Transportation Management

How do logistics operations using network planning compare to those that are not? How does popularity-based SKU placement affect supply chain reliability?

In APQC’s by the numbers: Logistics publication, supply chain executives and managers can gain insight about meaningful measures adopted throughout a wide range of industries, evaluate performance through benchmarking, and identify areas for ongoing process improvement. The information analyzed includes standard measures used regardless of industry or geography and identifies gaps among poor, median, and excellent performance in the logistics function and four related processes:

1.   Define logistics strategy
2.   Plan inbound materials flow
3.   Operate warehousing
4.   Operate outbound transportation

Perhaps more importantly, APQC’s research is also designed to provide insight into which business practices are associated with improved performance. We believe it is not enough just to know where the top quartile and bottom quartile lie, so our research helps explain what practices drive the variation in performance.

APQC’s research efforts show a substantial gap between high-performing and low-performing organizations.

In addition to gaps in quantitative performance, APQC’s by the numbers: Logistics uncovers several insights into performance.

·      Top performers have practices, processes, and/or systems in place to enable higher order fill rates with a lower investment in inventory assets, resulting in significantly lower inventory carrying costs.
·      Top performers deliver 20 percent more complete orders on time with close to 40 percent less inventory.
·      High performers in order cycle time employ their own practices to compensate for unreliable supplier deliveries. High performers experience the same rate of supplier on-time delivery as low performers: a median of 85 percent, as compared across industries.
·      Service levels for those organizations performing most cost-effectively remain high; in fact, they provide slightly higher service levels to their customers than do those organizations spending more logistics dollars in the service of their customers.

Over time APQC has confirmed that lower cost, improved productivity, reduced cycle time, and higher quality can go hand-in-hand. The important relationship among cost, quality, and cycle time cannot be ignored. Therefore, APQC supplements traditional cost measures with other key measures such as quality, productivity, and cycle time.

APQC research indicates that better performance is correlated with the use of certain business practices. This book quantifies the unit cost and productivity differences associated with the use of these practices. The practices examined and some key findings include:

·      Systems such as advanced planning and scheduling software (APS) and warehouse management systems (WMS), and warehouse operating strategies such as popularity-based SKU placement, enable significantly higher performance in key customer service measures at significantly lower cost per order shipped.
·      Redesigning logistics networks by using network planning and optimization tools increases order fulfillment rates while lowering operating costs.
·      Bar code scanning technologies have been widely implemented. However, radio frequency–based technologies still appear to be in infancy stages and are not widely implemented to date.

In short, logistics practices can be significantly improved and result in bottom-line savings. The Open Standards Benchmarking Collaborative(SM) (OSBC) research, from which this data is drawn, quantifies these gaps and goes on to explore specific business practices that are linked with better performance.

To read the executive summary from by the numbers: Logistics, please click here.