Benchmarking Supply Chain Performance

How Are You Doing?

Consultancy Pittiglio Rabin Todd & McGrath (PRTM) of Waltham, Mass., surveyed global companies across a sampling of industries to come up with best-in-class and median performances.

1. Total supply chain management costs (total cost of planning, IT and acquiring materials, plus managing order processing, inventory and supply-chain finance).

Best in class: 4 percent to 5 percent of sales

Median: 8 percent to 12 percent of sales

Savings: for a company with $500 million in annual sales, best in class nets a $25 million to $30 million advantage yearly

2. Cash-to-cash cycle time (the number of days between paying for raw materials and getting paid for product)

Best in class: 30 days or less

Median: 100 days 3. Delivery performance to request (the percentage of orders that are fulfilled on or before the customer’s requested date)

Best in class: 94 percent

Median: 69 percent to 81 percent

How Are Your Suppliers Doing?

Staples, the office supply products retailer, publishes key performance metrics on its supplier website—universal metrics for keeping suppliers on their toes including:

Initial fill rate: What percentage of the goods ordered did the supplier send in its first shipment? (A key driver of inventory availability to retail customers.)

Initial order lead time: How long did it take to get delivered goods after placing the order? (A good measure of a supplier’s supply chain responsiveness and speed.)

On time receipt performance: If a supplier agrees to your specified delivery date, how often was the product in your warehouse when you wanted it?