Logistics Bureau Consultants

How Good is Your Supply Chain Performance?

There are 4 levels of Supply Chain Performance

There are FOUR clear levels of Supply Chain Performance.

How Good is YOUR Supply Chain?

It’s important to know what level you are at, and what level you want to be at!

2% – These are the top 2% of organisations in every industry, who not only provide the best customer service, but do so at nearly half the cost of their competitors. Yes, it’s possible. I can show you the results.

BIC 20% – These are the Best In Class. A term that is accepted to mean, they are in the top 20% in their industry in terms of cost and service.

Good Enough – These are the organisations that are ‘cruising’ . They don’t have any major Supply Chain problems, but are not market leaders either. Usually, they are missing a lot of easy improvement opportunities that could boost the bottom line.

Blissfully Unaware – These organisations are in a dangerous position. They really don’t measure their own performance well, and they have no idea if their performance is good or not. It’s a sad place to be in, because they are performing well below their potential.

These ‘levels’ apply equally to the individual functions in the Supply Chain. Warehousing, Transport, Inventory Management… Lots of missed opportunities.

If you want some guidance on your current performance, within any Supply Chain function, and what it could be, just book a call with me HERE It’s a 15-20 minute chat online.

Best Regards

Rob O’Byrne – CEO Logistics Bureau

 

 

 

 

 

Let me ask you a question about your supply chain. How good is the performance of your supply chain in terms of cost and service?

I’ve been looking at the cost and service performance of supply chains for well over 30 years, and I’ve come up with four different levels of service performance, which I’d like you to think about for your own supply chain.

So, I reckon most supply chains fall into about four levels of service performance. And as I’m going through this, think about your own supply chain and where you think it fits.

Look at the diagram at the top of the page.

So, down at the bottom, this level I would tend to call Blissfully Unaware, which is a bit sad really. So these businesses, these supply chain managers, these senior execs really don’t know how well their supply chain is performing. They’re not sure how competitive they are, they’re really not sure what good looks like, and they’re kind of stumbling along, missing lots and lots of opportunities. So that’s a really sad spot to be. Hopefully you’re not there.

You might be, along with the bulk of people, in this next level up.

And I call this Good Enough, and I reckon that’s a really dangerous place to be. And why do I say that? Well, that’s why I’ve marked it with this big fat line as well. These businesses are okay in terms of cost and service performance, there’s no great issues, they’re reasonably competitive, they’re quite happy. But that’s complacent and there’s no incentive or drive to actually improve, and what happens is their competitors will improve and overtake them. So this is not a good spot to be. If you think you are there, you really ought to be pushing up to this next level, which is Best in Class.

Now, you might be saying, “Okay, what’s Best in Class?” Well, Best in Class is internationally recognized as the top 20% in terms of cost and service performance. So that’s a good spot to be.

Okay, you might be now wondering, what’s at the top in terms of Supply Chain Performance?

This is the 2% Club. And what’s the 2% Club? Well, we’ve been benchmarking supply chains for well over 20 years now. And a funny thing we found out about 10 years ago, it took us a while, is that the really top performers in terms of service, deliver that service at a lower cost than the average. How can that be? I mean, when I learned supply chain, and I’m sure when you learned supply chain as well, you remember this graph where we had service up here and costs up here. So, cost going up, service going up. And I can remember learning that as service levels improve, and maybe at 97%, and getting up here is 98, what happens to costs? Oh, they go up, almost exponentially, don’t they? As the service goes up, so the cost goes up.

Well, it’s not true.

We found that through about 10 years of benchmarking. What is actually true is that the businesses that focus passionately on service and deliver outstanding service, the best service in their industries, actually do so at half the cost of the average. Why could that be? What do you think?

It’s an absolute fact. We’ve benchmarked it across all different industries. The best service delivery is done at a lower cost, a lower cost than the average. Why could that be?

Because not only are their costs lower, but their sales start to lift as well. So where do you think you’re performing, and why do you think the 2% Club can actually deliver at a lower cost?

Book a call with me and I’ll explain how you can get to the 2% Club too.

 

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