material. Web based access to preferred and recommended suppliers, supplier performance data & spend data stratified by commodity, business unit/site, supplier, part type, process type None identified

PROCESS S3.1 Identify Sources of Supply S3.2 Select Final Supplier(s) and Negotiate EM.3 Manage MAKE Information

EM.3 Manage MAKE Information ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate ED.3 Manage Deliver Information

ED.1 Manage Deliver Business Rules P1 Plan Supply Chain

ED.7 Manage Product Life Cycle EM.4 Manage In-Process Products (WIP) ES.1 Manage Sourcing Business Rules ES.9 Manage Supplier Agreements D2.2 Receive, Configure, Enter and Validate Order

Support for modular skills inventory with links to training databases, compensations systems, and operator instructions

M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock

Use 4PL to manage and move.

ER.5 Manage Return Capital Assets M3.5 Package M1.4 Package M2.4 Package

None identified

406

June 2006

BEST PRACTICE Paperless Order Tracking and Customer Visibility of Orders

DEFINITION Electronic dispatch and data collection with external interface to internet.

Paperless Production Control

Electronic dispatch of operations

Paperless Production Order and Inventory Tracking

Electronic dispatch and data collection. Allow customer access to production status and inventories using internet technologies and web site features. None identified

Partnership with Outside Design Firms to Provide Skills and Capacity, as Needed Pay on Receipt

Performance Expectations and Business Rules Are Clearly Communicated Prior to the Initiation of Business with the Supplier Performance Results that Are Compared to Benchmarks (i.e. Capacity, Scheduling) and Readily Available to Employees Periodic Review of Metrics and Strategy with Comparisons to Industry Benchmarks

Periodic Review of Standards Planning and Forecasting Outsourced Return process Planogram Flexibility for Seasonal/Promotional changes Plans that Violate Business Rules (e.g. Joint Service Agreements) Are Addressed Cross-Functionally, Considering Total Business Impacts (Revenue, Cost, Quality, Customer Service, Etc.) Plans Which Do Not Violate Business Rules Are Communicated Openly and Cross-Functionally for Execution Posted Performance Results

© Copyright 2006 Supply-Chain Council, Inc.

Electronic Invoice Processing

Web based access / availability to business rules and performance criteria Data warehouse, report writing, real time database and Executive Information systems that are easily accessible. Use of web-based technologies for dissemination of information. Real time view of data.

Process for establishing and maintaining review schedules Collaborative planning and forecasting with RETURN outsourcing partners (3PL, reverse drop shippers, etc.) None identified

PROCESS M1 Make-to-Stock M2 Make-to-Order M3 Engineer-to-Order M3.4 Produce and Test M3.5 Package M1.4 Package M2.4 Package M1.3 Produce and Test M2.3 Produce and Test M1 Make-to-Stock

D3.1 Obtain and Respond to RFP/RFQ S3.7 Authorize Supplier Payment S1.5 Authorize Supplier Payment S2.5 Authorize Supplier Payment ES.2 Assess Supplier Performance M1 Make-to-Stock

ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory EM.2 Manage Production Performance P5 Plan Return

None identified

P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P4.4 Establish Delivery Plans

None identified

P4.4 Establish Delivery Plans

Data warehouse, report writing, real time data base and EI systems

M2 Make-to-Order M3 Engineer-to-Order M1 Make-to-Stock

407

June 2006

BEST PRACTICE Postponement

Postponement and Pre-Kitting Of Accessories into Modular Packages that Allow Flexibility While Maintaining Control Pre-Certify Supplier Capability to Send Return Products Correctly to Minimize the Need for Receipt Verification Pre-Defined Manufacturing Design Rules Predictive Maintenance Monitoring (Heat, Noise, Lubrication Composition & Vibration)

Priority-Based Inventory Reservations, for Key Customers, with FIFO Allocation for All Others Proactive Education of Customers to Set Expectations and Encourage Close Working Relationships (Knowledge of Long-Lead Items, Visibility to Supply Resources, Agreement on Levels of Flexibility) Produce Products to Unique Customer Requirements Product Data Management & Electronic Document Management Are Used to Manage Technical Documents and Requirements for Engineer to Order Product Product Design Collaboration with Customers Production Level Loading Production Reporting/Status Proof of Performance (Promotion Management) Provide Continuous Formal Training to Employees

DEFINITION Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identify changes, such as assembly or packaging, to the last possible supply chain location. None identified

PROCESS D1 Deliver Stocked Product D2 Deliver Make-to-Order Product M1 Make-to-Stock M2 Make-to-Order S1 Source Stocked Product S2 Source Make-to-Order Product M1.4 Package M3.5 Package M2.4 Package

- Push inspection to SOURCE

DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product EM.1 Manage Production Rules EM.5 Manage Equipment and Facilities

- Receiving quality criteria connected to ISO 9000 practices Libraries of manufacturing capabilities or design envelopes Database for equipment to contain expected results of analysis, allow entry of test readings, and have capability of generating desired reports, which could highlight suggested actions based upon readings obtained, track maintenance completed, contain a help-file to be consulted None identified

D1.3 Reserve Inventory & Determine Delivery Date

None identified

P4 Plan Deliver

Order entry specifications linked to manufacturing order None identified

M2 Make-to-Order

On-line design tools facilitated by internet connections. Capacity planning Real time monitoring of production status and In-Process Product (WIP) Scan store shelves / bar codes to confirm put-a-way. Scan using handheld and match with ad. Examples would be TQM, Six Sigma.

Provide Product or Service Training to Employees or FAQ's Online

None identified

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S3.1 Identify Sources of Supply

M3 Engineer-to-Order M2 Make-to-Order M1 Make-to-Stock EM.7 Manage Production Network D4.4 Stock Shelf M1.3 Produce and Test M2 Make-to-Order M1 Make-to-Stock M3.4 Produce and Test D4.7 Deliver and/or Install

June 2006

BEST PRACTICE Provide Scheduling Output Back to Material and Labor Planning Systems Provide Single Source of Information on the Customer (Single Group / Owner Responsible for Accuracy / Quality of Customer Data) Provide Visibility to and Quickly Escalate Delinquent Accounts for Resolution

DEFINITION Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler Secure E-Commerce Server and integrated Order Management System (OMS) Warehouse Management System (WMS) and Transportation Management System (TMS) Integrated accounts receivables

Publish Return Policy

Easy access to return business rules.

Push Product on Trailer Arrival

System prioritization of items coming off trucks vs. picked from back room.

Push-Based Forecasts Are Replaced with Customer Replenishment "PullBased" Signals Quote Capability, without Reserving Inventory, Which Can be Converted into an Order, But Does Not Generate Build Signal or Reserve Inventory Capacity Quote Capability, without Reserving Inventory, Which Can Be Converted into an Order in a Single Step Rapid Reconfiguration of Return Capacity

Standards Based (RosettaNet, eBXML, OAGI, etc) B2B integration tools and systems None identified

Rapid Replenishment, VMI, EDI Rapid, Dynamic Reconfiguration of Return Process to Meet Demand

Real Time Data on Current Status

Real Time Feedback from Production, Raw Materials, and Finished Goods Inventory and Test Activities

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PROCESS M1.1 Schedule Production Activities ED.3 Manage Deliver Information

D3.11 Invoice & Receive Payment D2.12 Invoice & Receive Payment D1.13, Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice ER.1 Manage Business Rules for Return Processes D4.1 Generate Stocking Schedule D4.2 Receive Product at Store P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements D2.1 Process Inquiry & Quote

None identified

D2.1 Process Inquiry & Quote D1.1 Process Inquiry & Quote

Use of RETURN tracking and projection systems and flexible partner agreements that allow the rapid addition of RETURN capacity to match unexpected demand. None identified The ability to reset and reconfigure the RETURN process capacity, routings, etc. by transmitting new requirements and directives using mathematical models, the Internet, outsourcing and flexible partnership agreements. Also requires integration with the CRM system for real time redirection of customer returns based upon cost and capacity. Dynamic calculation of safety stock based on actual sales.

P5.2 Identify, Assess, and Aggregate Return Resources

Allow dynamic re-synchronization of MAKE activities by tying in real time status information to scheduler.

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D1 Deliver Stocked Product P5.4 Establish and Communicate Return Plans

ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory M1.1 Schedule Production Activities

June 2006

BEST PRACTICE Real Time Package Tracking

DEFINITION Tracking and tracing

Real Time Performance Measurement Reporting Systems

Systems to collect production information online generate reports upon request by operators, and track progress against schedule and standards. Electronic collection of quality data and online SPC.

Real Time quality control techniques Real Time Return Anticipation

Real Time Statistical Control Techniques

Having real time data on return demand and including it in the plan and forecast. Requires a connection with customers, call centers or CRM system, possibly to the store level with retail returns. The return demand needs to be included in the production plan as soon as possible because upon repair it may be the next piece of serviceable inventory to satisfy demand. Electronic collection of defect data and online SPC.

Real-Time Optimized Shipment Method Selection (Air Parcel, Ground Parcel, LTL, etc.) Based on Customer Service Requirements

Transportation Management System (TMS) Maintenance Management

Real-Time Shipment Tracking, (via internet)

Transportation Management System (TMS) Maintenance Management

Re-Balancing of Full-Stream Supply/Demand on a Daily Basis, Including Source-Make-Deliver Resources and Requirements from "Customers' Customer to Suppliers' Supplier" Receivers on the Dock Communicate Directly with the Buyer to Efficiently Resolve Any Discrepancies

Enterprise-wide planning system customer Relationship Systems

Receiving Equipment and Packaging Materials to Transfer Product Are Planned for In Advance and Readily Available When Needed

Include packaging materials in inventory management system and treat as any other inventory to minimize potential of stock-out.

Reduce Chances of Operator Error

Automatic download of production equipment with batch recipes/part programs Reduction of WIP handling through automation (i.e. AGVs and ASRS) and process improvement (i.e. reduction of handling steps, shorter move paths) Use principals of Lean Manufacturing.

Reduce In-Process Product (WIP) Handling Reduce Non-Value Added Activities, Including Queue, Move, and Set-Up Times

© Copyright 2006 Supply-Chain Council, Inc.

Buyer's name for every receipt is clearly visible on Receiver.

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PROCESS ED.2 Access Delivery Performance ED.2 Assess Delivery Performance EM.2 Manage Production Performance M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test P5.1 Assess, and Aggregate Return Requirements

M3.4 Produce and Test M1.3 Produce and Test M2.3 Produce and Test ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation ES.6 Manage Incoming Product ED.6 Manage Transportation ER.6 Manage Return Transportation P1 Plan Supply Chain

DR3.3 Receive Excess Product DR1.3 Receive Defective Product DR2.3 Receive MRO Product DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product M2.3 Produce and Test M1.3 Produce and Test EM.6 Manage Transportation

M3.4 Produce and Test M2.3 Produce and Test M1.3 Produce and Test

June 2006

BEST PRACTICE Reduce Non-Value Added Paperwork While Still Measuring Process Metrics

DEFINITION Electronic data collection of completion, quality, lot tractability, scrap, and labor data

Reliable Continuous Improvement Process and Methodology. Remote (Sales, Customers) Order Entry Capability

None identified

Removal of Obsolete Capital Assets

Automated Calculation of ABC Velocity Movement Automated Calculation of ABC Velocity Movement Business to business Internet capability to share common data.

Removal of Obsolete Stock Re-Planning Process Exists in MultiLevels of the Supply-Chain between Business Enterprises Re-Planning Process Links the Supply Chain Operation with the Business Strategy and the Marketing Strategy Responsiveness and Flexibility Are Emphasized By Developing Expertise in Making Business Processes ReProgrammable, Re-Configurable and Continuously Changeable Return Process Electronically Tracks Transfer from Station to Station

None identified

PROCESS M1.3 Produce and Test M3.4 Produce and Test M3.5 Package M2.4 Package M2.3 Produce and Test M1.4 Package EP.2 Manage Performance of Supply Chain D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order ES.5 Manage Capital Assets ED.5 Manage Deliver Capital Assets EP.9 Align Supply Chain Unit Plan with Financial Plan

None identified

EP.9 Align Supply Chain Unit Plan with Financial Plan

Integrated process modeling and software reconfiguration tools

P1 Plan Supply Chain

Utilize Bar coding

DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product M2.6 Release Product to Deliver M3.7 Release Product to Deliver M2.6 Release Finished Product to Deliver M1.6 Release Product to Deliver P1.2 Identify, Assess, And Aggregate Supply Chain Resources DR3.4 Transfer Excess Product DR1.4 Transfer Defective Product DR2.4 Transfer MRO Product P4.1 Identify, Prioritize, and Aggregate Delivery Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements

Review Batch Records by Exception

Electronic batch records linked to process plans/recipes and exceptions flagged

Review Product Profitability

ABC and cost modeling.

Review Transfer Cycle Time Trends and Determine If Equipment Capacity is Properly Balanced with Projected Usage

Periodic review of capital asset plan to determine if additional equipment, if needed, can be funded.

RFID and Other Tagging

POG software/field force

Sales and Operations Agree to Limits of Short Term Flexibility

None identified

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June 2006

BEST PRACTICE Sales and Operations Planning (S&OP)

Scan Displays for Promotion Conformance Scan Displays for Promotion Conformance Schedule Includes Preventative Maintenance Program

Schedule Minimizes Changeover Costs between Products Schedule Optimizes Use of Shared Resources Such as Tooling and Production Equipment

DEFINITION A process to develop tactical plans that provide management the ability to strategically direct its businesses to achieve competitive advantage on a continuous basis by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, marketing, development, manufacturing, sourcing, and financial) into one integrated set of plans. It is performed at least once a month and is reviewed by management at an aggregate (product family) level. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company's plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Executed properly, the sales and operation planning process links the strategic plans for the business with its execution and reviews performance measurements for continuous improvement. (From APICS online dictionary.)

PROCESS P1 Plan Supply Chain

D4.4 Stock Shelf None identified Interface between maintenance management system and scheduling system

Algorithms that manage set up times/costs, cleaning times, and ideal job sequences (e.g., color sequencing light to dark) Scheduling utilizing optimization techniques Required production resources included in routing/process instructions

Schedule Reflects Current Plant Status (Equipment Availability, Other Jobs and Resource Availability) On Line

Schedule undated by on line reporting and status systems and re-sequence activities

Segregate In-Bound Carcass Return Cost from Other Transportation Costs

None Identified

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M1.1 Schedule Production Activities M2.1 Schedule Production Activities M3.2 Schedule Production Activities M3.2 Schedule Production Activities M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities M1.1 Schedule Production Activities M3.2 Schedule Production Activities M2.1 Schedule Production Activities ER.6 Manage Return Transportation

June 2006

BEST PRACTICE Select Carriers by Least Cost per Shipment and Rate Using Actual Rates Prior to Release to Billing

DEFINITION Rules based carrier selection and actual rate database

Service Provider Utilizes Web-Based Communicate to Identify New and Discontinued Repair Sites to Customers Set Up Electronic or Pre-authorized Returns

Continuously updated authorized repair sites

Shipment Tracking

None identified

Shipment Tracking and Tracing

Satellite communications, GPS, RFID

Short Move Paths

Software that allows for input of the distance that particular parts/WIP need to be moved. This software then need to provide a report based on the cubic feet of material times distance moved by part number. A data warehouse/data mart is the source of all planning (master) data, business rules and transaction data. Analyzing tools enable the ongoing maintenance and improvement of the business rules based on actual data. None identified

Single Data Source for Decision Support and Business Rules

Single Point of Contact for All Order Inquiries (Including Order Entry) SKU Rationalization

© Copyright 2006 Supply-Chain Council, Inc.

None identified

None identified

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PROCESS D3.7 Select Carriers and Rate Shipments D3.6 Route Shipments & Select Carriers D2.7 Select Carriers & Rate Shipments D3.6 Route Shipments D1.7 Select Carriers & Rate Shipments ER.7 Manage Return Network Configuration DR3.1 Authorize Excess Product Return DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return D1.12 Ship Product D2.12 Ship Product D3.12 Ship Product D2.10 Receive & Verify Product at Customer Site D1.11 Receive & Verify Product at Customer Site D3.9 Receive & Verify Product at Customer Site D2.13 Receive & Verify Product by Customer D1.11 Load Vehicle & Generate Shipping Documentation D3.13 Receive & Verify Product by Customer D3.6 Route Shipments & Select Carriers D3.6 Route Shipments D1.6 Route Shipments SR2.5 Return MRO Product SR3.5 Return Excess Product SR1.5 Return Defective Product D2.6 Route Shipments EM.6 Manage Transportation

EP.3 Manage PLAN Data Collection

D2.1 Process Inquiry & Quote D1.1 Process Inquiry & Quote EP.7 Manage Planning Configuration June 2006

BEST PRACTICE Sound Project Management Process and Methodology Specific Changes to the Plan Are Agreed to Cross-Functionally, According to Defined Business Rules Stage Product or Service Adoption Staging Based on In-store Zones Standard Inventory Policy to Determine Excess Standard Operating Procedures and Methodology Standards and Measurements Aligned to Maximize Supply Chain Performance Statistical Test Count

Stocking is Completed in Zones Storage and Configuration Management for Release and Revision Control of Final Documents Storage Location Zoning Strategic Safety Stock of Selected Materials, Items, or Subassemblies to Decouple Sourced Product Issuance Cycle Time from Supplier Lead Time Strategic Sales and Operations Planning Process in Place and Managed at the Executive Level Substitution

Supplier "Cost of Nonconformance" Data is Collected, Analyzed and Used in Performance Reporting Supplier and Material Rationalization

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION None identified None identified None identified Items are staged for re-stocking based on zones within the store. This minimizes restocking effort. None Identified None identified

Internal/external benchmarking, industry standards, customer/supplier alignment agreements, visibility of key performance indicators The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated across the inventory population, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined. Each area of the store has its own stocking plan and items are routed specifically to that area. Product data management (PDM) or Electronic Data Management (EDM) feature set Automated or Optimized Slotting (Storage Location) Systems Use of safety stock algorithms to minimize stock levels.

None identified Trained staff or automated systems (Internet) that recommend up-sell, crosssell, and/or substitution

PROCESS EP.2 Manage Performance of Supply Chain P4.4 Establish Delivery Plans D4.7 Deliver and/or Install D4.3 Pick Product from Backroom ER.1 Manage Business Rules for Return Processes ED.5 Manage Deliver Capital Assets ED.7 Manage Product Life Cycle EM.2 Manage Production Performance EM.4 Manage In-Process Products (WIP) ED.4 Manage Finished Goods Inventories ES.4 Manage Product Inventory ER.4 Manage Return Inventory D4.4 Stock Shelf EM.1 Manage Production Rules ED.5 Manage Deliver Capital Assets M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product EP.9 Align Supply Chain Unit Plan with Financial Plan D4.5 Fill Shopping Cart

See Up and cross selling Software application to automate data collection and reporting

ES.2 Assess Supplier Performance

Web based access to supplier/source data

ES.3 Maintain Source Data

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June 2006

BEST PRACTICE Supplier Certification Programs Are Used to Reduce (Skip Lot) or Eliminate Receiving Inspection

DEFINITION Skip lot/sampling inspection logic

Supplier Certification Programs Can Reduce the Cycle Time for Certifying Existing Suppliers to Provide New Technologies Supplier Delivers Directly to Point of Use

None identified

Supplier Delivers Directly to Point of Use - (Dock to Line or End Destination) Supplier Delivery to Production Process at Point of Use

Electronic Tag tracking to Point of Use (POU) destination

Supplier Development Programs Are Used to Get Local Suppliers to Invest in Developing New Technologies Supplier Managed Inventory of Parts

None identified

Supplier Performance Assessment System

Supplier Performance Data is Collected, Analyzed and Reported to Suppliers Online and Real-Time through Extranet Applications Supplier Replaces Defective Material at Customer's Facility with Good Product as Required Suppliers Are Evaluated, Selected and Qualified with Criteria Matched to Business Requirements and Competitive Needs Suppliers Share Responsibility for Balancing Supply and Demand through Joint Service Agreements Supply Chain Advance Planning System

Electronic Tag tracking to Point of Use (POU) destination

EDI link to supplier's sales order and inventory systems

E.D.I. linkage of Inventory Information “Assess Supplier Performance” is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs. Web based relational database / management application Electronic Tag tracking to Point of Use (POU) destination None identified

None identified Collaboration among Supply Chain partners extends outwards to customers, spanning the supply chain. Planning

PROCESS S3.5 Verify Product S3.4 Receive Product S1.3 Verify Product S2.2 Receive Product S1.2 Receive Product S2.3 Verify Product ES.7 Manage Supplier Network S3.2 Select Final Supplier(s) and Negotiate S3.5 Verify Product S2.3 Verify Product S1.3 Verify Product S3.4 Receive Product S1.2 Receive Product S2.2 Receive Product M1.2 Issue Product M1.2 Issue Material M2.2 Issue Sourced/InProcess Product M3.3 Issue Sourced/InProcess Product S3.1 Identify Sources of Supply EM.5 Manage Equipment and Facilities ES.2 Assess Supplier Performance

ES.2 Assess Supplier Performance S3.5 Verify Product S1.3 Verify Product S2.3 Verify Product ES.2 Assess Supplier Performance P2.3 Balance Product Resources with Product Requirements P1.4 Establish Supply Chain Plans P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements

Re-planning Business Rules Plan Changes

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June 2006

BEST PRACTICE Supply Chain is Designed to Have Supply Flexibility Equal to Demand Volatility Supply/Demand Process is Highly Integrated from Customer Data Gathering to Order Receipt, through Production to Supplier Request Systematic Disposition Of Equipment Systems Support Accurate On-Line Visibility of Full-Stream Demand Requirements and Priorities as Well as Resource Utilization and Availability Systems Support Accurate On-Line Visibility of Full-Stream Demand Requirements and Priorities The Demand Plan is Updated Frequently to Reflect Actual Consumption or Customer Forecast Information To Address Conditions which Cannot be Adequately Satisfied During the Current Planning Period, Each Functional Area Develops Prioritized Recommendations for the Subsequent Planning Period Tools Support Balanced Decision Making (e.g., Trade-Off between Service Level and Inventory Investment) Total Preventative Maintenance Program

Transportation Modeling and Rate Analysis

DEFINITION None identified

PROCESS P1 Plan Supply Chain

Integrated supply chain planning system with interfaces to all supply/demand data sources through public and private digitally enabled supply networks. Rules for deciding appropriate disposition.

P1 Plan Supply Chain

Advance Planning and Scheduling System

Advance Planning and Scheduling System Supply Chain Event Management Software None identified

P1.1 Identify, Prioritize, and Aggregate Supply Chain Requirements P2.1 Identify, Prioritize, and Aggregate Product Requirements

None identified

P4.4 Establish Delivery Plans

Supply chain planning optimization system

P1 Plan Supply Chain

Automatically generated TPM repair schedules integrated with MRP systems, electronic equipment repair history, parts listings, part stores inventory & reorder points, automatic store room parts purchases, Shop floor access to electronic data base of equipment line drawings, electrical wiring diagrams, parts listing reference guide and part cost lists. None identified

EM.5 Manage Equipment and Facilities ES.5 Manage Capital Assets

Two-Bin Floor Stock Located at Work Center for "B" And "C" Components Controlled by Operators and Replenished When One Bin is Empty Unique Identifier Tag for Each Repairable Asset Unplanned Orders Are Accepted and Scheduled Only When There is No Detrimental Impact on Overall Product Delivery Plan

None identified

Up and Cross Selling and/or Substitution

Trained staff or automated systems (Internet) that recommend up-sell, crosssell, and/or substitution.

© Copyright 2006 Supply-Chain Council, Inc.

EM.5 Manage Equipment and Facilities P1.4 Establish Supply Chain Plans

Asset management software using bar code, RFI tag, etc. Digital Linkages using XML standards (RosettaNet, eBXML, OAGI) to automatically query production capacity and ATP and schedule unplanned orders.

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SR2.4 Schedule MRO Shipment SR1.4 Schedule Defective Product Shipment SR3.4 Schedule Excess Product Shipment M3.3 Issue Sourced/InProcess Product ER.4 Manage Return Inventory P3.4 Establish Production Plans P4.1 Identify, Prioritize, and Aggregate Delivery Requirements D4.5 Fill Shopping Cart

June 2006

BEST PRACTICE Up-to-Date Shop Packet/Specification for Each Unique Production Event/Demand Up-to-Date Shop Packet/Specifications

DEFINITION Electronic Work Instructions

Use an Exchange System Where Customer is Issued a Serviceable Item Upon Submitting an Unserviceable Item Use Demand Planning

None identified

Use Historical Based Return Rate Forecasts Use of CAD/CAE Applications to Simulate Design, Cost and Manufacturing Process Use of Cross Functional Teams to Execute the Process of Developing Long-Term Capacity and Resource Plans Use of Platform Teams in the New Product Development Process Use of Speed Racks for Automated Material Handling Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data to Qualify as Part of Potential Supplier Network Utilize Concurrent Engineering with Suppliers to Allow Them to Provide Engineering and Product Performance Test Data Utilize EDI and EFT for Payment to Speed Closing of Receivables and to Reduce Processing Costs

Electronic work instructions

Demand Planning Systems to forecast returns, predict yield rates for reusable products or components, determine demand in a resale market, and project a revenue stream. None identified None identified None identified

None identified None identified Internet, EDI, FAX

EP.5 Manage Integrated Supply Chain Capital Assets EP.6 Manage Integrated Supply Chain Transportation EP.7 Manage Planning Configuration D2.9 Pick Product D1.9 Pick Product ES.7 Manage Supplier Network

S3.2 Select Final Supplier(s) and Negotiate

EDI transaction and network services

D1.13, Invoice & Receive Payment D2.12 Invoice & Receive Payment D3.11 Invoice & Receive Payment D3.15 Invoice D2.15 Invoice D1.15 Invoice S1.1 Schedule Product Deliveries S2.1 Schedule Product Deliveries S3.3 Schedule Product Deliveries EM.3 Manage MAKE Information

EDI interface for 830, 850, 856 & 862 transactions

Utilize Enterprise Information Systems

Enter, Process, and Deliver information about the manufacturing process to management using information systems that span the enterprise None Identified

© Copyright 2006 Supply-Chain Council, Inc.

P5.1 Assess, and Aggregate Return Requirements D3.1 Obtain and Respond to RFP/RFQ

None identified

Utilize EDI Transactions to Reduce Cycle Time and Costs

Utilize Internet-Based Freight Bidding Built Around Shared Shipping Volume Projections

PROCESS M3.5 Package M1.4 Package M2.4 Package M2.3 Produce and Test M1.3 Produce and Test M3.4 Produce and Test DR1.1 Authorize Defective Product Return DR2.1 Authorize MRO Product Return P5 Plan Return

417

ER.6 Manage Return Transportation

June 2006

BEST PRACTICE Utilize Invoice-less Freight Payment

DEFINITION None Identified

Utilize Real-World Cases in Employee Training Utilize Web-Based Collaboration between Asset Manager and Repair Sites Regarding Capacity and Scheduling Utilize Web-Based Collaboration between Customer and Service Provider on In-Bound Return Forecasts and Asset Tracking Utilize Web-Based Collaboration to Identify Potential New Repair Sites Prior to Their Selection Value Pricing Based on "Cost to Serve"; EDLP; Cost Plus Pricing

None Identified

Vendor Managed Inventory

VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

View for Analysis for All Orders and Shipments the Following Data: Logistics, Product, Cost, GL Charging Wave picking

Transportation Management System (TMS) Maintenance Management

© Copyright 2006 Supply-Chain Council, Inc.

Total return asset visibility throughout the network

PROCESS ER.6 Manage Return Transportation ER.1 Manage Business Rules for Return Processes ER.7 Manage Return Network Configuration

Shared return forecasts

ER.7 Manage Return Network Configuration

Shared knowledge of resource availability and bottlenecks

ER.7 Manage Return Network Configuration

Activity Based Costing; Integrated Order Management by Customer by Line Item

D2.2 Receive, Configure, Enter and Validate Order D1.2 Receive, Enter & Validate Order D1.5 Build Loads D1.6 Route Shipments D2.6 Route Shipments D3.5 Build Loads P1 Plan Supply Chain S3.4 Receive Product EM.4 Manage In-Process Products (WIP) S2.2 Receive Product S1.2 Receive Product ES.4 Manage Product Inventory M1 Make-to-Stock P4.1 Identify, Prioritize, and Aggregate Delivery Requirements ED.6 Manage Transportation ER.6 Manage Return Transportation D1.9 Pick Product

A practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DC’s, orders are scheduled to be picked when they are received. Wave picking consolidates orders into “waves” where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation.

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June 2006

INPUTS AND OUTPUTS INPUT / OUTPUT Actual Sales History

Advanced Ship Notice

DEFINITION Amount of past sales spanning any specified period of time (weeks, months, years, etc.) and expressed in any specified increments (per day, week, month, year, etc.) Reductions of actual quantities of items in stock, in process, or in transit. The loss may be caused by scrap, theft, deterioration, evaporation, etc. An EDI notification of shipment of product.

Air, Ground....Carrier Rate Tables

Rates charged by common carriers to move goods, or freight.

Approved Contract

Acceptance of an agreement between two or more competent persons or companies to perform or not to perform specific acts or services or to deliver merchandise. A contract may be oral or written. The "master" record for an item. Typically, it contains identifying and descriptive data and control values (lead times, lot sizes, etc.) and may contain data on inventory status, requirements, planned orders, and costs. Item records are linked by bill of material records (or product structure records), thus defining the bill of material.

Actual Shrink

Approved Item Master

Assorted by Shelf Order Authorization to Return to Service

The function of physically separating a homogeneous subgroup from a heterogeneous population of items Permission to return to service an item that has been repaired and found to be within specifications and operable.

Authorization to Scrap

Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical.

Available to Promise Date

The uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period in which an MPS receipt is scheduled. In the first period, ATP includes on-hand inventory less customer orders that are due and overdue

Benchmark Data

A set of measurements (or metrics) that is used to establish goals for improvements in processes, functions, products, and so on Benchmark measures are often derived from other firms that display "best in class" achievement

Bill of Materials

The Bill of Materials is a structured list of all the materials or parts needed to produce a particular finished product, assembly, subassembly, manufactured part, whether purchased or not. The process of accepting and translating what a customer wants into terms used by the manufacturer or distributor. The commitment should be based on the available-to-promise line (ATP) in the master schedule. This can be as simple as creating shipping documents for finished goods in a make-tostock environment, or it might be a more complicated series of activities, including design efforts for make-to-order products

Booked Order

Budget Constraints

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as pattern for and a control over future operations.

Budgets

A plan that includes an estimate of future costs and revenues related to expected activities. The budget serves as a pattern for and a control over future operations.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

INPUT / OUTPUT Business Plan

Business Rules for Return Processes

Business Rules for Source Processes

Capacity Constraints Capacity Requirements

Capital Assets Completed Proposal

DEFINITION A document resulting from a process of linking the long-range strategy with projections of revenue, activity, cost and profit. This process develops objectives usually accompanied by budgets, projected balance sheet, and a cash flow statement. Rules for conducting business, i.e. developing and maintaining customer and channel performance standards of an return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Business rules align Return process policies with business strategy, goals, and objectives. Rules that are translated into guidelines and policies for conducting business within the enterprise and other legal entities. Sourcing business rules include: supplier selection and negotiation processes, fulfillment and delivery performance and relationship definition for specific levels of collaboration and partnership. A capacity constraint is said to exist when the available capacity at a resource may be insufficient to meet the workload necessary to support the desired throughput. A capacity constraint is often a bottleneck. The resources needed to produce the projected level of work required from a facility over a time horizon. Capacity requirements are usually expressed in terms of hours of work or, when units consume similar resources at the same rate, units of production. Physical objects that are held by an organization for its production potential and that costs more than some threshold value (APICS) A document submitted in response to the a request for proposal from a customer with all the terms and conditions of sale of a product or service

Configuration Rules

The rules for the management of product configuration, which includes the management of critical sub processes needed to manage the life cycle of individual item numbers including item masters, routings, rationalization, and bill of materials.

Conformance Plan

Courses of action and processes that are established to meet the requirements placed on production by external entities.

Conformance Rules

An affirmative indication or judgment that a product or service has met criteria translated into rules for meeting external regulatory requirements

Consistently High Adoption Rates

Indication of product and service quality, i.e. customer satisfaction.

Consolidated Orders

The process of analyzing orders to determine the groupings that result in least cost/best service fulfillment and transportation.

Consolidated Product

Packages and lots that move from suppliers to a carrier terminal and are sorted and then combined with similar shipments from other suppliers for travel to their final destination.

Continuous Improvement Process

A process that identifies opportunities for performance improvement and facilitates their realization through the use of metrics, process development methodologies/approaches, project management principles, and reporting tools that support strategic and business plans. The rates charged by a carrier that does not serve the general public, but provides transportation for hire for one or a limited number of shippers under a specific contract.

Contract Carrier Rates

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

INPUT / OUTPUT Contract Status

DEFINITION Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

Contract Terms

All the provisions and agreements of a contract.

Contractual Obligations

A promise in a contract that binds one to a specific course of action. These promises maybe made by either the buyer of seller.

Corporate Objectives and Strategies

Corporate objectives are the goals and mission of an organization.

Cost to Produce

The cost to produce and item during a given period of time. Includes: the amount of direct materials, direct labor, and allocated overhead.

Credit Exchange Options

The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock. Report that portrays a potential customer's payment history and debt, indicating the ability to pay in a timely manner in the future.

Credit History Credit/ Exchange Options

The options available on the return of a repairable item, credit for the cost of the item, repair of the repairable item, receipt of a serviceable item from stock.

Current Inventory Source Data

Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer's needs.

Customer Address Data

Customer profile, which include address data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc.

Carrier Contracts (Customer)

Contracts that customers have with specific freight carriers through which suppliers have to work for the delivery of products. Customer manages carrier selection, shipment of purchased product, and payment of carrier. Customer profile, which includes history, customer preferences, status, and delivery requirements, etc.

Customer Data (preference) Customer Inquiry

General customer inquiries for information concerning products, availability, cost, and requests for quotes.

Customer Loyalty / Recurring Visits

Input to customer profile, frequency of visits, recurring, time frame, what purchased, numbers and rings. Measure of customer satisfaction with products and service.

Customer Master Database/Up to Date

This database contains all information relative to customers as a group or singly and is updated when ever new information is received about a customer, includes customer profiles.

Customer Order

An order from a customer for a particular product or a number of products. It is often referred to as an actual demand to distinguish it from a forecasted demand.

Customer Order Size, Weight, and Freight Class

Coupled with cube and route, these criteria determine type of carrier and cost of shipment

Customer Profile/Data

Customer profile, which includes history, customer preferences, status, and delivery requirements, etc.

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INPUT / OUTPUT Customer Quote

DEFINITION A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell.

Customer Replenish Signal Customer Requirements

A requirement for product from a distribution location to a source location. The part of the supply chain requirements related to the customer's needs, including sales forecasts and actual orders and backorders

Customer Service Requirements

Supply chain requirements related to the customer's needs, including service requirements, sales forecasts and actual orders/backorders.

Daily Replenishment Requirements

Resources needed to meet Item stocking schedule requirement.

Daily Shipment Volume

Daily Shipment Volume categorized by customer, source, traffic lane, carrier, etc.

Data About Return Capabilities

Information required in the process of integrating and maintaining the accuracy of return execution.

Data Cleansing Procedure

The procedure that outlines the cleansing of return data to insure its validity and accuracy during the return process.

Data System Requirements

List of requirements of the data system that insure cleansed data is compatible and usable, or the data system requirements to fully automate the return process. The amount of time that normally elapses between the time an order is received and the time the order is shipped.

DC/Vendor Lead Time DC/Vendor Transit Time

A standard allowance that is assumed on any given order for the movement of items from one operation to the next.

Defective Product Disposition Request

The customer request for disposition instructions for a defective product from the appropriate source.

Defective Product Return Authorization Request

The customer request for disposition instructions for a defective product from the appropriate source.

Defective Product Return Authorization Response

The approved or disapproved Return Product Authorization (RPA) for excess inventory, unserviceable products and/or serviceable or obsolete products as defined by the terms and conditions of a customer/supplier contract. Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

Defective Products Deliver Contract Terms

The process of making a delivery commitment. For make-to-order products, this usually involves a check of uncommitted material and availability of capacity, often as represented by the master schedule available-to-promise.

Deliver Return Requirements

A determination or projection of the requirements the supply chain must meet in the handling and execution of returns. (i.e. quantity, mix, timing) Products that have been acknowledged as received by the customer. Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered.

Delivered End Items Delivery Date

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June 2006

INPUT / OUTPUT Delivery Performance

DEFINITION The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs.

Delivery Plans

A plan for a course of action over specified time periods that involves a projected appropriation of supply resources to meet delivery requirements. As a whole with constituent parts, all sources of demand in the delivery of a product or service. As a whole with constituent parts, all things that add value in the delivery of a product. Claims for the refund of duties as a result of a ruling by the a government agency.

Delivery Requirements Delivery Resources and Capabilities Duty Drawback Claims Engineering Design Enterprise Distribution Model

Final drawings, specifications, formulas, part programs, etc.that describe requirements of a product. The design process consists of translating a set of functional requirements into an operational product, process, or service. Model of the distribution enterprise including the flows, processes, inputs, outputs, metrics, and best business practices.

EOQ/ESQ's

Economic Order Quantity - Result of a calculation that determines the most cost effective to quantity to order or produce. Economic Shipping Quantity Result of a calculation that determines the most cost effective quantity to ship.

Equipment and Facilities Characteristics

Equipment and facility traits and specifications required to meet external entities requirements.

Equipment and Facilities Maintenance History

The process of documenting of the timing and maintenance of equipment and facilities including required repairs, alterations, calibration, servicing, replacement of parts and other miscellaneous items to maintain production capability of the manufacturing fixed asset base

Equipment and Facilities Monitoring Information

Data gathered by measuring, examining, testing, or gauging one or more characteristics of equipment and facilities and comparing it to planned.

Equipment and Facilities Replacement and Disposition Plans

Actions relating to the planning, financing and disposition of capital outlays for such purposes as the purchase of new equipment, the introduction of new product lines, and the modernization of plant facilities

Equipment and Facilities Schedules and Plans

Time-phased plans of present and future load (capacity required) on all resources (Equipment and Facilities) based on the planned and released supply authorizations (i.e., orders) and the planned capacity (capacity available) of these resources over a span of time.

ETO Proposal

A proposal that may contain final drawings, specifications, formulas, part programs, etc.that describe requirements of a product A document used to solicit vendor responses when the functional requirements and features are known.

ETO Request for Proposal ETO Spec or Design

A clear, complete and accurate statement or drawing of the technical requirements of a material, item or service, and of the procedure to determine if the requirements are met.

Excess Product Disposition Request

Request disposition instructions for an excess item from the Supplier.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

INPUT / OUTPUT Excess Product Return Authorization Request

DEFINITION The process of a customer requesting authorization from a service provider, for the return of excess. In addition to discussing the excess, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of excess to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received.

Excess Product Return Authorization Response

The process of a customer obtaining authorization, from a service provider, for the return of excess product

Excess Products

Material in excess of the current requirements.

Existing Inventory Data

Available data that characterizes and quantifies raw material, work in process, and finished goods inventories Documentation and process standards set by external entities (i.e. government, trade officials, etc.)

External Regulatory Information Finish Goods Inventory Target Levels

In a min-max inventory system, the equivalent of the maximum. The target inventory is equal to the order point plus a variable order quantity.

Finished Goods Inventory Location

The physical storage location where Finished Product inventory is held in stock prior to use or shipment.

Finished Product Release

The authorization to ship a finished product that has been ordered.

Full Cart (Empty Cart)

Completion of customer checkout, sale of the selected goods, cart transitions from full to empty.

Full Cart Ready for Checkout

Customer selected goods transferred to the point of sale.

Full Shelf Locations

Determination of the best retail locations for implementation of full shelf equipment.

Government Constraints

Requirements established by a government which must be met before allowing the shipping, delivery of a product or manufacture of an item.

Government Regulations

Documents the implement law and requirements concerning the import and export of items and the manufacture of item.

High Customer Services Satisfaction Levels Historical Return Rates

Indication of product and service quality.

Import/Export Requirements

A judgmental forecasting technique based upon the a return history that is analogous to a present situation, such as the return history on a similar product, and using the past pattern to predict future returns. Requirements established by a government or trading areas (i.e EU, NAFTA etc) which must be met before allowing the shipping or delivery of a product across national boundaries. Data concerning product on order and due to be delivered to location agreed in the order.

Incoming Product Information Information Feedback Information from Business Processes

© Copyright 2006 Supply-Chain Council, Inc.

The flow of information back into the control system so that actual performance can be compared with planned performance. Data arranged or presented from a set of logically related tasks or activities performed to achieve a defined business outcome; so that the data yields an understanding not available from any single data element.

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INPUT / OUTPUT Information Infrastructure Plan Information Needed to Create and Maintain IT Information Needs Analysis Installed Product

Integrated Supply Chain Plan

DEFINITION A plan outlining the processes required for managing, collecting, maintaining, and communicating information and masterdata to support planning and execution processes. Interrelated computer hardware and software along with people and processes designed for the collection, processing, and dissemination of information for planning, decision making, and control. Specifying the inputs, files, processing, businesss rules and outputs for a new system, but without expressing computer alternatives and technical details. The process of preparing, testing and installing the product at the customer site. The standalone product is fully functional upon completion, but there may be requirment for subseqent integration. Communication of courses of action over the appropriate time-defined planning horizon and interval, representing a projected appropriation of supply chain resource and input material to meet supply-chain requirements as they affect the customer. The organic capability of an organization to produce output per time period.

Internal Capacity

Inventory Inventory Availability

Inventory Availability/Delivery Date Inventory Capacity Inventory in Stock Inventory Rules Inventory Status

Inventory Strategy Item Master Item Pick Sheet for Stocking Schedule

Item Stocking Requirements Load Information

© Copyright 2006 Supply-Chain Council, Inc.

In business management, inventory consists of a list of goods and materials held available in stock. Also, those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts) Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Those stocks or items on hand used to support production (raw materials and work in process items), supporting activities (maintenance, repairs and operating supplies), and customer service (finished goods and spare parts). Determination of the time required from the receipt of the order until the item should be delivered. Maximum rate of output for the inventory managment and warehouse process Stored products or service parts ready for sale, as distinguished from stores, which are usually components or raw materials. The rules that determining the desired levels of items, whether raw materials, work in process, or finished products including order quantities and safety stock levels. A periodic report showing the inventory on hand and usually showing the inventory on order and some sales or usage history for the products that are covered in the stock status report. The total supply chain inventory strategy. Contains the plan for total inventory limits or levels (including Raw Material, Work In Process, Finished and Purchased Finished Goods) including replenishment models, ownership, product mix, and stocking locations, both inter and intra company. A record of specific information for each product, which defines the system parameters with which to effectively plan and execute using ERP (MRP, etc) systems. A document that lists the material to be picked to meet the schedule for the planned movement of material from a bulk storage area to an order pick storage area. The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory maybe dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), an service parts. Information relative to a load that is built and shipped, i.e. customer, items, destinations, weight, etc

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June 2006

INPUT / OUTPUT Load, Shipping, Verify, and Credit Information Loaded Retail Cart or Pallet Location of Customers Logistics Selection Lost or Dropped Shopping Carts Low Rates of Failure Loyalty Customer Profile Changes Make/Buy Decision Manage Integrated Supply Chain Inventory Information Manage Regulatory Return Policy Management Process Reports Manufacturer's Recommended Maintenance Schedules & Specifications Markdown Plans

Merchandise Category/Classification Merchandising Plan (SUPPLIER)

Methods, Procedures, Processes

MRO Disposition Request

DEFINITION The function that performs tasks for the outgoing shipment of parts, components, and products. It includes packaging, marking, weighing, and loading for shipment. Also, verify the shipment and customer credit information. Customer selected retail finished goods transferred to the point of sale. Customer profile, which includes address and location data, credit and purchase histories, customer preferences including shipping, status, and delivery requirements, etc. Carrier selection and management for inbound or outbound shipments (linked to terms of delivery) On-line orders that are missing due to internet, software, or hardware malfunctions. Indication of quality in workmanship and design. More units, higher average ring, etc. The output of the process used to determine whether a demand will be supplied with internal capacity or purchased through contract manufacturing and/or contracted services externally. Managing the flow of raw materials and products in a supply chain based on uncertain demand for the finished products The process of identifying and complying with regulatory documentation and process standards set by external entities (i.e. government, trade officials, etc.) when planning for the Return and Recovery of Assets. Reports which provide management with the process information required to evaluate prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved. The scheduled activities, including adjustments, replacements, and basic cleanliness, that are recommended by the manufacturer to forestall machine breakdowns. Part of the Market Plan, which establishes an allowance or deduction, granted by the seller to the buyer, usually when the buyer meets certain stipulated conditions that reduce the price of the products purchased. For example, based upon paying early, buying in quantity, etc. The categorization of goods based upon the range of specifications met during the manufacturing process. The merchandising plan includes the current market position, opportunity and issue analysis, merchandising objectives and strategies, action plans, programs, projects, budgets, and pro forma profit and loss statement and management controls. Methods, procedures and processes required to produce distinct items, such as parts that retain their identity through the transformation process and are intended to be completed after receipt of a customer order, including custom products that are designed, developed, and produced in response to a specific customer request. Request disposition instructions for an MRO item from the Supplier.

MRO Parts Availability

The on-hand MRO inventory balance minus allocations, reservations, backorders, and (usually) quantities held for quality problems.

MRO Product Return Capabilities MRO Products

See “Product Return Capagilities” Maintenance, Repair and Overhaul spare parts used to support of operations and maintenance.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

INPUT / OUTPUT MRO Return Authorization Request

DEFINITION The process of a customer requesting authorization from a service provider, for the return of an MRO product. In addition to discussing the MRO issue, the customer and service provider would discuss enabling conditions such as return replacement or credit, packaging, handling, transportation and import / export requirements to facilitate the efficient return of the MRO product to the service provider. The customer may need to go through several return authorization iterations with multiple service providers before authorization is received.

MRO Return Authorization Response

The process of a customer obtaining authorization, from a service provider, for the return of an MRO product

On-demand Replenishment Requirements On-Order/Backorder

Requirements for the triggering of material movement to a work center only when that work center is ready to begin the next job. An unfilled customer order or commitment. A backorder is an immediate (or past due) demand against an item whose inventory is insufficient to satisfy the demand. Payment at the time of order, maybe partial or in full. Orders that have been received and entered into the order processing system and are in a queue waiting to be processed and shipped. The function encompasses receiving and entering all data necessary on orders, so the order can be finalized and entered into the order system. A statement of price, terms of sale, and description of goods or services offered by a supplier to a prospective purchaser; a bid. When given in response to an inquiry, it is usually considered an offer to sell. Rules for the function that encompasses receiving, entering, and promising orders from customers, distribution centers, and interplant operations. Reserved inventory and/or planned capacity and delivery date for a specific order. A plan that describes how a company will utilize third party business partners to provide products and services which the company chooses not to provide with internal capacity. Outsource Plans can vary in detail from simple policy statements to highly detailed plans with specifics about the third party business partners, specifications for products and services, performance expectations, and contract considerations. The items and services utilized to manufacture a product. Receipt of payment for goods and services per contract or purchase order. The process of authorizing payments and paying suppliers for product or services. This process includes invoice collection, invoice matching and the issuance of checks. Transportation modes are selected and efficient loads are built. Execution information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. Any company policies that affect how a planning process is defined, approved, and performed. Data required to develop and build a Plan-O-Gram display to help minimize setup time by showing specific placement of all items, by product number, on the display. The relief of inventory and computation of sales data at the time and place of the sales, generally (may be manual) through the use of bar-coding, or magnetic media and equipment. Planned and scheduled activities, including adjustments, replacements, and basic cleanliness, that forestall machine and facility breakdowns. Also, the established frequency to change and maintain parts, based on failure consequences, with frequency set per part or machine type. (Well cared for equipment and facilities will last longer and cause fewer problems.) A planned series of actions or operations that advances returns from one stage to another, or established procedures to manage and execute all activities in the process.

Optional Payment Order Backlog Order Information Order Quote (CUSTOMER) Order Rules Order Signal Outsource Plan

Parts and Services Consumed Payment Payment Terms Plan and Build Loads Information Planning Data Planning Decision Policies Plan-o-gram Data Point of Sale Data (Daily) Preventative Maintenance and Calibration Schedule

Process Procedures

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

INPUT / OUTPUT Procurement Signal (Supplier) Product Product Availability Product Data (linked/related SKU's) Product Design Product Design/Claims

Product Design/Quality Product Inventory Location Product Inventory Target Levels Product Location Information Product Mix and Plans

Product On Order Product Requirements Product Return Capabilities

Product Routings

Product Sources Product/Category Lifecycle Production Capacity (JN list calls Capability) Production Orders Planned Production Plans

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION Any signal that indicates when to produce or transport Items in a pull replenishment system, or the signal that sends the estimated need of parts or services to the supplier. The end object of a transformation process that includes physical objects, information or services. Availability of a product by location that is reserved, scheduled or available for sale, or the number of products ready to be or planned to be shipped to the specific customer or market at the specific time. The properties and characteristics of a product (e.g. the part number and a text description of the product) and the relationships to other items in the product family and linked / related SKU's. The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. The product design is the translation of a set of functional requirements into an operational product that meets both the enterprise and customer expectations. Claims are marketing information provided as to performance, etc. Claims from the users of the product indicate a need to change the product design A product design approach that uses quality measures to capture the extent to which the design meets the needs of the target market (customer attributes), as well as its actual performance, aesthetics, and cost. The physical storage location where product inventory is held in stock prior to use or shipment. The target for the total product inventory, including e.g. raw material, work in progress and finished goods. Attributes of the product's storage location. The proportion of individual products that make up the total production or sales volume and plan that authorizes the factory to manufacture a certain quantity of a specific item, or the portfolio of products the company has to cover the targeted customer need and the plans of how to manage that portfolio. Product on order with a selected source. As a whole with constituent parts, all sources of demand for a product or service in the supply chain. The capability of a system or resources to produce a quantity output in a particular time period; and, any element or factor that constrains the system or resources from achieving a higher level of performance in respect to its goal. The ability the supply chain has to return products in a valid and accurate way. Product routings represent the way products are made and are integrated with the Bill of Materials. Key elements of proper Routings include proper sequence of operations, work center identification, relevant tolerances, run times, lot size and setups. The equivalent concepts for services are the workflow processes and rules. As a whole with constituent parts, all material and other resources used to add value in the supply chain for a product or services. The time from initial research and development to the time at which the sales and support of the product to customers are withdrawn. The highest, sustainable output rate which can be achieved with the current product specifications, product mix, worker effort, plant, and equipment. A statement of the output of a production facility for a specified period, comparing planned to actual production. A master production plan used to allocate capacity among manufacturing resources and schedule finite manufacturing activities or executing the performance of a service. Production Plan includes production capability.

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INPUT / OUTPUT Production Quality and Policies

Production Resources Production Rules Production Schedule Production Status Projected Delivery Requirements

Projected Internal and External Capacity Promotion Event Calendar

Promotion/Event Plans Promotional Plan Purchase History Quality and Delivery Performance

Rated Carrier Data Rated Shipments Receipt Data Receipt Discrepancy Notification Receipt Verification Regulatory Requirements Replenishment Quantities Replenishment Signal Reports, Information, and Documents

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION The operational techniques and planned and systematic activities used to fulfill requirements for quality in the production process, or the quality of the production, as defined by the company. For example, a percentage of parts produced without a need for adjustment or repair. The production policy indicates standard rules on how the production quality should be secured. As a whole with constituent parts, all things that add value in the creation of a product or performance of a service. The rules directing or regulating the movement of goods through the entire manufacturing and repair cycle (parameters of production) from the requisitioning of raw material to the delivery of the finished products. A plan that authorizes the factory to manufacture or repair a certain quantity of a specific item. Feedback on the production schedule allowing for corrective action to a production problem, or an indication of how far in the production process a specific part has progressed The company's goal for the time to ship the product after the receipt of a customer's order. The policy is sometimes stated as "our quoted delivery time," or an estimate of the customer delivery requirements of a product or service, e.g. which kind of packaging, should the parts be shipped one by one or in bulks etc. An estimate of the amount of product or service a particular part of the business (internal capacity) or a third party business partner (external capacity) is capable of producing over a particular period of time when all factors that control the production processes are working optimally. Time phased promotion / event tasks where the product offering is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering during the year. Promotion activities - other than advertising, publicity, and personal selling that stimulate, interest, trial or purchase by final customers or others in the marketing channel. The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering The amount of purchased products for a certain time in history per specific intervals The process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers' business and/or competitive needs. Or, the extent to which the supplier delivers according to quality specification (e.g. product quality, logistic quality) and to delivery specification (in time, correct packaging etc). Sometimes these two metrics are connected in one. Contract rates and tariffs from carriers by commodity, lane, mode, etc. for shipments. Shipments subject to defined and established rates A collection of related receipt data records organized in a specific manner. Notification of a discrepancy relating to a receipt, including: damage, packaging, quantity, etc. Acknowledgement that the product received conforms to specified requirements and criteria. Requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). In a fixed-reorder quantity system of inventory control, the fixed quantity that should be ordered each time the available stock (on-hand plus on-order) falls to or below the reorder point. Any signal that indicates when to produce or transport Items in a pull replenishment system. Collecting data and organizing, arranging or presenting the data so that they yield an understanding not available from any single data element. 429

June 2006

INPUT / OUTPUT Resource Availability Return Benchmark Data Return Inventory Availability Return Inventory for Transfer Return Inventory Targets Return Inventory Transfer Data Return Network Configuration Return Performance Return Plans Return Process Capabilities Return Process Workflow Definition and Policies Return Product Authorization Return Product History Return Product Location Return Production Requirements Return Regulatory Requirements Return Requirements Return Resources Return Rules and Policies

Return Schedule Instructions Return Transportation Guidelines, Policies, & Agreements Returned Defective Product Returned Excess Product Returned MRO Product Returned Product Information Returned Product Location Returns Data Revised Aggregate Forecast and Projections

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION The capability of a system or resource to produce a quantity of output in a particular time period, or the available resources at a point in time able to generate an output. Data relative to the return process utilized to compare the company's actual results to selected values identified as reference. Inventory relative to return process available for use. Inventory relative to return process available for transfer to other destination. The goals and approach to the management of return inventories. The process of receipt and verification of the returned item against the return authorization and other documentation and prepares the item for transfer. The business rules that govern the flow of unserviceable material through the network, i.e. the network configuration. Performance measurement information for the Return Process (the actual value of measured for the criterion). Courses of action over specified time periods that represent the projected appropriation of required return resources and or assets to meet the return process requirements. The capability of a system or resources to produce a quantity output in a particular time period Definition and maintenance of the information flow about the Returns supply chain network for a group of similar or complimentary items through out their life cycle Permission to accept an excess product return for the designated return center, after communicating with the customer. The return history of product including failure rates, failure causes, etc. The physical location where the returned product inventory is held prior to disposition As a whole with constituent parts, all sources of demand in the creation of a product or service. Return requirements dictated by process standards set by external entities (i.e. government, trade officials, etc.). As a whole with constituent parts, all sources of demand for the return of a product. All resources that add value to, execute, or constrain the processes for the return of a product. Rules and Policies for conducting business, i.e. developing and maintaining customer and channel performance standards of return processes such as service levels, given service requirements by supply chain stakeholders/trading partners. Rules and policies align the Return process with the organization's business strategy, goals and objectives. A list of operations and procedures for scheduling the return of product. Guidelines, policies and agreements for the transportation activities around return process. Product being returned that is in a defective condition. Product being returned as defined by the terms and conditions of a customer/supplier contract as available inventory and disposition excess not usable for sale. Product being returned for maintenance, repair, or overhaul. Data concerning the return and disposition of defective products, excess inventory and/or serviceable or obsolete products, or MRO product. The storage location of those items being returned. The properties, characteristics and information relating to returns, including failure information, excess, obsolete, MRO, customer, etc. An update to the aggregate Supply-Chain Forecasts of Demand by Product Family supporting the Market/Channel Plans. Corresponding Projections, supporting Make, Source, Deliver, Inventory and Response Time Plans through the Supply-Chain are produced from these Forecasts Together, they represent balanced Supply and Demand.

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June 2006

INPUT / OUTPUT Revised Business Assumptions Revised Capital Plan RFQ/RFP

Routing Guide Satisfied Customer Scheduled Defective Product Return Scheduled Deliveries Scheduled Excess Product Return Scheduled Installation Scheduled MRO Return Scheduled Receipts Scrap Authorization Service Levels

Service Requirements Shipment Documents Shipment Routes Shipments Shipping Documents Shipping Export Parameters and Documentation Shipping History Shipping Parameters and Documentation Shipping Preferences (Customer) Shipping Schedules (internal or 3PL) Ship-to Data Source Execution Data Source Return Requirements Sourcing Plans

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION An update to the expected cause and effect statements that are the base for the Revised Aggregate Forecast and Projections. These are reviewed periodically with actual results to verify the linkage of actual cause and effect. A revision to plan for capital expenditures necessitated by either changes in specific business plans or factors and assumptions affecting a business plan. Request for Quote - A document used to solicit vendor responses when a product has been selected and price quotations are needed from several vendors. Request for Proposal - A document used to solicit vendor responses when the functional requirements and features are known but no specific product is in mind. Information used to select modes, transportation lanes, available carriers, etc. Listing or routes, carriers & rates. Customers who are satisfied with the product or service delivered by the suppliers, including the aspects such as time, quality, cost, etc. Planned or scheduled returning of material deemed defective for some certain time or times The required or agreed time or rate of delivery of goods or services purchased for a future period. Planned or scheduled returning of material deemed in excess of current requirements for some certain time or times. The process of evaluating the design and build schedules relative to customer requested installation date to determine installation schedule. Planned or scheduled act of installing something for some certain time or times. Product due to arrive. Permission to scrap material or item outside of specifications and possessing characteristics that make rework impractical. Performance targets in service related measures (i.e. delivery performance, lead times, etc.) compared to the established service requirements. Service levels are established by balancing requirements against operational strategy. A set of minimum acceptable values that describe service requirements of a particular industry, channel, and/or customer segment. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Routes for shipping by consolidating loads. Transactions related to sending the product to the customer. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc....). Shipping and documentation requirements established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. The transaction history of the physical shipment of an item to another internal location or to a customer. Shipping parameters, such as weight, size, cube and route decide carrier and cost. Legal documentation of the contents of a shipment (e.g. way bill, bill of lading, export papers, etc.) are required. Customer preferences including shipping, status, and delivery requirements, etc., and customer profile, which includes address data, credit and purchase histories, Scheduling of direct deliveries of material to a specified location on a plant floor near the operation where it is to be used. Data about the destination of a retun delivery. Data which will provide measurement of actual supplier performance against internal and or external standards to provide feedback to achieve and maintain the performance required to meet the customer's needs. All sources of demand in the Source Return of a product or service. An aggregate material requirements plan used to schedule material deliveries to meet production plan. 431

June 2006

INPUT / OUTPUT Standard Practices/Rules Stocking Requirements

Stocking Schedule Stock-out History Store Allocation Instructions Store Shelf Inventory Counts Strategic Plan Successful Installation / Live System Supplier Agreement Supplier Data Supplier Performance Supply Chain Execution Data Supply Chain Performance Improvement Plan Supply Chain Plans Supply Chain Requirements Supply Chain Resources Supply-Chain Performance Metrics

Systems Capability Tariffs and Duties (External) Transferred Product Transportation Capacity Valid Returns Request Validated Order

© Copyright 2006 Supply-Chain Council, Inc.

DEFINITION Industry established common practices, rules, and methods of doing business. The activities and techniques of determining the desired levels of items, whether raw materials, work in process, or finished products. Demand for inventory may be dependant or independent. Inventory functions are anticipation, hedge, cycle (lot size), fluctuation (safety, buffer or reserve), transportation (pipeline), and service parts. A timetable for the planned movement of material from a bulk storage area to an order pick storage area. History of a lack of materials, components, or finished goods that are ordered. A list of operations and procedures for allocating storage needs for items in inventory. The determination of inventory quantity by actual count. Physical inventories can be taken on a continuous, periodic or annual basis. A longer range, high-level plan that describes how a company intends to conduct business. Improve its market and competitive position, and increase its earnings performance. The installation of product is completed at the customer site, and the product is fully functional. An agreement between supplier and purchaser to perform or not to perform specific acts or services or to deliver merchandise, such as purchase order or supplier contract. Data or information about the supplier. This data can be organizational , product, information , financial. Structured supplier data is needed to set up and implement ERP or similar systems. The results of measuring the actual supplier performance on cost, quality, engineering, purchasing, and so on, based on an agreed set of measurements. Information necessary to plan the balance of supply chain resources to demand requirements at both the highest aggregate and lowest SKU planning levels. A plan that describes goals and objectives for a supply chain and the steps that will be taken to reach those goals and objectives from the current performance levels. Courses of action over specified time periods that represent a projected appropriation of total supply-chain resources to meet total supply-chain demand requirements. Sources of demand for the integrated supply chain of a product or service at the appropriate level, horizon and interval. As a whole with constituent parts, all sources of supply that are required to add value in the supply chain of a product or service at the appropriate level, horizon and interval. Standard measures that indicate how well a supply chain performs within certain categories of performance known as Performance Attributes, e.g. delivery reliability, flexibility and responsiveness, cost, and asset management. The capability of a system to perform its expected function Charges established by a government which must be met before allowing the shipping or delivery of a product across national boundaries. Product being tranferred to the appropriate stocking location within the supply chain. The capability of a trasportation system to perform it's function. Requests for returns that are valid. An order that has had the instructions / requirements validated i.e. the information that the order contains is accurate, consistent with previous information and does not violate business policies or rules. Note 1 - this does not make the order "committed" there may be other tasks to be performed before a commitment can be made. Note 2 - this order could be customer, internal, purchase or production. 432

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INPUT / OUTPUT Validated Return Material Authorization Vendor Merchandising / Co-op advertising agreements Vendor/DC inventory availability Warehouse Operating Constraints Warranty Data WIP Handling Rules, Move Information and Methods WIP Inventory Location WIP Location Rules WIP Move Information and Methods Year-to-Year for Like SKU/Subclass

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DEFINITION A validated and approved Return Product Authorization (RPA). The plan for a promotional product offering and how it is communicated to the customer and includes public relations, advertising, sales promotions, and other tools to persuade customers to purchase the product offering. Vendor/DC inventory available to a customer to supply demands. (Where the customer has access to the supplier's inventory and the supplier has access to the customer's requirements and inventory or vendor managed inventory). Warehouse constraints are those storage items that impact on the supply chain efficiency, including material handling equipment and personnel, equipment maintenance, building maintenance, and security personnel. All data relevant to a warranty claim for a customer for replacement, repair or credit because the product received did not meet a commitment, either expressed or implied, concerning a certain fact regarding the product The rules for handling WIP items in the production and repair process. These rules include the movement and accounting for in-process items between work locations, in inventory, and movement inventory. Location of inventory that is specified as "work in progress". This can be intermediate storage in a manufacturing facility prior to final packaging or can be a class of materials waiting final transformation to finished products. The process and rules for establishing and maintaining in-process item inventory ownership and stocking locations. The process of recording and tracking the movement of WIP items through the production and repair process. This process includes item stocking and accounting requirements. The sales or demand history that is analogous to the present situation for similar products, a SKU / Subclass.

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APPENDIX A METRICS Performance Attributes and Associated Level 1 Metrics Performance Attribute Supply Chain Reliability

Supply Chain Responsiveness Supply Chain Flexibility Supply Chain Costs Supply Chain Asset Management

Performance Attribute Definition The performance of the supply chain in delivering: the correct product, to the correct place, at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation, to the correct customer. The speed at which a supply chain provides products to the customer. The agility of a supply chain in responding to marketplace changes to gain or maintain competitive advantage. The costs associated with operating the supply chain. The effectiveness of an organization in managing assets to support demand satisfaction. This includes the management of all assets: fixed and working capital.

Level 1 Metric Perfect Order Fulfillment

Order Fulfillment Cycle Time Upside Supply Chain Flexibility Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost Cost of Goods Sold Cash-to-Cash Cycle Time Return on Supply Chain Fixed Assets Return on Working Capital

Performance Attributes and Level 1 Metrics Level 1 Metrics are primary, high level measures that may cross multiple SCOR processes. Level 1 Metrics do not necessarily relate to a SCOR Level 1 process (PLAN, SOURCE, MAKE, DELIVER, RETURN).

Performance Attributes Level 1 Metrics Perfect Order Fulfillment

Customer-Facing Reliability Responsiveness

Flexibility

Internal-Facing Costs Assets

x

Order Fulfillment Cycle Time

x

Upside Supply Chain Flexibility

x x x

Upside Supply Chain Adaptability Downside Supply Chain Adaptability Supply Chain Management Cost

x x

Cost of Goods Sold Cash-To-Cash Cycle Time

x x

Return on Supply Chain Fixed Assets Return on Working Capital

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x

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Key to Template for Appendix A Specification: This template was used to develop the hierarchical structure between SCOR level 1, 2, and 3 metrics. Metric Definition Intended to provide clear, concise, benchmarkable, definitions of the metric. Hierarchical Metric Structure These diagrams express the hierarchical structure of metrics from different levels by digraph. A causal link (arrow) from one metric A to another metric B means that metric A could affect metric B. For a level 1 metric, it needs to drill down to level 2 metrics. For a level 2 metric, it needs to drill down to level 3 metrics, and also, should roll up to level 1 metrics (dashed link). * The dashed line boxes represent optional metrics associated with the Level 3 processes. Qualitative Relationship Description If the relationships between metrics cannot clearly quantitatively expressed by mathematical equations, qualitative description of the relationships is required. Quantitative Relationship (optional, if calculable) Lists the quantitative relationships between metrics by mathematical equations, if calculable. Calculation Provides an operable method to calculate the metric, typically a formula. Data Collection Illustrates how to collect data for metric calculation. Discussion Additional descriptions which are necessary.

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Performance Attribute: Supply Chain Reliability Level 1 Metric: Perfect Order Fulfillment Metric Definition The percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage. Components include all items and quantities on-time using the customer’s definition of on-time, and documentation – packing slips, bills of lading, invoices, etc.

Hierarchical Metric Structure Level 1

Perfect Order Fulfillment

% of Orders Delivered in Full Level 2

Delivery Performance to Customer Commit Date

Perfect Condition Documentation Accuracy

Qualitative Relationship Description • • • •

An order is considered perfect if the products ordered are the products provided and the quantities ordered match the quantities provided (% In Full). A delivery is considered perfect if the location, specified customer entity and delivery time ordered is met upon receipt (Delivery Performance to Customer Commit Date). Documentation supporting the order line is considered perfect if it is all accurate, complete, and on time (Accurate Documentation). The product condition is considered perfect if the product is delivered / faultlessly installed (as applicable) on specification, with the correct configuration, with no damage, customer ready, and is accepted by the customer (Perfect Condition)

Quantitative Relationship (optional, if calculable) Calculation [Total Perfect Orders] / [Total Number of Orders] x 100% Note, an Order is Perfect if the individual line items making up that order are all perfect. The Perfect Order Fulfillment calculation is based on the performance of each Level 2 component of the order line to be calculated (product & quantity, date & time & Customer, documentation and condition). For an order line to be perfect, all of the individual components must be perfect. The calculation of line item perfect order line fulfillment is based on the Level 2 components: • Each component receives a score of 1 if it is judged to be perfect. • It receives a score of 0 if not perfect. If the sum of the scores equal the number of components (in this case, 4) the order line is perfectly fulfilled.

Data Collection Data for the components that are used to drive the calculation of supply chain performance are primarily taken from Deliver and impact Deliver Enable process elements. These are primarily associated with the original commitment (Customer Order Processing – D1.2, D 2.2, D3.3) and the satisfaction of that commitment (Receipt and Installation (as appropriate) – D1.11, D1.13, D1.14, D1.15, D2.11, D2.13, D2.14, D2.15, D3.11, D3.13, D3.14, D3.15). In addition, the documents necessary for support of the supply chain process should be scored across the set of Deliver process elements. The Enable Deliver Process Element - Assess Delivery Performance (ED.2) should be updated from metrics derived.

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Discussion The performance of the supply chain is considered “perfect” if the original commitment made to a customer is met through the supply chain. An order is defined as a collection of one or more order lines representing a request to deliver specified quantities of goods or to render specific services. The order can further be defined as a request (with a specific identifier as a reference) to deliver specified items or to render specific services with specific prices, dates, and quantities. Commitments are made to a customer at the order line level, where an order line is defined as a line representing a commitment on a sales order. An order line always references a product or service. For an order to be considered perfect the following standards must be met: • Delivered complete; all items on the order line are delivered in the quantities specified • Delivered on time to the initial commitment date, using the customer’s definition of on-time delivery • Documentation supporting the order including packing slips, bills of lading, invoices, quality certifications, etc., is complete and accurate • Faultlessly installed (as applicable), correct configuration, customer-ready and accepted, no damage, on specification Orders canceled by the customer are excluded from the metric. Order changes initiated by the customer and agreed to by the supplier supersede initial commitments and form a new comparative basis for the metric. Often for date and quantity issues (and occasionally product), a range rather than a strict value is used. This is acknowledged as a standard practice; in those situations the standard measured is considered to be met perfectly if the range specified is satisfied. The term “customer-ready” for the perfect condition standard may imply a subjective component based on the customer’s satisfaction. Although condition may not be as rigorously measured as time or quantity it should be considered as a component if available, especially since this attribute measures performance of the supply chain which is, of course, ultimately measured by its customers. It should also be noted that a corresponding evaluation of suppliers’ performances could be determined by extending these standards to each supplier’s ability to source products.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: % of Orders In Full Metric Definition Percentage of orders which all of the items are received by customer in the quantities committed

Hierarchical Metric Structure Level 1

Perfect Order Fulfillment

Level 2

Level 3

% of Orders Delivered in Full

Delivery Item Accuracy

Delivery Quantity Accuracy

Qualitative Relationship Description An order is considered delivered “in full” if: • All items ordered are the items actually provided, and no extra items are provided • All quantities received by the customer match the order quantities (within mutually agreed tolerances)

Quantitative Relationship (optional, if calculable) Calculation [Total number of orders delivered in full] / [Total number of orders delivered] x 100%

Data Collection Data for the components that are used to drive the calculation of % In Full are primarily associated with the original order processing step of ‘Reserve inventory and Determine Delivery Date’ (D1.3, D2.3 & D3.3), inventory availability (M1.1, M2.1, M3.1) including inventory location accuracy, (ED.4), and the satisfaction of that commitment through the shipment and customer receiving processes (D 1.12, D1.13, D2.12, D.2.13, D3.12, D3.13)

Discussion Order quantities are based on item / quantity original commitments agreed to by the customer. Orders canceled by the customer are excluded from the metric. Order changes initiated by the customer and agreed to by the supplier supersede original commitments and form a new comparative basis for the metric. This metric has no “timing” element, such that orders deliberately split by the supplier should still be considered “in full” so long as all metric criteria are met. In some cases, such as for supplying bulk materials, committed quantities refer to a range that is acceptable to the customer rather than a strict value. Several SCOR diagnostic metrics exist that can be used to focus “% In Full” improvement efforts. Some of these include: • % Orders Scheduled to Requested Quantity • Schedule Achievement • Yield variability • Planned Shipment Fill Rate (not yet defined) • % Stock Outs (not yet defined) • Inventory Cycle Count Accuracy (not yet defined) Orders may not be filled completely to the customer’s original request quantity due to the inability to © Copyright 2006 Supply-Chain Council, Inc.

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schedule to the initial request. Breakdown may also occur from the inventory availability (including stock outs for MTS and schedule achievement for MTO and ETO) and inventory location accuracy. Lastly, a deviation from the shipment plan may lead to inability to fulfill an order completely.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Delivery Performance to Customer Commit Date Metric Definition The percentage of orders that are fulfilled on the customer’s originally scheduled or committed date

Hierarchical Metric Structure Level 1

Perfect Order Fulfillment

Level 2

Delivery Performance to Customer Commit Date

Level 3

Customer Commit Date Achievement Time Customer Receiving

Delivery Location Accuracy

Qualitative Relationship Description An order is considered delivered to the original Customer commitment date if: • The order is received on time as defined by the customer • The delivery is made to the correct location and Customer entity

Quantitative Relationship (optional, if calculable) Calculation [Total number of orders delivered on the original commitment date] / [Total number of orders delivered] x 100%

Data Collection Data for the components that are used to drive the calculation of Delivery Performance to Customer Commit Date are primarily associated with the original order processing step of ‘Reserve inventory and Determine Delivery date’ (D1.3, D2.3 & D3.3), and the satisfaction of that commitment through the shipment and customer receiving processes (D 1.12, D1.13, D2.12, D2.13, D3.12, D3.13).

Discussion Order delivery performance from a timing perspective is based on original commitments agreed to by the customer. The acceptable window for delivering on time should be defined in the customer’ service level agreement. Orders canceled by the customer are excluded from the metric. Order changes impacting the timing of a delivery that are initiated by the customer and agreed to by the supplier supersede original commitments and form a new comparative basis for the metric. The original commitment date can refer to a range, rather than a strict date and time, that is acceptable to the customer (e.g. advanced shipments). This metric has no “In Full” element, such that partial deliveries can still be considered as meeting the Customer Commit Date so long as all metric criteria are met. Measuring the frequency of accepting the customer’s original request date, vs. commit date, can be an important measure of customer satisfaction. Several SCOR diagnostic metrics exist that can be used to focus delivery performance improvement efforts. Some of these include: • % Orders Scheduled to Request • % Orders Shipped on time (not yet defined) • Carrier Performance Reliability (not yet defined) Orders may not be delivered to the Customer Commit Date due to breakdowns in the order fulfillment and shipment process (e.g. Transportation availability). Orders may also be delivered late due to carrier delivery performance / issues.

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Perfect Condition Metric Definition Percentage of orders delivered in an undamaged state that meet specification, have the correct configuration, are faultlessly installed (as applicable), and accepted by the customer

Hierarchical Metric Structure Level 1

Perfect Order Fulfillment

Level 2

Perfect Condition

Warranty & Returns

Orders Delivered Damage Free Conformance

Level 3 Orders Delivered Defect Free Conformance

% Orders Received Damage Free

% Faultless Installations

Qualitative Relationship Description An order is considered to be delivered in perfect condition if all items meet the following criteria: • Undamaged • Meet specification and has correct configuration (as applicable) • Faultlessly installed (as applicable) and accepted by the customer • Not returned for repair or replacement (within the warranty period)

Quantitative Relationship (optional, if calculable) Calculation [ Number of orders delivered in Perfect Condition ] / [Number of orders delivered ] x 100%

Data Collection Data for the components that are used to drive the calculation of “Perfect Condition” are primarily associated with the receipt, installation (as applicable) and satisfaction of the order commitment (D1.13, D1.14, D2.13, D2.14, D3.13, D3.14). The Enable Deliver Process Element - Assess Delivery Performance (ED.2) should be updated to reflect this metric and its components. This data is typically available from a complaints, claims, or warranty/returns database.

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Discussion This metric, calculated at the order level, assesses the quality of products delivered through the supply chain from the customer’s perspective. Justified and non-justified product quality issues, claims and returns within the warranty period are included and count against this metric. Improving this metric lowers the supply chain cost associated with claims and returns. Several SCOR diagnostic metrics exist that can be used to focus Perfect Condition improvement efforts. Some of these include: • Cost of Noncompliance • Damage and Shrinkage • Scrap Expense • Warranty Costs • Yield Variability

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Performance Attribute: Supply Chain Reliability Level 2 Metric: Documentation Accuracy Metric Definition Percentage of orders with accurate documentation supporting the order, including packing slips, bills of lading, invoices, etc.

Hierarchical Metric Structure Level 1

Perfect Order Fulfillment

Level 2

Documentation Accuracy

Shipping Documentation Accuracy

Payment Documentation Accuracy

Level 3 Compliance Documentation Accuracy

Other Required Documentation Accuracy

Qualitative Relationship Description An order is considered to have accurate documentation when the following are accepted by the customer: • Shipping documentation • Payment documentation • Compliance documentation • Other required documentation All documentation must be complete, correct, and readily available when and how expected by the customer, Government and other supply chain regulatory entities.

Quantitative Relationship (optional, if calculable) Calculation [Total number of orders delivered with accurate documentation] / [Total number of orders delivered] x 100% Document supporting the order includes: • Shipping documentation: o Packing slips (Customers) o Bill of lading (Carriers) o Government or Customs documentation / forms • Payment Documentation: o Invoice o Contractual outline agreement • Compliance documentation o Material Safety Data Sheets • Other required documentation o Quality certification

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Data Collection Data for the components that are used to drive the calculation of Accurate Documentation are primarily associated with the Deliver processing step of ‘Load Product & Generate Shipping Documentation’ (D1.11, D2.11, D3.11), and ‘Invoice’ (D1.15, D2.15, D3.15). The data collection step is part of Assess Delivery Performance (ED2) and Manage Deliver Information (ED3)

Discussion This metric is calculated at the order level. The timeliness and quality of the documentation is measured from the perspective of the customer, Government, and other regulatory entities. Documentation may be late or incomplete due to the inability to prepare / process the correct documentation on time. Inaccurate or late shipping documentation may prevent the product to be loaded or shipped, increase the customs delay, and delay the customer’s acceptance of the order. Inaccurate or late invoices may also lead to the inability to fulfill the customer request. The definition encompasses On time and Accurate documentation. However, on-time documentation implies a scheduled ship date and scheduled invoice date. Accurate documentation metrics are similar to what exists for SOURCE process metrics Possible diagnostic metrics that can be used to focus Accurate Documentation improvement efforts include: • % orders documentation (shipping and invoice) processed on time • % faultless invoices

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Performance Attribute: Supply Chain Responsiveness Level 1 Metric: Order Fulfillment Cycle Time Metric Definition The average actual cycle time consistently achieved to fulfill customer orders. For each individual order, this cycle time starts from the order receipt and ends with customer acceptance of the order.

Hierarchical Metric Structure Level 1

Level 2

Order Fulfillment Cycle Time

Source Cycle Time

Make Cycle Time

Deliver Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Order Fulfillment Cycle Time ≈ Source Cycle Time + Make Cycle Time + Deliver Cycle Time

Calculation [Sum Actual Cycle Times For All Orders Delivered] / [Total Number Of Orders Delivered]

Data Collection Data for the components that are used to drive the calculation of responsiveness are taken from the Source, Make and Deliver process elements.

Discussion The order fulfillment cycle time as captured from the moment a customer places the order to the moment the order is fulfilled is considered to be a ‘gross’ cycle time. It represents all the time passed between these two events, regardless of whether this represented cycle time for the activities performed by the organisation to fulfill the order (both value-add and non-value-add) or dwell time because the order was placed well in advance by the customer. As such, this gross order fulfillment cycle time does not truly reflect the responsiveness of the organisation. Take for example an organisation that needs six days to fulfill a certain customer order. If the customer places the order one day in advance, the gross order fulfillment cycle time will be seven days. If the customer places the order 3 months ahead (pre-ordering), the gross fulfillment cycle time will be 96 days. However, the fact that the customer pre-orders does not reduce the responsiveness of the organisation. On the contrary, one can argue that it may increase the ability of the organisation to meet that order as it allows the organisation to plan ahead and fulfill the order in a more optimal way. The responsiveness of the organisation is determined by the cumulative cycle time for all activities that are required to fulfill the order, but should exclude any dwell time where no activity takes place. Therefore the definition of Order Fulfillment Cycle Time consists of a ‘gross’ component and a ‘net’ component named Order Fulfillment Process Time, according to the following formula: Order Fulfillment Cycle Time = Order Fulfillment Process Time + Order Fulfillment Dwell Time. Note that dwell time will equal 0 for companies who do not utilize this metric, so Order Fulfillment Cycle Time will equal Order Fulfillment Process Time. Order fulfillment dwell time is defined as ‘any lead time during the order fulfillment process where no activity takes place, which is imposed by customer requirements’. Note that this dwell time is different from ‘idle time’ or ‘non-value-add lead time’, which is caused by inefficiencies in the organization’s processes and therefore ultimately under responsibility of the organisation. This kind of idle time should not be deducted © Copyright 2006 Supply-Chain Council, Inc.

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from the gross order fulfillment cycle time. Dwell time is mostly associated with the ordering process, where a customer may place an order in advance to reserve capacity/materials etc, but where the actual steps in the order fulfillment process take place later on. It is also common in the delivery process where the organisation may be in principle ready to ship the product/service, but is requested by the customer to wait (for example to follow a certain shipment schedule). Note that for those organisations where dwell time does not play a role, the dwell time can be taken as zero days which results in the net order fulfillment cycle time to be equal to the gross order fulfillment cycle time For benchmarking purposes it is recommended to use the Order Fulfillment Process Time, as this is the cycle time reflecting most accurately the responsiveness of the organisation. It will also ensure that those organisations in industries where dwell time is a factor can be benchmarked against organisations in industries where dwell time does not play a role. The concept of dwell time applies not only to the level 1 metric, but also to all lower level metrics. This means that each lower level metric can have a gross component, consisting of the net component and dwell time. Because the lower level metrics are hierarchical (the cumulative sum of cycle times at level 2 or 3 should be equal to the cycle time at level 1), the cumulative sum of dwell times at level 2 or 3 should total up to the dwell time at level 1.

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Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Source Cycle Time Process Numbers: S1, S2, S3 Metric Definition The average time associated with Source Processes.

Hierarchical Metric Structure Level 1

Order Fulfillment Cycle Time

Level 2

Source Cycle Time

Identify Sources of Supply Cycle Time

Authorize Supplier Payment Cycle Time

Select Supplier and Negotiate Cycle Time

Level 3

Schedule Product Deliveries Cycle Time

Transfer Product Cycle Time

Verify Product Cycle Time

Receive Product Cycle Time

* The dashed line boxes represent optional metrics associated with the Level 3 processes. (The same hereinafter)

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Source Cycle Time ≈ (Identify Sources of Supply Cycle Time + Select Supplier and Negotiate Cycle Time) + Schedule Product Deliveries Cycle Time + Receive Product Cycle Time + Verify Product Cycle Time + Transfer Product Cycle Time + Authorize Supplier Payment Cycle Time

Calculation

Data Collection Discussion Metrics in Level 3 that are used to drive the calculation of ‘Source Cycle time’ are taken from the Source process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the dashed optional metrics ‘Identify Sources of Supply Cycle Time’ and ‘Select Supplier and Negotiate Cycle Time’ are not used in the calculation.

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Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Make Cycle Time Process Numbers: M1, M2, M3 Metric Definition The average time associated with Make Processes.

Hierarchical Metric Structure Level 1

Order Fulfillment Cycle Time

Level 2

Make Cycle Time

Schedule Production Activities Cycle Time

Issue Material/Product Cycle Time

Release Finished Product To Deliver Cycle Time

Stage Finished Product Cycle Time

Level 3 Produce and Test Cycle Time

Package Cycle Time

Finalize Production Engineering Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Make Cycle Time ≈ (Finalize Production Engineering Cycle Time) + Schedule Production Activities Cycle Time + Issue Material/Product Cycle Time + Produce and Test Cycle Time + Package Cycle Time + Stage Finished Product Cycle Time + Release Finished Product To Deliver Cycle Time

Calculation Data Collection Discussion Metrics in Level 3 that are used to drive the calculation of ‘Make Cycle time’ are taken from the Make process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the dashed optional metric ‘Finalize Production Engineering Cycle Time’ is not used in the calculation. And also, the data for the calculation of Level 3 metrics may also depends on different make strategies, e.g., when make-to-stock strategy is deployed, the metric ‘Issue Material/Product Cycle Time’ means the time for issuing material; while when make-to-order or engineer-to-order is deployed, it will be a measure for calculating the cycle time for issuing sourced or in-process product. In Make Cycle Time, there may be overlaps in the processes, so the “least amount of time” should be applied rather than the total sum.

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Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Delivery Cycle Time Process Numbers: D1, D2, D3 Metric Definition The average time associated with Deliver Processes.

Hierarchical Metric Structure Level 1

Order Fulfillment Cycle Time

Level 2

Delivery Cycle Time

Receive, Configure, Enter and Validate Order Cycle Time

Reserve Resources & Determine Delivery Date Cycle Time

Level 3

Schedule Installation Cycle Time

Consolidate Orders Cycle Time

Pick Product Cycle Time

Build Loads Cycle Time

Pack Product Cycle Time

Load Vehicle & Generate Shipping Documentation Cycle Time

Route Shipments Cycle Time

Select Carriers and Rate Shipments Cycle Time

Receive Product from Make/Source Cycle Time

Ship Product Cycle Time

Receive & Verify Product Cycle Time

Install Product Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Delivery Cycle Time ≈ MAX {[Receive, Configure, Enter and Validate Order Cycle Time + Reserve Resources & Determine Delivery Date Cycle Time + (Consolidate Orders Cycle Time + Schedule Installation Cycle Time) + Build Loads Cycle Time + Route Shipments Cycle Time + Select Carriers and Rate Shipments Cycle Time], Receive Product from Make/Source Cycle Time} + Pick Product Cycle Time + Pack Product Cycle Time + Load Vehicle & Generate Shipping Documentation Cycle Time + Ship Product Cycle Time + (Receive & Verify Product Cycle Time) + (Install Product Cycle Time) *The MAX function above is to indicate that Dx.3-Dx.7 may be in parallel with Dx.8and whichever takes longer should determine the cycle time.

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Calculation Data Collection Discussion Metrics in Level 3 that are used to drive the calculation of ‘Deliver Cycle time’ are taken from the Deliver process elements, depending on the possible strategies deployed by companies to fulfill orders such as make-to-stock, make-to-order or engineer-to-order. When make-to-stock or make-to-order strategy is deployed, the optional metric ‘Schedule Installation Cycle Time’ is not used in the calculation, otherwise the metric ‘Consolidate Orders Cycle Time’ will not be used. And also, the data for the calculation of Level 3 metrics may also depends on different make strategies, e.g., when make-to-stock strategy is deployed, the metric ‘Receive, Configure, Enter and Validate Order Cycle Time’ may not include the Configure process.

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Performance Attribute: Supply Chain Responsiveness Level 2 Metric: Delivery Retail Cycle Time Process Numbers: D4 Metric Definition The average cycle time of the processes used to acquire, merchandise, and sell finished goods at a retail store.

Hierarchical Metric Structure Level 1

Delivery Retail Cycle Time

Level 2

Generate Stocking Schedule Cycle Time

Fill Shopping Cart Cycle Time

Receive Product Cycle Time

Checkout Cycle Time

Pick Product Cycle Time

Install Cycle Time

Level 3

Stock Shelf Cycle Time

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Delivery Retail Cycle Time ≈ Generate Stocking Schedule Cycle Time + Receive Product Cycle Time + Pick Product Cycle Time + Stock Shelf Cycle Time + Fill Shopping Cart Cycle Time + Checkout Cycle Time + Install Cycle Time

Calculation Data Collection Discussion

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Performance Attribute: Supply Chain Flexibility Level 1 Metric: Upside Supply Chain Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in quantities delivered. Note - 20% is a number provided for benchmarking purposes. For some industries and some organizations 20% may be in some cases unobtainable or in others too conservative. Note - component metrics (Upside Source Flexibility, Upside Make Flexibility, etc) can be improved in parallel and as a result, this calculation requires the result to be the least amount of time to achieve the desired result).

Hierarchical Metric Structure Level 1

Level 2

Upside Supply Chain Flexibility

Upside Source Flexibility

Upside Make Flexibility

Upside Deliver Flexibility

Upside Source Return Flexibility

Upside Deliver Return Flexibility

Qualitative Relationship Description Calculation: Total elapsed days between the occurrence of the unplanned event and the achievement of sustained plan, source, make, deliver and return performance. Note: Elapsed days are not necessarily the sum of days required for all activities as some may occur simultaneously. Upside Source Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in quantity of raw materials. Upside Make Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. Upside Deliver Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints. Upside Source Return Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in the return of raw materials to suppliers. Upside Deliver Return Flexibility: The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers.

Quantitative Relationship (optional, if calculable) Calculation The calculation of supply chain flexibility requires the calculation to be the least time required to achieve the unplanned sustainable increase when considering Source, Make, and Deliver components. For example, if it requires 90 days achieve a 20% increase in raw material volume, 60 days for adding capital to support production, and no time to increase the ability to deliver, upside supply chain flexibility would be 90 days (if production changes can run concurrently with material acquisition activities) or as much as 150 days if production changes and material acquisition changes must run sequentially.

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Data Collection Data for the components that are used to drive the calculation of supply chain flexibility are taken from the actual planning activities incurred in devising the actions to be taken and the execution activities themselves. Neither the complete set of activities nor any given subset of those activities can be identified except in either contingency plans (in which case they are hypothetical), special analytical simulations conducted for the purpose of predicting total elapsed time, or after the fact (when they have actually occurred and are unlikely to reoccur in the same combination). Flexibility measures are assumption based or based on historic events. Some elements can be measured and taken as a basis for further considerations, e.g.

Discussion Certainly enterprises deal with change all the time. In most cases, these changes are minor deviations from the “norm” or fleeting “blips” in the marketplace. Also, certainly, most supply chains move through these changes almost effortlessly and, in this regard, demonstrate equivalent flexibility. In many extreme cases, however, it is possible that a particular supply chain has reached a condition of relative rigidity (say, at capacity or rigid, constraining agreements with partners) and a seemingly minor increase in production requirement can consume much time and effort as the supply chain struggles to restore its capability to perform. It is evidenced that enterprises engaged in appropriate business risk and competitive contingency planning activities will usually be in a better position to optimize overall supply chain performance and these activities are presented as best practices later in this document. When change is known in advance (such as Wal-Mart requiring RFID devices on all delivered cases, or a major sourcing change is planned to occur), and is incorporated in the enterprise’s operating plan, then the time incurred to undertake the adaptation isn’t necessarily a reflection of the supply chain’s flexibility. While flexibility is still addressed, it is frequently clouded by other considerations in the operating plan. Unplanned change is the primary consideration in measuring the supply chain’s flexibility.

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Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Source Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in quantity of raw materials. Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate. Possible constraint factors are included in this section.

Hierarchical Metric Structure Level 1

Upside Supply Chain Flexibility

Upside Source Flexibility

Level 2

Current source volumes

Additional source volumes

Productivity-purchase orders per FTE

Procurement staff availability

Current capital requirements

Time needed to recruit/hire/train additional staff

Current on-hand inventories (Raw, Purchased FG)

Constraint Factors

Capital availability

Current sourcing/supplier constraints

Current purchase order cycle times

Time needed to obtain additional capital

Additional demand sourcing - supplier constraints.

Time needed to increase inventory for additional order fulfillment (Raw, Purchased FG)

Time to reach and sustain current purchase order cycle time

Qualitative Relationship Description Least time to pursue all necessary activities.

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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Discussion Source: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question “How long will it take for the company to sustain a 20% increase in quantities sourced?”. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Ö Amount of each item purchased Staffing o Staff needed to meet current demand Ö Productivity-purchase orders per FTE Ö Needed, but may be underutilized Capital o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Ö Current contract terms. Ö Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Ö Time to place a purchase order Ö Supplier lead time Source: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question “How long will it take for the company to sustain a 20% increase in quantities sourced?” Demand: o Additional source volume Staffing o Staff availability in procurement (underutilized FTE’s) o Amount of time needed to recruit/hire/train additional staff to fill gap between underutilized FTE’s and staff needed to sustain 20% increase in quantities delivered Capital o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures o Amount of time needed to obtain capital to fill gap between current capital availability and capital needed to sustain 20% increase in quantities ordered Materials o Sourcing Constraints Ö Time required in negotiating new source/volume contracts/terms Ö Time required to find/obtain additional sources o All else equal in make, deliver, return, amount of time needed to obtain, deliver and phase in inventory (raw material and purchased finished goods) for order fulfillment, including safety stock to sustain 20% increase in quantities sourced. Cycle Time o Amount of time needed to reach and sustain current procurement cycle time Ö Time to place a purchase order Ö Supplier lead time

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Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Make Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in production with the assumption of no raw material constraints. Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure Level 1

Upside Supply Chain Flexibility

Level 2

Upside Make Flexibility

Current make volume

Additional make volume

Productivity-units/orders produced per FTE

Direct labor availability

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Time needed to recruit/hire/train additional labor

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Time needed to obtain additional capital Current inventory on hand (WIP, FG) Time needed to obtain additional equipment Current manufacturing order cycle time Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced or leased resources or facilities

Time needed to increase inventory (WIP, FG) for additional order fulfillment

Time to reach and sustain current manufacturing order cycle time

Qualitative Relationship Description Least time to pursue all necessary activities.

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Quantitative Relationship (optional, if calculable)

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Calculation Data Collection Discussion Make: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question “How long will it take for the company to sustain a 20% increase in quantities produced?”. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Ö Amount of each item manufactured Labor o Labor needed to meet current demand Ö Productivity-units/orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question “How long will it take for the company to sustain a 20% increase in quantities produced?” Demand: o Additional make volume Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTE’s) o Amount of time needed to recruit/hire/train additional labor to fill gap between underutilized FTE’s and labor needed to sustain 20% increase in quantities manufactured Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered © Copyright 2006 Supply-Chain Council, Inc.

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Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö Facilities, lease building, etc. Ö Lease manufacturing equipment, materials handling and packaging equipment, etc. Ö Co-packers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities made Materials o All else equal in source, deliver and return, amount of time needed to receive and phase in raw material inventory for manufacturing and make WIP and FG inventory, including safety stock to sustain 20% increase in quantities manufactured) Cycle Time o Amount of time needed to reach and sustain current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time)

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Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Deliver Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in quantity delivered with the assumption of no other constraints. Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure Level 1

Upside Supply Chain Flexibility

Upside Deliver Flexibility

Level 2

Current delivery volume

Additional delivery volume

Direct labor availability

Productivity-orders shipped per FTE

Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Time needed to recruit/hire/train additional labor

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Constraint Factors

Current internal storage capacity utilization

Capital availability Current capital requirements Time needed to obtain additional capital Current inventory on hand (FG) Time needed to obtain additional equipment Current logistics order cycle time Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities Time needed to increase inventory (FG) for additional order fulfillment

Time to reach and sustain current logistics order cycle time

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Qualitative Relationship Description Least time to pursue all necessary activities.

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion Deliver: Input Current elements needed to fully understand future requirements, to establish 20% gap, based on the question “How long will it take for the company to sustain a 20% increase in quantities delivered?”. These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Ö Number of orders shipped Labor o Labor needed to meet current demand Ö Productivity-orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time Deliver: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question “How long will it take for the company to sustain a 20% increase in quantities delivered?” Demand: o Additional delivery volume Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTE’s) o Amount of time needed to recruit/hire/train additional labor to fill gap between underutilized FTE’s and labor needed to sustain 20% increase in quantities delivered Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability © Copyright 2006 Supply-Chain Council, Inc.

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Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities delivered Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities delivered Materials o All else equal in source, make, return, amount of time needed to increase finished inventory for order fulfillment (time to receive/stock inventory, including safety stock to sustain 20% increase in quantities delivered) Cycle Time o Amount of time needed to reach and sustain current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time

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Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Source Return Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in the return of raw materials to suppliers. Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure Upside Supply Chain Flexibility

Level 1

Upside Source Return Flexibility

Level 2

Additional source return volume

Current source return volume

Productivity-orders returned per FTE

Procurement staff/Logistics labor availability

Time needed to recruit/hire/train additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Current internal storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Time needed to obtain additional capital Current supplier return order cycle time Time needed to obtain additional equipment

Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities

Time to reach and sustain current supplier return order cycle time

Qualitative Relationship Description Least time to pursue all necessary activities.

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Quantitative Relationship (optional, if calculable)

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Calculation Data Collection Discussion Source Return: Input Assuming no supplier constraints, current elements needed to fully understand future requirements, to establish 20% gap, based on the question “How long will it take for the company to sustain a 20% increase in quantities returned to suppliers?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Ö Number of orders returned Staff / Labor o Procurement Staff / Logistics Labor needed to meet current returned volume Ö Productivity-orders returned per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current supplier return order cycle time Ö Supplier return order processing cycle time (procurement and logistics) Ö Pick-to-ship cycle time Ö Transit time Source Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no supplier constraints, elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question “How long will it take for the company to sustain a 20% increase in quantities returned to suppliers?” Demand: o Additional supplier return volume Staff / Labor o Procurement staff / Logistics labor availability (underutilized FTE’s) o Amount of time needed to recruit/hire/train additional staff / labor to fill gap between underutilized FTE’s and staff / labor needed to sustain 20% increase in quantities returned to suppliers Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned to suppliers o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned to suppliers Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital © Copyright 2006 Supply-Chain Council, Inc.

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Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities returned to suppliers Cycle Time o Amount of time needed to reach and sustain current supplier return order cycle time Ö Supplier return order processing cycle time (procurement and logistics) Ö Pick-to-ship cycle time Ö Transit time

o

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Performance Attribute: Upside Supply Chain Flexibility Level 2 Metric: Upside Deliver Return Flexibility Metric Definition The number of days required to achieve an unplanned sustainable 20% increase in the return of finished goods from customers. Note: This is a planning activity normally considering constraints to increase delivery that results in an estimate.

Hierarchical Metric Structure Upside Supply Chain Flexibility

Level 1

Upside Deliver Return Flexibility

Level 2

Additional deliver return volume

Current deliver return volume

Productivity-orders returned per FTE

Customer Service staff/Logistics labor availability

Time needed to recruit/hire/train additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Constraint Factors

Current internal storage capacity utilization

Capital availability Current capital requirements Time needed to obtain additional capital Current customer return order cycle time Time needed to obtain additional equipment

Time needed to obtain additional internal space

Supplemental outsource/lease availability

Time needed to obtain supplemental outsourced (3PL) or leased resources or facilities

Time to reach and sustain current customer return order cycle time

Qualitative Relationship Description Least time to pursue all necessary activities.

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Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion Deliver Return: Input Assuming no customer constraints, current elements needed to fully understand future requirements, to establish 20% gap, based on the question “How long will it take for the company to sustain a 20% increase in quantities returned from customers?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Ö Number of orders returned Staff / Labor o Customer Service Staff / Logistics Labor needed to meet current returned volume Ö Productivity-orders returned per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current customer return order cycle time Ö Customer return order processing cycle time (customer service and logistics) Ö Transit time Ö Return processing and disposition cycle time Deliver Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no customer constraints, elements needed to establish 20% delta in resources and what is required to meet the 20% delta based on the question “How long will it take for the company to sustain a 20% increase in quantities returned to suppliers?” Demand: o Additional customer return volume Staff / Labor o Customer Service staff / Logistics labor availability (underutilized FTE’s) o Amount of time needed to recruit/hire/train additional staff / labor to fill gap between underutilized FTE’s and staff / labor needed to sustain 20% increase in quantities returned from customers Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o Amount of time needed to obtain capital to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned from customers o Amount of time needed to obtain assets/capacity to fill gap between underutilized asset capacity and assets needed to sustain 20% increase in quantities returned from customers Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. © Copyright 2006 Supply-Chain Council, Inc.

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Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o Amount of time needed to obtain supplemental outsourced or leased resources or facilities to sustain 20% increase in quantities returned from customers Cycle Time o Amount of time needed to reach and sustain current customer return order cycle time Ö Customer return order processing cycle time (customer service and logistics) Ö Transit time Ö Return processing and disposition cycle time

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Performance Attribute: Supply Chain Flexibility Level 1 Metric: Upside Supply Chain Adaptability Metric Definition The maximum sustainable percentage increase in quantity delivered that can be achieved in 30 days. Note: 30 days is an arbitrary number provided for benchmarking purposes. For some industries and some organizations 30 days may be in some cases unobtainable or in others too conservative. Note: Component metrics (Upside Source Adaptability, Upside Make Adaptability, etc) can be improved in parallel and as a result, this calculation requires the result to be the least increase in quantity sustainable in 30 days

Hierarchical Metric Structure Level 1

Level 2

Upside Supply Chain Adaptability

Upside Source Adaptability

Upside Make Adaptability

Upside Deliver Adaptability

Upside Source Return Adaptability

Upside Deliver Return Adaptability

Qualitative Relationship Description Note: The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. Upside Source Adaptability: The maximum sustainable percentage increase in raw material quantities that can be acquired/received in 30 days. Upside Make Adaptability: The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints. Upside Deliver Adaptability: The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability. Upside Source Return Adaptability: The maximum sustainable percentage increase in returns of raw materials to suppliers that can be achieved in 30 days with the assumption of unconstrained finished goods availability. Upside Deliver Return Adaptability: The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days.

Quantitative Relationship (optional, if calculable) Upside Source Adaptability + Upside Make Adaptability + Upside Deliver Adaptability

Calculation Data Collection Adaptability measures are assumption based or based on historic events. Some elements can be measured and taken as a basis for further considerations. Adaptability measures are based on the actual number of returns compared to the maximum number of returns which can be achieved within 30 days. The weakest component determines the overall volume.

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Discussion The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. “ P&L Impact Ö Revenue Ö COGS Ö SGA “ Balance Sheet Impact Ö Inventory

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Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Source Adaptability Metric Definition The maximum sustainable percentage increase in raw material quantities that can be acquired/received in 30 days.

Hierarchical Metric Structure Level 1

Upside Supply Chain Adaptability

Upside Source Adaptability

Level 2

Additional source volumes obtained in 30 days Current source volumes Procurement staff availability Productivity-purchase orders per FTE Amount additional staff recruited/hired/trained in 30 days Current capital requirements

Constraint Factors

Capital availability Current on-hand inventories (Raw, Purchased FG) Additional demand sourcing - supplier constraints. Current sourcing/supplier constraints Amount additional capital obtained in 30 days Current purchase order cycle times Amount of inventory (Raw, Purchased FG) obtained in 30 days

Purchase order cycle time reestablished and sustain in 30 days

Qualitative Relationship Description Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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Discussion Source: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of an increase in quantities sourced (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Ö Amount of each item purchased Staffing o Staff needed to meet current demand Ö Productivity-purchase orders per FTE Ö Needed, but may be underutilized Capital o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Ö Current contract terms. Ö Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Ö Time to place a purchase order Ö Supplier lead time Source: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question “How much of an increase in quantities sourced (expressed as a percentage) can the company sustain, given 30 days” Demand: o Additional source volume to be determined given ramped up resources below Staffing o Staff availability in procurement (underutilized FTE’s) o How much staff can be recruited/hired and trained fill gap between underutilized FTE’s and FTE’s needed to increase and sustain quantities sourced given 30 days Capital o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures o How much capital can be obtained to increase quantities sourced given 30 days Materials o Sourcing Constraints Ö Time required in negotiating new source/volume contracts/terms Ö Time required to find/obtain additional sources o All else equal in make, deliver, return, how much inventory (raw material and purchased finished goods) can be obtained, delivered and phased in and sustained for order fulfillment, including safety stock given 30 days. Cycle Time o Procurement order cycle time reestablished and sustained for increased quantities sourced given 30 days. Ö Time to place a purchase order Ö Supplier lead time

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Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Make Adaptability Metric Definition The maximum sustainable percentage increase in production that can be achieved in 30 days with the assumption of no raw material constraints.

Hierarchical Metric Structure Level 1

Upside Supply Chain Adaptability

Level 2

Upside Make Adaptability

Current make volume

Additional make volume

Direct labor availability

Productivity-units/orders produced per FTE

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Amount additional labor recruited/hired/trained in 30 days

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Amount additional capital obtained in 30 days Current inventory on hand (WIP, FG) Amount additional equipment obtained in 30 days Current manufacturing order cycle time Amount additional internal space obtained in 30 days

Supplemental outsource/lease availability

Amount supplemental outsourced or leased resources or facilities obtained in 30 days

Amount additional inventory (raw) received and made (WIP, FG) in 30 days

Manufacturing cycle time reestablished and sustained in 30 days

Qualitative Relationship Description Least quantity sustainable when considering all components

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Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion Make: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of an increase in quantities produced (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Ö Amount of each item manufactured Labor o Labor needed to meet current demand Ö Productivity-units/orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question “How much of an increase in quantities produced (expressed as a percentage) can the company sustain, given 30 days” Demand: o Additional make volume to be determined given increased resources below Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTE’s) o How much labor can be recruited/hired and trained fill gap between underutilized FTE’s and FTE’s needed to increase and sustain quantities produced given 30 days Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities produced given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets © Copyright 2006 Supply-Chain Council, Inc.

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needed to increase and sustain quantities produced given 30 days Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö Facilities, lease building, etc. Ö Lease manufacturing equipment, materials handling and packaging equipment, etc. Ö Co-packers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities produced given 30 days Materials o All else equal in source, deliver and return, how much raw material inventory can be received and phased into manufacturing and produced into WIP and FG inventory, and sustained for order fulfillment, including safety stock given 30 days. Cycle Time o Manufacturing cycle time reestablished and sustained for increased quantities produced given 30 days.

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Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Deliver Adaptability Metric Definition The maximum sustainable percentage increase in quantities delivered that can be achieved in 30 days with the assumption of unconstrained finished good availability.

Hierarchical Metric Structure Level 1

Upside Supply Chain Adaptability

Level 2

Upside Deliver Adaptability

Current delivery volume

Additional delivery volume

Direct labor availability Productivity-orders shipped per FTE Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Amount labor recruited/hired/trained in 30 days

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Current internal storage capacity utilization

Capital availability

Constraint Factors

Current capital requirements Amount additional capital obtained in 30 days Current inventory on hand (FG) Amount of additional equipment obtained in 30 days Current logistics order cycle time Amount of additional internal space obtained in 30 days

Supplemental outsource/lease availability

Amount supplemental outsourced or leased resources or facilities obtained in 30 days

Amount increase in inventory (FG) obtained in 30 days Logistics order cycle time reestablished and sustained in 30 days

Qualitative Relationship Description Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) © Copyright 2006 Supply-Chain Council, Inc.

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Calculation

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Data Collection Discussion Deliver: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of an increase in quantities delivered (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Ö Number of orders shipped Labor o Labor needed to meet current demand Ö Productivity-orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time Deliver: Resource Availability Assessment & Ramp-up/Lead Time Elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question “How much of an increase in quantities delivered (expressed as a percentage) can the company sustain, given 30 days” Demand: o Additional delivery volume to be determined given increased resources below Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTE’s) o How much labor can be recruited/hired and trained fill gap between underutilized FTE’s and FTE’s needed to increase and sustain quantities delivered given 30 days Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) o How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities delivered given 30 days © Copyright 2006 Supply-Chain Council, Inc.

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How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities delivered given 30 days Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities delivered given 30 days Materials o All else equal in source, make, return, amount of how much finished goods inventory can be received/stocked, including safety stock to sustain quantities delivered given 30 days Cycle Time o Logistics cycle time reestablished and sustained for increased quantities delivered given 30 days (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time

o

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Source Return Adaptability Metric Definition The maximum sustainable percentage increase in returns of raw materials to suppliers that can be achieved in 30 days.

Hierarchical Metric Structure Level 1

Upside Supply Chain Adaptability

Upside Source Return Adaptability

Level 2

Additional source return volume

Current source return volume

Productivity-orders returned per FTE

Procurement staff/Logistics labor availability

How much additional staff/labor recruited/hired/trained in 30 days additional staff / labor Internal and External (3PL) equipment capacity needed for current return volume

Internal and External (3PL) storage capacity needed for current return volume

Constraint Factors

Current internal equipment capacity utilization

Current internal storage capacity utilization

Capital availability Current capital requirements How much additional capital obtained in 30 days Current supplier return order cycle time How much additional equipment obtained in 30 days

How much additional internal space obtained in 30 days

Supplemental outsource/lease availability

How much supplemental outsourced (3PL) or leased resources or facilities obtained in 30 days

Supplier return order cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description The component which is the bottleneck determines the least volume for the increase of returns within 30 days. Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion Source Return: Input Assuming no supplier constraints, current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of an increase in quantities returned to suppliers (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Ö Number of orders returned Staff / Labor o Procurement Staff / Logistics Labor needed to meet current returned volume Ö Productivity-orders returned per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current supplier return order cycle time Ö Supplier return order processing cycle time (procurement and logistics) Ö Pick-to-ship cycle time Ö Transit time Source Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no supplier constraints, elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question “How much of an increase in quantities returned to suppliers (expressed as a percentage) can the company sustain, given 30 days” Demand: o Additional supplier return volume to be determined given increased resources below Staff / Labor o Procurement staff / Logistics labor availability (underutilized FTE’s) o How much procurement staff/logistics labor can be recruited/hired and trained fill gap between underutilized FTE’s and FTE’s needed to increase and sustain quantities returned to suppliers given 30 days Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures © Copyright 2006 Supply-Chain Council, Inc.

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Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned to suppliers given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned to suppliers given 30 days Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities returned to suppliers given 30 days Cycle Time o Source return cycle time reestablished and sustained for increased quantities returned to suppliers given 30 days Ö Supplier return order processing cycle time (procurement and logistics) Ö Pick-to-ship cycle time Ö Transit time o

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Upside Deliver Return Adaptability Metric Definition The maximum sustainable percentage increase in returns of finished goods from customers that can be achieved in 30 days.

Hierarchical Metric Structure Level 1

Upside Supply Chain Adaptability

Level 2

Upside Deliver Return Adaptability

Additional deliver return volume

Current deliver return volume

Productivity-orders returned per FTE

Customer Service staff/Logistics labor availability

How much additional staff/labor recruited/hired/trained in 30 days

Internal and External (3PL) equipment capacity needed for current return volume

Current internal equipment capacity utilization

Current internal storage capacity utilization Internal and External (3PL) storage capacity needed for current return volume

Constraint Factors

Capital availability

How much additional capital obtained in 30 days

Current capital requirements

Current customer return order cycle time

How much additional equipment obtained in 30 days

How much additional internal space obtained in 30 days

Supplemental outsource/lease availability

How much supplemental outsourced (3PL) or leased resources or facilities obtained In 30 days

Customer return order cycle time reestablished and sustained in 30 days

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Qualitative Relationship Description The component which is the bottleneck determines the least volume for the increase of returns within 30 days. Least quantity sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection Discussion Deliver Return: Input Assuming no customer constraints, current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of an increase in quantities returned from customers (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current return volume Ö Number of orders returned Staff / Labor o Customer Service Staff / Logistics Labor needed to meet current returned volume Ö Productivity-orders returned per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current return throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Credit line Ö Cash on hand Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) Cycle Time o Current customer return order cycle time Ö Customer return order processing cycle time (customer service and logistics) Ö Transit time Ö Return processing and disposition cycle time Deliver Return: Resource Availability Assessment & Ramp-up/Lead Time Assuming no customer constraints, elements needed to establish delta in resources and what can be ramped up and sustained within 30 days based on the question “How much of an increase in quantities returned from customers (expressed as a percentage) can the company sustain, given 30 days” Demand: o Additional customer return volume to be determined given increased resources below Staff / Labor o Customer Service staff / Logistics labor availability (underutilized FTE’s) o How much customer service staff/logistics labor can be recruited/hired and trained fill gap between underutilized FTE’s and FTE’s needed to increase and sustain quantities returned from customers given 30 days Capital/Assets o Current Internal Capacity utilization Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital availability Ö Credit line Ö Cash on hand Ö Accounting procedures © Copyright 2006 Supply-Chain Council, Inc.

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Ö Finance Procedures (outsource vs. in-source, lease vs. purchase) How much capital can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned from customers given 30 days o How much assets/capacity can be obtained to fill gap between underutilized asset capacity and assets needed to increase and sustain quantities returned from customers given 30 days Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o How much supplemental outsourced or leased resources or facilities can be obtained to increase and sustain quantities returned from customers given 30 days Cycle Time o Deliver return cycle time reestablished and sustained for increased quantities returned to suppliers given 30 days o Customer return order processing cycle time (customer service and logistics) Ö Transit time Ö Return processing and disposition cycle time o

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 1 Metric: Downside Supply Chain Adaptability Metric Definition The reduction in quantities ordered sustainable at 30 days prior to delivery with no inventory or cost penalties. Note: 30 days is an arbitrary number provided for benchmarking purposes. For some industries and some organizations 30 days may be in some cases unobtainable or in others too conservative.

Hierarchical Metric Structure Level 1

Level 2

Downside Supply Adaptability

Downside Source Adaptability

Downside Make Adaptability

Downside Deliver Adaptability

Qualitative Relationship Description The calculation of downside supply chain adaptability requires the calculation to be based on the least reduction sustainable when considering Source, Make, and Deliver components. Downside Source Adaptability: The raw material quantity reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Downside Make Adaptability: The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties. Downside Deliver Adaptability: The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

Quantitative Relationship (optional, if calculable) Downside Source Adaptability + Downside Make Adaptability + Downside Deliver Adaptability

Calculation Data Collection Adaptability measures are assumption based on historic events. Some elements can be measured and taken as a basis for further considerations.

Discussion The calculation of Supply Chain Adaptability requires the calculation to be the least quantity sustainable when considering Source, Make, Deliver and Return components. “ P&L Impact Ö Revenue Ö COGS Ö SGA “ Balance Sheet Impact Ö Inventory

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Source Adaptability Metric Definition The raw material quantity reduction sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure Level 1

Downside Supply Adaptability

Downside Source Adaptability

Level 2

Reduced source volumes accomplished in 30 days

Current source volumes

Procurement staff availability

Productivity-purchase orders per FTE

Amount of staff that can be laid-off in 30 days

Current capital requirements

Constraint Factors

Current on-hand inventories (Raw, Purchased FG)

Capital availability Current Capital requirements (accounting policy)

Current sourcing/supplier constraints

Current purchase order cycle times

Demand sourcing - supplier constraints.

Amount decrease in inventory (Raw, Purchased FG) obtained in 30 days Purchase order cycle time reestablished and sustained in 30 days

Qualitative Relationship Description Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation Data Collection

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June 2006

Discussion Source: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of a reduction in quantities sourced (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current source volumes Ö Amount of each item purchased Staffing o Staff needed to meet current demand Ö Productivity-purchase orders per FTE Ö Needed, but may be underutilized Capital o Current capital requirements Ö Accounting procedures Materials o All else equal in make, deliver, return, current inventory on hand (raw material and purchased finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) o Current sourcing/supplier constraints Ö Current contract terms. Ö Nature of items; commodity/sole source. Cycle Time o Current procurement cycle time Ö Time to place a purchase order Ö Supplier lead time Source: Resource Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question “How much of a decrease in quantities sourced (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery” Demand: o Reduced source volume to be determined given ramped down resources below Staffing o Staff availability in procurement (underutilized FTE’s) o How much staff can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital o Current capital requirements Ö Accounting procedures for selling/diverting/recycling assets Materials o Sourcing Constraints Ö Time required in negotiating new source/volume contracts/terms Ö Time required to ramp down supplier inventory o How much inventory (raw material and purchased finished goods) can be returned, sold or diverted without cost penalty to ramp down to decreased quantities delivered given 30 days notice Cycle Time o Procurement order cycle time reestablished and sustained for decreased quantities sourced given 30 days. Ö Time to place a purchase order Ö Supplier lead time

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Make Adaptability Metric Definition The production reduction sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure Level 1

Downside Supply Adaptability

Level 2

Upside Make Adaptability

Current make volume

Reduced make volume

Productivity-units/orders produced per FTE

Direct labor availability

Percent of labor used in manufacturing, not used in direct activity Internal and External manufacturing equipment capacity needed for current make volume

Amount labor that can be laid off in 30 days

Current internal equipment capacity utilization Internal and External facilities/, storage capacity needed for current make volume

Current internal facility/storage capacity utilization Capital Requirements (Acct/Finance Policy)

Constraint Factors

Current capital requirements Amount of equipment recycled, diverted or sold in 30 days Amount internal space subleased or sold in 30 days

Current inventory on hand (WIP, FG)

Supplemental outsource/lease termination ability

Current manufacturing order cycle time

Amount supplemental outsourced or leased resources or facilities terminated in 30 days Amount reduced in inventory made (WIP, FG) in 30 days

Manufacturing cycle time reestablished and sustained in 30 days

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June 2006

Qualitative Relationship Description Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation

Data Collection Discussion Make: Input Current elements needed to fully understand future requirements, to establish the volume delta that can be sustained based on the question “How much of a reduction in quantities produced (expressed as a percentage) can the company sustain, given 30 days?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current make volumes Ö Amount of each item manufactured Labor o Labor needed to meet current demand Ö Productivity-units/orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (outsourced) capacity needed for current demand throughput Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, deliver and return, current inventory on hand (WIP and finished goods), including safety stock required to sustain current order fulfillment. Ö Assuming optimized inventory practices (no excess inventory) Cycle Time o Current manufacturing cycle time (all else equal including procurement order cycle time and supplier lead time) Make: Resource Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question “How much of a decrease in quantities produced (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery” Demand: o Reduced make volume to be determined given ramped down resources below Labor o Direct labor availability and percent of labor used in manufacturing, not used in direct activity (underutilized FTE’s) o How much labor can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital/Assets o Current Internal Capacity utilization © Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. o Current capital requirements Ö Accounting procedures for selling/diverting/recycling assets Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) and their effect upon ability to terminate leases or sell capital equipment assets. o How many capital equipment assets can be recycled, diverted or sold or subleased without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Ö Facilities, space Ö Manufacturing equipment, materials handling and packaging equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö Facilities, lease building, etc. Ö Lease manufacturing equipment, materials handling and packaging equipment, etc. Ö Co-packers o How much supplemental outsourced or leased resources or facilities can be terminated to ramp down to decreased quantities delivered given 30 days notice Materials o All else equal in source, deliver and return, how much manufacturing quantities (WIP and FG inventory), including safety stock can be ramped down to decreased order fulfillment quantities given 30 days notice. Cycle Time o Manufacturing cycle time reestablished and sustained for decreased quantities produced given 30 days.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Flexibility Level 2 Metric: Downside Deliver Adaptability Metric Definition Downside Deliver Adaptability = The reduction in delivered quantities sustainable at 30 days prior to delivery with no inventory or cost penalties.

Hierarchical Metric Structure Downside Supply Adaptability

Level 1

Downside Deliver Adaptability

Level 2

Current delivery volume

Reduced delivery volume

Direct labor availability

Productivity-orders shipped per FTE

Percent of labor used in logistics, not used in direct activity Internal and External (3PL) equipment capacity needed for current delivery volume

Amount labor that can be laid off in 30 days

Current internal equipment capacity utilization Internal and External (3PL) storage capacity needed for current delivery volume

Current internal storage capacity utilization Capital Requirements (Acct/Finance Policy)

Constraint Factors

Current capital requirements Amount of equipment recycled, diverted or sold in 30 days Current inventory on hand (FG) Amount internal space subleased or sold in 30 days Current logistics order cycle time Supplemental outsource/lease termination ability

Amount supplemental outsourced or leased resources or facilities terminated in 30 days

Amount decrease in inventory (FG) obtained in 30 days

Logistics order cycle time reestablished and sustained in 30 days

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June 2006

Qualitative Relationship Description Least quantity reduction sustainable when considering all components

Quantitative Relationship (optional, if calculable) Calculation

Data Collection Discussion Deliver: Input Elements Current elements needed to fully understand future requirements, to establish what can be ramped down and sustained at 30 days prior to delivery, based on the question “How much of a decrease in quantities delivered (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery?” These elements are mainly output metrics from other attributes . . . responsiveness, reliability, cost, asset management. Demand o Current delivery volume Ö Number of orders shipped Labor o Labor needed to meet current demand Ö Productivity-orders per FTE Ö Needed, but may be underutilized Capital/Assets o Internal and External (3PL) capacity needed for current demand throughput Ö Facilities, space Ö Fleet equipment, outside carrier loads, materials handling equipment, etc. Ö Needed, but may be underutilized o Current capital requirements Ö Accounting procedures Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) Materials o All else equal in source, make, return, current finished goods inventory on hand (including safety stock required to sustain current order fulfillment) o Assuming optimized inventory practices (no excess inventory) Cycle Time o Current logistics order cycle time (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time Deliver: Availability Assessment & Ramp-down/Lead Time Elements needed to establish delta in resources and what can be ramped down and sustained at 30 days prior to delivery based on the question “How much of a decrease in quantities delivered (expressed as a percentage) can the company sustain without inventory or cost penalties, given 30 days notice prior to delivery” Demand: o Reduced delivery volume to be determined given ramped down resources below Labor o Direct labor availability and percent of labor used in logistics, not used in direct activity (underutilized FTE’s) © Copyright 2006 Supply-Chain Council, Inc.

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How much labor can be laid-off or diverted to other activities, without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Capital/Assets o Current Internal Capacity utilization o Facilities, space Ö Fleet equipment, materials handling equipment, etc. o Current capital requirements Ö Accounting procedures for selling/diverting/recycling assets Ö Finance Procedures (outsource vs. in-source, make vs. buy, lease vs. purchase) and their effect upon ability to terminate leases or sell capital equipment assets. o How many capital equipment assets can be recycled, diverted or sold without cost penalty, to ramp down to decreased quantities delivered given 30 days notice Ö Facilities, space Ö Fleet equipment, materials handling equipment, etc. Outsourcing Alternatives to capital o Supplemental Outsource/lease availability Ö 3PL facilities, lease building, etc. Ö Full service lease fleet, materials handling, etc. equipment Ö Outside carriers o How much supplemental outsourced or leased resources or facilities agreements can be terminated to ramp down to decreased quantities delivered given 30 days notice Materials o All else equal in source, make, return, how much inventory can be shipped or diverted without cost penalty to ramp down to decreased quantities delivered given 30 days notice (all else equal in source and make, includes safety stock) Cycle Time o Logistics cycle time reestablished and sustained for decreased quantities delivered given 30 days (all else equal including procurement order cycle time, supplier lead time, manufacturing cycle time, etc.) Ö Customer order processing cycle time (logistics only) Ö Dock-to-stock cycle time Ö Pick-to-ship cycle time Ö Transit time o

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Costs Level 1 Metric: Total Supply Chain Management Cost Metric Definition The sum of the costs associated with the SCOR Level 2 processes to Plan, Source, Deliver, and Return. Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost

Cost to Plan

Cost to Make

Cost to Return

Level 2 Cost to Source

Cost to Deliver

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) TSCMC = Cost to Plan + Source + Make + Deliver + Return

Calculation TSCMC = Sales – Profits – Cost to Serve (e.g., marketing, selling, administrative)

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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June 2006

Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Plan Process Number: P1, P2, P3, P4, P5 Metric Definition The sum of the costs associated with Plan.

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Plan

Cost to Plan Source

Level 3

Cost to Plan Make

Cost to Plan Deliver

Cost to Plan Return

Cost to Plan Supply Chain

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Cost to Plan = Sum of Cost to Plan (Plan + Source + Make + Deliver + Return)

Calculation

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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June 2006

Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Source Metric Definition

Process Number: S1, S2, S3

The sum of the costs associated with Source.

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Level 3

Cost to Source

Supplier Management (See processes under Source)

Material Acquisition Management (See processes under Source)

Qualitative Relationship Description

Quantitative Relationship (optional, if calculable) Cost to Source = Sum of Cost for (Supplier Management + Material Acquisition Management)

Calculation - Supplier Management = material planning + planning procurement staff + supplier negotiation and

qualification + etc.

- Material Acquisition Management = bidding and quotations + ordering + receiving + incoming

material inspection + material storage + payment authorization + sourcing business rules and rqmts. + inbound freight and duties + etc.

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Make Process Number: M1, M2, M3 Metric Definition The sum of the costs associated with Make. Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Make

Level 3

See “Cost of Goods Sold”

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Calculation

Data Collection

Discussion

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June 2006

Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Deliver and/or Install Metric Definition

Process Number: D1, D2, D3

The sum of the costs associated with Deliver and/or Install

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Deliver

Sales (order) Management (See processes under Deliver)

Level 3

Customer Management (See processes under Deliver)

Qualitative Relationship Description

Quantitative Relationship (optional, if calculable) Cost to Deliver = Sum of Cost of ( Sales order management + Customer Management )

Calculation -

Sales order management = inquiry & quotations + order entry & maintenance + channel management + order fulfillment + distribution + transportation + outbound freight and duties + installation + customer invoicing / accounting + new product release / phase-in + etc. Customer Management = financing + post-sales customer service + handling disputes + field repairs + enabling technologies + etc.

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

© Copyright 2006 Supply-Chain Council, Inc.

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June 2006

Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Return Metric Definition

Process Number: SRx, DRx

Cost to Return Defective Product - The sum of the costs associated with returning a defective product to the supplier. Cost to Return Excess Product - The sum of the costs associated with returning excess product to the supplier. Cost to Return MRO Product - The sum of the costs associated with returning MRO product to the supplier.

Hierarchical Metric Structure Level 1

Total Supply Chain Management Cost (TSCMC)

Level 2

Cost to Return

Cost to Source Return

Cost to Deliver Return

Level 3

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Cost to Return = Sum of Cost to Return ( to Sources + from Customers )

Calculation -

Cost to Return to Source (SRx) = Verify Defective Product Costs + Disposition of Defective Product Costs + Identify MRO Condition Costs + Request MRO Return Authorization Costs + Schedule MRO Shipment Costs + Return MRO Product Costs + etc. Cost to Return From Customer (DRx) = Authorization Costs + Schedule Return Costs + Receive Costs + Authorize MRO Return Costs + Schedule MRO Return Costs + Receive MRO Return Costs + Transfer MRO Product Costs + etc.

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 1 Metric: Cost of Goods Sold Metric Definition The cost associated with buying raw materials and producing finished goods. This cost includes direct costs (labor, materials) and indirect costs (overhead). Note - Cost of Raw Material and Make Costs are generally accounted for in COGS. It is recognized that there is likely to be overlap/ redundancy between supply chain management costs and COGS.

Hierarchical Metric Structure Level 1

Cost of Goods Sold (COGS)

Cost to Make

Level 2

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Cost of Goods Sold (COGS) = Cost to Make

Calculation COGS = direct material costs + direct labor costs + indirect costs related to making product

Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems).

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of the “horizontal” processes based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Costs Level 2 Metric: Cost to Make Process Number: M1, M2, M3 Metric Definition The sum of the costs associated with Make.

Hierarchical Metric Structure Level 1

Cost of Goods Sold (COGS)

Level 2

Cost to Make

Direct Material Cost

Direct Labor Cost

Level 3 Indirect Cost Related to Production

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) Cost to Make = Sum of Direct Material, Direct Labor, and Direct non-Material Product-related Cost (equipment) and of Indirect Product-related Cost

Calculation Data Collection Resource expenses (e.g., salaries, supplies, etc.) are initially captured in the organization’s general ledger accounting system. Then these expenses are traced and assigned (i.e., distributed) to the organizations “horizontal” core processes based employee time and non wage-related factors (drivers; e.g., # of units consumed). Data for these expense distribution assignments are collected from (1) employee time collection systems (or % split estimates), and (2) operational systems (e.g., enterprise resource planning [ERP] systems). In some cases, (1) direct material data is maintained at the “unit level” in bills of material (BOMs) or recipe formulas; and (2) direct labor and direct non-material product (equipment) data is maintained at the “unit level” in labor/machine routings or process sheets.

Discussion Collecting transactional information, primarily resource expenses and operational “drivers”, is now commonplace. The challenging task is to logically transform these expenses into calculated costs of (1) the “horizontal” processes (referenced in Lean environments as “value-stream mapping”), and (2) products (or intermediate outputs) – with both types of calculations based on cause-and-effect relationships without the temptation of using broad averages or arbitrary factors.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Cash-to-Cash Cycle Time Metric Definition The time it takes for an investment made to flow back into a company after it has been spent for raw materials. For services, this represents the time from the point where a company pays for the resources consumed in the performance of a service to the time that the company received payment from the customer for those services.

Hierarchical Metric Structure Cash-to-Cash Cycle Time

Level 1

Days Payable Outstanding

Days Sales Outstanding Level 2 Inventory Days of Supply

Qualitative Relationship Description The longer the cash-to-cash cycle, the more current assets needed (relative to current liabilities) since it takes longer to convert inventories and receivables into cash. In other words, the longer the cash-to-cash cycle, the more net working capital required.

Quantitative Relationship (optional, if calculable) The Cash-to-Cash Cycle time is measured by converting into days the supply of inventory in stock and the number of days outstanding for accounts receivable and accounts payable. The inventory days of supply is added to the days outstanding for accounts receivable. The accounts payable days outstanding is subtracted from this total to determine the cash-to-cash cycle time.

Calculation Cash-to-Cash Cycle Time = Inventory Days of Supply + Days Sales Outstanding – Days Payable Outstanding Level 2 Metrics: Inventory Days of Supply = the amount of inventory (stock) expressed in days of sales. The [5 point rolling average of gross value of inventory at standard cost] / [annual cost of goods sold (COGS) / 365] Example: If 2 items a day are sold and 20 items are held in inventory, this represents 10 days’ (20/2) sales in inventory. (Other names: Days cost-of-sales in inventory, Days’ sales in inventory) Days Sales Outstanding = the length of time from when a sale is made until cash for it is received from customers. The amount of sales outstanding expressed in days. The [5 point rolling average of gross accounts receivable (AR)] / [total gross annual sales / 365]. Example: If $5000 worth of sales were made per day and $50,000 worth of sales were outstanding, this would represent 10 days’ ($50,000/$5000) of sales outstanding. (Other names: Days sales in Accounts receivables) © Copyright 2006 Supply-Chain Council, Inc.

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Days Payable Outstanding = the length of time from purchasing materials, labor and/or conversion resources until cash payments must be made expressed in days. The [5 point rolling average of gross accounts payable (AP)] / [total gross annual material purchases / 365]. (Other names: Average payment period for materials, Days purchases in accounts payable, Days’ outstanding in accounts payable) The “5 point rolling average” calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. The 5 point rolling average calculation is: [Sum of the 4 previous quarters + projection for next quarter) / 5]

Data Collection Unlike the other SCOR attributes, where data requirements are specified, typically all of the cash-to-cash cycle time source data is already captured by business operating systems: - general ledger system - accounts receivable system - accounts payable system - purchasing system - production reporting system - customer relationship management system As a result, information is ‘calculated’ by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules.

Discussion Cash-to-cash Cycle Time is a value metric used to measure how efficiently a company manages its working capital assets. This metric is a generally accepted Supply Chain metric within many industries and is used to benchmark supply chain asset management performance. The term “5 point annual average” can be confusing in that it can imply a measure over a year’s period of time when the data points are taken over 5 quarters. The intent of the approach is to smooth the seasonal peaks and valleys over time and to balance projected data with historical data. The measurement can be taken quarterly or at any given consistent time frame.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Return on Supply Chain Fixed Assets Metric Definition Return on Supply Chain Fixed Assets measures the return an organization receives on its invested capital in supply chain fixed assets. This includes the fixed assets used in Plan, Source, Make, Deliver, and Return.

Hierarchical Metric Structure Return on Supply Chain Fixed Assets

Level 1

Level 2

Supply Chain Revenue

Cost of Goods Sold

Supply Chain Management Costs

Supply Chain Fixed Assets

Source Fixed Asset Value

Make Fixed Asset Value

Deliver Fixed Asset Value

Level 3 Return Fixed Asset Value

Plan Fixed Asset Value

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) The return on supply chain fixed assets is measured by monetizing the supply chain revenue, cost of goods sold and supply chain management costs to determine the profit from the respective supply chain. This amount is divided by the supply chain fixed assets to determine the return generated from the respective supply chain.

Calculation Return on Supply Chain Fixed Assets = (Supply Chain Revenue – COGS – Supply Chain Management Costs) / Supply-Chain Fixed Assets "Supply Chain Revenue" is used in the metric rather than just Net Revenue. SC Revenue is calculated as: Supply Chain Revenue - COGS - Total Supply Chain Management Costs. This provides the revenue generated through the supply chain less the total costs associated with the supply chain. There is a need for a more specific “revenue” number than “Net Revenue” for use in the “Supply Chain © Copyright 2006 Supply-Chain Council, Inc.

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Revenue" level 2 metric. Net Revenue could include revenue from sources other than the supply chain, such as investments, leasing real estate, court settlements, etc... Supply Chain Revenue will be used and will be only the portion of Net Revenue that is generated by the specific supply chain being measured and analyzed. Level 2 Metrics Supply-Chain Revenue Operating revenue generated from a supply chain. This does not include non-operating revenue, such as leasing real estate, investments, court settlements, sale of office buildings, etc... COGS Calculation - Refer to the section for COGS in the Attribute for Costs. Supply Chain Management Costs Calculation - refer to the section for Supply-Chain Management Costs in the Attribute for Costs. Supply Chain Fixed Assets Source Fixed Asset Value + Make Fixed Asset Value + Deliver Fixed Asset Value + Return Fixed Asset Value + Plan Fixed Asset Value Level 3 Metrics Plan Fixed Asset Value- The current value of the supply chain assets used in supply chain integration (See EP.5) Source Fixed Asset Value - The current value of the supply chain assets used in the Source process. (See ES.5) Make Fixed Asset Value- The current value of the supply chain assets used in the Make process. (See EM.5) Deliver Fixed Asset Value - The current value of the supply chain assets used in the Deliver process. (See ED.5) Return Fixed Asset Value - The current value of the supply chain assets used in the Return process. (See ER.5) A Revised Capital Plan is an output of the Manage Integrated Supply Chain Fixed Assets (EP.5) process element and would contain supply chain capital asset information that could be used in measuring the Supply Chain Fixed Assets.

Data Collection Unlike the other SCOR attributes, where data requirements are specified, typically all of the return on working capital’s source data is already captured by business operating systems: - general ledger system - fixed asset system - purchasing system - labor reporting system - production reporting system - customer relationship management system As a result, information is ‘calculated’ by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules. In order to measure Return on Supply Chain Fixed Assets, the investment in supply chain capital assets needs to be known. This requires a clear understanding of what is a “supply chain fixed asset”. SCOR Ex.5 process elements were used since these are all focused on managing SC capital assets. It is the assets managed in these Enable processes that comprise Supply Chain Fixed Assets. The value of these assets is the denominator of the metric.

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Discussion Range of fixed assets used in an organization that have the character of permanency rather than being rapidly replaced (or expensed); examples include land, warehouse, trucks, buildings, investments, and plant and machinery. Fixed assets used to operate the Supply Chain in each of the categories (P, S, M, D, R) are tracked within the Ex.5 process elements. A Revised Capital Plan is an output of the Manage Integrated Supply Chain Fixed Assets (EP.5) process element and would contain supply chain capital asset information that could be used in measuring the Supply Chain Fixed Asset Value.

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Performance Attribute: Supply Chain Asset Management Level 1 Metric: Return on Working Capital

P1, P2, P3, P4, S1, S2, S3, M1, M2, M3, D1, D2, D3, D4

Metric Definition Return on working capital is a measurement which assesses the magnitude of investment relative to a company’s working capital position verses the revenue generated from a supply chain. Components include accounts receivable, accounts payable, inventory, supply chain revenue, cost of goods sold and supply chain management costs.

Hierarchical Metric Structure Level 1 Return on Working Capital

Level 2

Supply Chain Revenue Accounts Receivable

(Sales Outstanding) Inventory

Accounts Payable

Cost of Goods Sold

(Payables Outstanding) SC Management Costs

Qualitative Relationship Description Quantitative Relationship (optional, if calculable) The return on working capital is measured by monetizing the supply chain profit and dividing into the calculated amount the supply chain working capital position.

Calculation Return on Working Capital = (Supply Chain Revenue – COGS – Supply Chain Management Costs) / (Inventory + Accounts Receivable – Accounts Payable) Level 2 Metrics: Supply-Chain Revenue Operating revenue generated from a supply chain. This does not include non-operating revenue, such as leasing real estate, investments, court settlements, sale of office buildings, etc... COGS Calculation - Refer to the section for COGS in the Attribute for Costs. Supply Chain Management Costs Calculation - refer to the section for Supply-Chain Management Costs in the Attribute for Costs. Inventory = the amount of inventory (stock) expressed in dollars. The [5 point rolling average of gross value of inventory at standard cost] © Copyright 2006 Supply-Chain Council, Inc.

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Sales Outstanding = the amount of accounts receivable outstanding expressed in dollars. The [5 point rolling average of gross accounts receivable (AR)] Payables Outstanding = expressed in dollars, the amount of purchased materials, labor and/or conversion resources that are to be paid (accounts payable). The [5 point rolling average of gross accounts payable (A/P)] The “5 point rolling average” calculation uses a combination of both historical and forward-looking data. This means that the rolling average value has to be calculated based on the average over the four previous quarters and the projection for the current or next quarter. The 5 point rolling average calculation is: [Sum of the 4 previous quarters + projection for next quarter) / 5]

Data Collection Unlike the other SCOR attributes, where data requirements are specified, typically all of the return on working capital’s source data is already captured by business operating systems: - general ledger system - accounts receivable system - accounts payable system - purchasing system - labor reporting system - production reporting system - customer relationship management system As a result, information is ‘calculated’ by importing data from these systems and transforming them into the prescribed analytics/information. The transformation is accomplished using business rules.

Discussion "Supply Chain Revenue" is used in the metric rather than just Net Revenue. SC Revenue is calculated as: Supply Chain Revenue - COGS - Total Supply Chain Management Costs. This provides the revenue generated through the supply chain less the total costs associated with the supply chain. There is a need for a more specific “revenue” number than “Net Revenue” for use in the “Supply Chain Revenue" level 2 metric. Net Revenue could include revenue from sources other than the supply chain, such as investments, leasing real estate, court settlements, etc... Supply Chain Revenue will be used and will be only the portion of Net Revenue that is generated by the specific supply chain being measured and analyzed.

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APPENDIX B Best Practices Definition of a Best Practice A current, structured, proven and repeatable method for making a positive impact on desired operational results. ƒ Current - Must not be emerging (bleeding edge) and must not be antiquated ƒ Structured - Has clearly stated Goal, Scope, Process, and Procedure ƒ Proven - Success has been demonstrated in a working environment. ƒ Repeatable - The practice has been proven in multiple environments. ƒ Method Used in a very broad sense to indicate: business process, practice, organizational strategy, enabling technology, business relationship, business model, as well as information or knowledge management. ƒ Positive impact on desired operational results The practice shows operational improvement related to the stated goal and could be linked to Key Metric(s). The impact should show ether as gain (increase in speed, revenues, quality) or reduction (resource utilizations, costs, loss, returns, etc.). (Defined by SCC Best Practices Team, 2003)

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Best Practice SCOR Process(es) Best Practice Description

Available-to-Promise (ATP) D1.3 (Reserve Resources and Determine Delivery Date)

Available-to-Promise (ATP) provides an availability and feasibility check concerning a customer request or a customer order whereas three outputs can be distinguished: 1. the soonest delivery date concerning the customer request, 2. the confirmation of desired delivery date, item quantity, and item configuration 3. the selection of alternative, but deliverable product variants in case the desired delivery parameters can not be fulfilled. ATP is applicable over multiple sites in a global environment. Essentially, it is based on the extrapolation of the available inventory in all relevant locations over time: ATP is the uncommitted portion of a company’s inventory and planned production maintained in the master schedule to support customer-order promising. The ATP quantity is the uncommitted inventory balance in the first period and is normally calculated for each period, in which an MPS (Master Production Schedule) receipt is scheduled. Best Practice Need and Suitability Indicators ATP is particularly suitable for environments where customers require on-time and fast deliveries. Additional Comments Three methods of ATP calculations are used: discrete ATP, cumulative ATP with look-ahead, and cumulative ATP without look-ahead. Discrete available-to-promise is calculated based on beginning inventory, planned production according to the master production schedule (MPS) and customer commitments. For the first period, the available-to-promise is the sum of the beginning inventory plus the planned production for the first period minus customer commitments for the first period and all periods following the first period up to, but not including, the next period for which production has been scheduled in the MPS. For the following periods, there are two possibilities: ƒ If a master production quantity has been scheduled for the period the available-to-promise is the quantity scheduled minus all customer commitments for the period and for all following periods up to but not including, the next period for which a master production quantity has been scheduled. ƒ If no master production quantity has been scheduled for the period the available-to-promise is zero, even if deliveries in the period have been promised. The promised shipments often are shown as backlog (customer commitments) in the period with the most recent production (MPS). Cumulative available-to-promise is a calculation based on the available-to-promise (ATP) figure in the master schedule. Two methods of computing the cumulative available-to-promise are used, with and without lookahead calculation. The cumulative with look-ahead ATP equals the ATP from the previous period plus the MPS of the period minus the sum of the differences between the backlogs and MPSs of all future periods until, but not to include, the period where point production exceeds the backlogs. The cumulative without look-ahead procedure equals the ATP in the previous period plus the MPS, minus the backlog in the period being considered.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

improves on-time delivery resulting in a higher service level (to commit date).

Responsiveness

reduces cycle times of certain administrative processes (e.g. definition of delivery date, order placement)

Flexibility

allows to determine whether flexibility is appropriate to cover future demand fluctuations and to prioritize activities accordingly.

Costs

None (except for less contract penalties caused by late deliveries)

Asset Management

Visibility of demand vs. production schedule and available inventory can result in better inventory planning and lower inventory levels.

Key Best Practice Success Factors Technology Features

Available-to-promise requires implementation in an ERP-/SCM-/APS-software solution.

Other Success Factors

Appropriate data management guarantees exact ATP quantities.

Additional Resources Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS – The Educational Society for Resource Management, Alexandria, VA Schönsleben, P. (2003): Integral Logistics Management – Planning & Control of Comprehensive Supply Chains, St. Lucie Press, Boca Raton, FL, p. 233-235

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Best Practice

Carrier Agreements

SCOR Process(es)

S1.2, S2.2, S3.2 (Receive Product), ES.2 (Assess Supplier Performance), ES.7 (Manage Supplier Network ), ES.9 (Manage Supplier Agreements), D1.11, D2.11, D3.11 (Load Vehicle & Generate Shipping Documentation)

Best Practice Description Carrier agreements are agreements between a company and its domestic and global carriers (for both, inbound raw materials and outbound finished goods) specifying service levels, payment terms, and other conditions. Such agreements can be established as part of a larger initiative to decrease raw material and finished goods inventory, while improving customer service. Contractual partnership requirements can include: ƒ Perfect Order Fulfillment (as a primary goal), ƒ equipment condition ƒ shipping condition ƒ pick-up and delivery times, ƒ documentation. Carrier performance in these fields is measured with immediate feedback and monthly formal reports. By measuring all carriers on a regular basis, trends of performance can be seen. This provides the opportunity to replace carriers performing “poorly” with those performing “exceptionally”. Furthermore, a transportation service agreement is signed with all domestic and global carriers. Contract line items specify on-time delivery, plus the payment requirements for services rendered. Best Practice Need and Suitability Indicators Any company receiving or shipping materials using common or contract carriers such as trucking, shipping, and airline companies. Also includes internal transportation providers (company owned transportation group). Additional Comments The top performance of carriers is due to a thorough knowledge of the industry and the requirements of a company, as well as the contract that is used with the carriers. Without a competent transportation manager, the contract, alone, would be of little value. The combination of trained, competent personnel and written agreements result in superior performance.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Better partnerships with and management of carriers typically results in improved on time deliveries.

Responsiveness

Carrier agreements often improve the ability to quickly book and execute transportation, reducing lead times.

Flexibility

Partnerships tend to work both ways, leading carriers to make additional capacity available to partners when needed, improving the ability to respond quickly to demand increases.

Costs

Carrier agreements provide a tool for both shipper and carrier to identify and take advantage of mutual cost savings.

Asset Management

More efficient use of transportation assets to move customer orders.

Key Best Practice Success Factors Technology Features

From the carrier side, their tracking systems support performance measurement to a different degree (EDI, web-enabled carriers). Continuous on line tracking of shipment would be beneficial. Anyone interfacing with the carrier needs to be familiar with the carrier agreement specifications.

Other Success Factors

Formal recognition of carriers, for example, they can be certified on basis of six months reliability/compliance to the agreement. Formal feedback on monthly performance and immediate feedback on failures to comply with specifications.

Additional Resources None

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Best Practice Collaborative Planning, Forecasting and Replenishment (CPFR) SCOR Process(es) P1 (Plan Supply Chain) Best Practice Description The CPFR reference model provides a general framework for the collaborative aspects of planning, forecasting and replenishment processes. The model is considered a “guideline” for trading partner collaboration, which should be tailored specially for the industry and company readiness and maturity. CPFR defines eight collaboration tasks: ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Collaboration Arrangement is the process of setting the business goals for the relationship, defining the scope of collaboration and assigning roles, responsibilities, checkpoints and escalation procedures. The Joint Business Plan then identifies the significant events that affect supply and demand in the planning period, such as promotions, inventory policy changes, store openings/closings, and product introductions. Sales Forecasting projects consumer demand at the point of sale. Order Planning/Forecasting determines future product ordering and delivery requirements based upon the sales forecast, inventory positions, transit lead times, and other factors. Order Generation transitions forecasts to firm demand. Order Fulfillment is the process of producing, shipping, delivering, and stocking products for consumer purchase. Exception Management is the active monitoring of planning and operations for out-of-bounds conditions. Performance Assessment calculates key metrics to evaluate the achievement of business goals, uncover trends or develop alternative strategies.

Based on this general framework, CPFR discusses collaboration scenarios (like replenishment collaboration or collaborative assortment planning), collaboration roles (who of the two partners involved is responsible for collaboration tasks), and organizational implications within partner companies.

The CPFR industry standard is sponsored by VICS, the Voluntary Inter-industry Standards body and the Uniform Code Council, UCC. The standard has also been adopted by the Global Commerce Initiative, GCI. Best Practice Need and Suitability Indicators Companies that heavily rely on demand forecast accuracy and high volume replenishment are primary beneficiaries of the standard. Additional Comments CPFR has primarily been adopted by the retail and consumer package goods industry. Wal-Mart was the founding company of the process and recently announced adoption by 1,200 of its suppliers. The process has also been adopted by the grocery industry as well as the chain drug store industry.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Better Store in stock Better customer service

2% - 8% 2% - 8%

Responsiveness

Faster Replenishment Cycle Times

12% - 30%

Flexibility

Forecast improvement

20% - 40%

Costs

Lower Logistics Cost

3% - 4%

Asset Management

Inventory Reduction

10% - 40% (AMR)

Key Best Practice Success Factors Technology Features

VICS CPFR interoperability technology standards documented and published by the CPFR Working Group. Standards support EDI 830, EDI 852, and XML Interoperability. Standards published for data modeling.

Other Success Factors

Careful selection of trading partners. Having a joint front-end agreement to refer back to when the project gets off track.

Additional Resources www.cpfr.org is the official website for the VICS CPFR Working group. This site contains multiple publications on CPFR as well as the actual CPFR process mapping guidelines, data model formats, and CPFR presentations. Suleski, Janet (2001): Beyond CPFR: Retail Collaboration Comes of Age, AMR Research, April 1, 2001. www.globalscorecard.net The Global Scorecard. This site provides a Capability Assessment Tool designed to give you a detailed understanding of your ECR (Efficient Consumer Response) capability and highlight specific improvement opportunities for your company. ECR was an early foundation for CPFR. www.drummondgroup.com The Drummond Group on CPFR interoperability has certified technology companies. Test results are available on their web site.

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Best Practice SCOR Process(es) Best Practice Description

Co-Located Procurement Representatives P1 (Plan Supply Chain)

Regionalized Procurement Representatives are positioned in local markets to support corporate / procurement goals. Companies realize support is needed when cost and delivery objectives are not consistent with organizational goals. This leading practice involves identifying local procurement personnel to assist in creating a supply base to meet internal and external product requirements. These local representatives will perform all procurement related activities for the organization. Co-located procurement personnel bring the knowledge of the local supply base, understand their organizations demand and supply signals, and communication capability to work with company global commodity leadership. For companies expanding their sourcing scope and distance, having personnel local to the market is a crucial element to maintaining supply chain performance. Local personnel are used to support the understanding of the demand and supply signals, production and logistics decisions. Companies that have sourced globally, but have not added local resources find challenges that diminish supply chain response time. Listed are some of the major factors: 1.) Communication (time, language, cultural) 2.) Lead time, 3.) Hidden Costs (taxes, tariffs, etc.), 4.) Quality Returns and Repairs, 5.) Political and Geography Risks, 6.) Units of Measure. Cost is the huge driver in this Best Practice. For example, decisions affecting the supply chain can be made more accurately and in a timelier manner by experts in the field who can experience the day-to-day activities. Best Practice Need and Suitability Indicators The best practice is most of all suitable for companies that source a large portion of their procurement volume in low-wage countries with a different culture. Additional Comments Regular meetings at least once a year among peers should be organized to share priorities and to align processes and reapplication opportunities.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Increase Order Fill Rates

Responsiveness

Reduction in Product Lead-Time Improved Supply Chain Response Time Improved Source/Make Cycle Time

Flexibility

Improved Production Plan Achievement Reduced Inventory Obsolescence

Costs

Impacts Purchase Order Costs Reduced Quality Returns

Asset Management

Increase Capacity Utilization Decrease Inventory Obsolescence

Key Best Practice Success Factors Technology Features

Accessibility, accuracy, timeliness and visibility of enterprise-wide procurement information. Commercial software (of varying degrees of sophistication) is available to support the procurement and planning processes.

Other Success Factors

None

Additional Resources None

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Best Practice SCOR Process(es) Best Practice Description

Convergence of SCOR, Six Sigma and Lean Methodology affects any SCOR process

SCOR, a cross-industry top-down standardized process analysis model, enables the efficient and effective endto-end evaluation of supply chains. By capturing operational baselines and comparing to industry peers and competitors, SCOR level one metrics provide a balanced measure of performance linked to the bottom line. Metrics and Best Practices steer teams to proven solutions, and the building block design provides a common language for both internal and external elements of a supply chain. SCOR therefore serves as a strategic project identification and prioritization engine for Lean and Six Sigma teams and provides the means to measure business impact. The strength of Six Sigma and Lean is producing results. These powerful methodologies can be used to gain efficiency and construct valuable processes because these disciplines, by their nature, look down at finite areas, cells, or processes to improve. They cannot look upward at organizational goals and select the best project on which to work. SCOR also helps introduce the concepts of Six Sigma and Lean to transactional (non manufacturing) areas not normally associated with productivity or quality initiatives. With its cross functional makeup a SCOR project team will focus on reducing variability and eliminate waste in areas such as accounting, customer service, and sales. Best Practice Need and Suitability Indicators Need to prioritize lean and six sigma project according to their effects on organizational goals. Additional Comments This Venn Diagram highlights tools of each methodology: TOOLS (Examples only)

Kaizen Kanban Single Minute Exchange of Die (SMED) Takt Time Poke Yoke

SIX SIGMA PFMEA ANOVA Gage R&R SPC Process Simulation Multi-Vari Analysis Regression Analysis DOE (Design of Experiments) Control Plans COPQ/Financial Analysis 7 Basic Quality Tools: Program Mgmt Pareto Multi-Level Cause & Effect Pareto Analysis/ SIPOC Histograms Decomposing Project Mgmt Control Charts Metrics Process Mapping/ Scatter Diagrams GAP Analysis Value Stream Mapping/ Graphs Voice of the Geographic Mapping/ Check sheets Customer Thread Diagram PDCA/ QFD (Quality Function SDCA Deployment) Standardized Work/ Best Practices 7 Mgmt Tools: Relations Diagram Affinity Diagram Tree Diagram Matrix Diagram Matrix Data-Analysis Arrow Diagram PDPC

Supplier/Customer Performance Scorecards Inter-Company Kanban CPFR

LEAN

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Reference Model Organization Map SCORcard – Level One Operational Process Metrics – Level Two Diagnostic Metrics – Level Three

SCOR

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Responsiveness

Flexibility

Convergence of SCOR, Six Sigma and Lean Methodology (with SCOR as a strategic project identification and prioritization engine) enables organizations to improve the right performance attributes, which can be any set of SCOR level one metrics. See other SCOR Best Practices and especially the Best Practices “Six Sigma” and “Lean Methodology” for possible impacts.

Costs

Asset Management Key Best Practice Success Factors Technology Features

None

Other Success Factors

None

Additional Resources There is a Supply Chain Council Special Interest Group on this Best Practice. Please contact the group, if you would like to contribute to the convergence of SCOR, Six Sigma and Lean Methodology.

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Best Practice

Cross Docking

SCOR Process(es)

D1.8 (Receive Product from Source or Make), D1.11 (Load Vehicle & Generate Shipping Documentation), D1.12 (Ship Product)

Best Practice Description Cross docking is used in many distribution centers (DC) to increase inventory velocity while maintaining shipping efficiency. In a traditional DC, the receiving process is disjointed from the shipping process and storage acts as an intermediary between the two processes. Cross docking actively links the receiving and shipping processes. In a DC, both cross docking (no storage) and traditional (with storage) operations might take place. Cross docking minimizes the need to put incoming inventory into storage and the number of “touches” for each order. To accomplish this, the receiving activity is linked with open order status. Each inbound shipment has a planned outbound already scheduled. When an item is received, the system will look to the open order file to find its outgoing order. The item is moved from receiving directly to the order staging area, order pick area, or into an outbound vehicle. Three common types of cross docking are: 1. Trans-shipment: The order received is already packaged for delivery to the customer Ship A Receive A

B

Customer A

Move B

C

Customer B

C Customer C

2. Flow-through: Some sortation or break bulk is needed when the order is received Pick Ship Receive

Allocate

Customer A

Customer B

Customer C

3. Merge-in-transit: Current inventory in storage at the DC is added to the incoming order (see separate Best Practice). Pick Storage Receive

Ship

Allocate Customer A

Customer B

Customer C

(Courtesy: Robert Novack, Penn State University, University Park) Best Practice Need and Suitability Indicators ƒ ƒ ƒ

Small shipment sizes (economies of scale through bundling shipments) Constrained distribution center capacity Perishability of products

Additional Comments Suppliers usually need to make some type of investment (customized bar codes, special overpacks, or unique pallet patterns) to participate in cross-docking.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

None

Responsiveness

None

Flexibility

None

Costs

Reduces transportation costs (compared to transportation without cross-dock), because deconsolidation at cross-dock for multiple receivers allows shippers to deliver larger shipments

Asset Management

Reduces average inventory level and (as a consequence) working capital invested in inventory

Key Best Practice Success Factors

Technology Features

Other Success Factors

Cross docking requires the use of a Warehouse Management System (WMS), which needs to interface with the order management system. Bar codes and RF scanners will allow the receiving function at the DC to become more productive. The use of EDI messages, especially of ASN´s (Advance Ship Notices) is highly beneficial. The shipper sends an ASN to the receiver as a notice that a shipment has been sent, allowing the receiving facility to more productively schedule order picking and outbound deliveries.

None

Additional Resources None

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Best Practice

Drum-Buffer-Rope Scheduling Technique

SCOR Process(es)

M1.1 (Schedule Production Activities) , M2.1 (Schedule Production Activities), M3.2 (Schedule Production Activities)

Best Practice Description Drum-Buffer-Rope (DBR, also referred to as Synchronous Manufacturing, or Constraint Management) is, in the Theory of Constraints (TOC), a technique used to manage resources to maximize throughput.

The Drum is the system’s constraint (or bottleneck) that sets the pace for the entire organization. Such a bottleneck determines the final output of the system regardless of the excess capacity that might be available on the other resources. (In DBR terminology, the drum is also the schedule of the constraint.)

The Drum Buffer is a time offset (raw material will be released earlier than expected by the conventional lead time) that helps exploit the drum’s capacity. Placing the buffer in front of the drum we reduce/absorb the impact of uncertainty along the production chain from the gating operations all the way to the constraint. The drum buffer can be seen as a powerful tool in helping us prevent the drum from starving.

The Rope is the material release schedule tied to the drum. With the rope we make sure that no material is released to the shop floor without the “prior approval” of the drum. The shop floor has a virtual rope tying the drum to the gating operations, each time the drum finishes a lot it will pull this rope to ask for more material to be released. This powerful concept (global management vs. localized approach) has an immediate impact on both lead time and WIP. Release only what is needed when it is needed! Best Practice Need and Suitability Indicators ƒ ƒ ƒ ƒ

High Work-in-progress (WIP) with deteriorating throughput Unpredictable manufacturing lead times (e.g. due to many prioritized production orders) Mature serial or mass production running at a fixed rate The technique is mainly suitable for machine-limited capacities.

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Additional Comments In the application of Drum-Buffer-Rope (DBR), the effectiveness of the pace setting operation (drum) is critical for maximizing throughput. The Overall Equipment Effectiveness (OEE) is the single metric that reflects that effectiveness. OEE is the result of multiplying ƒ Availability (up-time) Run time divided by scheduled time (also 1 minus downtime) ƒ Quality Rate (first pass yield) First-pass good units produced divided by total units produced ƒ Performance Efficiency Theoretical cycle time by the actual cycle time. Theoretical cycle time should be that, which was promised by the production equipment’s manufacturer. (In practice theoretical cycle time often is “downgraded” by industrial engineers applying factors such as personal fatigue and delay to derive a “standard cycle time”, which is used to cost the product and provide planning an attainable capacity quantity.) The difference between the OEE value and 1.0 indicates the percentage of production lost to ineffective operations. Examining the components of OEE will enable root cause analysis and direct corrective action.

Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Increases perfect order fulfillment, as manufacturing lead time gets more predictable

Responsiveness

Increases with decreasing manufacturing lead time

Flexibility

None

Costs

Higher equipment effectiveness reduces cost of goods sold

Asset Management

Reduces WIP, leads to a higher equipment effectiveness

Key Best Practice Success Factors Technology Features

None

Other Success Factors

None

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Additional Resources Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS – The Educational Society for Resource Management, Alexandria, VA, USA Goldratt, E. M., Cox, J. (1992): The Goal – A Process of Ongoing Improvement”, North River Press, Norwich, CT, USA Spencer, M. S.; Cox, J. F. (1997): The Constraints Management Handbook, The St. Lucie Press/APICS Series on Constraints Management. Umble, M.; Mokshagundam L. S. (1995): Synchronous Manufacturing – Principles for World Class Excellence, Spectrum Publishing Company. Hansen, R. C. (2002): Overall Equipment Effectiveness, Industrial Press, New York, NY, USA. Mondher, B.-H.: Synchronous Manufacturing Quick Reference Guide, Supply Chain Strategy and Solutions, BearingPoint, Inc.

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Best Practice Lean Methodology SCOR Process(es) affects any SCOR process Best Practice Description "Lean" is a term coined in 1990 in the book "The Machine that Changed the World" by MIT researchers to describe the effectiveness and efficiency of the Toyota Production System in comparison to the traditional mass production approach to manufacturing. "Lean" practices actually date back to the early 1900's when Sakichi Toyoda introduced jidoka (autonomation) into his loom operations. The modern understanding of "lean" comes from the Toyota Production System developed by Taiichi Ohno, which was inspired by Henry Ford's River Rouge moving assembly line. "Lean" thinking is a focus on creating process "flow" through the reduction of waste. The waste reduction in production environments is typically targeted at the seven wastes: overproduction, waiting, transportation, inappropriate processes, inventory levels, unnecessary motion, and defects. Lean Thinking is applicable to all processes.

The typical enabler for lean improvement is through the use of Value Stream Mapping (VSM). VSM is the process of walking and drawing the process steps (material and information) for one product family from beginning to end, typically within a single facility, to create a current state map. Current state maps are designed to highlight the process flow of an item through the value stream. Following the current state map, a future state map is created. Future state maps are then developed to identify process improvements that eliminate waste. Finally, a detailed implementation plan is developed to transition from the current state to the future state, typically within an 8-12 month period. VSM can also be applied similarly across suppliers to create supply chain value stream maps.

While lean excels at improving process efficiency, there are some limitations to lean application. Lean implementations are typically limited by the inability to systematically identify and prioritize lean projects, measure the effects of changes on the supply chain system’s bottom line, and align and communicate activities across organizations. See the Best Practice on “Convergence of SCOR, Six Sigma and Lean Methodology” to overcome this limitation.

Best Practice Need and Suitability Indicators ƒ ƒ ƒ ƒ

Need for process cycle efficiency improvements Need to reduce process cycle times Elimination of non-value added process steps Need to build a culture of lean thinking throughout

Additional Comments Lean is a methodology and way of thinking to transform organizations into new levels of efficiency, supported by a toolset for executing improvement projects that reduce process cycle time and increase process cycle efficiencies. Execution is enabled through people, and must become the way work is done within the organization. Application of lean tools is based on the effective use of value stream mapping. This methodology relies heavily on the ability to record all steps throughout processes and to determine value added versus non-value added activities. Lean is a methodology supported by a toolset that is generally limited by the inability to strategically select projects that provide the greatest value to the overall organization.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

enables organizations to determine how current process steps and cycle efficiencies affect overall supply chain reliability. Details can be displayed through value stream mapping.

Responsiveness

Process cycle-time decreases (typically by around 70%) through eliminating non-value added process steps. Lean organizations have the worker flexibility and adaptability to respond to surges and shocks in production.

Flexibility

Lean creates process flow and allows for quick changeover between functions, tools, and processes. Lean facilities typically have considerable cross training, which creates highly flexible teams of people and organizational layouts.

Costs

Cost reduction is a typical impact of lean as non-value added processes are removed and efficiency increases. Response times are also reduced which result in faster cash flow cycles.

Asset Management

Lean typically reduces inventory levels and ensures the efficient use of assets with regard to customer demand. Suppliers are likewise encouraged to improve cycle efficiencies to increase their available inventory for customers to pull from.

Key Best Practice Success Factors Technology Features

Lean is people-oriented and can be successfully employed with minimal technological requirements. Some technology (e.g. a data warehouse with data extracted from an ERP source system) could potentially support an organization’s application of lean.

Other Success Factors

The successful transformation to lean is marked by the change in the way people address their work. Lean thinking must become a part of how work is done within an organization to be have sustainable continuous improvement.

Additional Resources Womack, J. P., Jones, D. T. (1996): Lean Thinking – Banish Waste and Create Wealth in Your Corporation, Simon & Schuster, New York, NY Suzaki, K. (1987): The New Manufacturing Challenge – Techniques for Continuous Improvement, Simon & Schuster, New York, NY Keyte, B., Locher, D. (2004): The Complete Lean Enterprise – Value Stream Mapping for Administrative and Office Processes, Productivity Press, New York, NY Liker, J. (2004): The Toyota Way – 14 Management Principles From The World's Greatest Manufacturer, McGrawHill, New York, NY Marchwinski, C., Shook, J., (2004): Lean Lexicon – A Graphical Glossary for Lean Thinkers, Lean Enterprise Institute, Brookline, MA http://www.lean.org (Lean Enterprise Institute), http://www.lean.mit.edu (Lean Aerospace Initiative), http://www.superfactory.com (Superfactory)

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Best Practice Merge-in-Transit SCOR Process(es) D1.8 (Receive Product from Source or Make), D1.9 (Pick Product) Best Practice Description Merge-in-transit is a practice to combine items from multiple sources into a single customer shipment. This includes items on stock in the distribution center, from which the shipment is sent, items on stock in other distribution centers, items on stock elsewhere (e.g. at a plant or a supplier) as well as make-to-order items. The items to be merged are cross-docked from inbound receipt to outbound shipping (see Best Practice on CrossDocking, type three). Merging is usually performed in a shipper’s distribution center (DC) or in a carrier’s terminal.

Merge-in-transit allows the shipper to reduce its inventory levels on selected items in its DC’s while still maintaining complete order integrity and reliable delivery. The practice increases overall delivery times, though. To keep delivery reliability to customers, supply chain information systems are required, which integrate among the shipper, its suppliers, and its carriers.

For make-to-order (MTO) products, the order lead time should be greater than the manufacturing lead time. Otherwise, the products should be manufactured and stocked prior to the shipment. The point is emphasized here to ensure that the proper business policy is adopted around defining MTO versus MTS (make-to-stock) products. Best Practice Need and Suitability Indicators ƒ ƒ

Customer orders require commingling of products from different sources into a single shipment Order lead time is sufficient to allow collect products from their source locations

Additional Comments Merge-in-transit is a “Place Postponement” (see Best Practice on Postponement) for parts of the supply chain.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Delivery reliability is at risk, information technology is required to keep it.

Responsiveness

Delivery time and as a consequence order fulfillment time increases

Flexibility

Allows flexibility in a make-to-order manufacturing environment, if manufacturing lead time is shorter than order lead time. DC flexibility improves because of ability to cross-dock selected inbound items.

Costs

None

Asset Management

Inventory level (and as a consequence working capital) is lower, as products are kept on stock in fewer locations.

Key Best Practice Success Factors

Technology Features

Other Success Factors

This practice will require the use of some type of warehouse management system (WMS), bar code or RF scanner technology, and EDI (or some other technology that would allow the transmission of data between supply chain partners). It might also require the integration of MRP or other scheduling technology with the WMS. All will need to interface with the order management system.

Agreements with suppliers and carriers on: ƒ Delivery time requirements ƒ Inventory policies at the supplier locations and DC’s ƒ Packaging items to produce the combined shipment, including generation of packing slips and other documentation are required. All involved parties must agree on the types and timing of information exchange. Since DC’s will have lower inventory levels as a result of using this practice, extended stock-outs at suppliers or unreliable delivery times by carriers would negatively impact the customer delivery experience.

Additional Resources None

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Best Practice

Postponement

SCOR Process(es)

S1 (Source Stocked Product) , M1 (Make to Stock), D1 (Deliver Stocked Product)

Best Practice Description Postponement (delayed differentiation) is a supply chain concept where a product is kept as long as possible in a generic state. Differentiation of the generic product into a specific end-product is shifted closer to the consumer by postponing identity changes, such as assembly or packaging, to the last possible supply chain location. This allows keeping safety stock of one generic product instead of multiple specific end-products. Especially in cases where the split of demand into specific end-products is uncertain, postponement with its risk pooling effect leads to less safety stock required and to a lower risk of obsolescence of end-products. Furthermore, as less value has been added to the generic product than to the specific end-product, less capital is bound in each stocked unit.

There are three ways to implement postponement: ƒ

Product postponement A modular structure of the product allows late differentiation, e.g. adding country-specific power plugs shortly before shipment.

ƒ

Place postponement Safety stock is kept in one central warehouse instead of regional warehouses.

ƒ

Time postponement Processes which let the product become differentiated (e.g. coloring, flashing an EPROM with software) take place as late as possible.

Best Practice Need and Suitability Indicators ƒ ƒ

Significant number of variants of an end product with an uncertain split of demand on variants. Delivery time requested by customers must allow value-adding steps after receipt of customer orders (or reliable demand forecast).

Additional Comments Product postponement leads to economies of scale in procurement and production as well, since the generic product will be produced in larger amounts than its variants.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

With the same safety stock, fill rate will typically increase.

Responsiveness

Order fulfillment cycle time increases, if value-adding steps are carried out after receipt of a customer order (see need indicators)

Flexibility

Increases, because a wide range of specific end-products can be derived from the stocked generic product.

Costs

None (except from economies of scale, see additional comment)

Asset Management

A lower safety stock level (without effect on fill rate) reduces fixed assets.

Key Best Practice Success Factors Technology Features

None

Other Success Factors

For product postponement, an intelligent, modular product structure is a pre-requisite, so that logistics and/or supply chain management have to be involved in the product development process. To support the development process, logistics/supply chain management has to provide a clear estimation of the effects of product design (especially the number of variants) on production and logistics costs.

Additional Resources Cox, J. F.; Blackstone J. H. (2004): American Production and Inventory Control Society (APICS) Dictionary, 11th edition, APICS – The Educational Society for Resource Management, Alexandria, VA, USA Simchi-Levi, D.; Kaminsky, P.; Simchi-Levi, E. (1999): Designing and Managing the Supply Chain: Concepts, Strategies, and Cases, McGraw-Hill/Irwin, p. 56

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Best Practice Sales and Operations Planning (S&OP) SCOR Process(es) P1 (Plan Supply Chain) Best Practice Description Sales and operations planning (S&OP) is a process to develop tactical plans that provide management the ability to strategically direct its businesses by integrating customer-focused marketing plans for new and existing products with the management of the supply chain. The process brings together all the plans for the business (sales, distribution, inventory, production, procurement) into one integrated set of plans. This set of plans typically covers – at an aggregate (product family) level – a period of 8 to 18 months with monthly periods and further years with half-year periods. S&OP is revised on a regular basis, most commonly monthly, but at least twice a year. The process must reconcile all supply, demand, and new-product plans at both the detail and aggregate levels and tie to the business plan. It is the definitive statement of the company’s plans for the near to intermediate term, covering a horizon sufficient to plan for resources and to support the annual business planning process. Typically, Sales and Operations Planning includes four key monthly meetings: 1. Demand review (to align the sales forecasts for the next months) 2. Rough cut capacity planning review (to determine the available facilities and assess the feasibility of the production plans) 3. Pre-top Management review (to agree upon points to be escalated to top management) 4. Top Management review (to get plans authorized, issues fixed and financial plans committed). Best Practice Need and Suitability Indicators ƒ ƒ ƒ ƒ ƒ

Variability or misbalance in demand and/or supply, need to balance supply and demand across the supply chain. Conflicting measures and behavior in various departments Inventory unbalanced across the supply chain Asset Utilization below industry norms Especially important if operations are to a large extend planned to forecasts

Additional Comments None.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Effective S&OP plans will allocate resources such that inventory is in place at the correct locations at the correct time so that when customer orders come in they can be fulfilled within normal procedures/processes

Responsiveness

S&OP points out where the supply chain has lead-time issues. It raises the visibility of lead-time problems.

Flexibility

The S&OP process makes potential issues visible early, so that changes can be made to accommodate the dynamics of the supply chain.

Costs

In particular, S&OP helps reduce the number and impact of expedites and “rush production orders” – both of which have a negative impact on supply chain costs.

Asset Management

S&OP allows an enterprise to operate much closer to target production and inventory plans, and thus leads to lower inventory levels and more efficient use of assets.

Key Best Practice Success Factors

Technology Features

S&OP is essentially a PEOPLE process that can be achieved with minimal technology support. In some cases, Excel spreadsheets are adequate. Accessibility, accuracy and timeliness of aggregate enterprise-wide data are critical, though. Ideally strategic external data (e.g. customer forecasts, co-packer capacity/costs) would be an important asset to the S&OP process.

Other Success Factors

Managers should have visibility to the plans of all departments. They should also understand the impact of their deviations from plan on the other departments and the enterprise as a whole. Performance to plan should be measured. Top Management sponsorship and involvement is essential for the success of S&OP.

Additional Resources Civerolo, J.; Rice, D.: Sales and Operations Planning Handbook, Gray Research.

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Best Practice Six Sigma SCOR Process(es) affects any SCOR process Best Practice Description Six Sigma is based on a philosophy of driving for near perfect process performance (3.4 defects per million opportunities for a defect) in order to satisfy customer needs and improve financial performance. Individuals can be trained in the various roles of Six Sigma, including Deployment Champions, Black, Green, and Yellow Belts. These practitioners then lead project teams made up of people from the operation through the use of the methodology to define and solve problems.

Six Sigma improvements are enabled through a rigorous methodology referred to as DMAIC (named for the phases of Define, Measure, Analyze, Improve, and Control). The DMAIC methodology for problem solving utilizes both process and statistical analyses to improve product/process quality and drive reduction of defects and variation. The methodology generally provides a systematic way to define the problem being addressed from both a process and financial impact perspective, identify potential factors impacting performance, narrow to the critical few root causes of defects or variation, and then establish procedures to implement sustained performance improvements.

A couple of apparent limitations with Six Sigma are the lack of alignment of priorities, understanding the interdependency between projects, i.e., incremental process improvements versus process redesign, and the lack of methods to develop future projects once the "initial hit lists" (pet-pains) become exhausted. See the Best Practice on “Convergence of SCOR, Six Sigma and Lean” to overcome this limitation.

Best Practice Need and Suitability Indicators ƒ ƒ

Need for significant improvements for Product Quality or defect reduction Need to reduce process variability

Additional Comments Six Sigma provides a standard toolset for executing improvement projects to increase product quality and reduce defects and process variability. Execution is enabled based on the Six Sigma steps of Define, Measure, Analyze, Improve, and Control (DMAIC). Relies heavily on statistical data gathering and root cause analysis. Six Sigma is a toolset and generally lacks an organized method for project identification. Training in this methodology generally requires a costly investment.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Suppliers and customers focusing on defect and variability reductions will increase product quality product and perfect order fulfillment as a consequence.

Responsiveness

Improve order fulfillment cycle time by reducing number of defective products produced, held in inventory or shipped and returned for warranty. Very important for new Product development deliveries.

Flexibility

None.

Costs

Reduces cost as process variability is minimized or removed. Reduces product return due to defects.

Asset Management

None.

Key Best Practice Success Factors Technology Features

A data warehouse (with data extracted from ERP source system) and electronic exchange of quality data with suppliers is useful.

Other Success Factors

Teams should be set up with strong participation of the people directly working in the examined process. Six Sigma implementation should start with a small, controllable scope. Incremental learning prepares the organization for larger projects.

Additional Resources Tennant, Geoff (2000), “Six Sigma: SPC and TQM in Manufacturing and Services” Pande, Peter S., Neuman, Robert P., Cavanagh, Roland R. (2000), “The Six Sigma Way: How GE, Motorola, and Other Top Companies are Honing Their Performance” Pande, Peter S., Holpp, Lawrence (2001), “What Is Six Sigma?” Snee, Ronald D., Hoerl, Roger (2002), “Leading Six Sigma: A Step-By-Step Guide Based on Experience with GE and Other Six SIGMA Companies” Eckes, George (2003), “Six Sigma for Everyone” http://www.isssp.com/ International Society of Six Sigma Professionals (ISSSP)

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Best Practice

Statistical Test Count

SCOR Process(es)

ES.4 (Manage Product Inventory), ES.5 (Manage Capital Assets), ED.4 (Manage Finished Product Inventories), ED.5 (Manage Deliver Capital Assets)

Best Practice Description The Statistical Test Count (STC) process is a method of validating inventory on-hand values by physically counting and reconciling a statistical sample of the entire inventory population. This sample is then extrapolated, which provides an indicative measure of entire inventory population. Furthermore, with extrapolation the net and gross percentage of error is determined.

One of the primary benefits of this process is a significant reduction in the time and manpower required to perform an audit – control over data gained with STC meets or exceeds all requirements of both internal and external auditors. In contrast to physical inventory and cycle count methods STC creates virtually no disruption to receiving/shipping. Interim reporting allows for monitoring of early results.

STC provides a snapshot of piece count and inventory value accuracy level. Measurable results on both are achieved that can be benchmarked year-to-year, facility-to-facility, and network-to-network. Benchmarking is a proactive driver for inventory accuracy improvement.

Best Practice Need and Suitability Indicators Statistical Test Count is particularly beneficial in high SKU count environments. Additional Comments The Statistical Test Count process is based on validated statistical theorems that meet independent auditor annual inventory validation requirements.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Through constant measurement and root cause analysis, use of the STC process promotes greater inventory accuracy to support perfect order fulfillment.

Responsiveness

Unlike cycle count and physical inventory methods, STC does not impede daily operations and does not require warehouse shut-down.

Flexibility

The STC process requires a low volume of counts that can be executed during off-peak times as resource availability allows.

Costs

Significant cost avoidance as a result of decreased time and manpower to perform a physical audit – implementing STC typically delivers up to a 90% cost reduction over physical inventory/cycle count methods.

Asset Management

The diagnostic capabilities of Statistical Test Count identify opportunities to recover against previous inventory shrinkage (balance sheet implications).

Key Best Practice Success Factors

Technology Features

STC uses part cost and other SKU characteristics to select a statistical sample that is indicative of the entire inventory population. STC also uses confidence intervals and other statistical tools to manage application of the program over time. STC does not require high investments in technology. It can be implemented with common spreadsheet software, for example.

Other Success Factors

The STC process delivers the greatest value in an environment of strong process discipline and commitment to continuous improvement. Results of the STC process should embedded in established process disciplines to address any unexpected deficiencies through adjusted sample size and root cause analysis.

Additional Resources Statistical Test Count is currently not well documented in literature. The following books deal with inventory accuracy in general: Wild, T. (2004): Improving Inventory Record Accuracy: Getting your stock information right. Brooks, R.B.; Wilson, L.W. (1995): Inventory Record Accuracy: Unleashing the Power of Cycle Counting

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Best Practice Supplier Performance Assessment System SCOR Process(es) ES2 (Assess Supplier Performance) Best Practice Description “Assess Supplier Performance” is the process of measuring actual supplier performance against internal and/or external standards, providing feedback to achieve and maintain the performance required to meet the customers’ business and/or competitive needs.

The supplier management program at a representative company has six elements: 1. Viability of supplier Financial credit rating via D & B, Risk rating associate with overall financial health. 2. Supplier Capability Quality of supplier deliveries in PPM for Engineering programs and Production parts 3. Dependability On time delivery for Engineering programs and Production deliveries, number of stock outs, average days of stock out 4. Responsiveness Part lead time, inventory turns 5. Competitiveness YTD part cost savings, number of parts on pull processes (JIT), electronic data exchange 6. Technical ability Global reach, Engineering ability, Technology roadmaps Each month, the source data is extracted from an ERP software for each supplier. A report card is created and communicated to suppliers. Performance data is monitored by commodity managers with the expectation that supplier responds to any variance to goals or expected results.

This supplier performance data can be used to select suppliers for a preferred supplier program. Preferred suppliers are given preference for all new business awards and supporting Engineering development programs. Best Practice Need and Suitability Indicators ƒ ƒ

Significant expenses for raw material and semi-finished products (compared to own value-add) Need to reduce number of suppliers

Additional Comments Suppliers are an external extension of the manufacturing process. In today’s competitive environment, processes rely on dependable supply streams that react quickly to variability in demand.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Source data is from transactions logged in ERP system. No arguments concerning their data vs. our data. Variance to goals is trigger for supplier to present corrective actions. Supplier and customer can focus on performance vs. data integrity. Detail data on delivery and quality are used to identify chronic performance issues for improvement.

Responsiveness

Improve reaction time for demand inside of lead-time. Mind share is maintained due to monthly performance scorecard. Very important for New Product development deliveries.

Flexibility

Since new business is awarded to suppliers that perform well, suppliers are in a continuous improvement mode.

Costs

Not an event, but expected throughout the year.

Asset Management

Suppliers are encouraged to improve inventory turns by implementing pull systems for their parts.

Key Best Practice Success Factors Technology Features

A data warehouse (with data extracted from ERP source system) and electronic exchange of performance data with suppliers is useful.

Other Success Factors

Supplier Management Process, Supplier Survey and Evaluation process, and Supplier Performance Measurement process have to be defined; Source of data, and performance expectations need to be communicated to suppliers and stakeholders in the company (buyers, engineers). For critical suppliers, a qualification process is recommended to align the operational standards with the company’s requirements.

Additional Resources None

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Best Practice Vendor Managed Inventory (VMI) SCOR Process(es) P1, P2, P4, S1.1, S2.1, S3.3, ES.7, D1, D1.5, D1.6, D2.5, D2.6, D3.5, D3.6 Best Practice Description VMI is a concept for planning and control of inventory, in which the supplier has access to the customer’s inventory data and is responsible for maintaining the inventory level required by the customer. Re-supply is performed by the vendor through regularly scheduled reviews of the on-site inventory. The on-site inventory is counted, damaged or outdated goods are removed, and the inventory is restocked to predefined levels.

The supplier takes responsibility for the operational management of the inventory within a mutually agreed framework of performance targets, which are constantly monitored and updated to create an environment of continuous improvement.

Different styles of VMI agreements exist. ƒ ƒ ƒ

Re-supply need not be on a scheduled basis. It can be more flexible to occur within defined conditions, e.g. any day normal business hours. The customer can be included in the “approval” process: The supplier could propose a replenishment (quantity, date) and the customer has to approve the order. Often (but not necessarily) VMI is combined with consignment. The supplier owns items until they are taken from the VMI and used, i.e. items are to be paid when they are used.

Best Practice Need and Suitability Indicators Similar to conventional MRP planning of inventory, VMI implies manual planning and control tasks, but shifts these tasks to the supplier. This manual effort should be invested in such items, which are valuable and for which demand is unsteady or sporadic. For less valuable items with a continuous demand order point technique and kanban are more suitable. Additional Comments VMI works well, where demand and inventory data is readily available, systems are integrated, and economies of scale exist with large customers. Jointly Managed Information (JMI) is a derivation of VMI to use when and where VMI is not operationally or commercially practicable. Jointly-Managed Information is the automated collection, management, and integration of POS and inventory data into supplier inventory/materials management algorithms, independent of physical movements into the retail channel. This achieves many of the same benefits as VMI when there exists a free flow of information among retail channel partners, without introducing what can be sensitive financial relations between the parties. Retail partners often cannot or will not allow a vendor to automatically replenish them.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

VMI helps to assure the availability of items thereby helping to ensure better on-time delivery performance as well as greater fill rates.

Responsiveness

Less time is spent waiting for items, allowing the production to operate more smoothly and quickly. With visibility of the demand cycle, you can agree to an official lead time, which can be reduced, and be predictable. Kraft, for example, realized a 15-20% reduction in lead times.

Flexibility

The supplier gains flexibility, when to re-supply, and – as a consequence – when and how much to manufacture.

Costs

Inventory level decreases by up to 20% leading to lower inventory costs. The supplier gets a clear view of demand and flexibility (see above), so that he can achieve lower variable manufacturing costs

Asset Management

Transfer of ownership of inventory and payment terms vary depending on the VMI agreement. VMI has a focus on working capital, with the goal being both parties experiencing a working capital reduction. The effect will vary depending on the details of the VMI agreement.

Key Best Practice Success Factors

Specific capabilities must be in place for VMI to succeed. These include: ƒ Forecasting capability ƒ Replenishing capability ƒ Load building/order creation (at supplier) ƒ Reporting capability ƒ Electronic commerce infrastructure Technology Features

The addition of technology such as ERP and SCM applications will enhance these capabilities and hence the success of the VMI initiative. Depending on the company size, the number of suppliers and the number of items partners, technology may even be a prerequisite. In most VMI programs, technology plays a major role. Adding technology increases the complexity and cost of implementation, though. Access to data such as inventory levels, demand and demand forecasts is essential to a successful VMI program. VMI works very well in conjunction with CPFR – Collaborative Planning, Forecasting and Replenishment.

Other Success Factors

None

Additional Resources http://www.cpfr.org/documents/ppt/VMI_vs._CPFR.ppt (VMI vs. CPFR)

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Best Practice Wave Picking SCOR Process(es) D1.9 (Pick Product) Best Practice Description Wave picking is a practice used in many DC operations to increase labor picking productivity and reduce the labor cost per pick. In some DC’s, orders are scheduled to be picked when they are received. In contrast to that, Wave picking consolidates orders into “waves” where multiple orders with similar characteristics are picked at one time. Orders can be consolidated by customer, geography, or any other criteria that makes sense for the DC operation. In an operation where freight consolidation for shipping is important, wave picking can help consolidate less-than-truckload (LTL) shipments into truckload (TL) shipments. Many times wave picking is performed in conjunction with batch picking. Batch picking aggregates similar items across orders into a single pick. For example, assume that the DC has 15 orders each containing Item A. In a single order pick environment, the order picker would make 15 separate trips to the location containing Item A. In batch picking, the order picker would make 1 trip to the location of Item A and pick 15 units. Most wave picking attempts begin with small batch picking initiatives. The combination of batch and wave picking provides the most productivity. Wave picking, in conjunction with batch picking, increases the total travel time for each order picker, but the total time per item picked is reduced. This also allows the DC more flexibility when scheduling its order picking crew. If multiple waves are picked during the day, care must be taken to balance the number of orders across each wave as equally as possible. Waves can be planned based upon the estimated time required to complete the wave. For example, if picker productivity is 120 units per hour and the shift consists of 10 pickers, the system can release work in 1 hour blocks to make management more efficient. This makes the operation more predictable and measurable. Wave picking increases DC picking and shipping productivity substantially. If managed appropriately, customers should receive more consistent deliveries. Wave picking Best Practice Need and Suitability Indicators ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ ƒ

Low distribution center (DC) labor productivity High DC order pick costs High transportation costs Ideally suited for environments where many customers place large numbers of similar orders. Demand is fairly stable throughout the operating period (also be used where seasonality temporarily increases volume in a DC). Not too practical in a pallet pick environment Works best with single line orders with the same SKU going to multiple customers. Frequently seen in the retail sector where a single DC has many shipping locations, each receiving a similar product mix. Automated picking and conveyor systems make this practice more efficient.

Additional Comments Waves must match the business environment for which they are being planned. Direct-to-consumer businesses might schedule waves specific to days of delivery or might have a “clean-up” wave to catch all next day orders not waved throughout the day.

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Impact on Supply Chain Performance Attributes/Metrics Attribute

Experienced Impact

Reliability

Wave picking can increase perfect order fulfillment since there are fewer opportunities to mis-pick product.

Responsiveness

Delivery times to customer might increase (consolidation of orders into waves requires holding them for a period of time before they are picked).

Flexibility

Increases, because a wide range of specific end-products can be derived from the stocked generic product.

Costs

None (except from economies of scale, see additional comment)

Asset Management

A lower safety stock level (without effect on fill rate) reduces fixed assets.

Key Best Practice Success Factors

Technology Features

Efficient wave picking requires some type of Warehouse Management System (WMS) software to prioritize orders and allocate them to an appropriate wave. This practice also requires some type of interface with the firm’s order management system and its Transportation Management System (TMS). Batch picking is best accomplished with an integrated sortation device that takes the results of the batch pick and creates individual orders. This is more costly from a capital investment perspective but greatly reduces operating cost and increases the consistency of throughput.

Acceptable lead times must be defined between the DC and its customers. This will facilitate the allocation of orders into waves. Other Success Factors

Training of DC workers is necessary to implement the wave picking process. Also, training will be required for sortation as a result of the batch picking process. Most implementations begin with a small group of customers or geographic locations. Normally, these groups should provide some level of stable demand.

Additional Resources None

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