Focused Metrics. Tom Vander Weide G-3 Enterprises and Tom Patterson Saddle Creek Corporation
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1 Focused Metrics Tom Vander Weide G-3 Enterprises and Tom Patterson Saddle Creek Corporation
2 Saddle Creek Corporation Saddle Creek is a 3 rd Party Logistics Services Company Service offering includes warehousing, transportation, and packaging/value adding services Operating over 8 million sq. ft. 20+ facilities in 6 states 1,200 associates plus flex staff G-3 Enterprises Manufacturing, transportation, warehousing (beverage packaging components & logistics services) Network of 8 Regional Distribution Centers (RDC s) 4PL Rail deployment Truck fulfillment Six 3PL operators Variety of business systems EDI Organizational structure and processes
3 Relationship of Saddle Creek and G-3 Enterprises Saddle Creek began working with G-3 in 1997 Operate (3) RDC s DFW, ATL, FLA Warehouse, transportation & value-added 15MM cases annually throughput Metrics Program (KPIs) developed in 1999
4 Goals of this session What makes KPIs/Metrics Programs effective from Customer and Provider perspective? Case Study Understanding the G-3 Metrics from both perspectives Determining if your KPIs are focused and standardized
5 Distinguishing Metrics & KPIs G-3 Supply Chain Metrics Perfect Order Product Availability Inventory DOS Product Quality G-3 RDC KPIs Order Accuracy Inbound Timing Inventory Accuracy Damage/Hold SCC Operation Metrics
6 Metrics/KPIs from the 3PL perspective
7 What is an effective Metrics Program for the 3PL Operation? Relevant / Measurable / Focused / Timely Consistent across long time period Consistent across multiple like operations drives competition Develops desired behaviors no cheating to make numbers
8 How does a good Metrics Program add value? Improves communication through the supply chain Identifies areas of needed improvement Promotes positive change and innovation Advances operating process consistency Bolsters confidence in all organizations
9 Does meeting the KPI goals create a more effective operation? Short Term Long Term Improved Operations Past Performance Strategic Direction Process Improvement
10 Customer relationship s are better with Metrics Everyone understands expectations Customer & Provider Performance is the cornerstone of most 3PL relationships People throughout organization see their impact with the customer Key component of the Customer Value Team
11 Customer Value Team G-3 Expectations and Priorities Information Services Customer Value Team Executive Team Participation Warehouse Dallas/Ft Worth Operations Transportation Warehouse Atlanta Operations Transportation Warehouse Lakeland Operations Transportation
12 Role of the Customer Value Team Standardize/Improve Processes Consistency Review & Improve Customer & Internal Metrics Improve Communication Throughout Organization Align Multiple Locations to Customer Goals Seek Additional Ways to Add Value
13 KPIs from the customer s perspective
14 What is an effective Metrics Program for the customer? Alignment with overall organizational objectives and strategies Measure and drive business process / results Data availability integration into operations Routine periodic review (internally and with providers) Buy-in, accountability and communication Recognition and follow-up
15 Are we getting value from our 3PL s? 3PL performance vs. expectations / baseline Align 3PL s focus to customer goals Healthy competition Innovation, process improvement and cost reduction Standardization, best practices Voice of the customer
16 How do the 3PL KPIs compliment overall objectives? Look beyond the financials Lagging indicator Complimentary to internal Metrics Perfect Order <> Order Accuracy <> On-time, etc. Consistent focus on improvement throughout the supply chain Communication tool throughout the customer organization
17 How does the customer organization develop 3PL Metrics? Objectives / business drivers Listen to your customers Leverage 3PL experience Benchmark industry standards Simple and focused accountability Results Process Strategy Publish Review Refine
18 Case Study
19 G-3 Enterprises Case Study Manufacturing, transportation, warehousing (beverage packaging components and logistics services) Network of 8 Regional Distribution Centers (RDCs) 4PL Rail deployment Truck fulfillment Six 3PL operators Variety of business systems EDI Organizational structure and processes
20 KPI History Began RDC Network in 1996 financial metrics KPI / Metrics program developed in 1999 (voice of the customer) Initial measures 1. Order cuts inventory accuracy 2. Rail car cycle time inventory availability 3. On-time deliveries customer service 4. Warehouse damage 5. In-transit damage
21 KPI Program Today Current measures (scoring system) 1. Shipping errors order accuracy 2. Order cuts inventory accuracy 3. Rail car cycle time inventory availability 4. Warehouse damage 5. GMP audit rating 6. On-time deliveries customer service Monthly internal review published / distributed Annual review with providers Monthly / annual award program
22 KPI Scorecard Today
23 Determining the correct KPI focus
24 What is the right number of KPIs? No perfect number 4 to 6 KPIs? Greater the number Narrowly defined focus for each KPI Results oriented Past performance Smaller the number Broad focus for each KPI Process oriented Forward looking - strategic
25 Segmentation of KPIs in the Supply Chain Must be within the control of the operation Should challenge the operator to consider inputs/outputs look up and down stream Consistent in scope to other segments of the supply chain
26 Does the KPI measure the outcome (what) or the activity (how)? What Inventory Accuracy Error Free Shipment Product Availability How Cycle Counts Completed Orders Checked on Dock Inbound Productivity
27 Standardizing your KPIs Consensus on areas to measure Customer / 3PL Consistent data source Everyone in like function has same Metrics Track over time, limit modification, drive results
28 Current Customer KPI Examples Customer #1 Inventory Based Distribution KPI GOAL Units Per Total Man Hour None Perfect Orders On Dock 100% Cycle Counts Without Error 100% Dock to Stock Within Allowance 100% Carrier Meeting Shipping Appointment 100% OSHA Reporting Incidents 0
29 Current Customer KPI Examples Customer #2 Cross-Dock Program KPI Productivity Units Per Hour GOAL Multiple Orders Without Exceptions 95% On Time Delivery to RDC 98% On Time Delivery to Distributor 98% Transportation Costs Per Unit $0.045
30 Potential Pitfalls KPIs not aligned with organizational objectives Driving undesirable behavior Data Challenges obtain / maintain / validate Unhealthy competition / comparison Inconsistent review and follow-up Lack of accountability / communication / recognition
31 Bridging KPI Performance and Perception
32 Checks and Balances Do the numbers add up? Periodically look at complimentary measurements Dock to Stock <> Delivery and Receipt Date Cycle Count Accuracy <> Order Cuts On Time Delivery <> Reschedule Frequency Consider alternative data sources other parts of supply chain
33 Do the KPIs tell the story What is the real perception? Survey other parts of the customer organization Sales, Manufacturing, Accounting, Q/A Survey the end customer Consignees, Distributors Voice of the Customer
34 You don t have KPIs or Metrics?... Measure your own operation, division or function Incentives within your operation Comparison tool for like businesses Baseline for improvement initiatives Sales tool for your company
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