core benchmarks: planning - tompkins international

Hot Topic Report

Core Benchmarks: Planning Spotlight on Achieving Planned Results

Supply Chain Consortium

Benchmarking & Best Practices

October 2013

www.supplychainconsortium.com

2 Copyright © 2013 Tompkins Supply Chain Consortium. All rights reserved. Confidential and Proprietary

Table of Contents

Introduction 3

Survey Demographics 4

Sales Forecast Accuracy 8

On-Time Delivery to Customers 18

Total Inventory Turns 21

Order Fulfillment Lead Time 26

Production Plan Adherence 31

Summary 33

Report Authors 34


The Core Benchmarks: Planning report places a focus on how industry leaders

achieve the results for which they plan. The data derives from a large number

of respondents across many industries:

Retail

Consumer products manufacturing

Industrial / Commercial manufacturing

Third-party logistics providers (3PLs)

Wholesalers / Distributors

Data is also formatted by quartile:

Top quartile = Leaders

Second quartile = Competitive Advantage

Third quartile = Competitive Disadvantage

Fourth or bottom quartile = Opportunity

Introduction


Survey Demographics

32.9%

25.3%

17.7%

12.7%

11.4%

Percentage of Respondents by Industry

Commercial / Industrial Manufacturing

Consumer Products Manufacturing

Retail

Wholesaler / Distributor

3PL / Logistics Service Provider


Survey Demographics

1.3%

1.3%

1.3%

1.3%

1.3%

1.3%

1.3%

2.6%

2.6%

2.6%

3.8%

3.8%

5.1%

5.1%

6.4%

6.4%

7.7%

7.7%

16.7%

20.5%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Distributors

Mining/crude oil

Metals

Publishing

Paper

Appliance

Aerospace

Consumer direct

Plastics

Building products

Chemical

Furniture

Apparel/textile

Technology/electronics

Automotive/parts

Transportation services/3PL

Pharmaceutical/medical

Industrial/commercial equipment

Food & kindred product

Consumer products

Respondent Demographics by Segment


Survey Demographics

42.2%

34.4%

14.1%

9.4%

Percentage of Respondents by Company Size

Between $250 million and $1 billion annual revenue

Between $1 billion and $10 billion annual revenue

>$25 billion annual revenue

Between $10 billion and $25 billion annual revenue


Survey Demographics

36.4%

33.8%

22.1%

6.5%

1.3%

Title of Respondents

Director

Vice President

Manager

C-Level

Supervisor / Analyst


Sales Forecast Accuracy (Measured by Percent Error)

Forecast Accuracy: 3PL

Quartile Values

Leaders (top quartile) <2.0%

Competitive Advantage (second quartile) ≥2.0% and <7.0%

Competitive Disadvantage (third quartile) ≥7.0% and ≤10.0%

Opportunity (bottom quartile) >10.0%

Leaders have a forecast accuracy of less than 2.0%, with an average of 7.2%.

This is better than the general 3PL Consortium data that has an average closer

to 20%.



Forecast Accuracy: Commercial / Industrial

Manufacturing

Quartile Values





The leaders in commercial / industrial manufacturing have a forecast accuracy

measured by percent error of less than 5%. This is much better than the

general Consortium data for percent error, which averages at more than 20%.



Forecast Accuracy: Consumer Manufacturing

Quartile Values





Leaders in consumer products manufacturing have a percent error for

forecasting of less than 5%, with an average of nearly 23%. This aligns with the

Consortium’s data for consumer products manufacturers.



Forecast Accuracy: Retail

Quartile Values





The percent error for retail leaders is less than 3%, with an average of 10.5%.

This is much better than the Consortium’s data for retailers (average of more

than 20%). The trend has seen a steady improvement in forecast accuracy

over the past several years.



Forecast Accuracy: Wholesalers /

Distributors

Quartile Values





The leaders in wholesalers / distributors have a percent error of less than

3%. The data for the first two quartiles is very strong, and then jumps to

values in the 20% range and greater. This broad range is difficult to explain

for wholesalers / distributors, but is also indicative of the Consortium’s data.


Sales Forecast Accuracy (Measured by MAPE*)

Forecast Accuracy: 3PL

The average mean absolute percent error for 3PLs is 10.5%.

There is not enough data to provide quartile information. This data is

considerably better than the MAPE forecast error found in the Consortium

database that averages more than 25%.

*MAPE = Mean Absolute Percent Error


Sales Forecast Accuracy (Measured by MAPE)

Forecast Accuracy: Commercial / Industrial

Manufacturing

Quartile Values





The leaders in MAPE are less than 15%, with an average of just more than

30%. This is slightly better than the Consortium’s data for commercial /

industrial manufacturers. A MAPE greater than three-quarters is quite high

and offers opportunity for improvement.



Forecast Accuracy: Consumer Manufacturing

Quartile Values





The MAPE for leaders in the consumer products manufacturing industry is

less than 19%. This aligns with the Consortium’s data, where the average is

33%. Opportunities exist for those consumer products manufacturers with a

MAPE greater than 50%.



Forecast Accuracy: Retail

Quartile Values



Competitive Disadvantage (third quartile) ≥10.0% and ≤20%

Opportunity (bottom quartile) >20%

Retailers have the lowest MAPE for any industry, at less than 3% and an

average of 9%. This is significantly lower than the Consortium’s values for

retailers that average at more than a quarter.



Forecast Accuracy: Wholesalers /

Distributors

Quartile Values





The wholesalers / distributors MAPE for leaders is 5%, which is a very low

value. The overall average of 22% aligns with other data collected on

forecast accuracy. Opportunities exist for a MAPE greater than 30%.


On-Time Delivery to Customers for Retailers to Stores

On-Time Delivery to Customers

3PL average – 97.8%

Commercial / Industrial manufacturing average – 94.4%

Consumer products manufacturing average – 97.6%

Retail average – 95.2%

Wholesaler / Distributor average – 95%

Retailer on-time delivery to store values are mostly grouped around an

average of 95% to 97% for each industry surveyed. Some companies indicate

an on-time delivery at or near 100%, while others are in the 80% range.


On-Time Delivery to Customers for Retailers Direct to Consumers



Commercial / Industrial manufacturing average – 92%



Wholesaler / Distributor average – 90.7%

Retailers’ direct to consumer measure for on-time delivery provided results

that are difficult to explain. The numbers have much higher ranges for the

industries than other on-time delivery measures. It is not clear whether this

measure was understood as well as others.


On-Time Delivery to Customers for Manufacturers to Retailers



Commercial / Industrial manufacturing average – 93.3%



Wholesaler / Distributor average – 91%

On-time delivery for manufacturers to retailers have an overall average of

94%. This is better than the average Consortium data of nearly 93% for

on-time delivery.


Total Inventory Turns*

Total Inventory Turns: 3PL

Quartile Values

Leaders (top quartile) >27

Competitive Advantage (second quartile) ≤27 and >12

Competitive Disadvantage (third quartile) ≤12 and >6

Opportunity (bottom quartile) ≤6

The leaders in the 3PL industry have inventory turns greater than 27. This is

higher than expected, but is actually less than what is shown in the Consortium

database. The average for turns is 11.6.

*Defined as total cost of goods shipped divided by the annual average inventory value at cost



Total Inventory Turns: Commercial / Industrial

Manufacturing

Quartile Values


Competitive Advantage (second quartile) ≤10 and >6



Commercial / Industrial manufacturing leaders have inventory turns greater

than 10 and an average of 7. This is slightly higher than turns information

in the Consortium database, which averages 5 turns.




Total Inventory Turns: Consumer Manufacturing

Quartile Values


Competitive Advantage (second quartile) ≤13 and >7.2

Competitive Disadvantage (third quartile) ≤7.2 and >3.4

Opportunity (bottom quartile) ≤3.4

Consumer products manufacturing leaders have greater than 13 inventory

turns and average 7.5. This is slightly better performance than industrial /

commercial manufacturers.




Total Inventory Turns: Retail

Quartile Values


Competitive Advantage (second quartile) ≤18 and >9.5

Competitive Disadvantage (third quartile) ≤9.5 and >4.8

Opportunity (bottom quartile) ≤4.8

The leaders in retail inventory turns are greater than 18 and have an average

of 10 turns. This is a higher value than for the Consortium data, which has a

leader value of 14 and an average of 8. Opportunities exist for companies

performing lower than 4.8 in the retail industry.




Total Inventory Turns: Wholesalers / Distributors

Quartile Values

Leaders (top quartile) >7.7

Competitive Advantage (second quartile) ≤7.7 and >6



The Wholesale / Distributor industry has the lowest turns of any industry.

The leaders are greater than 7.7 and average 5.8.



Total Outbound Order Fulfillment Lead Time*

Order Fulfillment Lead Time: 3PL

Quartile Values

Leaders (top quartile) <2

Competitive Advantage (second quartile) ≥2 and <5

Competitive Disadvantage (third quartile) ≥5 and <24

Opportunity (bottom quartile) ≥24

*Defined as average elapsed time from receipt of an order to invoicing in hours

The leaders in the 3PL industry have a lead time of less than 2 hours and

an average of 6 hours.



Order Fulfillment Lead Time: Commercial /

Industrial Manufacturing

Quartile Values






For the commercial / industrial manufacturing industry, leaders have an

order fulfillment lead time of less than 3 hours and an average of 9.2

hours.



Order Fulfillment Lead Time: Consumer

Manufacturing

Quartile Values






The leaders in consumer manufacturing have a lead time of less than 3

hours and an average of 6.3 hours.



Order Fulfillment Lead Time: Retail

Quartile Values






The leaders in retail have a lead time of less than 1 hour and an average

of 5.6 hours.



Order Fulfillment Lead Time: Wholesalers /

Distributors

Quartile Values






Wholesalers / distributors have a lead time of less than 1 hour and an

average of 5.8 hours.


Production Plan Adherence/Attainment to Firm Schedule

for Manufacturing Operations

Production Plan Adherence: Commercial /

Industrial Manufacturing

Quartile Values

Leaders (top quartile) >95.0%

Competitive Advantage (second quartile) ≤95.0% and >89.0%

Competitive Disadvantage (third quartile) ≤89.0% and >79.0%

Opportunity (bottom quartile) ≤79.0%

Commercial / Industrial manufacturers’ production plan adherence for leaders

is greater than 95%. The average is 87%, which correlates to Consortium

data for production plan adherence.


Production Plan Adherence/Attainment to Firm Schedule

for Manufacturing Operations

Production Plan Adherence: Consumer

Manufacturing

Quartile Values

Leaders (top quartile) >95.0%

Competitive Advantage (second quartile) ≤95.0% and >89.0%

Competitive Disadvantage (third quartile) ≤89.0% and >80.0%

Opportunity (bottom quartile) ≤80.0%

Consumer products manufacturers’ production plan adherence for leaders is

greater than 95%. The average is 88%, which correlates to Consortium data

for production plan adherence.


Summary

This report provides data for five key metrics in the planning function:

Sales forecast accuracy

On-time delivery to customers

Total inventory turns

Outbound order fulfillment lead time

Production plan adherence

The data have been segmented by commercial / industrial manufacturing,

consumer products manufacturing, retail, wholesaler / distributor, and 3PL.

Information has been provided by quartile with the top quartile as the top

25% of companies participating in the survey, the second quartile as the next

25%, and so forth. Companies can select a metric of interest and find the

quartile data that aligns with their supply chain. For more information about

the data, contact the report authors.


To learn more about benchmarking and best practices, additional resources are available to members

through the Supply Chain Consortium: www.supplychainconsortium.com

Qualified companies may join the Supply Chain Consortium’s LinkedIn or Xing Group:

www.supplychainconsortium.com/rc/connections.asp

Bruce Tompkins Executive Director

6870 Perry Creek Road

Raleigh, NC 27616

(919) 855-5527 Office

(919) 345-0479 Mobile

[email protected]

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Chris Ferrell Director

6435 Hazeltine National Drive

Suite 105

Orlando, FL 32822

(407) 362-0369 Office

(919) 624-3947 Mobile

[email protected] S

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Report Authors

http://www.supplychainconsortium.com/

http://www.supplychainconsortium.com/rc/connections.asp

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