Supply chain management: analyzing industry and air force metrics

Air Force Journal of Logistics, Fall, 2007 by Ross E. Marshall

Dr Tom Mentzer, who chairs the Supply Chain Management Department at the University of Tennessee, is one of the most sought after authorities in the supply chain business. He is a noted author and consultant for numerous private companies. (47) His guidance has been used by many corporations in establishing supply chain processes and metrics.

Dr Mentzer suggests that to be successful in the SCM business, companies have implemented what he terms the twelve drivers of SCM competitive advantage. (48) The twelve drivers are described as follows:

* Coordinating the traditional business functions

* Collaborating with supply chain partners on noncore competency functions

* Looking for supply chain synergies

* Noting that all customers are not created equal

* Identifying and managing the supply chain flow cycles

* Managing demand in the supply chain

* Substituting information for assets

* Recognizing that systems are templates to be laid over processes

* Realizing that not all products are created equal

* Making yourself easy to do business with

* Not letting tactics overshadow strategies

* Making sure your supply chain strategies and your reward structures are aligned

The last element is where Mentzer focuses attention on measurements. He writes," What gets measured gets rewarded, and what gets rewarded gets done." (49)

His methodology for developing the key logistics measurements starts with strategy formulation. Once the corporate strategy has been determined and is understood, planning should take place. Planning is defined as the deliberate process to produce a specific outcome. It includes the design of the logistics system, taking into account all of the elements needed to be both effective and efficient. Next the business must organize for success. There is not much literature found that identifies an ideal organization or structure for SCM. However, Mentzer suggests that understanding specifically what customers want and their resulting input expectations is fundamental to achieving customer satisfaction and therefore should drive the organizational structure. (50) Once the structure is in place, performance measurements can be developed. The key to the specific measures is to reward the company employees and supply chain partners who act in ways consistent with the business strategies. The performance dimensions should include measures of efficiency, effectiveness, quality, productivity, quality of life, innovation, profitability, and budgeting. Key measures include outbound freight cost, order fill rate, on-time delivery, customer complaints, inbound freight cost, order cycle time, forecast accuracy, invoice accuracy, and equipment downtime. (51) Dr Mentzer believes that there has been no firm evidence of the value of the SCOR approach. (52) He further believes that there is no one set of governing standards that define a business model. (53)

The approaches to SCM practices and measures of these notable authors and experts provide a good understanding of the supply chain techniques and metrics being used in the Air Force.