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 Business executives are always looking for ways to get ahead. Complex matters – how to improve customer service, increase margins, reduce sourcing expenses ... or simply shorten cycle times – are by definition difficult to make educated decisions about. How can decision makers make use of important metrics that could shape their decisions and greatly improve their chances of getting ahead of the competition? What tools are at your disposal to increase sales, margins and customer satisfaction while reducing internal expenses?
Part of the answer lies in your B2B program, though probably not in the way you expect. It’s not just through reducing overhead and eliminating non-value-added functions, which are typical benefits of B2B/EDI. The key building blocks for improving your current performance are in the vast amounts of information contained in the transactions that flow through your network.
Everyone has heard of scorecards, Key Performance Indicators (KPIs) and business intelligence. Yet, according to Aberdeen Research (2005), only 31% of North American organizations have enterprise-level visibility of their procurement scorecard. Moreover, “60 percent of corporations in 2007 rely on manual tools to collect and analyze spend data, resulting in limited spend visibility and the inability to improve cost savings.” Clearly, there must be a way to improve this metric, since a large number of corporations are working with a B2B enabled supply chain for all the most important trading partners that they want to monitor on a daily basis. |
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Vendor Performance Management |
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When looking at vendor performance, most companies seek reliability, consistency, accuracy and responsiveness. Being able to follow up, in real time, on information that indicates performance level therefore becomes crucial. As part of its base offering, InterTrade provides clients with a set of supply chain metrics that reveal how vendors perform measured against certain standards. Averages for every metric are calculated so that vendors can be evaluated among their peer group or against a benchmark target value.
Perfect orders: How many orders are shipped on time with the exact quantities of items ordered; how many are invoiced with 100% accuracy?
Fill rate: As a percentage, how many orders, line items or dollar values are being filled by vendors?
Backorders: In quantities or dollar value, what is the unfulfilled content of orders by supplier?
On-time shipping: Taking into account the expected delivery date, how many orders, line items and dollar value are shipped on time?
Performance to promise: Compared with actual deliveries, how accurate are purchase order acknowledgement promises?
These metrics (others are being developed to support further vendor-performance assessment) provide much more information than what is commonly available in financial or procurement applications. For example, most companies know the dollar amount spent with a given vendor for a certain period but it is much less common to know how many purchase orders were placed, with how many lines, and which SKUs were ordered most or least. Requests such as these usually entail many data exports and much analysis. But they can provide a lot of valuable information with which to compare the actual performance of certain vendors, since it is much easier to accurately deliver a small number of orders of a few high-value items than a large number of orders of many lower-value items.
The InterTrade solution also allows users to spotlight real numbers for order cycle time, for items lead time and for invoicing accuracy.
Depending on your corporation’s environment, it may be useful to capture other data to extract further meaningful information. InterTrade can configure custom reports to enhance search criteria or modify existing reports to better fit your requirements.
For most retailers and distributors, the issuance of penalties or charge-backs to vendors is implemented as a push to comply with a process and its requirements. Real efficiencies for both retailers and manufacturers appear when no penalties are assessed. In an effort to reach that state, InterTrade can open up visibility tools to vendors so that they can see their performance with a specific retailer and compare their results with averages and expectations. Sharing this information brings value to retailers in the sense that suppliers always want to perform to expectations and certainly wish to improve their relationships with retailers. |
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Customer Activity Monitoring |
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For most organizations, orders received through EDI or other B2B channels represent a significant part of their business. In most cases it is the famous “80% that gets the most attention.” Unfortunately, most answers about the logistics process and the overall supply chain for these orders require many queries about various IT systems. It can therefore become somewhat difficult to give real-time answers to questions about specifics such as “the 10 largest orders that need to be shipped today,” “the five customers for which backorder volume is highest,” and so on.
The InterTrade Customer Activity Monitoring solution is based on analyzing the B2B traffic flowing through the TradeLinks platform. Customer-specific business rules allow the extraction of the most important supply chain information and the calculation of key performance indicators (KPIs) in real time.
With InterTrade you can determine your fill rate for any customer at any given moment, based on the purchase orders and the shipment information just exchanged. Since this is the exact same data that your trading partners are using, there is only one version of the truth.
Many other KPIs are available for you to review your own delivery performance and to analyze patterns in orders received from your customers. Access to this valuable information allows InterTrade clients to improve their service level, which reduces charge backs, generates savings and makes their customers happier.
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Supply Chain Activity Score Card |
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Monitoring KPIs in real time is a way to provide business users with quantifiable performance measurements of their supply chain. The InterTrade Supply Chain Activity Scorecard is a way to get ahead by calculating scores that combine multiple KPIs and allow more precise ranking of vendors or trading partners.
In situations where many KPIs are measured for each of your trading partners, scorecarding allows you to select which measurements are the most important. Multiple KPI values can be combined into a single complex measurement and can be presented on a customized page including all relevant information.
Multiple scorecards can be defined for a given customer to take into account the different areas of their supply chain activity. Specific scorecards can also be built to allow sharing of information with trading partners.
By providing you with the tools to gain better insight into your supply chain performance, the InterTrade business activity monitoring solutions help you draw meaningful, actionable conclusions. |
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