The Logistics Institute at
Georgia Tech (Atlanta, GA) has released the results of a supply chain strategy
focus group that included representatives from 29 companies. Conducted as part
of the institute's Logistics Management Series, the focus group examined four
issues in logistics and supply chain management: 1. Data requirements and
activity-profiling for reverse logistics planning; 2. Logistics performance
indicators; 3. Criteria for differentiating customers for customer service
policy development; and 4. Supplier selection criteria.
Dr. Ed Frazelle, director of the series and president of Logistics
Resources International, led the group, which included representatives from
Cargill, Case, Celiant Corp., Clorox, Corporacion Supermercados Unidos, C-P
Flexible Packaging, Defence National Stockpile Center, Diageo, FedEx Supply
Chain Services, W. Grainger, JMAC Consiel S.p.A., Kohler, NCR, Newark Electronics,
Office Depot, RBX Industries, Russell Athletic, Schneider Logistics, Team S.A.,
Thomas & Betts, Tiffany & Co., Transentric, the U.S. Army, U.S. Marine
Corps, U. S. Department of State, Vaisala, Vistakon, and XonTech. Among the
findings of the focus group were the following.
1. Data requirements and profiles for reverse logistics planning.
Participants were asked to determine what data requirements are involved with
reverse logistics planning and to identify the factors that generate disproportionate
returns activity. Potential problem areas pinpointed included: certain customer
groups, particular SKUs, and individual suppliers. Each category could, the group
felt, account for higher-than-normal returns.
2. Logistics performance metrics.
"Developing and implementing a logistics performance measurement program
with appropriate performance targets for each metric is perhaps the fastest, simplest,
and least expensive means of raising total logistics performance," said Dr.
Frazelle. "If we can get the right metrics in place, we will yield the right
behaviours."
The focus group developed and ranked a list of key logistics performance indicators
in terms of their usefulness in monitoring total logistics performance. These
indicators included: A. Perfect-order percentage; B. On-time delivery percentage;
and C. Inventory accuracy.
3. Criteria for segmenting customer service.
The top three criteria identified by the focus group for segmenting customers
into service-level categories were: A. Profitability (profit percentage derived
from serving the customer); B. Sales volume (dollar and unit sales derived from
the customer); C. Growth potential (customer's long-term potential for increased
revenue).
4. Supplier-selection criteria.
"Once customer service performance targets have been developed, supplier
selection criteria can be established to ensure the customer service policy can
be executed reliably and without incurring excessive logistics costs," Dr.
Frazelle stated. "The supplier selection criteria helps to formalize the
choice of suppliers to support the customer service policy and those same criteria
become the report card for monitoring supplier performance on an ongoing basis."
The following are the focus group's top three supplier-selection criteria: A.
Total logistics cost, as compared to Receive/PO cost; B. Proximity; C. On-time
delivery percentage.
