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Procurement & Supply Chain Benchmark Metric PCD Peer Group Best in Class Health Check Chart Qualifiers Findings Conclusion People Process System Recommendations PCD • Align PCD metrics with peer group and best in classPCD PCD employees as Percentage of Company 5% 4% 1% more staff than the peer Staffing level is comparable to peer group, therefore PCD staff should be able to employs average perform at the same level (as long as their capabilities match) ITPCD Percentage of PCD employees included in the following functions; PCD employees • Integrated IT platform: automated workflow across the business, as Percentage of automated metrics, paperless processes, EDI, IT up skilling for PCD Best in Class Company √ √ √ 15% 17% 53% Peer Group employs Comparable to peer group but 38% A greater resource is required to focus on strategic sourcing and supplier staff, increase utilization of current SAP, benchmark SAP best Strategic Sourcing / Supplier Development 100% 3 strategic with SRS PCD less than the best in class development to be able to reach best in class and optimize the supplier base practices, reduce check points... 0% 10% 20% 30% 40% 50% 60% 80% Best in Class Strategic People Peer Group Purchasing group without strategic Comparable to peer group but 24% In order to be able to reach best in class, PCD needs to divert the resource Transactional (non-strategic) Purchasing 23% 24% 0% PCD Training spend 60% Sourcing / team (17-3) more than best in class currently dedicated to tactical activities to strategic activities (see above). √ √ • Greater delegation of authority per PCD employs Supplier 0% 5% 10% 15% 20% 25% 40% Development • Performance management Best in Class • Lower staff empowerment 20% Best in class organizations manage and own the supplier relationship post contract Peer Group Not Available (post contract award Falls way short of the peer group award to ensure that the hard won savings are delivered (value for money). PCD • Training Contract administration / Analysis 0% 15% 34% PCD 0% activity) (15%) but a huge gap of 34% needs reclaim the ownership of the post award contract process (significant √ √ √ 0% 5% 10% 15% 20% 25% 30% 35% 40% between the best in class resource is needed to address this issue) Processes Best in Class • CRM Materials Management 47% 30% 30% Peer Group Inventory + Whs + IBL Over staffed by 15% The warehousing team (including EI) seems high but when EI is excluded the √ √ • Consistent methodology in solving problems: Proactive Approach PCD Materials Transactional figure is in the ball park of the peer group 0% 10% 20% 30% 40% 50% Management (non-strategic) • Lean the processes / BPR (debottleneck) Purchasing • Organization decisions Best in Class Even though the spend is comparable to peer group, to reach the best in class or • Central warehouse Comparable to peer group but falls √ √ Peer GroupPCD Training spend per PCD employs 2,833 2,673 6,261 Training budget / employees even to match the performance of the peer group, PCD needs to invest more in its PCD short by 50% against best in class 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 human resource to make the step change from existing level to the best in class. Contract administration / Best in Class Analysis 9 months actual, 3 months Peer Group extrapolation 2009. Spend without This would suggest that PCD processes are not lean and therefore inefficientPCD PCD Operating expenses as a percentage of spend 8.78% 0.89% 0.10% PCD Best in Class PCD Peers feed stock (including feed stock = Ten times more than the peer group compared to its peer group and lag far behind the best in class √ √ √ 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 0.18%) Best in Class Spend per employee is 10% of the PCD needs to lean its processes, to eradicate waste (non value added activities), same as above (including feedPCD Total spend per PCD employee (USD) 2,000,000 22,602,890 45,833,333 Peer Group PCD stock = 100,000,000USD) peer group and 5% when compared and needs to optimize the use of IT to achieve scalability in order to close the gap √ √ √ 0 10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 to best in class between it and the peer group and the best in class. Best in Class SRS Smaller pool of suppliers per The level of suppliers is acceptable at this stage (due to the maturity of theSRS Active suppliers per PCD employee 7 40 34 Peer Group Quarterly Report employee than peers and best in business), but going forward, PCD needs to deploy lean and IT to gain scalability to √ √ √ • Up skill people resource (hire new people + train existing staff) PCD 0 5 10 15 20 25 30 35 40 45 Active suppliers class be able to match the ratios within its peer group and best in class per PCD • Activate vendor rating system Best in Class employee 100% To be able to reach best in class, PCD needs to concentrate its spend with fewer Percent of active suppliers that account for 80% of Peer GroupSRS spend 10% 3.7% 2.1% PCD based on 2009 data Supplier base not optimized key suppliers to develop collaboration, partnering, longer term relationships (EDI, √ • Database cleansing / supplier classification 0% 2% 4% 6% 8% 10% 12% 80% …). That impact on revenue, production and reputation. Best in Class 60% • Define SRS role within PCD See above. Percentage of active suppliers with active supplier Peer Group PCD needs to identify its key suppliers that are critical to the business and workSRS performance plans in place 0% 1.7% 10% PCD 40% Percent of active None with them to plan, forecast… the demand to ensure continuity of supply and value √ √ • Strategic sourcing / supplier positioning / commodity positioning Pre-Approved suppliers that 0% 2% 4% 6% 8% 10% 12% Suppliers account for 80% of money to the business. 20% of spend Best in Class Track and monitor suppliers ruthlessly. Quarterly Report (Q3 09 data - Q3 15% short than peers and 30% than √ Peer Group 0%SRS On time delivery 60% 75% 90% PCD needs to put in place a monitoring program with active daily communication PCD was 44% on time delivery) best in class 0% 20% 40% 60% 80% 100% for all expected deliveries. Best in Class PCD needs to undergo a cleansing program for the vendor mater and apply the pre Huge gap between peer group and √ Peer GroupSRS Pre-Approved Suppliers 3% 50% 90% Quarterly Report approval process for all registered suppliers. This will reduce considerably the PCD best in class 0% 20% 40% 60% 80% 100% Percentage of internal procurement LT. active suppliers Best in Class with active On time delivery Peer Group supplier PCD needs to capture customer complaints through arm to be able to fix problemsSRS 5% performance and improve services. In a functional environment arm can be done off line, Customer complaints PCD 0% 1% 2% 3% 4% 5% 6% plans in place however to achieve best in class, arm should be an enabler as part of an overall forecasting and demand process. This should be done through an IT platform. Best in Class Best in Class PCD Peers PCD needs to tackle the issue of delayed payments by reviewing its current Peer GroupSRS On time payment 76% 60% 95% PCD processes. PCD needs to be more pro active in dealing with this matter: fixing the √ √ 0% 20% 40% 60% 80% 100% problem through analyzing and fixing the root causes Best in Class Warehouse & Inbound LogisticsWHIL Logistics / Transportation employees as a 20% 44% 17% Peer Group Including EI Comparable to best in class √ • Data integrity review (SAP and manual reports) percentage of Materials Management employees PCD 0% 10% 20% 30% 40% 50% • Lean the processes (implement the warehousing strategy) Best in Class LogisticsWHIL Warehousing employees as a percentage of 7% greater than best in class (still PCD needs to put a warehousing strategy in place, have lean processes to reduce Peer Group Materials Management employees 67% 52% 60% PCD Organization Including EI comparable) the cost. The current approach is expensive. √ √ • Move forward with Central warehouse 0% 10% 20% 30% 40% 50% 60% 70% 100% 80% • Up skill the resources Best in Class PCD needs to capture this KPI and monitor it. √ Peer GroupWHIL Order pick accuracy NA 80% 99.5% Not Available PCD Returns to 60% Warehouse This measures the effectiveness of the warehouse team (shelving) • 5S implementation 0% 20% 40% 60% 80% 100% 120% warehouse Organization 40% Best in Class Comparable to peer group but 8% √ √ Peer Group 20%WHIL Orders shipped on time and complete 91% 90% 99% Quarterly Report PCD less than best in class 84% 86% 88% 90% 92% 94% 96% 98% 100% 0% Best in Class Peer Group Peer group and best in class recognize this as an important KPI. It measures theWHIL Inventory accuracy NA 85% 97% PCD Not Available inventory accuracy √ √ 0% 20% 40% 60% 80% 100% 120% Orders shipped OSDR on time and Best in Class complete Technical Inspection is not implemented yet. Although the GR is done on time, the Peer Group Comparable to peer group but 9%WHIL Internal GR on time 90% 90% 99.5% PCD Quarterly Report less than best in class absence of technical inspection might create problems at the issuing time because √ √ 84% 86% 88% 90% 92% 94% 96% 98% 100% 102% of the quality of the materials. Internal GR on Best in Class time Peer GroupWHIL OSDR 2% 5% 1.5% PCD Quarterly Report Comparable to best in class 0% 1% 2% 3% 4% 5% 6% Best in Class PCD Peers Best in Class Peer GroupWHIL Returns to warehouse 3% 8% 3% PCD Quarterly Report Comparable to best in class 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Best in Class Inventory The current level is acceptable due to the maturity of the business. Once theInv Average Customer service level 79% 80% 95% Peer Group Quarterly Report Comparable to peer group but 15% handover is complete, database finalized, Inventory needs to start working on the √ √ √ • Permanent solution for technical evaluation / Material query PCD less than best in class 0% 20% 40% 60% 80% 100% demand forecast to improve this KPI. • Demand forecast for better planning and better service level Best in Class Due to the maturity of the business, it is not possible to capture this data for the Peer Group moment. However, Inventory needs to start collecting the data and preparing theInv Average forecast accuracy NA 60% 90% PCD Not available process for it. The forecast process needs to go beyond inventory, it should be at √ √ √ • Collaborate with customer to collect maintenance parameters Average 0% 20% 40% 60% 80% 100% Customer service PCD level. and upload in system (stock optimization) level Best in Class 100% Turnover measures the efficiency of the supply chain. Inventory needs to set the • Address the issue of over stocking (investment recovery) √ √ √ Peer GroupInv Spares stock turnover (years) NA 2.5 1 right parameters to avoid having dormant stock. Inventory needs to do this in PCD 0% 50% 100% 150% 200% 250% 300% 80% conjunction with the business and in particular with the key section of PCD. • Collaborate with purchasing to set agreement for fast moving TE cycle time MRP LI vs. TE Best in Class 60% items / set VMI... This KPI is related to the accuracy of the data in the catalogue. Inventory needs to Peer Group Comparable to peer group but 8%Inv MRP LI vs. TE 13% 15% 5% PCD 40% Quarterly Report more than best in class undergo a data enrichment program to reduce the internal LT for procurement. √ √ 0% 2% 4% 6% 8% 10% 12% 14% 16% In best in class, TE is carried out at the front end. 20%Inv Type of PRs Best in Class 0% Not under the control of inventory. Normal 80% 70% 80% Peer Group PCD Quarterly Report Comparable to best in class However, the target should be communicated to customer in the OLA. √ √ Urgent 8% 20% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Overstock Urgent Others 12% 10% 10% Best in Class The figures are comparable to best in class due in part to the overstock (19%). √ Peer GroupInv Level of stock outs 3% 4% 2.5% Quarterly Report Comparable to best in class However, to achieve best in class PCD needs to implement demand forecasting / PCD 0% 1% 1% 2% 2% 3% 3% 4% 4% 5% achieve lean supply chain Level of stock Best in Class Shortages outs Peer Group To maintain the best in class figures, PCD needs to achieve lean supply chain toInv Shortages 5% 10% 5% PCD Quarterly Report Comparable to best in class replenish the stock quickly (5S) √ √ 0% 2% 4% 6% 8% 10% 12% Best in Class Best in Class PCD Peers √ √ Peer GroupInv Overstock 19% 10% 2.5% Quarterly Report 17% more than the best in class Inventory needs to undergo an integrated approach to limit the overstock PCD 0% 5% 10% 15% 20% Best in Class The bottleneck in the process is the customer apathy. PCD should communicate Long lead time to process TE. 3 with customer to sort this issue out. An integrated approach needs to take place