SCMN 77007706 Demand Fulfillment

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SCMN 7700/7706Demand Fulfillment Segment
20 PEC Case Part 4 Data Mining
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Measuring Supplier Performance

• Monitor KPIs and take corrective action, to
  ensure value is provided by suppliers
• Create visibility into process and performance
  across the entire supply management life cycle

Supply Mgt.
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Understanding Current Suppliers Supply Activity
Profile

• Objective
• Build a database for decision making
• Reveals opportunity to improve purchasing
  activities and supplier management

PO history Transaction DB Supplier files

• Purchase by
• - Supplier
• Location
• SKU
• Combinations

Supplier ABC Supplier activity SKU activity PO
statistics
Supplier Perf. Supplier Quality Sole
sourcing Make vs. Buy Rationalization
Data Sources Queries Profiles Decisions
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Supply Activity Profiling

• Supplier profiles
• Who do we buy from?
• Analyze purchasing activity based on their
  location, dollars spent with them, cases, pieces,
  weight, frequency, deliveries, ABC class, etc.
• Item profiles
• What do we buy?
• Analyze purchasing activity based on dollars,
  pieces, cases, pallets, cube, weight, lines.
• Supplier-Item profiles
• ABC x ABC analysis

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Purchasing Performance Analysis

• Key Criteria
• Quality
• Delivery
• Price
• Value added services
• Process and types of measures are similar to
  those presented for the purchase of
  transportation services
• Criteria measured on a weighted point plan

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Matching the Criteria and Measures

• Efficiency
• Vendor quality and delivery
• Effectiveness
• Price effectiveness
• Material flow and control
• Inventory levels
• Adaptability
• JIT performance
• Short order cycle time

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Supply Performance Measures

• Financial
• Total supply cost
• All costs related to planning, management, and
  procurement execution
• Purchase order cost
• TSC / number of purchase orders placed
• Supplier return on inventory
• Supplier total logistics cost
• Total acquisition cost (not just unit cost)

• Supply Quality
• Perfect purchase order percent
• Arrives on time, without damage, and with perfect
  documentation at the right location with correct
  quantities of all SKUs ordered
• Vendor fill rate
• Order
• Line
• Unit
• Supplier satisfaction index

• Productivity
• Number of SKUs managed
• Number of suppliers managed
• Dollars managed
• Number of POs launched
• Inventory turns vs. target
• Fill rate performance vs. target

• Cycle time
• PO cycle time
• PO cycle time variability

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Examples of Price/Cost Metrics

• Target Prices Achieved
• Target is initially established for finished
  product/service
• Unit Price/Cost Reduction
• Compares actual price paid for a product or
  service in one period versus actual price paid in
  an earlier period
• Spend As Percentage of CGS or Revenue
• Looks at change in spend as a percentage of Cost
  of Goods Sold or of Revenue over some time period
• Actual Price Change vs. Market Index Change
• Measures actual price changes for a commodity
  group, relative to a market index, over some time
  period
• Total Delivered Cost
• Recognizes that cost goes beyond just unit price
  paid for a product/service
• Inventory Cost Reductions
• Inventory represents a significant cost element
  in most supply chains, and offers substantial
  savings opportunities. Purchasing effectiveness
  clearly impacts inventory holding costs.

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Point Electronics Project Case Part 4 Supply
Mgt.
You and your partners have been retained by Point
Electronics to help them get a better
understanding of their logistics performance.
They have done the necessary data collection for
your analysis. In this part of the project,
supplier performance data is available on your
CD.
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Basic Information

• Supplier Database Field Details

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Your Assignment for Part 4 of the Project

• Complete the Supplier Profile worksheet
• What data use the PEC Supplier Database
• How use MS Access queries to answer the
  questions
• Complete the supplier data mining requirements
• What data use the PEC Supplier Database
• What questions answer all questions that follow
  in this PowerPoint presentation
• How follow the same process as you did for the
  previous parts of the project
• use MS Access queries to generate information
• Copy results to MS Excel
• In Excel, calculate totals, percentages, and key
  inventory metrics, format tables, and print your
  results (one set of responses per team)
• Analyze the data mining results
• Use your data mining results along with the key
  questions to analyze PECs inventory management
  performance during August.
• use the Analysis Form provided on the class
  website
• Work with your teammates to develop a Supply
  Chain Assessment for PEC

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Supply Mgt. Profile - Use database queries to
amass the following information regarding PECs
current situation for August (2003)
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Supplier Analysis

• Q1. Is Point purchasing the right products for
  their supply chain?
• A. Summary of purchases by business class
• B. Compare Purchases to Revenue (Demand DB) and
  Value of Inventory (inventory DB) By Business
  Class
• Note Query has already been built for Q1b, just
  double click on the query named Question 1B to
  generate table
• C. ABC Analysis

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Deliverables Format (Q1A)
Use Excel
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Deliverables Format (Q1B)
Use Excel
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Deliverables Format (Q1C)
Use Excel
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Supplier Analysis

• Q2. Does Points supplier base provide effective
  logistics services?
• A. Summary of Order Cycle Time
• B. Summary of Timeliness Status
• C. Summary of Fill Rates

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Deliverables Format (Q2A-B)
2A
2B
Use Excel
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Deliverables Format (Q2C)
How many of the orders received had a First Time
Fill Rate of less than 100? _________ What
percentage of the total orders had a First Time
Fill Rate of less than 100? ________
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Supplier Analysis

• Q3. Does Points vendors supply base provide
  quality products?
• A. Summary of Product Quality
• B. Summary of 10 Worst Suppliers

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Deliverables Format (Q3A)
Use Excel
Defect rate quantity rejected /total units
ordered Defect rate in PPM defect rate
1,000,000
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Deliverables Format (Q3B)
Use Excel
Hint perform a Select Query, grouping by
Supplier, summing the other four columns and
sorting the Value of Goods Rejected in descending
order . The first ten rows of the table will be
your ten worst suppliers. Proportion of Order
Rejected Value of Goods Rejected / Value of
Order x 100
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Supplier Analysis

• Q4. Does Point effectively leverage its
  purchasing power with its suppliers?
• A. Supplier Status Analysis
• B. Supplier Status by Model ABC Analysis
  (crosstab query with value of goods received)

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Deliverables Format (Q4A)
4A
Use Excel
What is the average number of transactions per
supplier for PEC? _________
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Deliverables Format (Q4B)
4B
Supplier Status
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Supplier Analysis

• Q5. Does Point receive exceptional value from
  their suppliers?
• A. Perfect Order Analysis (use a crosstab query
  with count of any field)
• B. Low Cost Supplier Analysis

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Deliverables Format (Q5A)

• 5a.

How many orders are perfect? ____________ What
percentage of total orders are perfect?
______
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Deliverables Format (Q5B)
Use Excel
5B
Conduct a select query Group By Model Number,
Sum the Quantity Received, Sum the Value of Goods
Received, and Min for Unit Cost to get
information needed for the overall analysis
(total for all purchase). Within the query
results table use the Find function to get the
data for the four individual model numbers.
Purchase cost if Bought from Low Unit Cost
Supplier Quantity Received x Low Unit
Cost Savings Value of Goods Received -
Purchase cost if Bought from Low Unit Cost
Supplier Savings (Saving / Value of Goods
Received) x 100
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OTHER RESPONSIBILITIES PEC Supplier Analysis
Questions

• Is Point purchasing the right products for their
  supply chain? YES SOMEWHAT NO
• Does Points supplier base provide effective
  logistics services? YES
  SOME DO NO
• Does Points vendors supply base provide quality
  products? ALL MOST FEW NONE
• Does Point effectively leverage its purchasing
  power with its suppliers? YES SOMEWHAT NOT
  REALLY
• Does Point receive exceptional value from their
  suppliers? YES SOMEWHAT NOT REALLY
• Summary Questions

CHECK SYLLABUS FOR DUE DATES
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OTHER RESPONSIBILITIES PEC Executive Briefing

• The last requirement for the case is to develop a
  brief report for your clients at Point
  Electronics.
• Create an executive summary report which
  describes
• The work that you have done
• The current Point supply chain
• Performance levels in each function studied
• Recommendations for improvement with discussion
  of anticipated benefits
• Answer the questions posed by the CEO of Point
  Electronics Corp.
• See the instructions posted on the website for
  details regarding this final team requirement for
  the PEC case.

CHECK SYLLABUS FOR DUE DATES
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OTHER COURSE RESPONSIBILITIES

• Earthbound Foods Case Analysis an individual
  assignment where you will read the HBS case
  study, analyze the situation, and make
  recommendations regarding the organizations
  future use of the forward distribution strategy.
• Course Exam an individual open-book exam where
  you will assess short scenarios and develop
  strategies for improving fulfillment processes
  and performance.
• See the instructions on the website for details
  regarding these two requirements. Information
  will be available no later than June 1st.

CHECK SYLLABUS FOR DUE DATES
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Final Notes

• The best way to keep in contact with me for the
  balance of the summer is via email. My address is
  brian.gibson_at_auburn.edu
• My goal is to grade your work a minimum of twice
  per week
• Work turned in Sunday through Wednesday will
  receive feedback by Friday.
• Work turned in Thursday through Saturday will
  receive feedback by Tuesday.
• I currently have two stretches of time where my
  access to email will be limited. Please be
  patient as I may be slow to respond to questions
  or grade your work between the following dates
• June 21 29
• July 26 August 2
• Thanks, and have a great summer.