Supply Chain Intelligence

SUPPLY CHAIN INTELLIGENCE
This white paper on Supply Chain Intelligence gives an overview

about Supply Chain Management, the importance of using
Supply Chain Intelligence in organizations to derive better
operational efficiency and some of the Key Performance
Indicators for any organization in SCM.
WHITE PAPER
SIVAKUMAR KRISHNAMURTHY
Supply Chain Intelligence
Table of Contents
INTRODUCTION ...................................................................................................................................... 3
SUPPLY CHAIN MANAGEMENT ................................................................................................. 3
SUPPLY CHAIN ANALYTICS / INTELLIGENCE (SCI) .................................................................. 3
SCM AND SCI DIFFERENTIATION ............................................................................................... 4
WIPRO'S UNDERSTANDING OF THE NEED FOR SCM ANALYTICS ................................................ 4
SCI GOALS ....................................................................................................................................... 4
APPLICATION AREAS ..................................................................................................................... 5
MEASURING OVERALL SUPPLY CHAIN PERFORMANCE ....................................................... 5
SUPPLY CHAIN MEASURES FOR GROWTH .............................................................................. 5
SUPPLY CHAIN MEASURES FOR COST MINIMIZATION ......................................................... 5
SUPPLY CHAIN MEASURES FOR WORKING CAPITAL EFFICIENCY ..................................... 6
SUPPLY CHAIN MEASURES FOR FIXED ASSET UTILIZATION ................................................. 6
PAIN AREAS .................................................................................................................................... 6
KEY PERFORMANCE INDICATORS (KPI) ................................................................................... 6
ENABLING SCI .............................................................................................................................. 16
PACKAGED SCI............................................................................................................................. 16
NON PACKAGED / CUSTOMIZED SCI ...................................................................................... 16
DOMAIN EXPERTISE .................................................................................................................... 16
ALERTING ...................................................................................................................................... 16
SIX STEPS TO SCI .......................................................................................................................... 17
ADVANCED SUPPLY CHAIN LOGISTICS .................................................................................. 17
SEGMENTATION OF SUPPLY CHAIN ........................................................................................ 17
CHALLENGES IN SCI DEVELOPMENT ....................................................................................... 17
DATA SOURCES REQUIRED ....................................................................................................... 17
DEFINING BUSINESS AND END-USER REQUIREMENTS ...................................................... 18
ORGANIZATIONAL AND CULTURAL ISSUES ............................................................................ 18
DATA WAREHOUSES FOR SCI ................................................................................................... 18
WIPRO'S VALUE PROPOSITION .......................................................................................................... 19
ARCHITECTURAL FRAMEWORK FOR SUPPLY CHAIN INTELLIGENCE ......................................... 19
ABOUT THE AUTHOR ............................................................................................................................ 20
ABOUT WIPRO TECHNOLOGIES ......................................................................................................... 21
WIPRO IN SUPPLY CHAIN MANAGEMENT ...................................................................................... 21
Page: Table of Contents

INTRODUCTION
Supply chain management

A network of facilities and option that integrates activities from procurement of materials from suppliers through manufacturing
and distribution to customer, which is normally accomplished through integration of business processes across organizational
walls.
Supply chain Eco-system
Enterprise Resource
Planning ERP
SCM
Production Fulfillment CRM
Material Warehouse Order

Sales
Management Management Management
Supplier Customer
Transportation
Relationship Procurement Distribution Service Relationship
Management
Management Management
(CRM)
Inventory
Manufacturing Logistics Marketing
Management
Supply chain analytics / intelligence (SCI)

Application of BI to various SCM functions and product life cycles on a strategic scale to optimize the results of these functions
by means of enhancing the ability to produce cost effective products. Leading ERP and SCM systems have proven useful in
automation of transaction related processes of the supply chain, however these systems have not provided the ability to
adequately analyze the operational effectiveness across the supply chain. Current day supply chains are extremely complex
environments whose operating state can affect company’s ability to operate effectively and profitably.
It has become essential to closely examine and measure the effectiveness of supply chain processes in taking intelligent
decisions. SCI offers the mechanisms that facilitate this view.
SCI requires the ability to analyze products, processes, components, and materials. This demands a data integration infrastructure,
which provides capability to extract, transform and load data acquired from multiple enterprise sources like ERP source data,
SCM source data, CRM source data, customer data, supplier data, product manufacturing / testing data, quality management
data, shop floor manufacturing data sources, legacy system data sources, data from online industry trading exchanges, market
places & auction, demographics and marketing data purchased from third party data suppliers.
SCI requires tighter integration of manufacturing into analytics. And, information resulting from the integration is critical to the
identification of design issues and costs through out the product life cycle.
© Wipro Technologies Page: 03 of 21

SCM and SCI differentiation

SCM SCI
Largely about managing the Provides a broad view of an
procurement and production entire supply chain to revealfull product and
links of the supply chain component
life cycle
Transactional Analytic
Tactical decision making Strategic decision making
Helps reduce costs through improved Reveals opportunities for cost reduction,
operational efficiency but also stimulates revenue growth
Records one state of data representing Maintains historic data
‘now’
Assists in material and production What-if forecasting based in historic data
planning
Quantifies cost of some materials Enables an understanding of total cost
Can show today’s yield but cannot Can drill into yield figures to reveal what
explain influences on it caused the performance level
Configured to order products, collaborative development, global outsourcing, web based buying and selling, just in time
manufacturing are driving forces in adoption of SCI in companies of all sizes and business models.
WIPRO’S UNDERSTANDING OF THE NEED FOR SCM ANALYTICS
SCI Goals
SCI’s objective is application of DW and BI techniques on a strategic, enterprise scale across the supply chain and product life
cycle. Working as an integral part of SCM, SCI is intended to enhance the ability of manufacturing processes to produce cost
effective products by applying BI to supply, operations, logistics, demand and customer support processes. The broad goals
are to
• Establish metrics – Use of mutually agreed upon metrics to evaluate progress and measure the supply chain’s contribution.
• Manage exceptions – Create a vehicle for managing exceptions related to demand and inventory
• Communicate – Inform supply chain partners about time sensitive information
• Plan collaboratively – Perform collaborative planning with the supply chain partners
Typically the following are the derived goals
• Reduce the inventory across the supply chain
• Improve product quality
• Enhance yield and asset usage
• Identify top performing suppliers, measure performance over time, negotiate performance based agreements
• Measure and improve demand forecasting performance
• Improve forecasting accuracy of items not meeting acceptable levels, enable better management of raw materials,
inventory, production planning and finished goods.
• Measure accuracy of production plan for a given time period

• Identify products that may affect customer service levels and alert sales functions to proactively manage customer
relationship
• Measure delivery performance of customer orders
• Reduction of decision cycle processes
Application areas
Measuring overall supply chain performance

The overall performance of the supply chain significantly affects the financial health of both the P & L and the balance sheet.
Therefore, an effective supply chain performance measurement process needs to directly address performance areas that
create sustainable profitability and financial strength.
In order to accomplish SCI, the performance measurement process will need to provide a reliable indication of the contribution
of supply chain operations to the areas like growth, cost minimization, working capital efficiency and fixed asset utilization.
Supply chain measures for growth

Key growth measures related to demand / supply management processes often include customer service level, measured as the
percentage of orders fulfilled during first attempted completion and perfect order rate, measured as the percentage of
completed orders for which no errors occur during order fulfillment, transportation and billing.
Growth measures for procurement are activities that typically include percentage of materials that arrive just in time for
production purposes and lead times.
Manufacturing related growth measures focus on quality, percentage of defect-free orders to the total orders; percentage of
units returned to total units shipped and order to delivery time.
Key growth measures for logistics are measured as percentage of order delivered to customers on time.
Supply chain measures for cost minimization

Cost minimization measures related to demand / supply chain planning typically include inventory measures of excess /
obsolete inventory. Inventory turnover is also a leading metric for working capital efficiency.
Procurement related cost minimization measures to focus on the cost of purchased materials and services. Inbound transportation
expense, measured as a ratio of total inbound transportation costs to total purchased material value Cost minimization
measures fro manufacturing include total direct manufacturing costs as a percentage of cost of sales or revenue. Indirect costs
are measured as a ratio of total indirect costs to revenue or total direct costs
Logistics related cost minimization performance measures focus on freight and storage costs as a percentage of cost of sales
or revenue. Significant opportunity for cost minimization in SCM is related to tax consequences of asset ownership, location,
timing, transfer costs etc.

Supply chain measures for working capital efficiency

Inventory is one of the largest components of working capital. In manufacturing and distribution scenarios, inventory investments
are measured as percentage of sales. Procurement related working capital efficiency performance measures are related to
inventory investments i.e. percentage of raw materials and purchased components are compared to total inventory investments.
Manufacturing related working capital efficiency uses work in progress (WIP) inventory and percentage of WIP inventory to
total inventory for measurement.
Working capital performance measures for logistics activities use finished goods inventory and order fill rates at distribution
centers.
Supply chain measures for fixed asset utilization

Key fixed asset utilization performance measures for demand / supply planning include fixed production / distribution
infrastructure investment as a percentage of revenue or total assets.
Manufacturing related fixed asset utilization performance measures are investment in plant, property and equipment related to
production as a percentage of revenue.
Logistics related fixed asset utilization measures are investments in storage facilities, transportation infrastructure as a percentage
of revenues or cost of sales.
Pain areas
• Maintenance of desired level of customer service by maintaining finished goods inventory levels by scheduling to meet
customer delivery requirements.
• To make the best use of material, labor and equipment.
• To maintain inventory investment at the required levels
This finding, although somewhat shocking initially, is not really all that surprising. Supply chains are large, complex environments
consisting of a multitude of business processes distributed across multiple departments, groups, and operations. Moreover,
similar requirement rates for reengineering business processes have been found to be associated with customer relationship
management, enterprise relationship management, and other large-scale corporate analytical undertakings.
Key Performance Indicators (KPI)

Key performance indicators are measurements that directly relate to key business needs. KPIs come in various forms from
simple reporting measurements to very complex, cross correlated analytic results. Some of the KPI relating to SCM are presented
below.

S.No KPI Definition
1 # of call backs as % of total inquiries

2 # of Orders Not Delivered Complete Number of orders in which not all of the items on order are delivered
in the quantities requested.
3 # of Orders with Complete and Accurate Number of orders without correct documentation supporting the
Documentation order, including packing slips, bills of lading,invoices, etc.
4 % of EDI Transactions Percentage of orders received via electronic data interchange, EDI.
5 % of Faultless Installations
6 Actual-to-theoretical Cycle Time Actual-to-theoretical Cycle Time
7 Asset turns Total gross product revenue ÷ Total net assets
8 Average plant-wide salary
9 Bill of Material Data Accuracy Bill of Material Data Accuracy
10 Build cycle time Built cycle time is the average cycle time for build-to-stock products
calculated as the average number of units in process divided by the
average daily output in units.
11 Build to ship cycle time Average time from when a unit/product is deemed shippable by
manufacturing until the unit/product actually ships to a customer.
12 Capacity Utilization A measure of how intensively a resource is being used to produce a
good or service. Some factors that should be considered are internal
manufacturing capacity, constraining processes, direct
labor availability and key components/materials availability.
13 Cash-to-cash Cycle Time Cash-to-cash cycle time = inventory days of supply + days sales
outstanding – average payment period for materials (time it takes
for a dollar to flow back into a company after its been spent for raw
materials).
14 Channel Inventory Finished Goods inventory which is allocated to a particular distribution
channel, i.e. OEM goods, retail.
15 Commodity Management Profile Number of distinct part numbers (purchased commodities) sourced
within the following areas: 200 miles, Own country, Own continent,
Off-shore.
16 Complete Manufacture to Order Includes pick/pack and prepares for shipment time, in calendar days.
Ready for Shipment Time
17 Contract/Program and Channel Includes all costs for activities related to contract negotiation,
Management Costs monitoring progress and reporting against the customer’s contract,
including administration of performance or warranty related issues.
18 Create Customer Order Costs Includes costs for creating and pricing configurations to order and
preparing order documents.

19 Cross training Providing training or experience in several different areas, e.g.,

training an employee on several machines rather than one. Cross-
training provides backup workers in case the primary operator is
unavailable. 20 Cumulative Source/Make Cycle The cumulative
external and internal lead Time time to build shippable product (if
you start with no inventory on-hand, no parts on-order, and no
prior forecasts existing with suppliers), in calendar days.
21 Customer Invoicing/Accounting Costs Includes costs for invoicing, processing customer payments, and
verifying customer satisfaction.
22 Customer Receipt of Order to Includes product installation, acceptance and
Installation Complete product up and running time, in calendar days.
23 Customer Signature/Authorization to Time, in calendar days, from when the Order Receipt Time customer
authorizes an order to the time that the order is received.
24 Days Sales Outstanding 5 point annual average of gross accountsreceivable÷(total gross
annual sales before WIC rebates÷ 365)
25 Delivery Locations by Geography The number of ship-to locations by geography (United States/Canada,
Europe, Middle East/Africa, Japan, Asia/Pacific, Mexico/Central
America /South America).
26 Delivery Performance to The percentage of orders that is fulfilled on or before the customer’s
Customer Request Date requested date.
27 Delivery Performance to The percentage of orders that is fulfilled on or before the original
Scheduled Commit Date scheduled or committed date.
28 Demand/ Supply Planning Costs Costs associated with forecasting,developing finished goods or end
item inventory plans, and coordinating Demand/Supply process
across entire supply chain, including all channels. (Not including
MIS associated costs.)
29 Distribution Costs Includes costs for warehouse space and management, finished goods
receiving and stocking, processing shipments, picking and
consolidating, selecting carrier, and staging products/systems.
30 ECO cost Costs incurred from revisions to a blueprint or design released by
engineering to modify or correct a part. The request for the change
can be from a customer or from production quality control or another
department.
31 End-of-Life Inventory Inventory on hand which will satisfy future demand for products
that are no longer in production at your entity.
32 Faultless Invoices The number of invoices issued without error. Examples of potential
invoice defects are: Change from customer purchase order without
proper customer involvement, Wrong Customer Information (e.g.,
name, address, telephone number), Wrong Product Information (e.g.,
part number, product description), Wrong Price (e.g., discounts not
applied), Wrong Quantity or Wrong Terms or Wrong Date

33 Field Finished Goods Inventory The inventory which is kept at locations outside the four walls of the
manufacturing plant, i.e. distribution center, warehouse.
34 Fill Rates The percentage of ship-from-stock orders shipped within 24 hours of
order receipt.
35 Finished Goods Inventory Costs associated with finished goods
Carrying Costs inventory: opportunity cost, shrinkage, insurance and taxes, total
obsolescence, channel obsolescence and field sample
obsolescence.
36 Finished Goods Inventory Days Finished goods inventory days of supply
of Supply are calculated as gross finished goods inventory ÷ (value of
transfers/365 days).
37 Finished Goods Shrinkage The costs associated with breakage, pilferage, and deterioration of
finished goods inventories.
38 Forecast Accuracy Forecast accuracy is calculated at the shippable end-product level
for each distribution channel, and for both units and dollars.
Forecast Accuracy = Forecast Sum - Sum of Variance / Forecast
Sum. Forecast Sum = The sum of the units or dollars forecasted to
be shipped in each month based upon the forecast generated three
months prior. Sum of Variances = The sum of the absolute values, at
the forecasted line item level, of the differences between each
month’s forecast as defined above and actual demand for the same
month.
39 Forecast Cycle The time between forecast regenerations that reflect true changes
in marketplace demand for shippable end-products. Only true
“bottoms-up” forecasts are counted: for example, if weekly or
monthly updates to the forecast only recalendarize or shift dates
for the forecast to avoid changing the annual dollar-based
forecast, they should not be considered true forecast
regenerations.
40 Incoming Material Quality
41 Indirect to direct labor headcount ratio Ratio of total number of employees required to support production
in general without being related to a specific product, indirect
labor, to the total number of employees that is specifically applied
to the product being manufactured or used in the performance of
the service, direct labor.

42 In-process failure rates

43 Installation Costs Includes costs for verifying site preparation, installing, certifying,
and authorizing billing.
44 Installation Planning Costs Includes costs for installation engineering, scheduling and
modification, handling cancellations and planning the installation.
45 Intra-manufacturing replan cycle Time between when a regenerated forecast is accepted by the end-
product producing location and the time the the revised plan is
reflected the master production schedule of all the affected plants,
excluding external vendors.
46 Inventory accuracy
47 Inventory aging The percentage of total gross inventory (based on value) covered
by expected demand within specific time buckets.
48 Inventory Carrying Costs Inventory Carrying Costs are the sum of opportunity cost,
shrinkage, insurance and taxes, total obsolescence for raw material,
WIP, and finished goods inventory, channel obsolescence and field
sample obsolescence.
49 Inventory cycle-counting accuracy Inventory cycle-counting accuracy
50 Inventory days of supply Total gross value of inventory at standard cost before reserves for
excess and obsolescence. Only includes inventory on company
books, future liabilities should not be included. 5 point annual
average of the sum of all gross inventories (raw materials & WIP,
plant FG, field FG, field samples, other) ÷ (COGS ÷ 365).
51 Inventory Obsolescence as a % The annual obsolete and scrap reserves
of Total Inventory taken for inventory obsolescence expressed as a percentage of
annual average gross inventory value.
52 Machine wait time
53 Make cycle time The sum of the following average times: Order release to start
actual build + Total build cycle + End build to leaves plant (i.e.,
moves to on/off-site distribution or goes to customer). For
continuous and mixed processes, manufacturing cycle time is
calculated as the average number of units (doses, kilos, pounds,
gallons, etc.) in process divided by the average daily output in
units.
54 Make flexibility
55 Material Acquisition Costs Material acquisition costs include costs incurred for production
materials: sum of materials management and planning, supplier
quality engineering, inbound freight and duties, receiving and
material storage, incoming inspection, material process
engineering and tooling costs.

56 Material Management and Material (Commodity) Management and

Planning Costs as a % of Material Planning – All costs associated with
Acquisition Costs supplier sourcing, contract negotiation and qualification and the
preparation, placement, and tracking of a Purchase Order
expressed as a percentage of material acquisition costs. This
category includes all costs related to buyer/planners.
57 Material Overhead Cost Material Overhead Cost Per Dollar of
Per Dollar of Material Expenditure Material Expenditure
58 Material Process Engineering Material Process Engineering – Cost
as a % of Material Acquisition Costs associated with tasks required to document and communicate
material specification, as well as reviews to improve the
manufacturability of the purchased item expressed as a percentage
of material acquisition costs.
59 Material requisition cycle time Material requisition cycle time
60 Number of Channels The number of different channels through which product is
shipped to customers.
61 Number of ECOs Total number of revisions to a blueprint or design released by
engineering to modify or correct a part, engineering change orders
(ECO). The request for the change can be from a customer or from
production quality control or another department.
62 Number of End Products/SKU’s Total number of unique end item product offerings. End items are
individually planned and managed.
63 Number of Orders, Line Items, The aggregated of orders, line items
and Shipments in the Channel and shipments for the retail channel.
64 Number of Supply Sources Total number of internal and external direct production material
suppliers used.
65 Order Consolidation Profile Consolidation is defined as the activities associated with filling a
customer order by bringing together in one physical place all of
the line items ordered by the customer. Some of these may come
directly from the production line, others may be picked up from
stock. The following profiles have been captured: Shipped direct to
customer’s dock from point of manufacture (No Consolidation).
Shipped direct to customer with consolidation completed local to
customer by your transport company. Moved to on-site staging
location for consolidation and shipment direct to customer. Moved
to on-site stockroom for later pick, pack and ship. Shipped to
different locations for consolidation or later pick, pack and ship.
Shipped to different locations for consolidation or later pick, pack
and ship.
66 Order Entry and Maintenance Costs Includes costs for maintaining the customer data base, credit
check, accepting new orders and adding them to the order system
as well as later order modifications.
67 Order Entry Complete to Order Including release to manufacturing,
Ready for Shipment Time order configuration verification, production scheduling, build,
pick/pack, and prepare for shipment time, in calendar days.

68 Order Entry Complete to Start Time from completion of order entry to

Manufacture Time that of the release to manufacturing, in calendar days.
69 Order Entry Methods The method of how orders are entered into a company’s system,
whether the orders are entered by: the customer, sales personnel in
the field, sales support personnel in remote sales offices, or sales
support personnel in business unit or corporate headquarters.
70 Order Fulfillment Costs Includes costs for processing the order, allocating inventory,
ordering from the internal or external supplier, scheduling the
shipment, reporting order status and initiating shipment.
71 Order Fulfillment Lead Times The average actual lead times consistently achieved, from Customer
Signature/ Authorization to Order Receipt, Order Receipt to Order
Entry Complete, Order Entry Complete to Start-Build, Start Build to
Order Ready for Shipment, Order Ready for Shipment to Customer
Receipt of Order, and Customer Receipt of Order to Installation
Complete.
72 Order Management Costs The aggregation of the following cost elements (contained in this
glossary): Create Customer Order Costs, Order Entry and
Maintenance Costs, Contract/Program and Channel Management
Costs, Installation Planning Costs, Order Fulfillment Costs,
Distribution Costs, Transportation Costs, Installation Costs,
Customer Invoicing/Accounting Costs
73 Order Management Cycle Time Order Management Cycle Time
74 Order Ready for Shipment to Including total transit time (all
Customer Receipt of Order Time components to consolidation point), consolidation, queue time,
and additional transit time to customer receipt of order, in calendar
days.
75 Order Receipt Modes The mode of how an order is received by a company, whether it
received via: EDI, fax, mail, or phone.
76 Order Receipt to Order Entry Time required, in calendar days, for order
Complete Time revalidation, configuration check, credit check, and scheduling of
received orders.
77 Overhead cost Costs incurred in the operation of a business that cannot be

directly related to the individual products or services produced.
These costs, such as light, heat, supervision, and maintenance, are
grouped in several pools and distributed to units of product or
service by some standard allocation method such as direct labor
hours, direct labor dollars, or direct materials dollars.
78 Percent defective
79 Percent of parts delivered to point of use The percentage of material receipts that are delivered directly to
production or a consolidation point or to point of use on the
production floor with no inspection or minor visual/paperwork
inspection only.
80 Percentage of Orders The percentage of orders whose delivery
Scheduled to Customer Request is scheduled to within a agreed to time frame of the customer’s
requested delivery date.

81 Perfect Order Fulfillment A “perfect order” is defined as an order that meets all of the
following standards: Delivered complete; all items on order are
delivered in the quantities requested; Delivered on time to
customer’s request date, using your customer’s definition of on-
time delivery; Documentation supporting the order including
packing slips, bills of lading, invoices, etc., is complete and
accurate; Perfect condition: Faultlessly installed (as applicable),
correct configuration, customer-ready, no damage
82 Plan Stability
83 Planning Interval Data Accuracy Planning Interval Data Accuracy
84 Plant cost per hour
85 Plant Finished Goods Inventory Plant finished goods inventory days of
Days of Supply supply are calculated as gross plant finished goods inventory ÷
(value of transfers/365 days).
86 Plant-level order management costs Plant-level order management costs
87 Product & Process Data Accuracy Product & Process Data Accuracy (Bills
(Bills of Material, Routings, of Material, Routings, Planning
Planning Factors, etc.) Factors, etc.)
88 Product/grade changeover time Product/grade changeover time

89 Production Flexibility Upside Flexibility: The number of days required to achieve an
unplanned sustainable 20% increase in production. Downside
Flexibility: The percentage order reduction sustainable at 30 days
prior to delivery with no inventory or cost penalties.
90 Production Plan Adherence
91 Published Delivery Lead Times The typical standard lead time (after receipt of order) currently
published to customers by the sales organization. For typical
orders only, not standing/re-supply orders.
92 Purchased Material by Geography Number of the following distinct part numbers of: Raw materials,
Externally manufactured intermediates, Toll manufactured finished
products, Packaging material, Labeling material that are sourced in
within the following areas: 200 miles, Own country, Own
continent, Off-shore.
93 Quality levels
94 Quarantine time Setting aside of items from availability for use or sale until all
required quality tests have been performed and conformance
certified.
95 Ratio of actual to theoretical cycle time Ratio of actual to theoretical cycle time
96 Raw Material & WIP Inventory Raw material & WIP inventory days of
Days of Supply supply are calculated as gross raw material and WIP inventory ÷
(value of transfers/365 days).
97 Raw Material Days-of-Supply Raw material inventory days of supply are calculated as gross raw
material inventory ÷ (value of transfers/365 days).
98 Raw material inventory carrying costs Sum of all costs associated with raw material inventory:
opportunity cost, shrinkage, insurance and taxes, and total
obsolescence.
99 Raw material shrinkage The costs associated with breakage, pilferage, and deterioration of
raw material inventories.

100 Receiving & material storage Receiving and Material Storage –

costs as a % of Material All costs associated
Acquisition Costs with taking possession of and storing material. Includes
warehouse space and management, material receiving and
stocking, processing work orders, pricing, and internal material
movement. This does not include incoming inspection.
101 Receiving and put-away cycle time Receiving and put-away cycle time
102 Receiving costs as a % of All costs associated with taking
Material Acquisition Costs possession of material expressed as a percentage of material
acquisition costs. This does not include inspection.
103 Replan Cycle Time The time between the initial creation of the regenerated forecast
and its reflection in the Master Production Schedule of the end-
product production facilities.
104 Responsiveness lead time
105 Return on Assets A financial measure of the relative income-producing value of an
asset. It is calculated as net income divided by total assets.
106 Routing Data Accuracy
107 Schedule achievement The percentage of time that a plant achieves its production
schedule. This calculation is based on the number of scheduled
end-items or total volume for a specific period. Note: overships do
not make up for undership.
108 Scrap expense Expenses incurred from material falling outside of specifications
and possessing characteristics that make rework impractical.
109 Shrinkage The costs associated with breakage, pilferage, and deterioration of
inventories.
110 Source Cycle Time Cumulative lead time (total average combined inside-plant
planning, supplier lead time [internal or external], receiving,
handling, etc. from demand identification at the factory until the
materials are available in the production facility) required to source
95% (chosen to eliminate outlying data) of the dollar value of
materials from internal and external suppliers.
111 Source Flexibility
112 Supplier cycle time
113 Supplier Fill Rate
114 Supplier on-time Delivery Performance The percentage of orders that are fulfilled on or before the original
customer requested date (suppliers performance measured by the
customer).
115 Supply chain finance costs Costs associated with paying invoices, auditing physical counts,
performing inventory accounting, and collecting accounts
receivable. (Does not include customer invoicing/accounting
costs.)

116 Total build time Total build time is the average time for build-to-stock or configure-
to-order products from when production begins on the released
work order until the build is completed and unit deemed shippable.
117 Total Logistics Costs Total logistics costs are the sum of supply-chain related MIS,
Finance and Planning, Inventory Carrying, Material Acquisition, and
Order Management costs.
118 Total manufacturing employment Total manufacturing employment
119 Total Source Lead Time Total source lead time is the cumulative lead time required to
source 95% of the dollar value of materials from internal and
external suppliers.
120 Total WIP Inventory DOS Total WIP inventory days of supply are calculated as gross WIP
inventory ÷ (value of transfers/365 days).
121 Touch labor job classifications Touch labor job classifications
122 Training/ education
123 Transportation Costs Includes all company paid freight and duties from point of
manufacture to end-customer or channel.
124 Unit cost Total labor, material, and overhead cost for one unit production,
e.g., one part, one gallon, one pound.
125 Value-Added Employee Productivity Value added per employee is calculated as total product revenue
less total material purchases ÷ total employment (in full-time
equivalents).
126 Warranty and returns Number of returns within the warranty period. Warranty is a
commitment, either expressed or implied, that a certain fact
regarding the subject matter of a contract is presently true or will
be true.
127 Warranty costs Warranty costs include materials, labor and problem diagnosis for
product defects.
128 WIP Shrinkage The costs associated with breakage, pilferage, and deterioration of
WIP inventories.
129 Work-In-Process Inventory Sum of all costs associated with WIP
Carrying Costs inventory: opportunity cost, shrinkage, insurance and taxes, and
total obsolescence.
130 Yield The ratio of usable output from a process to its input.
131 Yield Factor Data Accuracy
132 Yield variability The condition that occurs when the output of a process is not
consistently repeatable either in quantity, quality, or combination
of these.

Enabling SCI
The term SCI implies the process by which individuals, organizational units and companies leverage supply chain information
through the ability to measure, monitor, forecast and manage supply chain business processes. It is, therefore, essential to have
an assortment of technology and applications.
There are about eight independent providers of supply chain analytic applications solutions, prominent of them are SageTree
and SeeCommerce. Major ERP application providers like SAP, Peoplesoft and Oracle among others have entered the market, of
late mature versions of products from the vendors have become available. i2 and Manugistics have built analytic solutions
besides there supply chain planning offerings.
The decision to build or buy SCI will have to strike a balance between business functionality and technology. Normally it is
preferred to buy a packaged SCI as it is faster to customize and install than building from scratch, occasionally building SCI
applications is a choice where commercially available ones are absent.
Packaged SCI
SCI is enabled by packaged applications that deliver high value out of the box without the need for undue amounts of
development. Packaged application for SCI encapsulates best practices involved in SCM, historic supply chain data to perform
what-if analysis that helps to forecast material and production line needs.
Non packaged / customized SCI

A packaged SCI cannot be firmly packaged as packaged applications like ERP or SCM or CRM due to the heterogeneity in source
data that is required for analysis. It is important that the data model represents highly specific business entities, the vendor
providing a customized SCI has to ensure the services are a blend of experience in manufacturing and SCM and expertise in data
warehousing and DSS development.
Domain expertise
The primary value proposition of any SCI application is the domain expertise encapsulated. The services vendor should have
proof of the productized capabilities in both manufacturing and SCM areas.
Alerting
Alerting is an effective method for obtaining relevant information from large amounts of data. A properly designed alerting
system uses the best of both push and pull technology. The alert mechanism is essentially a software that runs in the background
without direct user intervention, triggered by every event of change in data.

Six steps to SCI

• Break organization barrier. Develop the ability to share information about business activities and interact on a near real
time basis across the supply chain.
• Build visibility into the supply chain. Give more people a view in to the metrics of supply chain performance
• Manage by metrics. Make specific performance metrics align to cross organizational business processes and assign
them to individuals for monitoring.
• Reduce decision cycle processes. Respond to market or customer demand in days and hours and not in weeks
• Encourage collaborative decision making aided by internet involving internal and external stakeholders
• Measure and monitor supply chain activities iteratively in order to respond timely
Advanced supply chain logistics

Supply chain logistics involves the process of planning, implementing and controlling the flow of materials from the point of
origin to the point of consumption. Materials undergo value added steps and integration with other materials at several points
in the supply chain.
Segmentation of supply chain

Supply chain activities can be classified into two distinct categories: inventory and transportation, these functional divisions
suggest that the supply chain may be divided into multiple segments defined by a starting inventory location, a transportation
link and an ending inventory location. These segments can be combined to model any path of arbitrary flexibility within the
supply chain.
Modeling any path of a complex supply chain can be accomplished by combining appropriate segments. Each segment may
be linked by noting that the ending inventory location of one segment will be the starting inventory location of the next. Thus
the segments can be linked together to create a single path from supplier to end customer. Changes in supply chain can be
easily implemented by addition or removal of segments corresponding to the change.
Segmentation provides flexibility in analysis and modeling, analysis routines can be applied appropriately without affecting
other segments. Segmentation also reduces uncertainty and variability when compared to standard inventory projection
techniques by providing segment focused analysis utilizing incremental measurements within the segment .
Challenges in SCI development

Data integration, defining business and end-user requirements, and organizational issues (e.g., getting different departments
and groups to function/collaborate cohesively based on related metrics, etc.) are the three most difficult issues companies are
experiencing with SCI application development.
Data sources required

It requires five to 15 data sources to be integrated. Following are the data sources that companies are integrating to support
their SCI applications
As one might expect, enterprise resource planning (ERP) systems data into SCI applications. Data from suppliers, legacy
systems, SCM systems, and customer relationship management (CRM) systems is also vital for feeding supply chain analytics.
Data from online industry exchanges and marketplaces is not being used by the companies widely. Data from shop floor
systems and product manufacturing/testing applications.

The bottom line is that SCI requires a data integration architecture that will support supply chain analytics applications with the
ability to extract, transform, cleanse, and integrate data from a variety of data sources. Many of these sources can be difficult
to reach; while everyone now knows the difficulty associated with retrieving ERP and legacy systems data, other sources can
be even more difficult to access. For instance, shop floor manufacturing data can be especially difficult to collect because many
of these systems use proprietary APIs and arcane data formats
Defining business and end-user requirements

The fact that companies consider defining business and end-user requirements as second most difficult is interesting. Basically,
defining business and end-user requirements demands involving end users early on and often in the requirements gathering
and planning stages. This should include developing a prototype of the application, which can be used to demonstrate to end
users planned functionality and to gather feedback.
Organizational and cultural issues

These are some of the most difficult aspects of SCI development, companies place organizational and cultural issues as the third
most difficult aspect of SCI application development (behind data integration and defining business and end-user requirements).
Cultural and organizational issues can be attributed to the fact that supply chain processes are distributed among many internal
(and external) organizational groups that tend to operate individually.
In addition, people sometimes resist changes to the ways in which they are familiar with performing their jobs. Consequently,
getting different departments and groups to function cohesively based on related metrics and models as opposed to their own
focused solutions or familiar ways, as well as to collaborate with others with whom they have had little or no previous
interaction, can meet with stiff resistance.
Further complicating the “cultural problem” are the organizational issues, which are usually difficult to quantify and qualify
during the planning stages because they tend to arise only once, new procedures, processes, and systems are implemented or
brought online. Implementers also agree that cultural and organizational issues are not completely resolved by using packaged
applications because such issues tend to be company-specific; hence, it is difficult to embed or package “solutions” in
application functionality (although industry best practices can help).
It should be expected to encounter organizational problems. The best way to limit the impact is to ensure that there are
adequate lines of communication between different divisions. In addition, a detailed escalation plan should be put in place that
includes a clear communication channel, as well as someone (or some group) empowered with the authority to solve issues
and concerns when they arise. This will help ensure that collaboration can in fact take place across different supply chain
processes and groups.
Data warehouses for SCI

The question of whether companies should use their general enterprise data warehouse for their SCI application needs or a
dedicated data warehouse built specifically to support supply chain analytics is a topic of hot discussion. According to a
Gartner report, 57% of companies said their organizations were using their general corporate or enterprise data warehouses to
support their SCI applications, as opposed to 43% who were using a separate data warehouse intended specifically for supply
chain analytics.
The question of which type of data warehouse to use to support the SCI initiative involves several considerations. Using
enterprise data warehouse will allow consolidation of all supply chain-related information with all other corporate data. This
consolidated view offers the optimum capabilities for enterprise data analysis and reporting. The drawback to this approach is
that it typically requires a considerable undertaking in which redesigning the enterprise data warehouse to incorporate supply
chain models and reporting processes is essential.

On the other hand, using a dedicated data warehouse built specifically for supply chain analysis will allow faster application
development and enables realization of benefits quickly from the SCI initiative. However, it will not offer the (consolidated)
enterprise analysis and reporting capabilities provided by the enterprise data warehouse.
WIPRO’S VALUE PROPOSITION

• Provide best customer service
• Provide lowest production cost
• Provide lowest inventory investment
• Provide lowest distribution cost
• Maximize the use of firm’s resources.
• Window to supply chain processes
• KPIs generated by analyses can be used to solve strategic business problems bringing visibility to key supply chain
processes
• Visibility of inventory coverage across the supply chain
• Closed loop processing of analytic data for operational needs on a real time basis
ARCHITECTURAL FRAMEWORK FOR SUPPLY CHAIN INTELLIGENCE
Product tracking,
Real
time BI quality
measurement,
Operational
applications Cost analysis,
customer support
performance
Hand
held
ERP CRM ETL Browser

based
Shop Data interfaces
SCM Warehouse EIP
floor
Legacy External
system data Client
applications
E-Biz
applications
Personalization
Customer / Tailor functionality

supplier order. / content
returns, Order Distribute
status, Customer respective
service, persons / devices
customer,
supplier data

ABOUT THE AUTHOR

The writer is a post graduate in Systems Management and has 12 years of IT experience and has 5 years of experience in ERP and
BI technologies spanning multiple industry verticals. He understands supply chain management and their analytical needs. The
writer’s areas of expertise include design, architecting solutions for various IS needs like EAI, real-time BI etc. in addition to large
project management, development of e-marketplaces etc.

ABOUT WIPRO TECHNOLOGIES

Wipro is the first PCMM Level 5 and SEI CMMi Level 5 certified IT services company globally. Wipro provides comprehensive IT
solutions and services (including systems integration, IS outsourcing, package implementation, software application development
and maintenance) and research & development services (hardware and software design, development and implementation) to
corporations globally.
Wipro’s unique value proposition is further delivered through the pioneering Offshore Outsourcing Model and stringent
quality processes of SEI and Six Sigma.
WIPRO IN SUPPLY CHAIN MANAGEMENT

Wipro Technologies, a global IT solutions provider offers complete business consulting and technical integration services for
Supply Chain Management (SCM). Our Supply Chain solutions address key issues like Purchasing, Inbound Logistics, Operations,
Warehouse, Outbound Logistics and Demand Management. SCM technology practice provides expertise solutions like i2, SAP
and Oracle. Wipro’s unique value proposition is further delivered through our pioneering Offshore Development Model and
stringent Quality Processes of ISO-9000, SEI-CMM and Six Sigma.
For further information visit us at: http://www.wipro.com/scm
For more whitepapers logon to: http://www.wipro.com/insights

© Copyright 2005. Wipro Technologies. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without express written permission from Wipro Technologies. Specifications subject to change without notice. All other trademarks mentioned herein are the
property of their respective owners. Specifications subject to change without notice.
Disclamer: The views represented here are those of the author and do not necessarily represent those of Wipro Technologies
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SUPPLY CHAIN INTELLIGENCE

This white paper on Supply Chain Intelligence gives an overview

Page: Table of Contents

Supply chain management

Production Fulfillment CRM

Material Warehouse Order

Supply chain analytics / intelligence (SCI)

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SCM and SCI differentiation

WIPRO’S UNDERSTANDING OF THE NEED FOR SCM ANALYTICS

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Measuring overall supply chain performance

Supply chain measures for growth

Supply chain measures for cost minimization

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Supply chain measures for working capital efficiency

Supply chain measures for fixed asset utilization

Key Performance Indicators (KPI)

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S.No KPI Definition

1 # of call backs as % of total inquiries

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19 Cross training Providing training or experience in several different areas, e.g.,

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42 In-process failure rates

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56 Material Management and Material (Commodity) Management and

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68 Order Entry Complete to Start Time from completion of order entry to

77 Overhead cost Costs incurred in the operation of a business that cannot be

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88 Product/grade changeover time Product/grade changeover time

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100 Receiving & material storage Receiving and Material Storage –

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Non packaged / customized SCI

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Six steps to SCI

Advanced supply chain logistics

Segmentation of supply chain

Challenges in SCI development

Data sources required

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Defining business and end-user requirements

Organizational and cultural issues

Data warehouses for SCI

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WIPRO’S VALUE PROPOSITION

ARCHITECTURAL FRAMEWORK FOR SUPPLY CHAIN INTELLIGENCE

ERP CRM ETL Browser

Customer /  Tailor functionality

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ABOUT THE AUTHOR

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ABOUT WIPRO TECHNOLOGIES

WIPRO IN SUPPLY CHAIN MANAGEMENT

For further information visit us at: http://www.wipro.com/scm

For more whitepapers logon to: http://www.wipro.com/insights

U.S.A. U.K. France

Germany Japan U.A.E.

© Wipro Technologies Page: 21 of 21

Customer / Tailor functionality