Supply Chain Excellence: Series 1 - Understanding The Supply Chain by Vishnu Rayapeddi

Level 1 Processes included in SCOR are: Plan, Source, Make, Deliver, Return and Enable

Level 1 Metrics included in SCOR are: a) Perfect order fulfilment, b) Order fulfilment cycle time, c) Upside supply chain flexibility, d) Upside supply chain adaptability, e) Downside supply chain adaptability, f) Overall value at risk, g) Total cost to serve, h) Cash-to-cash cycle time, i) Return on supply chain fixed assets, j) Return on working capital.

So, how do we define supply chain excellence?


We can define Supply Chain Excellence in simple terms as, “Getting the right things to the right place, in the right quantities, at the right time and at the desired quality, the first time, while minimising waste and being open to embrace change.”
Objectively, Supply chain excellence is defined both by improving year-on-year financial performance and by outperforming the industry on a portfolio of metrics that correlate closely to market capitalization. The metrics used are 1) Inventory Turns, 2) Operating Margin, and 3) Return on Invested Capital (ROIC). While we often see companies performing well in one of the three metrics, it is believed that supply chain excellence is based on the ability to drive improvement on the complete portfolio—improving all three metrics together.

This article is written by Vishnu Rayapeddi, a Lean Manufacturing & Supply Chain Operations Specialist, who works as a volunteer Executive Committee Member of NZPICS, the only Premier Channel Partner of APICS in New Zealand. NZPICS Offers the following courses in Supply Chain in affiliation with APICS: CPIM (Certified in Production & Inventory Management, CSCP (Certified Supply Chain Professional) and Principles of Operations Management, which is a fully customisable solution to businesses. For further information, please visit www.nzpics.org.nz or call on 09-525 1525.