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Surviving Supply Chain Integration: Strategies for Small Manufacturers
release-to-ship date (elapsed time between release of new or modified products and their shipment to customers)
materials lead time (elapsed time between placement of an order and receipt of materials)
logistics cost (product distribution costs)
obsolescence (reduction in inventory value due to expiration of shelf life or changes in technology)
warranty costs (rework, repair, replacement, shipment, and legal costs associated with defective products delivered to customers)
cash-to-cash cycle (elapsed time between payment for goods and services used to produce the product and receipt of payment from the customer)
inventory days of supply (inventory levels divided by average quantity used or shipped per day)
inventory aging (measures of elapsed time that perishable or potentially obsolete goods remain in inventory)
days of sales outstanding (accounts receivable divided by average daily sales)
asset turns (frequency of inventory replenishment per year)
ship-to-invoice cycle (delay in billing customer after product shipment)
Standards developed by associations and governing bodies provide a common language for communications, which can be used to increase awareness of supply chain performance. Standard techniques, such as statistical process control (SPC), can be useful for monitoring individual processes. However, although certification and conformance to standards is important, they are not always sufficient for measuring some aspects of supply chain performance.
Benchmarking is another technique that can be used for measuring, understanding, and communicating the dynamics of supply chain performance. A detailed discussion of benchmarking in integrated supply chains may be found in Chapter 13 of Robert Camp's book, Business Process Benchmarking (1995).
Recommendation. Small and medium-sized manufacturing enterprises (SMEs), as participants in supply chains and as integrators of their own supply chains, should study the process of supply chain integration. Based on a thorough analysis, each participant should then develop an