In September, the Automotive Aftermarket Industry Association (AAIA) and the Supply Chain Council (SCC) invited AAIA members to participate in a supply chain benchmarking project for the aftermarket to help companies identify gaps between current performance and strategic targets. The SCC's Richard Sherman spoke to Aftermarket Business World about the program.
Tell us about the benchmarking project and how it will work.
One of the byproducts of our Supply Chain Operations Reference (SCOR) model is that it not only includes definitions, but also all metrics associated with the execution and performance of those supply chain processes. We've convened a series of meetings over the past few months with major members of the aftermarket, and that group has defined specific aftermarket supply chains, prioritized those supply chains, and defined metrics. Now we're seeking member companies to submit their data, totally confidentially, and we will provide each of those members with a scorecard that shows their performance relative to other aftermarket companies. They'll be able to see where their performance is superior or at parity with the industry, and it will enable to identify different processes that could stand some improvement.
When you say you have identified different supply chains, what does that mean?
When think about the aftermarket, you have distributors and wholesalers, jobbers and retailers, professional installers, and consumers. You have four distinct supply chains, and you can identify categories of products that also represent supply chains, like glass or hard parts. You have different categories of parts going to different channels, and each represents a unique supply chain.
What types of information will participants need to submit?
The information is very focused on revenue, gross margin, inventory, inventory cost, or factors like perfect order fulfillment, and order fill rates. It's a combination of quantitative metrics and how that drives customer-facing reliability, flexibility, and adaptability. Anyone who has any kind of business application or enterprise system should be able to come up with those numbers relatively quickly.
In addition to identifying areas for improvement, will you provide recommendations for improvement strategies?
By identifying the process areas that need improvement, that will determine the strategy. Companies will need to ask, how important is this metric? Do we really want to be superior in this metric, or is parity good enough? You'll define and prioritize which metrics are important, then map all of the metrics to business processes, so they will be able to see the business process and also associate what the best practices are for that process.
For example, in planning the metrics may be cash-to-cash cycle time, or order fulfillment cycle time. The best practices might be collaborative planning, forecasting and replenishment; vendor managed inventory; or using different technology tools that can support better decision making. Those might include having online visibility to orders and demand signals, or more collaboration with suppliers and customers.
In September, the Automotive Aftermarket Industry Association (AAIA) and the Supply Chain Council (SCC) invited AAIA members to participate in a supply chain benchmarking project for the aftermarket to help companies identify gaps between current performance and strategic targets. The SCC's Richard Sherman spoke to Aftermarket Business World about the program.
Tell us about the benchmarking project and how it will work.
One of the byproducts of our Supply Chain Operations Reference (SCOR) model is that it not only includes definitions, but also all metrics associated with the execution and performance of those supply chain processes. We've convened a series of meetings over the past few months with major members of the aftermarket, and that group has defined specific aftermarket supply chains, prioritized those supply chains, and defined metrics. Now we're seeking member companies to submit their data, totally confidentially, and we will provide each of those members with a scorecard that shows their performance relative to other aftermarket companies. They'll be able to see where their performance is superior or at parity with the industry, and it will enable to identify different processes that could stand some improvement.
When you say you have identified different supply chains, what does that mean?
When think about the aftermarket, you have distributors and wholesalers, jobbers and retailers, professional installers, and consumers. You have four distinct supply chains, and you can identify categories of products that also represent supply chains, like glass or hard parts. You have different categories of parts going to different channels, and each represents a unique supply chain.
What types of information will participants need to submit?
The information is very focused on revenue, gross margin, inventory, inventory cost, or factors like perfect order fulfillment, and order fill rates. It's a combination of quantitative metrics and how that drives customer-facing reliability, flexibility, and adaptability. Anyone who has any kind of business application or enterprise system should be able to come up with those numbers relatively quickly.
{C}In addition to identifying areas for improvement, will you provide recommendations for improvement strategies?
By identifying the process areas that need improvement, that will determine the strategy. Companies will need to ask, how important is this metric? Do we really want to be superior in this metric, or is parity good enough? You'll define and prioritize which metrics are important, then map all of the metrics to business processes, so they will be able to see the business process and also associate what the best practices are for that process.
For example, in planning the metrics may be cash-to-cash cycle time, or order fulfillment cycle time. The best practices might be collaborative planning, forecasting and replenishment; vendor managed inventory; or using different technology tools that can support better decision making. Those might include having online visibility to orders and demand signals, or more collaboration with suppliers and customers.
