The Manufacturing Value Chain Report: Supply-chain Planning
Adapting To The Times
How has political and economic uncertainty impacted your supply chain over the past five years? For most manufacturers the pain is most evident in decreased sales and increased costs, say respondents to the 2003 IW Value Chain survey. While difficult times have also increased lead times, one out of five manufacturers say they haven't been impacted at all or their sales have actually been bolstered by the market turmoil. To adapt, supply-chain leaders have been striving to increase customer responsiveness, extract and then figure out what to do with real-time information, and share risks across trading partners. As of yet, most manufacturers have only gotten their feet wet in these areas, with "real-time" information transparency and cross-organizational risk sharing remaining more hope than reality.
See the full report: The Manufacturing Value Chain Report: The Ties That Bind
Adoption Of Leading Supply-Chain Practices
| Some adoption | Widely adopted | |
| Rapid Response to Changing Market Conditions | 57% | 23% |
| Maximizing Variable Supply-Chain Costs to be Aligned with Revenues | 53% | 15% |
| "Real Time" Information Transparency Inside and Outside the Enterprise | 40% | 12% |
| Sharing Risks Across A Network, Rather than Concentrating Them in a Single Enterprise | 38% | 8% |
A Need For IT
The more sophisticated planning and execution practices today require some level of visibility into what's going on in the supply chain. That requires information technology. Although a majority of respondents have not yet automated many business processes, for those operations that have pursued some form of electronic linkages, Internet technology is either on par with or has surpassed conventional EDI in popularity in all but a few of the older technology's original strongholds.
Electronically Implemented Business Processes
| Conventional EDI | Web/Internet Enabled technology | |
| Customer Order Entry | 33.2% | 30.6% |
| Payment Processing | 40.2% | 17.0% |
| Procurement of Direct Supplies | 24.4% | 23.9% |
| Customer Service and/or Help Desk | 15.6% | 31.2% |
| Collaborative Planning with Suppliers | 21.3% | 24.9% |
| Procurement of Indirect Supplies | 17.6% | 25.1% |
| Collaborative Planning with Customers | 15.7% | 20.7% |
Calculating Capital Costs
Cash-to-cash cycle time measures how much working capital an organization has tied up in its supply chain. Simply put, it's the number of days between paying for raw materials and components and getting paid for a product. For our purposes, respondents were instructed to calculate cash-to-cash cycle time by adding the days of supply inventory and sales outstanding, minus the average payment period for materials.
Cash-to-cash cycle time
| Days | Percentage of Respondents |
| 0-30 days | 26.2% |
| 30.1-60 days | 36.4% |
| 60.1-90 days | 19.3% |
| Over 90 days | 18.2% |
| Key Performance Indicators | Bottom 25% | Median | Top 25% |
| Cash-to-cash cycle time, days | 90 | 56 | 30 |
| Total inventory turn rate | 3.2 | 6.0 | 10.0 |
| Production schedule attainment | 77% | 90% | 97% |
| Cost of quality, percent of annual revenues | 3.1% | 0.7% | 0.1% |
