Supply Chain KPIs: Measuring Performance Across Order Fulfillment, Costs & Inventory

SUPPLY CHAIN
KEY PERFORMANCE INDICATORS (KPIs)

COMMON PLATFORM
NOV. 2000 1
SUPPLY CHAIN KPI INDEX
THE 41 KPIS HAVE BEEN GROUPED AROUND ABILITY TO SERVE CUSTOMERS,
OPERATING EFFICIENCY, AND WORKING CAPITAL PERFORMANCE
Group I Group II Group III

1. Perfect Order 7. Total Supply Chain Cost 16. Supply Chain Cycle Time
1.1 On-Time Delivery -as % of Net Sales 16.1 Days Sales Outstanding
1.2 Order Fill Rate -as Cost per Net Ton Sold 16.2 Days Payables Outstanding
16.3 Total Supply Chain Inventory
1.3 Item (Line) Fill Rate 8. Asset Utilization 16.3.1 Finished Product Inventory
1.4 Case Fill Rate On - Time 9. Conversion Reliability
16.3.2 Raw Material & WIP Inventory
9.1 Up-Time
1.4.1 Case Fill Rate On - Time 16.3.3 Packaging Material Inventory
9.2 System Rate
1.5 Invoice Accuracy 9.3 First Run Yield 16.4 Trade Working Capital
10. Schedule Attainment
2. Order Cycle Time 10.1 Adherence 17. Inventory Accuracy
11. Changeover Times 18 Finished Goods Write Off
3. Stock-out 18.1 Obsolete Materials
12. Overall Yield
4. Returns (Cases and Value) 13. Supplier Reliability 19. Total Inventory in US$
5. Stock-Out at Retail Shelf 13.1 Incoming Quality
13.2 Supplier Quantity Adherence
6. DSD Volume 13.3 Supplier Schedule Adherence
13.4 Item Certification
14. Latest Month Sales Forecast Error
15. 3 Month Prior Sales Forecast Error
KPIS PARAMETERS INCLUDE: NAME, OBJECTIVE, DEFINITION, CALCULATION, FREQUENCY OF MEASUREMENT, AREA
MEASURED, PROCESS LINK, KPI SEGMENTATION, EVA LINK AND BEST IN CLASS PERFORMANCE (WHERE AVAILABLE)
NOV. 2000 2
1. Perfect Order
Objective: Improve customer service
Definition: Percent of orders filled perfectly, with no changes, no substitutions, and delivered on time,
first time, with no invoice errors.
Calculation: Number of Perfect Orders

Total Number of Orders Received
Note: Perfect" is currently defined as filled complete, delivered on time, no changes or substitutions and no
paperwork problems. This definition will be frequently revisited to consider additional components of "perfect order"
Frequency of
Measurement: Monthly
Area Measured: All orders for aggregate and key customers (to 70% of sales volume)
Process Link: Fulfill Orders
EVA Link: Revenue Growth
Best-in-Class
Performance: 90% aggregate
99% key customers
NOV. 2000 3
1.1 On-Time Delivery
Definition: Percent of orders delivered on time against Requested Arrival Date (RAD) or
Scheduled Arrival Date (SAD)
Note: For the short term, two KPI definitions will be calculated and reported due to discrepancies in buyer
requested (RAD) and scheduled date (SAD). Action plans have been written for BF to work with key
customers to resolve differences in RAD and SAD.
Calculation: Number of Orders Delivered within RAD or SAD

Total Number of Orders Delivered with RAD or SAD
Note:An order is "on-time" if it arrives within customer determined appointment date in terms of RAD or SAD.
Frequency of
Area measured: All orders for aggregate and key customers (to 70% of sales volume) by DC
Implementation
Enablers: Order and Delivery Tracking System that measures SAD, RAD, and Actual Delivery Dates
Best-in-Class
Performance: 98%
NOV. 2000 4
1.2 Order Fill Rate
On Time at first delivery
Definition: Percent of orders filled completely on first delivery to customer (no partial credit)
Calculation: No. of Orders Filled Completely on First Delivery to Customer
Total Number of Orders Received
Note: "Filled Completely" is defined in the short term as shipping all ordered SKUs and cases as indicated on the
order, with no changes or substitutions.
Frequency of
Area Measured: All orders for aggregate and key customers (to 70% of sales volume).
Visibility by DC is best practice.
Best-in-Class
Performance: 95%
NOV. 2000 5
1.3 Item (Line) Fill Rate
On time at first delivery
Definition: Percent of items (lines) of an order filled completely on first delivery to customer
Calculation: Number of Items (lines) Filled Completely on First Delivery to Customer
Total Number of Items (lines) on Orders Received
Frequency of
Measured by product line and by DC is best practice.
Best-in-Class
Performance: 98%
NOV. 2000 6
1.4 Case Fill Rate
On time at first delivery
Definition: Percent of cases filled completely by order on first delivery to customer
Calculation: Number of Cases Shipped Completely on First Delivery to Customer
Total Number of Cases Ordered
Frequency of
Measured by product line and by DC is best practice.
Best-in-Class
Performance: 99%
NOV. 2000 7
Example of Order, Item and Case
Fill Rate On time at first delivery
Customer Order Fulfillment Scenarios
Cases Cases Cases Cases Cases
Item
Ordered Shipped Shipped Shipped Shipped
001 10 10 9 9 8
002 10 10 9 10 10
003 10 10 9 10 10
004 10 10 10 7 10
40 40 37 36 38
Case Fill Rate: 100% 93% 90% 95%
Item Fill Rate: 100% 25% 50% 75%
Order Fill Rate: 100% 0% 0% 0%
NOV. 2000 8
1.5 Invoice Accuracy
Definition: Invoices sent to customer with absolutely no errors (eg. Unit description, number of
units, price per unit, total value, customer name, customer address, etc.)
Calculation: (Number of Credit Notes Issued Due to Invoice Error Over Past 3 Months)
1-
Total Number of Invoices Issued Over Past 3 Months
Frequency of
Measurement: Calculation monthly but expressed as latest three-month average
Area Measured: All invoices issued, by DC
Process Link: Fulfill orders

Working Capital
Best in Class
Performance: 100%
NOV. 2000 9
2. Order Cycle Time
Definition: Elapsed time from time customer places order to delivery to the customer (excluding delivery
time agreements)
Calculation: Time (day or hour) Order is

Time (day or hour) Order is Delivered __
to Customers Receiving Dock Entered into BF Order System
Frequency of
Measurement: Quarterly
(total orders received and orders delivered (excluding pre-agreed delivery times)
To be measured by DC by steps of cycle:
Salesman response (order entry date - order date)
DC pick & load (Load sheet date - Order entry date)
Carrier response (Actual ship date - Consolidated Load date)
Transit time (Actual arrival time - Actual ship date)
Best-in-Class
Performance: 1 - 3 days
NOV. 2000 10
3. Stockouts
Definition: Number of cases not available for shipping when a customer orders
Calculation: Number of Cases not Available at Delivery Time

Total Number of Cases Ordered
Frequency of
Area Measured: All cases by product category for all customer orders and by DC

Working Capital
Best-in-Class
Performance: 0
NOV. 2000 11
4. Returns (Cases)
Definition: Resellable cases returned by customers for any reason
Calculation: Number of Resellable Cases Returned

Total Number of Cases Invoiced
Frequency of
Area Measured: All cases returned and to be reshipped (not destroyed) by DC and by customer

Working Capital
NOV. 2000 12
4. Returns (Value)
Definition: Value of resellable cases returned by customers for any reason
Calculation: Value of Resellable Cases Returned

Total Value of Invoiced Cases
Frequency of
Area Measured: Returns of goods to be reshipped (not destroyed) by DC and by customer

Working Capital
NOV. 2000 13
5. Stockouts at Retail Shelf
Objective: Improve consumer service
Definition: Times a stockout ocurrs at audited Point of Sale. Stockout occurs when there is not at least
one unit of the audited SKU on the audited store shelf at time of audit.
Calculation: Number of Stockouts for SKU

Number of Sites Audited By SKU
Total Number of Stockouts for all Audited SKUs

Total Number of Sites Audited * Number of SKUs Audited Aggregate
Frequency of
Area Measured: Selected SKUs at selected sites.

Reports should be consolidated by key retailers, SKUs and sites
Best-in-Class
Performance: 1% - 2% weekends
NOV. 2000 14
5. Example of Stockouts at
Retail Shelf
Example:
No. of SKUs audited: 3
No. of Sites where 3 SKUs are audited: 10
No. of possible stockouts = No. of SKUs audited X No. of Sites audited = 3 X 10 = 30
Stockouts Stockouts at
SKU
Detected Retail Shelf
1 5 50%
2 1 10%
3 2 20%
Aggregate 8 27%
NOV. 2000 15
6. DSD Volume
Objective: Optimize volume of product distributed through the Direct Store Delivery (DSD) channel
Definition: Percentage of volume distributed to large retailers through DSD channel
Calculation: Actual Volume Delivered via DSD in cases

Possible Volume Delivered via DSD in cases
Note: Possible refers to total cases that are distributed for large retailers
Frequency of
Measurement: Quarterly
Area Measured: All orders for large retailers (defined as retailers with stores having more than 15 checkouts per
store)
Process Link: Fulfill Orders, Develop Go-to-Market Strategy
NOV. 2000 16
7. Total Supply Chain Cost
Objective: Manage Supply Chain costs
Definition: Supply Chain costs will cover the end-to-end Supply Chain processes. Includes cost of inputs
(raw material, packaging material, ingredients), conversion or plant costs, distribution and
logistics costs, all other direct and shared labor costs, all external costs such as third party
transportation and warehousing.
Calculation: Sum of Area Costs:

Sales Administration
Productive Purchasing (RM, PM and MRO's)
Logistics
Plant (Depreciation + COGS + Maintenance)
DC's
Accounts Receivable
Frequency of
Area Measured: All Supply Chain processes as an absolute value (US$), as a % of net sales and as cost per
ton sold and / or produced
Process Link: Make Products Available

Fulfill Orders
Implementation
Enablers: Activity based analysis and costing to clarify costs of share activities or assets
EVA Link Operating Margin
NOV. 2000 17
7. Example of Total Supply
Chain Cost
The matrix below is intended to give an overall and high level view of how the area costs might be distributed among the
Supply Chain processes. That distribution will depend on activity analyses and will vary by country.
To begin to implement Total Supply Chain Costs, the countries should first identify all of the area costs that are easily
identified as Supply Chain related and can be isolated in existing cost centers. Those costs can then be distributed at
the process level if possible without an activity analysis. For example, within plant costs, the majority of the costs will fall
into the Produce Product sub-process. However, if materials receiving, storage, and inbound warehouse management is
conducted by personnel at the plant, then that portion of the plant personnel costs should be allocated to the sub-
process of Procure Materials and Services.
Refinement of the separation of Area Costs will come with the application of Activity Analyses and identification of
process cost drivers.
Supply Chain Processes

Manage Integrated
Make Product Available Fullfill Orders
Supply/Demand Plan.
Manage
Manage SC Manage Deliver Manage
Areas Costs\SC Processes Procure Produce Store Customer
Cap. Util. Inventory Products Invoices
Orders
Administrative Sales x
Purchasing x
Logistics x x
Plant x x
DC's x x x x
Accounts Receivables x
NOV. 2000 18
8. Asset Utilization
Objective: Increase asset utilization
Definition: Percentage of time that equipment actually runs, related to the total hours the equipment is
available to run. Baseline hours = 8,760 (365 days times 24 hours per day). = Total Available
Time to Run.
Calculation: Total Available Time to Run - Scheduled Downtime - Unscheduled Downtime

Total Available Time to Run
Frequency of
Measurement: Annual
Area Measured: Packaging lines by core business (Pasty savory, Dehydrated and Dressings)
All Sites
Process Link: Manage Integrated Supply/Demand Planning

Make Products Available
EVA Link: Operating Margin

Capital Investment
NOV. 2000 19
9. Conversion Reliability
Objective: Improve system reliability and capability to achieve a stable process
Definition: The ability of the process to constantly produce high quality products is called reliability. The
processes must run when required, at the capable rate, and generate good outputs.
Calculation:
Uptime (%) x System Rate (%) x FRY (%)
By SKU
Sum of Individual Volume x Reliability by SKU
Volume of all SKU

Aggregate
Frequency of
Area Measured: Work centers that run 80% of volumes for major SKUs


Capital Investment
Best-in-Class
Performance: 88%
NOV. 2000 20
9. Example of Conversion
Reliability
While total process reliability can be used to measure all supply chain
processes, Bestfoods will focus on the bottleneck operations
Scheduled Downtime
Process Reliability =
Shift Patterns
No Requirements (Uptime) X (System Rate) X (First-Run-Yield)
Scheduled Maintenance
Scheduled Changeovers
Unscheduled
Downtime
Process
Total
Run Rate Reliability
Process
Losses Losses
Capacity
Total Process Time Rework

Consumed To 100%
Meet Conversion
Requirements Uptime
System Rate
First Run
Yield
(FRY)
NOV. 2000 21
Reliability
Steps to Determine Reliability by SKU
1. Determine
Uptime
System rate
First Run rate
} Can be calculated as defined
in following sections.
2. Multiply all 3 together
Example
System rate = 92%

Uptime = 90%
First Run Yield = 85%
Individual Reliability = (92%) x (90%) x (85%) = 70%
NOV. 2000 22
Reliability
Steps to Determine the Aggregated Reliability
1. Determine the individual reliability
2. Determine the volume by SKU

3. Multiply and determine pondered reliability
(volume by Reliability)
4, Divide the result by the volume and multiply by 100
Example
Volume (cases) Reliability
SKU A 1,000 70%
SKU B 10,000 75%
SKU C 5,000 80%
Total Reliability = (1,000 x 0.70) + (10,000 x 0.75) + (5,000 x 0.80)

x 100
1,000 + 10,000 + 5,000
Total Reliability = 76.25%
NOV. 2000 23
9.1 Uptime
Definition: Scheduled time to run line versus time line was actually running. Identifies total
unscheduled downtime.
Calculation: Actual Run Time Scheduled Run Time in hours - Unscheduled Downtime in hours
=
Scheduled Run Time Scheduled Run Time in hours
Frequency of
Area Measured: All production lines that run 80% of volumes for major SKUs with visibility by core
business and by line

Best-in-Class
Performance: 95%
NOV. 2000 24
9.1 Example of Uptime
Steps to Determine
1. Obtain scheduled run time, unscheduled downtime (exclude scheduled maintenance and
changeovers), and calculate actual packaging line run time
Actual run time = Scheduled run time - Unscheduled downtime
2. Divide by scheduled run time
3. Multiply by 100
Example
Scheduled packaging line run time = 100 hours
Unscheduled packaging line downtime = 5 hours
Uptime 100 - 5
= X 100 = 95%
100
NOV. 2000 25
9.2 System Rate
Definition: Velocity at which machine runs. It is the repeatability of a process to produce at its actual
run rate compared to its capable run rate. Capable run rate is normally highest
demonstrated velocity at which sellable product was produced even with a similar type of
product
Calculation: Actual Run Rate in Units per Hour
Demonstrated Run Rate in Units per Hour
Frequency of
Area Measured: All production lines that run 80% of volumes for major SKUs,
with visibility by core business and by line

Best-in-Class
Performance: 98%
NOV. 2000 26
9.2 Example of System
Rate
Steps to Determine
1. Calculate actual run rate unless otherwise available
Units produced Units produced

Actual run rate = =
Actual run time Scheduled run hours - Unscheduled downtime
2. Divide by the scheduled capable run rate

the bottleneck rate of the process
could potentially be the production planning value of the line
3. Multiply by 100
Example
Actual units produced = 1.000 units

Scheduled run hours = 5,0 hours
Unscheduled downtime hours = 0,5 hours
} 1.000
Actual run rate = _________
5,0 - 0,5
= 222 units/hour
Scheduled capable run rate = 300 units/hour
222
System Rate = ______ = 0,74 x 100 = 74 %
300
NOV. 2000 27
9.3 First Run Yield (FRY)
Definition: Percentage of all output without rework. It is a measurement of the ability of the process to
produce quality output from start-up and throughout the production run, the first time with no
rework. Product output approved by quality at first time.
Calculation: Total Output - Rework

Total Input to the Process
Note: Rework is also defined as process or package rework, or finished product not approved at the first time
by quality and requires re-analysis by production or quality control.
Frequency of
Area Measured: All lines that run 80% of volumes for major SKUs with visibility by core
business and by line

Best-in-Class
Performance: 95%
NOV. 2000 28
9.3 Example of First Run Yield
(FRY)
First Run Yield is the ability of the process to produce quality outputs the first time
without rework and throughout the duration of the production run.
Manufacturing Packaging Storage
900 855 727 654 634 602

P1 P2 P3 P4 P5 P6 P7
1,000 542
90% 95% 85% 90% 85% 95% 90%
input 99 79 output
P5A
80%
EXAMPLE Ingredient Equipment Failure Spoilage

-Process Failures
PROBLEMS -Heat
Decipline Packaging Handling Damage
-Pressure Package Design Outdated Product
Equipment Problems
MIS Ship
Note: Process P5A is not

First Run Yield = Yield P1 % x Yield P2% x Yield P3% x Yield P4% xYield P7% included in the first-run-
yield calculation because it
First Run Yield = 90% x 95% x 85% x 90% x 85% x 95% x 90% = 47.5%
is all rework. It is implicit in
the overall yield.
Overall Yield = 542/1000 = 54.2%
NOV. 2000 29
9.3 Example of First Run Yield
(FRY)
Steps to Determine FRY
}
1. Determine units (kgs, pounds, tons) output
from the process units. out - units. rework
2. Subtract rework from the result units. in
3. Divide the result of step 2 by units run yield

4. Multiply by 100 Output Format
Plant A
Product Product Product \
Family A Family B Family C
Example:
Units input to process = 300 Units In 300 1,100 2,500

FRY = 250 - 25
300 process = 250
Units output from
Units Out 250 1,050 2,400
Units rework = 25
Units
Rework
25 50 75
250 - 25 = .75 x 100 = 75%
FRY = _________
300 FRY 75% 91% 93%
NOV. 2000 30
10. Schedule Attainment
Objective: Improve the ability of a system to achieve Supply Chain scheduled outputs
Definition: Schedule Attainment is the measure of a system's ability to consistently produce to schedule.
It gives equal weight to actual production, whether over or under schedule.
Calculation: (Scheduled Production Actual Production)

1 abs
Scheduled Production
Frequency of
Measurement: Reported Monthly, calculated and demonstrated weekly
Area Measured: Weekly consolidated by SKUs and production lines that account for 80% of production
with visibility of core business

Best-in-Class
Performance: 95%
NOV. 2000 31
10. Example of Schedule
Attainment
Steps to Determine
1. Calculate the difference in units between scheduled and actual production

2. Divide by scheduled production
3. Take the absolute value of that %
4. Subtract from 1
5. Multiply by 100
Example
Cases scheduled = 1000

Cases produced = 1055
Schedule
Attainment = [
1 abs ( 1000 1055
1000
) ] X 100 = 94.5%
NOV. 2000 32
Attainment
Output Format
For a given division producing a product family of multiple sizes at multiple plants,
schedule attainment would be depicted as follows:
Plant C
Plant B
Plant A
Size 1 Size 2 ... Size N
Units Scheduled 1000 150 ... 500
Units Produced 1055 125 ... 500
Schedule Attainment 94.5% 83.3% ... 100%
NOV. 2000 33
Attainment
With the weekly data collected, it is possible to build an histogram to analyze

variance between actual and scheduled volumes
XYZ Product
8
7
Number of Weeks
6
5
4
3
2
1
0
-100%
100%
-90%
-80%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
40%
10%
20%
30%
50%
60%
70%
80%
90%
NOV. 2000 34
10.1 Adherence
Objective: Improve the production daily program to increase the raw and packaging materials planning
schedule, as well as a better productive process utilization.
Definition: Adherence is the measure of the system ability to consistently produce to schedule as it was
established in cycle and sequences.
Calculation: SKUs scheduled to be produced that week

SKUs originally calculated to be produced that week
Frequency of
Measurement: Reported Monthly, calculated and demonstrated weekly according original cycles and
sequences established in the demand base run strategy calculation.
Area Measured: Weekly consolidated by SKUs and production lines that account for 80% of production
with visibility of core business

Best-in-Class
Performance:
NOV. 2000 35
10.1 Example of
Adherence
Steps to calculate
1. Calculate the adherence by sku (1 or 0)

2. Sum the individuals values of adherence bu week of all SKUs
3. Divide the result bye the total events of SKUs
4. Multiply by 100
Week N
Week 2
Week 1
SKU A SKU B SKU C SKU N Total
Units Scheduled by 10000 25000 --- 1000

Run Strategy
Units Scheduled 15055 10000 125 ---
Adherence 1 1 0 0 50%
NOV. 2000 36
11. Change Over Times
Objective: Gain flexibility in run strategy and or capacity
Definition: Elapsed time from last good sellable or good product from one SKU to first run sellable or
good piece of another SKU, at target run rate
Note:Process flexibility is the ability of the manufacturing process to be responsive to demand changes, which allow batch
sizes to be reduced. The primary components of flexibility include:
Changeover Clean-out Preventive Maintenance

Incubation Fumigation
Calculation:
Time (day/hour) the First Sellable Time (day/hour) the Last
or Good Unit of One SKU is __
Sellable or Good Unit from
Produced at the Target Run Rate Previous Run was Produced
Frequency of
Measurement: Reported Monthly, calculated and demonstrated weekly with the SKU/line matrix
Area Measured: All change overs for all SKUs on shared lines
Process Link: Manage Integrated Supply/Demand Planning/Make Products Available
Best-in-Class
Performance: Processing: 30 minutes, Packaging: 10 minutes
NOV. 2000 37
11. Example of Change Over
Times
Process with Low Flexibility
Total Available Time
Production Run Changeover Production Run Changeover

Product A Product B
Example:
No. of product types that could be run =2

Changeover duration = 10 hours each
Run quantity = 1 month of demand
Transition Approach
Calculate economic order quantities to work around changeovers
NOV. 2000 38
11. Example of Change
Over Times
Process with High Flexibility
Flexibility increases when changeover activities can be shortened and/or

be performed "external" to the process
Example:
Perform changeover preparation activities during the production cycle of the previous production run
"External" Changeover
Activities
Product A Product B Product C Product D Product E Product F Product G Product H
Total
"Internal" Changeover
Changeover
Activities
Duration
Goal : To convert as many Internal activities External activities
Result: Reduce production run quantities

Reduce finished goods inventory
Limit loss due to unemployment market conditions
NOV. 2000 39
Over Times
Functionality
A changeover matrix helps you to optimize the production run sequence and
identify opportunities for changeover reduction.
Inputs
The key data elements for this analysis are:
List of different changeover types

major: size change
processing: includes major, comprehensive clean out with or without a size change
minor: a simple packaging change (I.e. label to label) or
a fill weight adjustment, without major machine adjustments
Changeover times for each type

Frequency of changeovers
NOV. 2000 40
Over Times
Steps to Determine
1. List changeover types/combinations across both sides of a matrix

2. Document the elapsed time necessary to changeover from type to type
3. Document the number of times each changeover occurred during the
baseline period
4. Multiply frequency with elapsed times to determine total changeover
hours insured
TO SKU
A B C D
A 1 10 2
FROM SKU
B 1 10 2
C 10 10 2
D 2 2 2
HOURS
NOV. 2000 41
12. Overall Yield
Objective: Reduce costs and losses associated with yield and capacity
Definition: As with reliability, this yield is measures production line yields. For a given set of inputs, it is
defined as actual units of output within specifications versus theoretical units of output within
specifications. Formula yield is used as baseline.
Calculation: Total Material Output (US$)

Total Material Input (US$) Aggregate
Total Material Output in Units by Line

Total Material Input in Units by Line By Line
Frequency of
Area Measured: Separate packaging and raw materials in analysis. Monthly reports should be
by core business and by packaging line for day-to-day management

Best-in-Class
Performance: 95%
NOV. 2000 42
12. Example of Overall
Yield
Inputs
The key data element needed for yield analysis are:

Total volume (or$) of input by line/system
Total volume (or$) of output by line/system
Steps:
1. Divide the total volume (or $) of output by the total volume (or $) of input
2. Multiply this value by 100 and arrive at yield percentage for that specific line/system
3. Calculate yield (%) for all lines/systems
4. Calculate the yield (%) for the plant as the average of yield (%) of the various lines/systems
5. Calculate yield (%) for the division as the line average of yield (%) for all the plants
NOV. 2000 43
12. Example of Overall
Yield
Example
Total volume of input = 200,000 lbs.

Total volume of output = 180,000 lbs.
Yield = 180,000 X 100 = 90%

200,000
(B) Product Packaged Product

Packaging (A)
Process
Packaging Product
Packaging
(to be reworked
or srapped)
A
Formula x 100
B
By component or ingredient
NOV. 2000 44
13. Supplier Reliability
Objective: Synchronize supply to conversion
Definition: Predictability of supplier performance measured as:

Incoming Quality (Off-code)
Supplier Quantity Adherence
Supplier Schedule Adherence
Item certification
Ingredient X
Supplier 1 Incoming Quality
Ingredient Y
conformance to specification
Supplier Service for
Supplier 2 Ingredient Z
normal and exceptions
Plant (change, short notice) orders
Packaging A Supplier Quantity
Supplier 3
Adherence
Supplier Schedule
Packaging B Adherence
Supplier 4 Packaging C Item Certification
NOV. 2000 45
13. Supplier Reliability
Supply Classifications
Supplier capabilities will determine the relationships across the supply chain.
CLASS I: Partnership
Demand driven (pull)
Supplier as extension of the conversion Supplier Conversion
I I
process P1 P2 P3
Production equal to plant consumption
Hourly to daily deliveries
Lead time equals transportation time
In-advance mutual planning
CLASS II: Collaborative
Demand driven (pull)
Sharing in progress Supplier Conversion
II
Delivery offset due to process II
constraints
Inventory used to compensate for
conversion reliability & capacity
CLASS III: Traditional
Forecast driven (push)
Reliance on incoming inspection Supplier Conversion
III QC
Long leadtimes III
Inventory determined by rules
Independent reactions to problems
NOV. 2000 46
13.1 Incoming Quality
Definition: Incoming quality (off code). Anything that falls out of specification or is not accepted the
first time due to quality and requires to be reconsidered
Calculation: Units Conforming to Specification

Total Units Received
Frequency of
Area Measured: All items (A,B and C) per plant, by exception and by supplier delivery

Best-in-Class
Performance: 100%
NOV. 2000 47
13.2 Supplier Quantity
Adherence
Definition: Quantity delivered vs ordered
Calculation: (Quantity Supplier Committed to deliver - Quantity Received)

1 - abs
Quantity Supplier Committed to Deliver
Frequency of
Area Measured: All items (A,B and C) per plant, by exception and by supplier

Best-in-Class
Performance: 100%
NOV. 2000 48
13.3 Supplier Schedule
Adherence
Definition: Schedule Adherence vs commitment (on-time delivery) to the day
Calculation:
1-abs ( Actual Time of Delivery - Scheduled Delivery)
Scheduled Delivery
Frequency of
Area Measured: All items (A,B and C) per plant, by exception and by supplier

Best-in-Class
Performance: 100%
NOV. 2000 49
13.4 Item Certification
Definition: Percentage of of raw material and packaging materials certified by specific supplier
(A, B classified)
Calculation: No. of Raw and Packaging Materials Certified by Specific Supplier

Total Number of Packaging and Raw Materials
Frequency of
Area Measured: By item class (A, B and C)

Implementation
Enablers: Common definition and understanding of Certification
NOV. 2000 50
14. Latest Month Sales
Forecast Error
Objective: Improve sales forecast by tracking absolute differences to correctly quantify over or under
forecast
Definition: The difference between the actual sales and forecasted sales. Forecast is the latest estimate
of sales (usually prepared by marketing or sales) prior to start of month weekly forecasted.
Calculation: (Actual Sales - Forecasted Sales)

Forecasted Sales
Frequency of
Measurement: Monthly / Weekly
Area Measured: Sales forecast in sales units by product line in Argentina and Brazil, by SKU in Mexico,
by DC and consolidated for 80% of the volume

Best-in-Class
Performance: 7,5% by SKU
NOV. 2000 51
15. Three Month Prior Sales
Forecast Error
Objective: Improve sales forecast by tracking absolute differences to correctly quantify over or under
forecast
Definition: The error between the actual sales and forecasted sales. This forecast is the three-month
rolling sales forecast in sales units (usually prepared by marketing or sales)
Calculation: (Actual Sales - Forecasted Sales)

Forecasted Sales
Frequency of
Measurement: Monthly / Weekly
Area Measured: Sales forecast in sales units by product line in Argentina and Brazil,by SKU in Mexico,
by DC and consolidated for 80% of the volume

NOV. 2000 52
16. Cash to Cash
Cycle Time
Objective: Decrease cash-to-cash cycle time
Definition: Measure the average theoretical time to convert a dollar spent to acquire raw material into dollar
collected for finished products
Calculation:
Total Supply Chain Days Sales Days Payables
Inventory (DOH) + Outstanding (DSO) - Outstanding (DPO)
Frequency of
Area Measured: All Inventory, exception of spare parts (MROs). All invoices issued / received
Process Link: Execution Processes

Support Supply Chain Organization
EVA Link: Working Capital
Best-in-Class
Performance: 29 days
NOV. 2000 53
16.1 Days Sales Outstanding
(DSO)
Objective: Decrease days receivables
Definition: Average period of time between invoicing and cash payment for all items on the order
Calculation: 30 X (Trade Accounts Receivables)
Monthly Net Sales**
** including TAX and VAT and excluding intercompany sales
Frequency of
Measurement: Calculated monthly but expressed as latest three month average
Area Measured: All invoices issued / received
Process Link: Support Supply Chain Organization

Fullfill Orders
NOV. 2000 54
16.2 Days Payables
Outstanding (DPO)
Objective: Increase days payables
Definition: Average period of time between invoicing and cash payment for all items on the order
Calculation: 30 X (Accounts Payables & Accrued minus Expenses)
Monthly COGS
Note: for Supply Chain purposes accounts payable excludes long-term and non operative accounts (eg. Pension Plan and
other deferred compensations, accrued interest provisions, income tax provision and direct marketing related items)
Frequency of
Area Measured: All invoices issued / received
Process Link: Support Supply Chain Organization

Manage Payables
NOV. 2000 55
16.3 Total Supply Chain
Inventory (DOH)
Objective: Decrease inventory levels
Definition: Total average Supply Chain inventory (raw material, packaging material, WIP and finished goods)
in terms of days (30 days per month baseline)
Calculation:
Finished Products Raw Material & WIP Packaging Material
+ +
(DOH) (DOH) (DOH)
30 x (Raw Material + WIP + Packaging Material + Finished Product) Inventory

Monthly COGS
Frequency of
Area Measured: All product categories, by aggregate customers and segmented by division, plant and DC

Best-in-Class
Performance: 41 days
NOV. 2000 56
16.3.1 Finished Product
Inventory (DOH)
Objective: Decrease finished product inventory
Definition: Total average finished product inventory in terms of days (30 days per month baseline)
Calculation: 30 X Dollar Value of Finished Product Inventory
Cost of Goods Sold per Month
Frequency of

Best-in-Class
Performance: 12,3 days
NOV. 2000 57
16.3.2 Raw Material and WIP
Inventory (DOH)
Objective: Decrease raw material and WIP inventory
Definition: Total average raw material and WIP inventory in terms of days (30 days per month baseline)
Calculation: 30 X Dollar Value of ( Raw Material + WIP)
Dollar Value of Raw Material Consumed per Month
Frequency of

NOV. 2000 58
16.3.3 Packaging Material
Inventory (DOH)
Objective: Decrease packaging inventory
Definition: Total average packaging material in terms of days (30 days per month baseline)
Calculation: 30 X Dollar Value of Packaging Material Inventory

Dollar Value of Packaging Material Consumed per Month
Frequency of

NOV. 2000 59
17. Inventory Accuracy
Objective: Reduce stock levels and stockouts
Definition: Measures variances between number of units in inventory management computer system and
number of units physically on shelf at DC or plant. Absolute value of inventory variance (actual
case quantity versus reported case quantity).
Calculation: Absolute Value of Case Variance (Over and Under)

Total Cases of Audited Products in Inventory System
Frequency of
Measurement: Monthly, SKU coverage depends on cycle count program adopted
Area Measured: Annually cover all products and DC's

Fullfill Orders
Implementation
Enablers: Cycle count program

Revenue Growth
Best-in-Class
Performance: 100%
NOV. 2000 60
18. Finished Goods
Write Offs
Objective: Reduce costs of write-offs
Definition: Dollar value of product written off (destroyed)
Calculation: Cost of Destroyed Products Fiscal Year to Date
Net Sales Fiscal Year to Date
Frequency of
Measurement: Monthly cumulative to fiscal year end
Area Measured: All SKUs, all write-offs of finished products by DC
NOV. 2000 61
18.1 Obsolete Materials
Objective: Reduce material cost
Definition: Meant to capture cost of raw and packaging material that is obsolete (not to be used or
required), that may or not be written off or destroyed
Calculation: Cost of Obsolete Inventory Year to Date
Cost of Goods Sold Year to Date
Note: Identify and value all raw and packaging material that does not show movement in some reasonable
amount of time (eg. 120 days)
Frequency of
Measurement: Calculated monthly, reported quarterly, cumulative to fiscal year end
Area Measured: All raw and packaging material, by product line
NOV. 2000 62
19. Total Inventory in US$
Objective: Decrease inventory levels
Definition: Average inventory in US$ (based on monthly historical cost and volumes (30 days baseline))
Calculation:
Dollar Value of Inventory of
(Finished Product + WIP + Raw Material + Packaging Material)
Frequency of
Measurement: Calculated monthly but expressed as latest three-month average

NOV. 2000 63

Supply Chain KPIs: Measuring Performance Across Order Fulfillment, Costs & Inventory

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SUPPLY CHAIN

KEY PERFORMANCE INDICATORS (KPIs)

Group I Group II Group III

Objective: Improve customer service

Calculation: Number of Perfect Orders

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve customer service

Calculation: Number of Orders Delivered within RAD or SAD

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Calculation: No. of Orders Filled Completely on First Delivery to Customer

Total Number of Orders Received

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Calculation: Number of Items (lines) Filled Completely on First Delivery to Customer

Total Number of Items (lines) on Orders Received

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Definition: Percent of cases filled completely by order on first delivery to customer

Calculation: Number of Cases Shipped Completely on First Delivery to Customer

Total Number of Cases Ordered

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve customer service

Area Measured: All invoices issued, by DC

Process Link: Fulfill orders

EVA Link: Revenue Growth

Objective: Improve customer service

Calculation: Time (day or hour) Order is

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve customer service

Calculation: Number of Cases not Available at Delivery Time

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve customer service

Definition: Resellable cases returned by customers for any reason

Calculation: Number of Resellable Cases Returned

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve customer service

Definition: Value of resellable cases returned by customers for any reason

Calculation: Value of Resellable Cases Returned

Area Measured: Returns of goods to be reshipped (not destroyed) by DC and by customer

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Objective: Improve consumer service

Calculation: Number of Stockouts for SKU

Total Number of Stockouts for all Audited SKUs

Area Measured: Selected SKUs at selected sites.

Process Link: Fulfill Orders

EVA Link: Revenue Growth

Definition: Percentage of volume distributed to large retailers through DSD channel

Calculation: Actual Volume Delivered via DSD in cases

Process Link: Fulfill Orders, Develop Go-to-Market Strategy

EVA Link: Revenue Growth

Objective: Manage Supply Chain costs

Calculation: Sum of Area Costs:

Process Link: Make Products Available

EVA Link Operating Margin

Supply Chain Processes

Objective: Increase asset utilization