CSCMP Standards

Develop Vision and Strategy Develop and Manage Products and Services
CSCMP Suggested Minimum Supply Chain Benchmarking Standards

eBook Edition
Market and Sell Products and Services Deliver Products and Services Manage Customer Service Develop and Manage Human Capital Manage Information Technology Manage Financial Resources Manage Environmental Health and Safety Manage Knowledge, Improvement, and Change

eBook Edition
ACKNOWLEDGEMENTS
The Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Visions thank the many individuals and companies who volunteered their time as Subject Matter Experts (SMEs), contributing substantial information and other valuable assistance during the creation of the CSCMP Suggested Minimum Supply Chain Benchmarking StandardseBook Edition (Standards). With the assistance of the SME group, the body of minimum acceptable standards has been improved, expanded, and validated. The representative descriptors contain noteworthy guidance for all who are involved in the area of logistics and supply chain management. There is a complete list of SME companies on page 62 of this reference book. We would also like to acknowledge the contribution of APQC, for allowing CSCMP to use the open standard Process Classification FrameworkSM (PCF) as the organizing foundation, and for providing invaluable support and expertise in the development of this edition of the Standards. CSCMP would also like to express gratitude for the contribution in hours, resources, and knowledge that Supply Chain Visions has invested in updating this CSCMP Suggested Minimum Supply Chain Benchmarking StandardseBook Edition.
Created and Compiled by Supply Chain Visions and CSCMP
2010 by the Council of Supply Chain Management Professionals and Supply Chain Visions, Ltd. All rights reserved. No parts of this book may be reproduced in any form or by any means without written permission from the publisher. The terms, content and graphics for APQC, the Process Classication FrameworkSM, and the Open Standards Benchmarking CollaborativeSM are the intellectual property and trademarks of APQC and are used with permission. 1992-2010 APQC. ALL RIGHTS RESERVED. ISBN 978-0-9825348-2-3
Council of Supply Chain Management Professionals 333 East Buttereld Road, Suite 140 Lombard, Illinois 60148-5617 USA cscmp.org Printed in the United States of America
TABLE OF CONTENTS
Acknowledgements________________________________ 3 Introduction______________________________________ 4 Using the CSCMP Suggested Minimum Supply Chain Benchmarking Standards_ __________________________ 4 Process Classification FrameworkSM (PCF)_ __________ 4 Understanding the PCF Numbering Scheme__________ 5 Research Methodology_____________________________ 6 The Standards____________________________________ 6 The Structure of the Standards_ ____________________ 6 The Link to APQCs OSBC Survey and Metrics_ _________ 7 Glossary of Terms_________________________________ 7 List of Contributors_ ______________________________ 62

INTRODUCTiON
The Council of Supply Chain Management Professionals is dedicated to developing, advancing, and disseminating supply chain knowledge. During our research for the CSCMP Supply Chain Process Standards it became apparent that there was a lack of free and accurate cross-industry benchmarking data available to supply chain practitioners. CSCMP, in an attempt to ll this gap, is making available the suggested minimum process benchmarking data excerpted from the popular CSCMP Supply Chain Process Standards, Second Edition. CSCMP has developed the CSCMP Suggested Minimum Supply Chain Benchmarking StandardseBook Edition available as a free download for to all supply chain practitioners. It is our belief that making available a set of suggested minimum crossindustry process standard benchmarks will give supply chain managers a point of reference to benchmark their supply chains against what our research found to be common practice across a large sample of industries. Our goal is to help spark improvement initiatives that will make all industries more productive and enhance supply chain knowledge and awareness. CSCMP will continue to provide supply chain research and tools to supply chain professionals. Those interested in further exploring benchmarking or who are interested in performing a self assessment can obtain the second edition Standards from CSCMPs bookstore.
eBook Edition
USiNG THE CSCMP SUGGESTED MiNiMUM SUppLY CHaiN BENCHMaRKiNG STaNDaRDS

This eBook is meant to be used as a reference tool to help companies identify common supply chain processes across a broad spectrum of their supply chain. CSCMP recognizes that not all industries are the same and compiled the Standards for general use by as many industries as possible. The Standards are intended to be used out of the box and they apply to most industries. Different industries, companies within the same industry, and even different locations of the same company may have practices which are best for thembut different from those used by others. The Standards are meant to be general guidelines to help companies assess their current processes. However, it should also be noted that no company should attempt to achieve best practice across all processes as this would be cost prohibitive. Companies need to determine which processes and attributes are essential to their industry and competitive strategy, and focus their energies on achieving best-practice goals in these areas, while maintaining minimum standards in all other applicable areas.
PROCESS CLaSSifiCaTiON FRaMEWORKSM (PCF)

The second edition of the Standards utilized the American Productivity & Quality Center (APQC) Process Classication FrameworkSM (PCF) to present the suggested minimum attributes. The PCF serves as a high-level, industry-neutral enterprise process model that allows organizations to see their business processes from a cross-industry viewpoint. This cross-industry framework has experienced more than 15 years of use by thousands of organizations worldwide, enabling companies to perform benecial benchmarking. The PCF was developed by APQC and its member companies as an open standard to facilitate improvement through process management and benchmarking regardless of industry, size, or geography. The PCF organizes operating and management processes into 12 enterprise level categories, including process groups and over 1,000 processes and associated activities.
OPERATING PROCESSES

1.0
Develop Vision and Strategy
2.0
Develop and Manage Product and Services
3.0
Market and Sell Products and Services
4.0
Deliver Products and Services
5.0
Manage Customer Service
MANAGEMENT and Support Services

6.0 Develop and Manage Human Capital 7.0 Manage Information Technology 8.0 Manage Financial Resources 9.0 Acquire, Construct, and Manage Property
10.0 Manage Environmental Health and Safety 11.0 Manage External Relationships 12.0 Manage Knowledge, Improvement, and Change
1992-2010 APQC. ALL RIGHTS RESERVED.
UNDERSTaNDiNG THE PCF NUMbERiNG SCHEME

The Standards practice statements are mapped to the process and/or the activity level related to the supply chain. The PCF is a comprehensive framework that includes end-to-end business processes. CSCMP and the researchers have intentionally excluded processes and attributes not directly related to supply chain functions. For example, PCF section 11.0 Manage External Business Relationships, entails processes focused on investor, government, and other stakeholder relationships. These processes are not directly tied to the supply chain function, and the research team did not develop statements for them. There will be gaps in the outline numbering where these non-supply chain processes have been omitted. Also note that each PCF element has two numbers: a number used to locate the content within that particular framework (in the format 1.1.1.1), and a serial number (beginning with 10000) used to uniquely identify the process element across all of the various Open Standards Benchmarking CollaborativeSM (OSBC) research databases, which allow organizations to benchmark comparable business processes. For example, the process element 1.2 Develop Business Strategy (10015) is uniquely identied by the serial number 10015 and the hierarchical reference number 1.2. The Process Classication FrameworkSM overview is available from APQC, and may be downloaded at www.APQC.org/pcf. Access to the Open Standards Benchmarking CollaborativeSM research is available at www.APQC.org/osbc.
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RESEaRCH METHODOLOGY
The Standards were compiled by Supply Chain Visions utilizing academic research, as well as on-site observations of companies in practice. In addition, a thorough validation process was used, where leading subject matter experts (SMEs) in the profession reviewed and validated the accuracy of the Standards. The following are representative sources that were used to compile the Standards: White papers/case studies from companies specializing in benchmarking and best practices research, such as the Performance Measurement Group, Bain and Company, Best Practices LLC, and various universities, etc. Journals and trade magazines such as Supply Chain Management Review, Journal of Business Logistics, Logistics Management, DC Velocity, Inbound Logistics, American Shipper, and International Journal of Logistics Management Functional white papers from sites like WERC, APICS, American Productivity & Quality Center (APQC), etc. Site visits by researchers to over 250 locations to observe practices
This Minimum Standards edition of the CSCMP Supply Chain Management Process Standards covers a broad spectrum of supply chain processes and activitiesderived from research into current cross-industry standards. CSCMP worked with over 50 SMEs in developing the Standards, including academics, researchers, practitioners, and consultants who are widely considered experts in the eld of supply chain management. The Standards truly represent a unique, broad-based, cross-industry repository of supply chain knowledge.
THE STaNDaRDS THE STRUCTURE Of THE STaNDaRDS

The Standards are an assessment tool offering general guidelines on what is considered to be common and minimum practices, and are organized as follows: The Standards cover 10 of the 12 main categories in the PCF that are supply chain related or have processes that impact the supply chain: 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 10.0 12.0 Develop Vision and Strategy Develop and Manage Products and Services Market and Sell Products and Services Deliver Products and Services Manage Customer Service Develop and Manage Human Capital Manage Information Technology Manage Financial Resources (limited to accounts payable and accounts receivable) Manage Environmental Health and Safety (EHS) Manage Knowledge, Improvements, and Change
Each main category section is further organized by process groupsprocess groups in the PCF that are not supply chain related are not included. Process attributes are listed for each process or activity included in the Standards. Descriptions of the suggested minimum process standards are included. The graphic on the next page illustrates how this reference book is organized.
TabLE 1: STaNDaRDS EXaMpLE

CaTEGORY PROCESS GROUp SUGGESTED MiNiMUM PROCESS STaNDaRD
1.0 Develop Vision and Strategy

1.1 Dene the Business Concept and Long-Term Vision (10014)
1.1.1 Assess the External Environment (10017)
Supply Chain Responsiveness
Collaboration with key suppliers provides better visibility into supply-side processes. Major supply chain risks are assessed. Informal process to plan for and manage risks is developed. An ad-hoc review and assessment process is in place to identify supply chain related risk and sustainability. Process is typically reactive in nature, instead of proactive. SWOT analysis is commonly used to assess external factors and internal responses.
PROCESS OR aCTiViTY (X.X.X or X.X.X.X)
Descriptions of Suggested Minimum Standard for the Process or Activity.
In some cases, specic metrics are presented in the Standards such as two days or 98% to clarify uptime or accuracy. The metrics cited are typically well recognized as general rules of thumb across many industries. However, companies should recognize that these are general rules of thumb, and are encouraged to seek out benchmark targets for their specic industry and organization. Since actual benchmark metrics are typically unique to particular industries, only general benchmark metric information applicable across many industries was included.
THE LiNK TO APQCS OSBC SURVEY aND METRiCS

The Standards provide essential qualitative process data to perform assessment, analysis, and improvement efforts on core processes. However it is also important to review quantitative performance metrics for key processes as part of a comprehensive performance improvement effort. To help achieve this goal, CSCMP chose to align the second edition of the Standards with the APQC Process Classication FrameworkSM (PCF) because it allows companies to access independent, cross-industry performance benchmark metrics. Built around the PCF, the APQC Open Standards Benchmarking CollaborativeSM (OSBC) invites companies to participate in a performance survey that produces widely accepted performance metrics for their company, and comparative benchmark metrics for their industry. The OSBC database contains hundreds of supply chain related measures and thousands of data points from over 7,000 organizations across the globe. Participation in the survey is free and condential. Each process in the Standards can be linked to key quantitative benchmarking metrics. Cross-reference tables linking OSBC metrics to PCF processes are available on www.APQC. org/measurematrix. APQC is continually renewing and expanding the depth and scope of the OSBC benchmarking database (www.APQC.org/osbc). All metrics are validated, normalized, and aggregated to ensure the data is relevant and accurate. The cost of the OSBC research program is underwritten by organizations that support the creation of common, open frameworks to measure business processes.
GLOSSaRY Of TERMS
The second edition of the Standards include an exhaustive glossary of supply chain terms. This glossary can and should be referred to as a useful tool during a work-through of the Minimum Supply Chain Benchmarking Standards.
Operating Processes
SUGGESTED MiNiMUM PROCESS STaNDaRD
1.0 Develop Vision and Strategy

1.1 Dene the Business Concept and Long-Term Vision (10014)
1.1.1 Assess the External
Environment (10017)
Supply Chain Responsiveness C ollaborations with key suppliers provide better visibility into supply-side processes. M ajor supply chain risks are assessed. Informal process to plan for and manage risks is developed. An ad hoc review and assessment process is in place to identify supply chain related risk and sustainability. The process is typically reactive in nature, instead of proactive. A SWOT analysis is commonly used to assess external factors and internal responses. Align Supply Chain with Customer Needs Structured market research is conducted to assess the supply chain needs of key customers. R egional and key market and industry trends are gathered as part of the strategic planning process. The process is typically reactive to major market swings and is not proactive in nature. Limited what if scenarios to market changes may be developed and used to model customer needs. Marketing activities are linked to projected increased revenues, ROI, and other business results. Analyze and Align Supply Chain with Strategy Budget/planning workow processes are in place at the division and/or regional level. S ome planning/budgeting process ows have been automated, or utilize a well established process and analysis tools. Disseminate Strategic Vision D ocumented supply chain strategy and vision are in place and communicated at senior management levels. The strategic vision is articulated in terms of external factors (suppliers, customers, competitors, and business environment), internal factors (core competencies and existing business portfolio), and the enterprises values.
Survey Market 1.1.2 and Determine Customer Needs and Wants (10018)
1.1.3 Perform Internal

Analysis (10019)
1.1.4 Establish Strategic

Vision (10020)
1.2 Develop Business Strategy

1.2.1 Develop Overall
Mission Statement (10037)
Dene Mission M anagement has a written vision, mission, and strategy. These statements have been communicated to the management team. The enterprise has a formal business plan that denes what the rm will offer and how it will compete in the marketplace. The formal business plan links external factors to internal competencies. T he mission statement describes what the enterprise does and which markets it serves. Communicate Mission Statement Mission and vision statements exist, are generally communicated across the enterprise, and are used to drive planning and behavior.

1.2.2 Evaluate Strategic Options to Achieve the Objectives (10038) 1.2.2.1 Dene Strategic
Options (10047)
Business Strategy T he enterprise considers strategic options in developing an integrated business strategy. This includes elements of market strategy, nancial strategy, supply chain strategy, sustainability strategy, global strategy, risk mitigation strategy, etc. Supply Chain Strategy A high level supply chain strategy roadmap is in place. T he supply chain strategy is in sync with the overall business strategy and business plan.
Assess and Analyze 1.2.2.2 Impact of Each Option (10048) Develop 1.2.2.3 Sustainability Strategy (14189)
Evaluate Strategy S upply chain strategy is re-evaluated as part of infrequent business reviews or driven by reaction to market conditions. Sustainability S trategies are in the development stages, to build enterprise-wide sustainability awareness on energy conservation, environmental impacts, and carbon footprint. A regional (or departmental) sustainability policy may be in a developmental or in early implementation phase. Executive-level responsibility has been assigned for green supply chain planning and initiatives development. Developing or implementing processes and tools to measure corporate sustainability initiatives. There is awareness of regulations and reporting requirements in all operating geographies. There is compliance with regulations on a regional basis. A commercial rationale was established for the enterprises sustainability strategyi.e., does the rm make more money as a result or is the effort primarily for public relations? Key suppliers are implementing sustainability measures and programs for their region. R egulatory requirements such as Waste Electrical and Electronic Equipment (WEEE); Restriction of Hazardous Substances (RoHS); and Registration, Evaluation, Authorization, and Restriction of Chemical substances (REACH) are considered with respect to all geographies where production or distribution of goods may occur. Plan for Global Operations W orkows between operating locations and with suppliers/partners are understood and are coordinated by supplier and by region. Executive owner(s) of corporate globalization strategy is (are) assigned. A n Enterprise Resource Planning (ERP) strategy is aligned with the globalization strategy, although it may not be fully implemented. ERP implementations are well managed but regionalized versus global. T he enterprise is developing or implementing global standards for sustainability and environmental safety. Any current programs are managed regionally. Plan for Shared Services Shared services may be used for some processes (typically nancial support services).
Develop Global 1.2.2.4 Support and Shared Services Strategy (14190)

1.2.2.5 Develop Risk
Mitigation and Management Strategy (14191)
Risk Management Strategy R isk management policies are regionalized and regional teams develop, maintain, and control risk management policies and procedures. There is an ongoing assessment of changing regulatory items that would materially affect the specic regional supply chain. There is executive level commitment and ownership for risk management initiatives. Supply Chain Risk Management Strategy Some collaboration with supply chain partners takes place to jointly identify supply chain risks. Limited supply chain risk assessment metrics are in place. R esponse and recovery plans (with potential backup carriers and suppliers) have been developed for high probability risks.
1.2.2.6 Develop
Continuous Improvement Strategy (14197)
Continuous Improvement Vision & Strategy The management team has accepted Lean as the primary methodology for continuous improvementalthough it may not have taken full ownership in the vision of the Lean enterprise, but they are working on it. Management Commitment Management is educated in Lean concepts and has made a decision to adopt the philosophy but has not set a formal process in place. Lean is established in some parts (or regions) of the enterprise and is the preferred way the enterprise will conduct its business. Management supports continuous improvement initiatives. Continuous Improvement Culture C ommunication forums have been established to communicate lean concepts and to disseminate information on lean programs. The need to change has been identied and communicated to the workforce. A cultural change process has begun. F loor level change leaders have been identied and are being educated on the need to change and how to effect change. Six Sigma awareness is underway and at least one successful project has been completed. A systematic approach for project identication has not been adopted. No formal program is in place. Continuous Improvement Infrastructure The need to address infrastructure is recognized and has been communicated. Infrastructure is under development to support lean initiatives. K ey personnel is identied both at the enterprise and process levels. C hampions have been identied.
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1.2.3 Select Long-Term
Business Strategy (10039)
Business Plan T he business plan is consistent with the strategic objectives. To include market strategy, nancial strategy, supply chain strategy, sustainability strategy, global strategy, risk mitigation strategy, etc. A 3 to 5 year business plan is documented and is supported by key departmental and area plans. Business Plan Alignment A n annual, strategic plan is crafted using an informal process. M anagement has a clear line of sight from vision to mission and from strategic initiatives to tactical objectives. Organizational Design M ethods exist (surveys, policies, etc.) for employees to provide feedback as to the effectiveness of the strategic plan and the effectiveness of management in this plan. Management practices meet legal and ethical requirements.
1.2.4 Coordinate and

Align Functional and Process Strategies (10040)
Create 1.2.5 Organizational Design (Structure, Governance, Reporting, etc.) (10041)
1.2.6 Develop and Set

Organizational Goals (10042)
Set Organizational Goals G oals and objectives are performance oriented and revised as needed, based on events and plans. Business Unit Level Strategies Business unit strategies are developed within the framework of the strategic plan.
1.2.7 Formulate Business

Unit Strategies (10043)
1.3 Manage Strategic Initiatives

1.3.4 Establish HighLevel Measures (10060)
High-Level Metrics Alignment Critical success factors (CSF) are dened, performance is measured, and targets are set. A top 10 list (or similar) drives functional behavior and enterprise goals. Metrics are generally aligned to overall business strategy. Key business processes are measured from a customer-facing orientation. Progress toward the rms overreaching strategic goals is monitored. Balanced End-to-end Performance Measures A wide range of measurescrossing departmental and area boundariesexist and are used by management to make informed decisions and track performance. Process and results metrics are balanced to prevent sub-optimization. I ndexing or category measures are collected as needed. U se of industry benchmarking takes place for selected KPIs and/or metrics.
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Develop and Manage Products and Services
2.0 Develop and Manage Products and Services (10003)

2.1 Manage Product and Service Portfolio (10061)
2.1.2 Dene Product/
Service Development Requirements (10064)
Product/Service Improvement P roduct/service improvements are managed in the sales and operations planning processes. There is ongoing evaluation and analysis of product/service versus the competition. P erformance metrics help drive product/service improvement priorities. R egular forums are held to expose employees to product development information outside of their normal working environment. There is some involvement with top tier suppliers, for development support of new products. New Product Identication A long-range vision is in place for R&D and the enterprise. T here is clear R&D ownership of business results. A n effective design/conguration system is available to most client-facing employees. Some customers and suppliers can access limited design/conguration data.
Perform Discovery 2.1.3 Research (10065)
Product Technology The current technology is generally sufcient to support current customer objectives. T echnology research is conducted during product development cycles, while leading edge or emerging technologies are infrequently implemented. The enterprise uses a great degree of rigor in its new product development and research processes, and adheres to them thoroughly. Plan and Develop Products/Services There is little focus on sub-processes and cost to manufacture or support. P roduct performance is the driver, but a focused effort is made to reduce time of development and overall cost. New and existing products and services are designed or re-engineered in close part nership with customers, suppliers, and employees, with quality and safety being given appropriate weight with protability. Most customers perceive the enterprise to be procient in conguration excellence. Establish Development Product/Service Targets D esign and overhead costs are generally allocated by product or service category. N ew product/service ROI is calculated after initial start up and roll-out. T arget costs are routinely established for all new products or services. Product/Service Offerings There is a range of modular products and services. S ome engineering is necessary to meet customer conguration requirements. A full product/service menu is available to all clients, customers, and suppliers.
Conrm Alignment 2.1.4 of Product/Service Concepts with Business Strategy (10066)
Manage Product 2.1.5 and Service LifeCycle (10067)
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Product/Service Life-Cycle Management P roduct/service life-cycle issues are managed in the sales and operations planning processes. A plan for managing the various life-cycles of a product or service offering exists and is followed. There is a multi-functional, coordinated approach to product launches and phase-outs.

New Product/Service Introduction Some new products/services were introduced within the past 12 months. C lear goals and measures exist for products and service introductions. M odels and prototypes are used to develop new products and services. Product/Service Management The product/service offerings and range are well controlled. T here is a dened process used to update the range of products and services. C ontracts are created and managed based on accurate information about markets and costs. Compliance standards are jointly created and communicated.
Manage Product 2.1.6 and Service Master Data (14192)
Product/Service Data P roduct/service availability data is fully available and integrated into an effective enterprise resource planning (ERP)/materials requirements planning (MRP) system. A process exists to ensure data integrity and optimal availability. U nique product identication exists at all packaging levels of the same physical product (e.g., pallet-quantity, shipping case, inner pack, and usage units). There is use of industry standard product identication if it exists (e.g., Global Trade Identication Number or GTIN). Item Identication Standards T here is full use of the industry standards for item identication formats and numbers. I ndustry standard item identication exists at all applicable packaging levels. A n uniqueness management function ensures that each item is uniquely identied and that item numbers are recycled appropriately. Auto ID is used on all products shipped. All products are labeled with a machine readable, industry standard Auto ID scheme (1D barcode, 2D barcode, RFID, etc.). Auto ID is used at all packaging levels.
2.2 Develop Products and Services (10062)

2.2.1 Design, Build, and
Evaluate Products and Services (10080)
Product Engineering (Design) A formal product engineering process is in place. A formal new product introduction (NPI) process is in place. F eedback to the NPI process is at least minimally effective. M andatory and elective external reviews (legal, regulatory, standards, internal) are conducted. Engineering and design processes are tightly and effectively integratedeven though they may employ different technology platforms across business units and/or external partners. Product development has begun to form cross-functional development teams. M ost internal departments are represented, but customers and suppliers are not yet part of the team. Most engineering personnel have been exposed to Lean, and costs and schedule adherence is becoming part of the key process metrics. Individual departments cooperate as a cross-functional team, and fully communicate to design and introduce new products/services.
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Design for Quality F ormal design processes are utilized. F eedback loops are in place from manufacturing and customer service/support. Q uality defects are tracked and root-causes determinations are linked to product design and are reported to R&D. Collaborative Design Product design processes exist with key suppliers. S ome supplier expertise is leveraged to design or rene products/services. I n some contract manufacturing relationships, the third party engineering team will drive new product development. 2.2.2 Test Market for
New or Revised Products and Services (10081)
Customer Partnership C ustomers are consulted about new products/services or requirements for current products/services. Product concepts include customer specic packaging issues. T he rst article inspection includes customer approval. C ustomer feedback gained in customer satisfaction surveys is available to the design team. End user feedback is used to close end-customer requirements gaps. F ocus groups used to understand/evaluate new and existing products. C hannel partner feedback is used to close end-distribution requirements gaps. Minimal written agreement exists to identify risks, specify delivery and quality expectations, and protect both parties from inventory exposure. Identify Requirements Manage Design Changes Considerations for packaging, distribution methods, and other unique requirements are created for each channel strategy.
2.2.3 Prepare for

Production (10082)
Design for Manufacture/Assembly (DFM/A) C ustomers and suppliers are involved in some designsand some use of common manufacturing platforms. Some supplier manufacturing partnerships are developed. A ssembly and manufacturing have limited input during the design process. A feedback loop exists to the design team, to review manufacturing issues during production validation.
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3.0 Market and Sell Products and Services (10004)

3.2 Develop Marketing Strategy (10102)
3.2.3 Dene and Manage
Channel Strategy (10122)
Marketing StrategySupply Chain Integration M arketing has a high degree of integration between product management and product planning. Marketing strategy integrates with supply chain management, demand management, and sales/channel managementas well as participates in ongoing sales and operational planning activities. Basic marketing is driven by the existing product strategy using techniques (such as segmentation), to drive customer communications strategy. Reporting is available by segment and product family to determine successful penetration of these markets. Price/Prot Optimization Formal pricing simulation is performed. T here is ongoing tracking of actual pricing-to-pricing plan, performance-to-plan, and analytics of variances for decision support.
3.3 Develop Sales Strategy (10103)

3.3.1 Develop Sales
Forecast (10129)
Sales Forecast R egular forecast reviews are performed with sales reps and line managers. T here is easy access to the sales forecast data, and the regionalized, or business unit level database. Sales forecasts are in line with revenue forecasts. S ales resource allocation may be based more on intuition than data or facts. Manage Channel Partner A model of direct and indirect sales has been determined. P roduct, price, customer, and inventory strategies have been determined for channel partners versus the enterprise. The effective management of channel and partner programs takes place, for programs such as trade promotions and marketing events. Determine Structure and Strategy for Outbound Sales The policy, process, and technology decisions necessary for the effective management of sales methods, technology, organizational structure, and partnerships have been made. The channel sales strategy analysis reviews methods, process, locations, information sharing, best t of product/service mix, what/when to outsource, how many channels to use, and what products to deploy through which channel. There is minimal process support to manage outbound sales. Basic planning tools such as spreadsheets and contracts are used to manage processes and data. Manage Distribution Network The sales plan is coordinated with outbound supply chain network planning and the creation of the distribution strategyincluding a review of markets and customer/ consumer models by geographic market sector. This drives the product family that should be the focus of a particular DC.
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Develop Sales 3.3.2 Partner/Alliance Relationships (10130)
SUGGESTED MiNiMUM PROCESS STaNDaRD 3.5 Develop and Manage Sales Plans (10105)
3.5.3 Manage Customer
Sales (10184)
Sales Process Marketing and sales have recognized the need for establishing customer service objectives and metrics in order to operate effectively. Necessary relationships are pursued and developed with key customers. Other enterprise departments are now considered an active part of the customer service organization. Marketing and sales management is aware of the Lean movement and is interested. Managing Quotes and RFI/RFP Formal processes are in place for managing routine customer quote requests. Routine quotes are usually based on a cost-plus methodology. Routine quotes incorporate supply availability within the enterpriseincluding manufacturing resources and materials. Complex quotes and RFx response include the business owner (in addition to sales) at most levels of the new business acquisition process. A prot and loss statement approach is structured for all new business. Costs are based on standard estimates. Close the Sale Protability analysis always takes place before and during contract review and acceptance, using a structured process. Prots for a segment/individual enterprise are the result of deducting direct labor, allocated support labor, and material costs from income, and are produced at least quarterly. Implementation hand-offs from sales take place using an informal approach. Project management is driven exclusively by business owners.
Manage Sales Orders (10185) 3.5.4
3.5.4.1 Accept and

Validate Sales Orders (10194)
Order Receipt There is the capability to receive and process customer orders by phone, fax, e-mail, and electronic data interchange (EDI). Customer service representatives (CSRs) have the language skills required to support selling geographies. There is an export order check for denied parties. Order Validation There is a manual or automated verication of credit against predetermined levels maintained in a common database. The manual or automated verication of orders takes place against denied parties lists for export compliance. Customer eligibility verication takes place for purchases of specied SKUs, with customer/SKU lists maintained in a common database. Customer allocation is based on predened business rules. A pricing model is developed and applied to all products and services.
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3.5.4.2 Collect and
Maintain Customer Account Information (10195)
Customer Data Management Customer data is available from multiple systems/sources for integrated processing. Analysis requires extraction from more than one system/source. Any safeguards against corruption are largely manual. The ofine data management process ensures all customer data is current and accurate before processing. Database errors found in customer data are corrected as they are found for future use. Internal applications use common customer data, but may not be directly interfaced and may require extraction and upload. There is a simple customer master with xed attribute allocation. Data integrity is checked regularly. The data management process ensures all data has been checked for accuracy before entry. Application of Customer Data A common suite of reports is produced ofine. Specialists are required to create new or automated reports.
Determine Stock 3.5.4.3 Availability (10196)
Available to Promise (ATP) A manual check of product availability is based on a common inventory database. A manual allocation of inventory is done against an order. Transportation The transportation mode and carrier are selected based on service level requirements, routing guides (if applicable), and product characteristics. Product installation is scheduled with engineering/CSRs if necessary. Order Entry Orders are entered into a single database for all operators at a given region (Europe, Asia Pacic, etc). Price lists are updated regularly for manual price conrmation. Web-based order entry is available for select trading partners. All pertinent dates and times include local zone or GMT ags for processing center, shipping, and customer locations. Employees are empowered to present customers with cross-sell and up-sell opportunities. Customer Order Entry (e-Commerce) The e-Commerce offering is reliable and responsive to customer requirements. A client or customer web interface is easy to nd and use. The web interface is usually available, with low downtime. Although novice web users may need some help, experts manage web entry satisfactorily. Order Processing All orders are entered into the system on the same day, if the order is received before 2pm local time (actual time is industry dependent).
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Determine 3.5.4.4 Logistics and Transportation (10197)
3.5.4.5 Enter Orders

Into System and Identify/ Perform CrossSell/Up-Sell Activity (10198)

Order Conrmation Manual order conrmation is faxed or e-mailed to customerwithin the same day of order receipt, if received before local time 2pm, or 10am next day if received after 2pmconrming requested date or advising best possible date based on shipment and transportation standard (cutoff times for order receipt determined by industry norms). Conrmation documents are generated in local languages as required.
Process Back 3.5.4.6 Orders and Updates (10199)
Backorders A process is in place to advise the customer on or before scheduled ship date if the ship date slips more than one day. Customer teams have visibility into customer backlog, order status, scheduled shipments, customer segmentation, customer protability, customer credit history, and current customer inventory positions. The tracking and reporting of the actual ship date is against planned ship date and customer requested delivery date. Order Monitoring All queries from customers receive an initial response within 2 hours, and closure within 24 hours. Customer focused teams provide streamlined and dedicated response to major accounts for customer inquiries.
3.5.4.7 Handle Order

Inquiries Including Postorder Fulllment Transactions (10200)
18
4.0 Deliver Products and Services

4.1 Plan for and Acquire Necessary Resources (Supply Chain Planning) (10215)
4.1.1 Develop Production and Materials Strategies (10221) 4.1.1.1 Dene
Manufacturing Goals (10229)
Manufacturing Strategy The enterprise has dened and implemented a production philosophy appropriate to their market(s) and products. Market requirements are validated for nancial feasibility and other metrics, such as market share by market. Management understands the nancial requirements and commitments in all functional areas. Buffer requirements exist to support design, and build and go-to-market are understood. Labor Policies Labor policies meet all local regulations (i.e., Fair Labor Standards Act of the United States, Employment Rights of Europe). Labor policies are in line with corporate strategy. Material Policies Materials management staff is educated in Lean concepts and has made a decision to adopt the philosophy. Materials management stresses common material usage across product designs. Standardized material handling equipment is used to move materials through the supply chain.
Dene Labor 4.1.1.2 and Materials Policies (10230)
Dene 4.1.1.3 Outsourcing Policies (10231)
Outsourcing Policies Outsourcing is utilized for non-strategic processes or activities, or with business processes where performance is subpar and non-core. Key stakeholders are involved with outsourcing decisions before and after outsourcing. Outsourcing contracts are initiated for any outsourced manufacturing/warehousing required to support peak demand cycles. Outsourcing contracts allow for variable rates and service levels to support changes in volume. Manufacturing Capital Expense Policies A simple return on investment (ROI) calculation is utilized. Typical payback occurs within a two- to three-year period. Metrics used are net present value (NPV) and internal rate of return (IRR). Strategically important projects are assessed using a lower hurdle rate than a tactical project that focuses on immediate savings opportunities. Capacity There is a general understanding of maximum capacities by product/product family/ process type at each facility or installation. A standard process exists for examining new capacity requirements.
4.1.1.4 Dene
Manufacturing Capital Expense Policies (10232)
4.1.1.5 Dene
Capacities (10233)
19

4.1.1.6 Dene Production
Network and Supply Constraints (10234) Dene Production 4.1.1.7 Process (14193)
Dene Constraints Annual reviews use total cost of goods sold (COGS) for in-house manufactured items and total cost of acquisition for sourced items. The margin contribution on make vs. buy is considered in the analysis. Production Process All procedures/forms are documented and are available to all operators (posted or displayed as required). Paper forms are primarily used. The work sequence is dened and routinely followed; however, detailed work instructions must be read to understand the sequence (no visual cues). Some visual control techniques are utilized. Supervisors can tell when the work area is not running properly. Support processes (HR, IT, legal, nance, etc.) operate independently, but effectively enable production and delivery. Clear routine instructions are posted for workers. Reliance is on supervision to monitor progress, and prioritize and manage exceptions. Small batches tend to feature moderate work in progress (WIP). Operators are directed to move to bottleneck areas. Most jobs within the cell or work processes are adequately covered through multi-skilling. The norm involves training for mastery of more than one job. Production Process Alignment Internal processes are aligned for best results. Internal and external processes are aligned to coordinate such issues as inbound receiving and manufacturing requirements (pull to point of use versus put-away, etc.). Workplaces are clean and orderly. Set-up time is consistently measuredwith some internal and external separation occurring. Production Process Control A certied operator or a similar program is in place. Self-verication by certied operators is not re-checked at a later time. Statistical methods are widely used to track critical processes and performance trends. Production Change Changeover methods are analyzed and understood. All extraneous activities are completed during run time. Most internal processes run smoothly. Formal processes are in place to manage and implement engineering change orders (ECO)/engineering change notications (ECN). First article inspection ensures that product/service and service quality are consistently right the rst time after changeovers. Cell/Shop Floor Performance Measures Productivity metrics and KPIs are utilized. Visible performance measures are published in the cell/shop oor with management triggering improvements. There is some ownership of applicable measures. Action plans are in place to correct deciencies and improve performance with management triggering improvements.
20

Workplace Layout and Infrastructure (14194)
Workplace Design Machines are arranged by families of productbut perhaps not in cellular fashion. Customized work aids help reduce physical and workplace stress. Safety teams evaluate work environments based on Occupational Safety and Health Administration (OSHA) standards, and lost time reports. The design utilizes available space and capacity. Manufacturing or service delivery layout is aligned to maximize product/service ow and process ow. Workstations are integrated into process ow. Material handling and distance traveled are minimized but not fully streamlined. Some equipment has poka-yoke (mistake-proong) devices installed with operators trained on functionality and corrective action. Workplace Layout Standard work aids are employed to reduce physical demands (including physical, visible, and audible stress). The layout is aligned with the process ow to minimize material travel time. W orkstations are integrated with the manufacturing ow. Manufacturing Capability The enterprise is usually capable of supporting required congurations and designs. A bill of material reduction efforts may be underway, but is typically incorporated after the design process. Plan and Manage Customization and Postponement Operations Final assembly and packaging for low volume and build-to-order products are delayed until orders are received. Products are designed for rapid conguration and assembly/build to order. Parts are held in kits but not organized around order-of-use. Common use items are stored in bins common to many work areas, with operators responsible for identifying/selecting the proper items from these common bins.
4.1.2
Manage Demand for Products and Services (10222)
4.1.2.1 Develop Baseline

Forecasts (10235)
Forecasting Methodology Simple processes are used to modify historic demand. Market intelligence is updated based on monthly reports from eld personnel, customers, and suppliers. Appropriate methods are used to develop forecasts at the lowest level product, component, or ingredient. All data sources are evaluated for accuracy. The ability exists to forecast based on attributes (volume, quantity, frequency, period, SKU, and geographic location). Historical and other methods are used to evaluate approachesforecast accuracy, use of proper patterns and algorithms, etc.
21

Demand Forecasting Incremental technology changes are used to improve stable planning processes. Specic responsibility is assigned for management of the forecasting process. Robust market intelligence (rather than simple shipment data) is used to develop a long-term operational forecast. Planned changes in products, services, pricing plans, and promotions are considered in the forecast. A single demand forecast is created with inputs from multiple roles within the organization. Structured market research is conducted incorporating the needs of potential new markets and customers. Planned new products (including competitor products) are included in the market research studies. 4.1.2.2 Collaborate with
Customers (10236)
Market Forecast There is limited collaboration with channels and customer plans to move nonperforming products. The forecasting process is not given high priority in the business. Sales volume for specic key customers or channels is considered in the forecasting process. Trading partner inventories are estimated from available data, and considered during demand planning. Consensus Forecast Process T he short-term portion of the forecast is reviewed at least weekly. M ethodologies used for consensus planning helps to reconcile conicts between data sources. Consistency is maintained between the nancial budget, forecast, and operating plan. Allocate ATP A ccurate ATP product data is available within each business unit and is used to determine product availability for demand. Determine share of scarce inventory to channels and customers. Forecast Revisions Forecast demand is offset/blended with actual demand, and used to drive operations. T he production/distribution schedule and stafng is updated weekly or daily with actual demand depending on volatility. Market intelligence is processed, analyzed, and disseminated on a timely basis. Forecast Process Improvement D emand planning is utilized to maximize the percentage of orders complete and on time, with the least amount of inventory required. The ability exists to assess consumption rates, mix, re-order, and safety stock levels within the forecast. Measure Forecasting Accuracy Performance is measured against forecast (accuracy, skew, and stability). A thorough history is maintained for comparison purposes. A bility to measure forecast accuracy at the SKU level.
4.1.2.3 Develop Consensus

Forecast (10237)
4.1.2.4 Allocate Available

to Promise (10238)
Monitor Activity 4.1.2.5 Against Forecast and Revise Forecast (10239)
Evaluate and 4.1.2.6 Revise Forecasting Approach (10240)
4.1.2.7 Measure Forecast

Accuracy (10241)
22

4.1.3
Create Materials Plan (10223) Unconstrained Plan (10242)
4.1.3.1 Create
Unconstrained Forecasting Process T here is a coordinated functional approach to satisfying market requirements. T he unconstrained forecast is agreed on through a consensus processthe nancial forecast may be a variation on the operational forecast. Supplier Collaboration A formal supplier relationship management (SRM) program is in place with designated supplier managers who communicate regularly with their suppliers. A performance management program has been developed with input from the suppliers. T here is collaboration with tier 1 suppliers on short- and long-term item requirements and forecasts. Supplier ratings tied to service level agreements include: availability, quality, and other criteria. The nancial condition of key suppliers is monitored. Identify Capacity Constraints F ormal monthly meetings are held to address business performance issues and link business strategy to operational capabilities.
Collaborate 4.1.3.2 with Supplier and Contract Manufacturers (10243)
Identify Critical 4.1.3.3 Materials and Supplier Capacity (10244)
4.1.3.4 Monitor Material

Specications (10245)
Manage Material Specications S tandardized processes for releasing designs from engineering to procurement are in place. There is a single source of information for detailed, material data with easy access for engineers and procurement, in order to nd existing material specications. There is monitoring of material detail (content and activity) as it impacts regulatory, safety, and other key concerns. There is rationalization of materials to a common set of specications to reduce proliferation of SKUs. There is reuse, when possible, of existing materials in new designs to improve quality and to speed time-to-market. Constrained Forecasting Process A single number operational forecast is agreed on by consensus process and drives all functional responses. A plan exists to ensure that product and service ows remain uninterrupted in the event of unforeseen events. Surge capacity partners exist in case of demand upsides, seasonal upside, etc. Production Balance C ell or line bottlenecks are quickly addressed and resolved by management, while inventory buffers exist between tasks. The work level is relatively smooth but may not match sales mix.
Generate 4.1.3.5 Constrained plan (10246)

Balance and Control (14196)
23

4.1.4 Create and Manage Master Production Schedule (10224) 4.1.4.1 Generate Site Level
Plan (10247)
Production Scheduling Proactive demand management balances high customer service and manufacturing efciencies, while minimizing inventory costs. Flexible manufacturing allows fast ramp-up and/or ramp-down to meet spikes and drops in demand. Small batches and short lead times exist. P roduction runs to within 20% of established Takt time. Work-in-Progress W IP targets are established for inventory turns and WIP levels. W IP is monitored daily through system tools against targets and demand. A cycle time reduction plan is implemented with specic, tracked goals. Supplier SupportProduction Scheduling D emand plans are shared with suppliers on an agreed schedule or when upside or downside exibility agreement is violated. Execute Production Schedule P roduction schedules are kept current and accurate. S caled business rules prevent the interruption or change of the production plan, unless approved by upper level management, and based on a hierarchy of the change cost/ benet impact. Manage Distribution Requirements A vailable inventory is allocated to customers based on committed forecasts. I n-transit inventories are shown in the system with expected arrival dates. T here is the ability to allocate in-transit inventories. I t is possible to view end-to-end inventory while providing available-to-promise. T here is a manual process and review which ags and noties when the forecast consumption rate is higher or lower than the congured allowable rate. Data required to manage distribution is maintained on the system of record. T he approach for managing transportation is dened, and outsourced or managed via inhouse capability. There may be a combination of select outsourcing with some in-house. There is a dened 3PL or carrier selection process based on cost, performance, quality, customer requirements, and business KPIs. Reorder Execution R eorder is based on simple planning systems is effectively supported by appropriate control techniques. MRP system requirements are based on minimum lead time, customer order, and forecast horizons. MRP parameters are regularly reviewed and agreed to. R eorder points are adjusted based on performanceat least 2 times per year.
Manage Work-in4.1.4.2 Progress Inventory (10248)
Collaborate with 4.1.4.3 Suppliers (10249)
4.1.4.4 Generate and

Execute Site Schedule (10250)
Plan Distribution 4.1.5 Requirements (10225)
24

4.1.6 Establish Distribution Planning Constraints (10226) 4.1.6.1 Establish
Distribution Center Layout Constraints (10267)
Distribution Center Management L ot size and release cycles are optimized for storage space. C ross-docking operations replace traditional warehousing where feasible. S pace lighting is activated only when space is in use. Inventory Management A ll inventory decisions are made with full knowledge of relevant costs and associated risk. Inventory turns tracked for monthly review and adjustment. Inventory levels are set at least twice a year. Excess and obsolete inventory is reviewed regularly at the part number level. Transportation Management T ransportation spend is tracked and managed regionally. T he documented process (regional) to manage transportation includes inbound, outbound, and freight payment. Routing guides consider total landed costs (by source, by lane, by product), service level requirements, carrier performance requirements, and carrier contract terms. A process is in place to control inbound transportation based on the potential for economies of scale, carrier/3PL contract terms, and on the availability of systems to plan, monitor, and proactively manage inbound ow from suppliers. Review and revise carrier contracts at least annually, or when major changes in the supply chain occur. Distribution Network B asic network modeling is performed on an infrequent basistypically as part of a larger cost savings initiative. Network optimization is focused on transportation costs, labor costs, and overhead costs. A project-based process is in place to capture transportation network cost data and route data (possibly through third party systems). Deployment Policies There is regular exchange of supply chain information between supply chain members (i.e., e-mails, reports, calls). Appropriateness of control techniques (make to stock, make to order) is reviewed regularly to reect changes in demand patterns and capacity availability. Delivery, lead time, and inventory levels are rationalized and optimized with parameters being regularly reviewed and updated. Products are classied and managed in tiers according to volume and variability of ABC classication. Demand management policies are established to help balance customer service and distribution system costs. 3PL or other outsourced warehousing space is used for cyclical peak demand storage.
Establish Inventory 4.1.6.2 Management Constraints (10268)
Establish 4.1.6.3 Transportation Management Constraints (10269)
Review Distribution 4.1.7 Planning Policies (10227)
25

4.1.8 Assess Distribution
Planning Performance (10228)
Distribution Planning Performance D C managers should have key metrics at their ngertipssuch as units moved per man hour, orders unfullled on time, the age of unfullled orders, and costs per unit moved. D ata is collected and analyzed for better conguring of slotting, labor planning, etc. S elected distribution center KPIs are benchmarked to industry exemplars. V isibility into warehouse operation status, costs, inventory availability, and cycle times are accessible to order takers upstream to improve order promising and order protability decisions. DistributionSupplier Performance Key suppliers are engaged to provide input on conguration of the distribution network. S uppliers have incentives to forward ideas that might yield mutual benets. J oint improvement initiatives improve supply performance against targets for top tier suppliers. Supplier performance is tracked and shared. C ollaborative targets are set with key suppliers.
4.1.9
Develop Quality Standards and Procedures (10368)
4.1.9.1 Establish Quality

Targets (10371)
Quality Deployment E ffective supplier quality assurance procedures are in place. P erformance metrics include quality, cost, time, and service. O perations functions develop their own quality results. T he quality department is a resource. M anagement is involved in major quality initiatives. M etrics are reviewed and targets are challenged regularly. Testing Product/service quality is veried prior to shipping. S ervice quality is monitored and controlled. Q uality process is owned by a quality assurance entity with authority to establish standards, verify compliance, and initiate corrective action. Quality process/inspection existing from inbound receiving through the whole manufacturing process. Work center performance is reviewed for waste, quality, etc. Q uality teams are utilized. Supplier Quality Specications E ach product has documented specications and quality requirements. P roduct management works with the supplier to establish product quality standards during the new product introduction cycle. Some key suppliers are asked to assume responsibility for quality assurance before the product leaves the suppliers facility.
4.1.9.2 Develop Standard

Testing Procedures (10372)
Communicate 4.1.9.3 Quality Specications (10373)
26
SUGGESTED MiNiMUM PROCESS STaNDaRD 4.2

4.2.1
Procure Materials and Services (10216)

Develop Sourcing Strategies (10277) Procurement Plan (10281)
4.2.1.1 Develop
Procurement Strategy M inimum requirements are dened for procurement consistent with the enterprises strategy. Current spend by individual category is understood and tracked. T here is an assigned owner for each material category based on use and knowledge. P otential suppliers for a category may include current providers and new providers. T he fundamental nancial viability of all suppliers is regularly assessed. T he enterprise leverages buys by reducing the number of suppliers (selective use of single-supplier solutions). The enterprise centralizes electronic procurement systems at the regional or business unit level. Purchasing strategies may be centralized at the regional or business unit level. B enchmarks are used when setting sourcing strategy. S uppliers are notied about Lean, changes that are going to take place, and the probable impact to current supplier relationships. Procurement Execution Group buying agreements are in place for high value/strategic materials. M ultiple facilities/organizations pool commodity purchases internally to gain leverage. O utsourcing is utilized for non-strategic applications. Supplier Consolidation Plan Sole source (or primary source) provision of components/items are enforced but only to the limit of a suppliers capacity. Backup source(s) for components/items identied (may or may not be pre-qualied) and volumes quantied. Supplier metrics are visible and used in supplier selection and buying decisions, volumes are consolidated with top performing suppliers.
4.2.1.2 Clarify Purchasing

Requirements (10282) Develop Inventory 4.2.1.3 Strategy (10283)
Purchasing Function Effectiveness A balanced scorecard approach to supplier management is used. Inventory Strategy S tock levels are set according to planned, buffered analysis techniques and reviewed frequently against forecasts. Stock levels are based on customer service requirements (e.g., ABC classications and statistical safety stock-setting rather than nominal weeks of supply). Stock levels are reviewed frequently against forecasts. S ervice levels are measured, and stock levels adjusted to compensate if necessary. S ervice levels are set taking into account the costs and implications of stock outs. T here is the ability to determine safety stock targets for inventory at critical nodes in the supply chain. The ability exists to replenish inventory into distribution buffers based on customer demand. I nventory is managed by product and product groups. S upplier and buyer partners are involved in the coordination of inventory in the supply chain.
27

4.2.1.4 Match Needs to
Supply Capabilities (10284)
Supplier Capability T here is a clear understanding of supplier capacity reected in lead time and volume constraints within the buying system. Spend Analysis Q uality and price are considered the key components of cost, but other variablessuch as lead time variability, on-time delivery, assured source of supply, damage avoidance, etc.are also considered. Analysis of price includes logistics costs including inventory carrying cost over the life of the product (especially for major equipment). Supplier Improvement S upplier scorecards that identify the total cost of acquiring, using, and disposing of suppliers products are used to identify top and marginal performing suppliers. Cost breakdowns are shared with suppliers to identify cost reduction opportunities. J ustiable price increases are applied to only the appropriate portion (material, labor, logistics, etc.) of cost. A cost benet analysis of the changes is performed. Processes and applications are shared with suppliers to leverage their expertise. Q uality and process expertise is applied as problems occur. Joint service agreements with suppliers include key metrics on which supplier will be judged. Supplier Involvement S uppliers are a valued source of information when investigating new or alternate sources of supply and services. Positive relationships with suppliers are maintained using a win-win philosophy. S upplier relationships are differentiated based on strategic value. C ontact exists at all levels with regular visits to the enterprise and supplier factories. A nnual supplier conferences recognize performance and share corporate goals and objectives.
4.2.1.5 Analyze Companys

Spend Prole (10285)
Seek Opportunities 4.2.1.6 to Improve Efciency and Value (10286)
4.2.1.7 Collaborate with

Suppliers to Identify Sourcing Opportunities (10287)
Select Suppliers and Develop/Maintain Contracts (10278) 4.2.2
4.2.2.1 Select Suppliers

(10288)
Supplier Selection Criteria and Process S election criteria are dened prior to the RFI/RFP process. T he supplier selection process for key suppliers considers establishing long-term partnerships to secure supplies at low cost, short lead time, and exible supply. A supplier capacity analysis of specic areas of capability is performed. Supplier evaluation includes a full review of the nancial condition and stability of the supplier. C ross-functional teams are involved in sourcing decisions, with the buyer negotiating contracts. Buyers have the responsibility for re-assessing sources of supply. Supplier Certication and Audit Process Supplier certication programs are used and enforced. S upplier capacity and capability are regularly evaluated to ensure a good match to requirements. Supplier nancial strength, (i.e., Dun & Bradstreet rating) is regularly evaluated to ensure supplier viability. The supplier is evaluated on its ability to meet appropriate industry/federally required standards (may or may not require registrations).
4.2.2.2 Certify and

Validate Suppliers (10289)
28

4.2.2.3 Negotiate
Contracts (10290)
Contract Negotiation C ontracts with long term suppliers are based on total cost of acquisition. A n established, regular contract review process is used to update the contract with changing technology and/or changes in regulation. Contracts mandate cost improvements and service level improvements (balance cost and value received), over time using continuous improvement language. Contract Management L ong-term agreements in place allow for annual or multi-year contract pricing and purchase orders, allowing the enterprise to reduce the total cost of ordering. There are clearly dened key contract support drivers with established KPIs. S tandardized contracts are in use across enterprises and categories to ensure consistency and increase speed of contracting.
4.2.2.4 Manage Contracts

(10291)
4.2.3 Order Materials and Services (10279) 4.2.3.1 Process/Review

Requisitions (10292)
Process Requisitions System generated purchase orders (PO) bypass the requirement to generate and review purchase requisitions. Simplied procurement requisition processes are in place to free up buyers to make strategic buys. A standardized requisition review functions across the entire purchasing organization. A MRP system is used to gain better visibility of purchasing requirements. A well-documented procurement policy is in place. Authorization of Discrete Purchases P rocedures are dened to allow purchases to be authorized by individuals, buyers, or management depending on cost. Purchase authorization is based on a formal set of business rules. Manage Quotes A uctions are used (where practical) for indirect material and commodity items. T here is a formal process to solicit, track, and review commodity quotes from the existing supply base (approved supplier list). A formal policy denes procurement ethics and behavior with suppliers. Manage Purchase Orders B lanket purchase orders cover period requirements. C all-off orders against blanket PO are generated automatically based on periodic demand. A clear understanding of supplier capacity is reected in lead time and volume constraints at time of order placement. Buyer has responsibility for administration of POs. Purchase Order Expediting Expediting processes are in place. S chedule and/or forecast changes drive the expediting (and de-expediting) process. R easons for PO expediting are tracked and corrective/preventative action is taken to address the cause, in order to reduce a reoccurrence.
29
Approve 4.2.3.2 Requisitions (10293)
4.2.3.3 Solicit/Track
Vendor Quotes (10294)
4.2.3.4 Create/Distribute
Purchase Orders (10295)
4.2.3.5 Expedite Orders

and Satisfy Inquiries (10296)

Record Receipt of 4.2.3.6 Goods (10297)
Goods Receipt A ccounting principles are followed (for the regions/geographies where business is performed). Balances are reconciled to the supporting documentation at month end close. P ost goods receipts are reconciled on a monthly basis. Exceptions Management S upplier compliance procedures have been adopted and enforced within the enterprise. Suppliers follow compliance processes. Compliance procedures have been adopted and are enforced to address internal issues and exceptions. Receiving errors are tracked and corrective actions are initiated with suppliers and internal personnel.
4.2.3.7 Research/Resolve
Exceptions (10298)
Appraise and Develop Suppliers (10280) 4.2.4 Monitor/ 4.2.4.1 Manage Supplier Information (10299)
Supplier Information Management S upplier data integrity is checked regularly. T he supplier data management process ensures all data has been checked for accuracy before entry. Errors found in supplier data are corrected, as found. S afeguards against data corruption are largely manual, through periodic review projects and data correction projects. A standard statement of work (SOW) is used for major suppliers, but not for all. A locally-created statement of work is normally used. Supplier Performance Evaluation T here is a regular forum (such as a quarterly business review) for performance evaluation using jointly determined criteria of cost and service. Reporting requirements are established and understood by all parties. A range of performance metrics are set, tracked, and communicated. S uppliers are recognized and rewarded for achievement. S uppliers are measured against published performance targets. S uppliers are benchmarked to evaluate process waste and leverage opportunities. S upplier ratings are tied to service level agreements which include: availability, accuracy, timeliness, quality, and other criteria. Simple supplier scorecards are used to evaluate supplier performance (reviewed quarterly or annually). Scorecards are constructed to minimize gaming by either party. Supplier Audit The quality (or supplier quality) department facilitates regularly scheduled supplier audits for key or critical suppliers. Supplier performance is audited by parties who are not a part of the supplier negotiation and approval process. Problems encountered during the audit process are usually addressed and xed quickly. Procurement Performance Evaluation P rocurement key performance indicators (KPIs) are in place and tracked.
4.2.4.2 Prepare/Analyze
Procurement and Vendor Performance (10300)
30

Support Inventory 4.2.4.3 and Production Processes (10301)
Inventory Replenishment I nventory replenishment promises are standardized across the enterprise. F actory oor data is collected and used in collaboration with suppliers. Product Quality A fully documented supplier audit process exists and is supported by effective training, measurement, reporting, and action processes. A one size ts all supplier audit system is used with standardized audit questions and techniques. Third party auditors are used to supplement the audit staff and suggest improvements. O n time delivery and quality of supplier supplied parts and services is tracked and data is used in supplier reviews. Late or incomplete shipments and/or shipments with defects are within established parameters. Product management works with the supplier to establish root causes for defects and to determine an appropriate solution to reduce/eliminate the problem, preventing a reoccurrence.
4.2.4.4 Monitor Quality of

Product Delivered (10302)
4.3 Produce/Manufacture/Deliver Product (10217)

Schedule 4.3.1 Production (10303)
Production Scheduling C ycle times are known and work is being performed toward establishing standard work and cycle time targets. Demand has been synchronized with manufacturing execution. M RP systems support production scheduling. Production Release L ot size and order cycle have been optimized for capacity and materials availability. L ot sizing policies such as xed order quantity (FOQ), lot-for-lot (LFL) and period order quantity (POQ) are regularly used. Automated WIP limiting tools are utilized.
4.3.2 Produce Product (10304) 4.3.2.1 Manage Raw

Material Inventory (10310)
Manage Raw Material P ull/Kanban systems are used in the manufacturing processes to improve inventory and to reduce order cycle time. Execute Production Schedule E mployees self-sequence their work activities. M anagement regularly reviews progress against schedules. A lerts or alarms exist to warn of potential to miss deadlines. E mployees typically rely on supervisors to manage exceptions. S chedule changes are communicated appropriately. E nterprise resource planning systems are in use to support scheduling.
4.3.2.2 Execute Detailed

Line Schedule (10311)
31

4.3.2.3 Rerun Defective
Items (10313)
Manage Defective Material Defective materials discovered during the manufacturing process can be tracked to the supplier and supplier PO. Defective materials are returned to the supplier and product costs are recovered. D efective materials are returned within the supplier warranty/returns agreement so that the full value of defective materials is recovered. Total Quality Management techniques are applied to reduce defects and costs related to scrap and rework. Production Performance Measurement P roduction performance measures are published with supervision, generating most improvements. Data collection and analysis occurs at the front line and on a timely and regular basis. P roduction performance data is generally used to detect substandard performance or variances in certied processes or practices. Quality circles or work cell teams work under management supervision on process upgrades based on customer performance goals and the enterprises goals (e.g., setup times, various manufacturing costs). Production Process Control B asic metrics exist and are used to analyze process events or issues. K aizen methods are used to reduce scrap and rework. C ertied processes and practices are used to establish consistency in production output.
Assess Production 4.3.2.4 Performance (10314)
4.3.3 Schedule and Perform Maintenance (10305)

Determine Process 4.3.3.1 for Preventive (Planned) Maintenance (Preventive Maintenance Orders) (10315)
Preventative Maintenance Process A formal maintenance program is in place to support overall equipment efciency and performance. Standardized processes are used for maintenance and reliability across the enterprise. B reakdowns are infrequent. B reakdowns are tracked and uptime or downtime measured to maintain mean time between failure (MTBF) metrics. Manage Unplanned Maintenance P roblems are xed as they occur.
4.3.3.2 Determine Process

for Requested (Unplanned) Maintenance (Work Order Cycle) (10316)
4.3.3.3 Execute
Maintenance (10317)
Maintenance Activities Daily cleanings are performed (sort, straighten, shine, safety), causes of dirt and contamination are identied, and solutions are developed. Employees follow the cleaning/setup procedure. T horough cleanings are scheduled and performed. M achines and equipment are routinely inspected and serviced at regular pre-determined intervalsall relevant maintenance history is collected for future use. All breakdowns and the root cause of the problem are identied and tracked.
32

Calibrate Test 4.3.3.4 Equipment (10318)
Equipment Calibration T est and measurement equipment is certied by the relevant test agency and meets standards. Test equipment is calibrated on a schedule recommended by the equipment manufacturer. All test equipment (including lease and rental equipment) is listed in an equipment database. Engineering and production test equipment are managed under a single calibration policy. Maintenance Reporting and Tracking A record of equipment complaints, problems, or issues exists and is used to prevent problem recurrences. A basic root cause analysis is performed at the rst level (rst detectable x). C auses of excessive dirt and contamination are identied and root causes investigated. Production Testing Non-conforming product is fully segregated and a process exists to release or dispose of it properly. Damage and waste metrics are low for the organizations industry and the processes employed. Production Traceability T he system enables batch lots of products and services to be accurately traced up to point of shipment. Components/ingredients can be traced to suppliers raw material lots. T raceability exists through suppliers manufacturing plant, production time, and specic hour of production. There are clear lot management processes and lot denitions to allow for proper lot tracing. Product traceability is built into the production process. Data collection from the plant oor is semi-automated or fully automated.
4.3.3.5 Report
Maintenance Issues (10319)
4.3.4 Perform Quality

Testing (10369)
4.3.5 Maintain
Production Records and Manage Lot Traceability (10370)
4.4 Deliver Service to Customer (10218)

Conrm 4.4.1 Specic Service Requirements for Individual Customer (10320)
Manage Service Customer Segmentation C ustomer segments are quantied by the value of each segment based on its size, its potential revenues, and cost-to-serve. All enterprises within each segment are treated essentially the same. S ervices are selected and targeted on cost/value basis. C ustomers are segmented by service needs for higher operating margins. F ield service employees build strong relationships with customers and thoroughly understand customer needs. Customer service reps are trained to identify opportunities to sell additional services and/or products. A customer service survey is used to gather customer requirements.
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Monitoring Change of Market Requirements Market research focuses on competitor activities. C ustomer input is used to identify future service requirements. A nnual internal reviews of service offering take place and help drive marketing decisions. 4.4.2
Identify and Schedule Resources to Meet Service Requirements (10321) Provide the 4.4.3 Service to Specic Customers (10322)
Schedule Service Resources W eekly schedules are in place for critical working centers. T echnical services are tracked for each critical working center.
Provide Service A culture of service excellence increases customer satisfaction and loyalty. F ield technicians own their accounts to increase service focus and protability. R egular service monitoring is conducted by management. S ervice parts inventory is visible to service representatives. Customer Focus F ocus is on customer satisfaction and loyalty. P rimarily react to specic customer feedback. There are some targeted improvement efforts in place to proactively address cross-customer service level issues. Local or regional management is focused on a short list of key customers to improve service levels. CSRs are fully trained to ensure a high quality experience for customers. C ustomer service and support expectations are tracked (at least annually). C PFR and other techniques are in place for supporting the quality of service focus. Customer Delivery Feedback Complaints analysis is used to highlight and resolve internal problems. P eriodic audits are conducted on a customer-by-customer basis to identify internal improvements and to document service levels. Customer scorecards are in place with many top customers being measured monthly. A scorecard of service measures provides an overall view of the customer experience. A n active customer satisfaction and loyalty program is in place. Many employees are aware of their role in customer satisfaction. The enterprise conducts customer surveys approximately once a year. Processing Customer Feedback The organizations systems meet the needs of the users, and enable support for the customer at agreed current minimum standards. Appropriate technology development is planned in parallel with the business plan. A process is in place to inform customers about the enterprises ability to respond to their needs (i.e. visits, reports, collaborative routines).
4.4.4 Ensure Quality of

Service (10323)
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SUGGESTED MiNiMUM PROCESS STaNDaRD 4.5 Manage Logistics and Warehousing (10219)
4.5.1 Dene Logistics Strategy (10338)
Translate 4.5.1.1 Customer Service Requirements Into Logistics Requirements (10343)
Customer Focused Logistics Requirements A set of overall performance metrics are adopted based on customer, corporate, and social values that are the basis of requirements. Delivery and service level promises are based on an understanding of customer requirements, internal operational performance, and logistics network performance. Logistics processes are aligned with other departments (e.g., customer service) to create efciencies. Logistics processes are documented and mapped to customer service requirements. T here are shared logistics strategic planning sessions with customers to determine the future impact of changes or improvements to logistics strategies. Connectivity is in place with carriers, logistics service providers, and suppliers for periodic visibility into shipments and orders in transit. A continuous improvement program is designed to reduce waste, cost, and energy consumption in facilities and transportation. Service level agreements are in place with key customers and are used in developing the logistics strategy. Social Responsibility Strategy There is an understanding of and adherence to Environmental Protection Agency, Department of Energy, and local (other state, international, and community) standards and regulations. There is understanding of customer compliance standards and adherence to those standards. A risk assessment of corporate, employee, and environmental issues is conducted with results feeding a corporate plan for improvement. An ROI-based plan to reduce cost/waste and address environment, labor, and quality concerns is included in the enterprises annual plan. Communication of plans for employees and suppliers is conducted. Carbon Footprint/Energy Consumption Minimum processes are in place to reect a constant reassessment of transportation routes, and reduction in energy consumption on those routes. This can include network design, delivery time options, and more effective use of carrier/containment. There are review plans to update/replace equipment based on ROI data. T here is a reassessment of transportation delivery methods to maximize the value of each load. Product design, footprint, and packing are regularly assessed. Packaging There is an assessment of opportunities to reduce the cost and space requirements of packaging, as well as more effective use of pallets (sustainable materials and long lasting materials versus wood), and the reuse or recycling of materials (these techniques are required in trade in the European Union).
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Building/Warehouse U nderstand and ensure local environmental and community standards are met. U nderstand evolving building codes and best practices. O SHA and regional safety standards are fully complied with. Understand consumption and disposal of water, energy, solid waste, air quality, and emissions. Conduct energy assessment to evaluate whether building codes are met, as well as ensure maximum use of insulations and energy consumption reduction techniques. Business Conduct and Emergency Response Plan T here is adherence to local and internal trade and labor relationships standards. S afety and cleanliness are ensured within facilities. P roper product protection techniques are in place to maintain product quality and freshness, as well as reduce theft and fraud. An emergency response plan has been created with the assistance of local authorities (policy, re, and other services) and it is communicated to employees and required support elements.
Design Logistics 4.5.1.2 Network (10344)
Network Design Process I nventory processes and service level/reorder point data is included in the network design to determine the best inventory strategy for the markets served. The use of network modeling tools to design the supply chain typically occurs at the national or regional level. Irregular use is typically based on optimization projects and limited to specic segments, lanes, or regions. Network modeling is typically outsourced to third parties due to the skills/investment required for in-house tools. Network Optimization Supply chain network design process (either in-house or contracted) models are used. Outputs from the modeling will help make recommendations for warehousing, distribution locations and volumes, inventory and transportation strategies, and waste reduction strategiesincluding scenario costing and service level tradeoffs. Analysis and optimization of a segment of the supply chain are performed using commer cially available technology or professional level expertise (either in-house or contracted).
Communicate 4.5.1.3 Outsourcing Needs (10345)
3PL Support The overall logistics outsourcing strategy is based on the context of long-term supply chain goals and assessment of the enterprises core competencies and resource utilization. Tight partnerships with forwarders and carriers include the ability to tender electronically with carriers, receive electronic messages from carriers, and provide outbound carrier schedules to the warehouse. Logistics service providers (LSP) are selected based on visibility, codes of conduct and connectivityas well as experience, services, and cost. Formal SOPs are in place for managing 3PLs. Logistics Service Level Policy Logistics processes are communicated and interactions with logistics providers are aligned. P olicies are in place to manage service quality. L ogistics processes are customer focused.
Develop and 4.5.1.4 Maintain Delivery Service Policy (10346)

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4.5.1.5 Optimize
Transportation Schedules and Costs (10347)
Transportation Planning R outing guides and rates should be assessed frequently and/or automated routing and scheduling technology solutions used to determine transport mode, carrier, and service levels for both inbound and outbound transportation. Transportation planners create consolidated shipments, mode shifts, multi-stop truckloads, and intermodal assignmentsusing manual skills or automated technology depending on size, variability, and complexity of the freight shipping environment. Consolidations and round trips/backhauls are created whenever possible. A continuous improvement program is provided as part of ongoing logistics services. F lexible contracts should be negotiated to assess performance. Detailed records are kept online of actual shipments to assess performance by each customer. Transportation Planning Support Suppliers are provided copies of routing guides or selected carriers as the enterprise requirements. Standardized transportation management procedures are in place. C arrier compliance checking is completed post payment. A TMS is utilized for transportation planning (industry dependant). I ntegration with carriers conrms on time pick-ups and deliveries.
4.5.1.6 Dene Key

Performance Measures (10348)
Establish Logistics KPIs B usiness reviews are used to seek cost and service improvements. R esults are communicated to the customer. C ollaboration with stakeholders is used to improve key process indicators (KPIs). T here are fewer than 10 departmental KPIs. KPIs are based on triple bottom line goalscustomer, prot, and social goals.
4.5.2 Plan Inbound Material Flow (10339) 4.5.2.1 Plan Inbound

Material Receipts (10349)
Inbound Material Notice I nbound carriers primarily call (e-mail or fax) to schedule delivery appointments. L imited advanced ship notication exists for a few key suppliers. It is mainly automated via purpose-built single supplier interfaces. Industry standards interchange formats are used for ASN. T here is a weekly schedule in place for inbound planning (using manual or semiautomated tools). Inbound Transportation Planning Scheduled delivery date information is utilized for high level capacity and labor planning. A formal transportation planning process is in place (site level or regional), and planning is performed on a regular basis. Suppliers are directed to use a specic carrier or set of carriers for a given lane of trafc. Typically web-based routing or other tracking information is provided on the supplier PO.
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Manage Inbound 4.5.2.2 Material Flow (10350)
Manage Inbound Schedules D elivery to cross-dock facility is on a scheduled basis and at a predetermined time (as appropriate). Direct-to-line delivery is at the end of the shift prior to use. T he supplier delivers according to agreed time, lot size and packaging, terms of sale, appropriate mode of transportation and compliant carrier. Systems are integrated to tender freight and optimize inbound logistics. A container management process is in placemanaging containers and the orders and lines they contain. A trailer drop process (manual or system supported) is in place to optimize through-put and reduce demurrage charges. There is appropriate use of standardized packaging and in standardized case and master packs quantities (as directed). There is appropriate use of rental pallets and reusable and/or recycled pallets from the supplier. Warehouse Management System Formal WMS exists with mixed manual and computerized records by SKU. I nventory control and reconciliation practices verify inventory accuracy according to policy or local procedure. WMS addresses receiving, put-away, inventory, and slotting. S lotting and picks are controlled by a locator system. A location grid is created to manage warehouse layout, efcient put-away, pick, and inventory cycle counting. Visibility is enhanced by the integration of order management, manufacturing, and nancial systems. The WMS provides reporting to support chosen KPIs.
4.5.2.3 Monitor Inbound

Delivery Performance (10351)
Monitor Inbound Performance A process is in place to continuously assess and improve distribution center productivity and space utilization at the site or local level, and at the transportation lane level. A formal process is in place to track inbound on time performance and shipment damage. V olume and performance data are leveraged for review. I nbound shipment data is available from carrier systems in the form of online inquires, or monthly or ad hoc reports. Plan for Returns R eturns are planned based on knowledge of product and customer actions. P roduct life-cycle and support (repairs) requirements are considered. P rocesses are clearly documented and monitored. Returns are treated as an outbound material. I nventory turns of returned product are known. T he cost of each return activity is known. Product can be in the eld and not sent back through the returns system if the cost exceeds the product recovery value. Logistics, marketing, manufacturing, and customer service have developed policies and processes to decrease/eliminate controllable returns from customers.
4.5.2.4 Manage Flow of

Returned Products (10352)
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Systems IntegrationReturns O rder management and returns processes are integrated using common systems to capture orders, shipments, and return authorizations/information. 4.5.3 Operate Warehousing (10340) 4.5.3.1 Track Inventory
Deployment (10353)
Inventory Deployment Plan Inventory locations are balanced at least annually and preferably quarterly, to keep high turn items closer to the staging area and products which typically ship together in proximity. There is a process in place to identify inventory/material ow bottlenecks as part of an overall continuous improvement initiative. There is full barcode scanning of all warehouse locations and product codes. If master carton labeling does not include a barcode, cartons are labeled at receiving before put-away. Participate in industry based labeling and package standards for marking, labeling and tracking products in warehouse and for later picking labeling, shipping, and information management requirements and standard accounting. Receiving T he receiving process is well documented and understood. The procedure denes the process to manage/sign/review carrier documents, and issues escalation path and transaction steps. The receiving area is clearly laid out into unloading, staging, and holding areas. All products in the receiving area are properly marked as to the status in the receiving process. Receiving appointments are manually tendered. P erformance metrics/standards are clearly posted. M anual scheduling of trailer receipts takes place. I nbound shipment data is available from carrier and/or 3PL systems in the form of online inquiries or monthly and/or ad hoc reports. Reduction of trailer switch times is accomplished by pre-planning all trailer moves and yard staging of trailers. Timely unloading avoids detention/demurrage A ll receipts (e.g., received by 2pm) are processed and posted as available inventory on the same day. Wireless technology and automation are used to help efcient put-away, track/manage inventory, and increase picking efciency. Pallets are labeled with appropriate tracking license plates prior to put-away. Inspection There is sufcient inspection to identify non-conforming productwhich is then quarantined to prevent use. Non-conforming product is referred to suppliers within a prescribed timeframe. R eceiving errors, shipping errors, damage levels, and over and shortage levels are at or below agreed requirements. A nonconforming report is created, analyzed, and shared with the supplier and employees for corrective action.
4.5.3.2 Receive, Inspect,

and Store Inbound Deliveries (10354)
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Cross-Docking P roducts received which are destined for immediate shipment (cross-docking) must be properly identied. Cross-docking or immediate replenishment of requirements is manual. C ross-docking of in-transit product is utilized (where applicable) to reduce inventory levels in the DC. Material Handling Efcient material handling is characterized by well ordered staging areas, clear aisles, and clearly marked locations. There is appropriate use of material handling equipment in storage and pick areas. G ood housekeeping translates into aisles and work areas that are clear of debris, goods that are neatly stacked, and no evidence of excess moisture or dirt. Products which are destined for immediate shipment (cross-docking) are handled appropriately. Performance metrics/standards are clearly posted. Storage Basic product cube data is available but not held within the system. S torage locations are reviewed annually to assure best access and proper sizing. S torage locations for high volume SKUs are contiguous, and rst in, rst out (FIFO) or rst expired, rst out (FEFO) rules (in some industries) assure proper lot control. Caged and controlled access exists for all high value, highly pilfered, hazmat, regulated, and quarantined items. Items withodor transfer, re risk, ortemperature control requirements must also be segregated and stored in special areas. Space is efciently utilized. S torage locations are adequately marked for identication at the shelf/bin level. A good manual or automated system exists to inspect, track, assign space, pick, and protect products. Slotting A slotting strategy is employed to assign products to locations based on product velocity and physical characteristics. Fast-moving items are located at the most ergonomic levels, while balancing the volume across aisles reduces trafc and labor congestion. Slotting assignments are static and are reviewed quarterly. A process is in place to manage damaged or unsalable products found in a location. Unsalable product is removed from available inventory immediately.
Track Product 4.5.3.3 Availability (10355)
Product Availability T he ability to perform order promising is available for nished goods inventory (ATP). T here is the ability to exibly schedule and reschedule orders based on due dates. I t is possible to provide a single view of inventory across multiple facilities.
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4.5.3.4 Pick, Pack, and
Ship Product for Delivery (10356)
Picking & Packing T he warehouse picking document is generated based on slotting assignments. S hift or individual productivity performance is measured. A record of weekly activity by major task and manning levels is displayed on warehouse shop oor. Barcoding is used to create effective put-away and picking. E nabling technologies, such as APS and WMS, are used to improve order ll rates and cycle time. The design of the warehouse allows for effective pick, pack, and shipincluding assess ment, denition, and marking locations for system and employee reference. This minimal data can be used for data capture systems. All pick locations and product codes are clearly marked and visible to workers during normal picking activity without dismounting from material handling equipment. All packing materials consumed by warehouse operations are on automatic replenishment programs (e.g., Kanban, Min/Max, etc.). A master BOL is used for multi-stop shipments with a sub-bill for each of the individual stops and its respective sequence. SchedulingPick & Pack Shipments are scheduled daily according to customers requested delivery date. Orders are shown as shipped in system of record as soon as the vehicle leaves dock. T he shipping department has forward visibility in the system to anticipate surges in load. L oad optimization and consolidation analysis is performed. Shipping The shipping process is well documented and understood. Procedure denes the pro cess to complete/sign/review carrier documents (weigh bills, manifest, hazmat declarations, etc), issues the escalation path, and delineates the transaction steps. The shipping area is clearly laid out into staging, holding, and loading areas. All products in the shipping area are properly marked as to status in the shipping process. There are customer and export (Customs) compliant shipping documents and labeling for all shipments (e.g., retailer specic labeling). Full compliance to customer labeling requirementsincludes AutoID labels/tags. A SNs are available for all customers by EDI, fax, or e-mail. Although not all customers may want ASNs, they should still be made available. The automated shipment manifesting system features tracking. A ppropriate hazardous materials documents are generated as necessary. Export Compliance There is full compliance with C-TPAT and 10+2 guidelines, as well as any international guidelines or requirements. Compliance requirements are considered to be the domain of export partners and may require products to be re-packaged or relabeled. Compliance is maintained with a 24 hour manifest rule. A ppropriate international documents are generated as necessary. E xport records are archived as required by regulation, policy, or audit requirements. A pre-determination is made of all export/Customs duties, fees, and settlement processes.
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Consolidation/Loading E ach load is built in stop sequence (i.e. rst truck destination loaded last, etc). A process is in place to combine all open orders for single ship-to within the time window agreed to by the customer/client. Any load consolidation with break-bulk is processed at remote terminals. A strategy is in place to strap or over package small parcel shipments and take advantage of lower rates based on parcel aggregation.
Track Inventory 4.5.3.5 Accuracy (10357)
Inventory Accuracy S tock locations are specied in the system. C ycle counting is done with the minimum parameters. A SKUs (high volume) are counted weekly. B SKUs (moderate volume) are counted monthly. C SKUs (low volume) are counted quarterly. S pecial categories (high value, perishable, etc.) allow for exible count frequency. Pick discrepancies trigger a daily cycle count. T he system requires a zero location balance conrmation as part of the normal transaction activity. Inventory is controlled at the 99% level or better. 3PL PerformanceShipping T he KPI dashboard is built and monitored jointly, by the third party and the customer. Regular meetings help to review performance. A formal process is in place to track outbound on time delivery performance and shipment damage based on carrier reporting. Outbound shipment data is available via the carriers system, as online inquiries and/or monthly reports. Manage Finished Goods Inventory Inventory control and reconciliation practices verify nished goods inventory (FGI) accuracy. I ntegration with order management and manufacturing systems provide visibility into FGI transactions and balances. WMS provides reporting to support KPIs.
Track Third Party 4.5.3.6 Logistics Storage and Shipping Performance (10358)
4.5.3.7 Manage Physical

Finished Goods Inventory (10359)
Operate Outbound Transportation (10341) 4.5.4
4.5.4.1 Plan, Transport, and

Deliver Outbound Product (10360)
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Transportation Planning T here are regionally standardized business rules and carrier relationships. P eriodic reviews are conducted with key internal leaders in customer support, nance, and purchasing to determine what shipping processes and information would best support their initiatives. 3PL experience is leveraged by outsourcing outbound transportation (if appropriate) based on analysis of corporate strategy, core competencies, and resources. Distribution strategies are in alignment with sales and channel plans. T here is an integrated harmonized code database. T here is a global tax and trade strategy. The type of service each facility provides (e.g., warehouse, merge-in-transit) is clearly dened. I n transit cross-docking operations are part of multimodal distribution planning and strategy. Goods can be cross-docked when needed, to eliminate additional handling in distribution centers or intermediate warehouses.

Small Parcel Transport Management T he carriers web tool is used to tender and track all parcels, or a multi-carrier solution is used. Common information is held in the database to eliminate the rekeying of data. A quarterly review of shipping rates includes all accessorial fees and performance costs by carrier to insure least cost per shipment. This is based on analytics information provided by carriers or third parties. Unique shipping requirements are addressed with the carrier and included in the carriers customer prole. The carrier website provides tracking, rate information, documentation, and pickup information. Common Carrier Management Routing guides are used and compliance to preferred carriers is tracked and reported. T here are good carrier relationships with a mix of local, regional, and global partners. O n time performance, pickup, and delivery are monitored, reported, analyzed, and used to alter carrier behavior. Periodic updates to carrier contracts are performed via a well-dened RFP process supported by technology to track responses, quotes, and awards. Unique shipping requirements and service level requirements are addressed with the carrier and included in the carriers customer prole. There is system based carrier manifesting and EDI (or carrier web based) updates including transit times. Service level agreements (SLAs) are in place and are reviewed periodically. Transportation ManagementFreight Modes A process is in place to manage the freight mode as required to support shipments (multi-modal, small parcel, less than truckload, full truck, atbed, special equipment service, rail, air, ocean, etc). Mode and provider are selected by least total cost per shipment and rate using actual rates prior to the release to billing (at order entry prior to the release to the warehouse). There is a process in place to select carriers, service providers, external warehouses, etc. (criteria are well documented and revises periodically). Transportation Management Process Routing guides provide direction regarding shipment mode, shipping lanes, and carriers to be used. Thorough workow (in accordance with business processes) is dened, documented and accessible to all personnel responsible for shipping freight. The capability exists to plan centrally and execute shipping orders from decentralized locations. Freight rates and charges are audited to include accessorial charges to agreements. Discrepancies are submitted to carriers for subsequent review and settlement. Automated tender capability exists via manual selection, cascade, or broadcast tendering. T here are automated tender communications with carriers C arrier acceptance workow is dened, executed, and monitored for compliance. A ll automated shipment status updates are in accordance with contract terms. T here is a full audit trail of all shipment status and changes from dock to dock. S upplier (for inbound) and carrier performance are monitored and reported. Electronic invoices are obtained from carriers. I nvoices are automatically matched to rated shipments.
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Transportation Management System T he automated import of orders for shipment from ERP, OMS, or WMS takes place as appropriate for the enterprise workow. 4.5.4.2 Track Carrier
Delivery Performance (10361)
Carrier PerformanceOutbound D aily records of performance are maintained. C omplaints are responded to within 24 hours. C arrier compliance is measured to contract by on-time delivery (carrier reported). R outing guides are in place and include expected service levels. S pecic carrier service level agreements are in place and specic lanes/routes or customer requirements may be specied. Regular (minimum annual) reviews are held with carriers. A performance management program is applied equally across all modes of transportation (e.g., rail, barge, air, etc.). Carriers have (as required/contracted) vehicle telemetric systems in place, to track driver and vehicle performance and to provide a higher level of security.
4.5.4.3 Manage
Transportation Fleet (10362)
Fleet Management O wned or hired vehicles are fully utilized in a single shift, with limited double shifting. T here are weekly measures of driver, tractor, and trailer utilization. T here is inbound/outbound ow coordination (e.g., backhauls). I t is possible to automatically determine the optimal stops to include in a dynamic routing environment. The optimal sequence and directional routing of stops are determined. There is in-truck communication with dispatch. D emand spikes and idle time are lled through cooperative agreements.
Process and Audit 4.5.4.4 Carrier Invoices and Documents (10363)
Proof of Delivery/In Transit Visibility P roof of delivery is available from the carrier, if requested. C Rs can access ofine conrmation of shipment location and delivery status. Freight Payment/Audit Freight bill matching is performed on bill of lading location and date to prevent duplicate payment. Batch-approved shipments and schedule for payment exist. F reight payment audit systems exist to validate ratings and eliminate multiple payments. C arrier compliance is measured to contract by invoice accuracy. T here is tracking of total freight cost. T here is a streamlined and automated freight settlement process. T here is an assessment of cost trade off of utilizing internal or external transportation procurement and payment.
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4.5.5 Manage Returns: Manage Reverse Logistics (10342) 4.5.5.1 Authorize and
Process Returns (10364)
RMA Authorization and Entry There is a formal policy for handling returns. A return merchandise authorization (RMA) system is utilized. S tandard operating procedures have been established for processing returns by type, value, channel, etc. Item identication is accomplished through product labeling and the use of barcode labels. A process is in place to accommodate product return without pre-approval. Process includes approval loop and customer service notication. The data is manually entered into the order entry to process credit. T he WMS system fully supports the return process. T here is a dedicated call center operation for processing returns, and rst level technical support and problem analysis. A website can be used to track the full return process from shipment to disposition. End User Returns Management The customer receives return instructions in the product package. T he customer is directed to contact the call center for RMA to provide user education and prevent unnecessary returns. Channel Returns Management Rule based returns are agreed on in the customer contract (e.g., time based requirements, % of returns to sales requirements, etc). The customer can receive an RMA via call center or the Internet. The customer can receive an RMA and schedule a carrier pickup in the same transaction. The customer can track the status on the customer interface on the web. Returns Inspection/Analysis Returns are processed according to standard receiving processes including the use of Advanced Ship Notice (ASN) when appropriate. Incoming returns are given a damage assessment and coded for return reason. T here is a designated returns processing area. R eturns are inspected and quarantined or refused due to spoilage, infestation, hazmat, and other aspects that may create unsafe and/or unsanitary conditions in the receiving facility (as appropriate). Return inventory is aligned with cycle count process.
Perform Reverse 4.5.5.2 Logistics (10365)
Returns Logistics P roducts and components subject to track and trace requirements are handled appropriately. The credit memo process awaits full inspection of returned products. The website provides return shipment tracking. R eturns are directed to a specic dock or limited to specic time windows (when possible) to minimize errors and to improve utilization of dock workers. End User Returns Logistics The customer receives a return merchandise authorization (RMA) label and call tag with clear instructions to call for pick-up.
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Channel Returns Logistics R MA shipping labels are included with original shipments. T he RMA label tracking number is captured during the shipping process for use in identifying returns. 4.5.5.3 Perform Salvage
Activities (10366)
Returns Quarantine R eturns are moved to a secure area where there is sufcient and secure space to support the disposition process. Items tagged for identication feature product identiers with status/control numbers. Returns Disposition Returns are classied on a timely basis and either resold, refurbished, or destroyed. D efective components are returned to suppliers for analysis. R ecords are maintained manually and presented periodically as necessary. N on defective products are returned to nished goods. Environmentally sound practices are employed for all items being destroyed or disposed of. Procedures are in place to manage items that may create unsafe, hazardous, and/or unsanitary conditions in the facility and are properly quarantined/secured. Adjustments to inventory are completed as an integral part of the returns process. The disposition for credit memo occurs within 5 working days of receipt. Finance adjustments are completed in a timely manner and are initiated by the returns disposition notication. Dispositions are performed according to the local regulatory environment.
Manage and 4.5.5.4 Process Warranty Claims (10367)
arranty Claims W W arranties are well documented and clear to all employees processing returns. P roduct warranty and customer claims are tracked and used in product development cycles. Product returns are linked to supplier warranty and the supplier is charged for any warranty related repairs as allowed in contracts. A warranty analysis of defective components is developed with suppliers. RepairReturn to Customer Items being repaired are properly identied and tagged to ensure return to the correct customer. P roducts and components subject to track and trace requirements are appropriately identied. An individual repair order is assigned to each specic unit being repaired. T he customer is notied and authorization obtained prior to completion of repairs typically via telephone, fax, or e-mail. Any additional warranty or government mandated repairs specic to the unit being serviced are addressed. Accurate repair orders promised date and order status information is available. C ustomers are advised of goods that are near the end of service/shelf life, and authorization is requested prior to repair. The customers are notied of available upgrades and/or revisions prior to repair. T he customer is notied and authorization is obtained if the product is not repairable. Service/replacement options are offered at the time of notication.
Manage Repair/ 4.5.5.5 Refurbishment and Return to Customer/Stock (14195)
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Repair/RefurbishReturn to Stock A close visual, electronic, or hydraulic inspection of all the components ensures the quality of refurbished products. Products and components subject to track and trace requirements are appropriately identied. Rebuild consumes any used parts stock prior to using new parts, according to rst expiry, rst out (FEFO) rule. Completed, refurbished products pass same quality inspection as new. R efurbished products are properly identied as suchincluding revision levels. Products are relabeled as required. Refurbished products are kept physically separate in dened storage areas, apart from new products or virtually separate using specic model/SKU numbering. Inventory management considers refurbish stock. Disassembly/Used Parts to Service Stock Close visual, electronic, or hydraulic inspection takes place of all components which are to be placed in inventory. Components subject to track and trace requirements are appropriately identied. U sed components are kept physically separate in dened storage areas apart from new components, or virtually separate using specic SKU numbering and component markings.
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5.0 Manage Customer Service (10006)

5.1 Develop Customer Care/Customer Service Strategy (10378)
5.1.1 Develop
Customer Service Segmentation/ Prioritization (e.g., tiers) (10381)
Customer Segmentation F avorable trading terms are primarily used to prevent customer defection. W ell-dened segments are targeted with varying service levels. C ustomer segmentation is used to deliver a branded customer experience. Measuring Customer Protability Individual customer protability is the result of deducting direct labor, allocated support labor, and allocated material costs from income. Reports are produced quarterly. C ustomer protability is shared internally across the business and used for decision making.
5.1.2 Dene Customer

Service Policies and Procedures (10382)
Customer Service Policy F irst contact resolution is achieved for most requests. T raining is provided for customer-facing employees. C ustomer self-service options include order inquiry, credit/nancial inquiry, product inquiry, and account status. The web is used as a customer service vehicle and to up sell services. T he appropriate technology supports customer service processes. stablish Customer Service Requirements E P rocesses for establishing customer requirements focus on product and service reliability. P erformance metrics are set and measured. Communicating Customer Service Requirements All customer service requirements are clearly understood by the key managers within the organization. Service levels are established for key customer segments to improve satisfaction. T he majority of the requirements are understood by all customer-facing personnel. S ervice levels are consistent with the organizations objectives. A ppropriate technology development is planned in parallel to the business plan and current customer requirements. Customer Requirement Documentation A standard statement of work is used for major customers, but the format can vary by customer. Processes for establishing customer requirements focus on product and service reliability. T he role of the business owner as key customer contact and interface is clearly evident to all personnel. Customer Business Reviews Business reviews (BRs) take place with the top 75% of customers, at least quarterly. B Rs are well structured and usually include preparation with customer involvement.
Establish Service 5.1.3 Levels for Customers (10383)
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SUGGESTED MiNiMUM PROCESS STaNDaRD 5.2 Plan and Manage Customer Service Operations (10379)
Customer Service Workforce (10387)
5.2.1 Plan and Manage
Scheduling Customer Service F irst tier support is available 24x7 (may not be applicable to all industries). S econd tier support is available during business hours only and usually by return call. T here are written job descriptions and expectations. Measuring Customer Service Complaints analysis used to highlight and resolve internal problems with CSR or customer service processes. Audits conducted on customer service activate the internal improvements identication process. Key indicators (data points) are captured regarding call volume, resolutions, and escalations. Customer service representative performance is reviewed internally on a quarterly basis. I f managed by third party, customer service representative performance metrics are in place and reported as part of contract requirements.
5.2.2 Manage Customer Service Requests/Inquiries (10388) 5.2.2.1 Receive Customer

Requests/Inquiries (10394)
Customer Request/Inquiry I nformal software (e.g., multiple formats such as Word, Excel, or Access) or a customer relationship management (CRM) system provides customer tracking and input to CSRs, to keep the customer informed. Provide CSRs well-dened support functions for inquiry management. L ogging of all customer inquiries takes place to ensure a correct response and that all inquiries are answered (closed). The customer can receive support via call center C SRs have the necessary language skills to support selling geographies. ustomer Request/Inquiry Process C T he process for resolving the most common inquiries is dened. E scalation path for non-routine inquiries is known to initial contact personnel. E scalation is dened for issues that cannot be resolved on the phone. Customer Request/Inquiry Response C SR has visibility into customer account and order information to support customer inquiries. Employees are empowered to act on customer inquiries to improve brand image. Formal processes are in place to close the loop on inquires, and requests are tracked through to resolution (including response/deliverables from outside of the organization). There is resolution of >80% of all inquires during the initial call. A dened escalation path exists for those technical inquires that cannot be resolved over the phone. The process for resolving most common inquiries is dened and is part of the system knowledge base. The escalation path for non-routine inquiries is known to initial contact personnel. The path is clear and documented with contact information.
49
Route Customer 5.2.2.2 Requests/Inquiries (10395)
Respond to 5.2.2.3 Customer Requests/Inquiries (10396)

5.2.3 Manage Customer Complaints (10389) 5.2.3.1 Receive Customer
Complaints (10397)
Customer Complaints A customer can receive tech support via call center. S ervice parts orders are given priority (e.g., emergency parts orders). T he process for resolving the most common complaints and technical inquires is dened and is part of the system knowledge base. Customer Complaint Process T here is a dened escalation process for technical issues that cannot be resolved on the phone. The escalation path for non-routine complaints is known to initial contact personnel. Customer Complaint Resolution 8 0% of all technical issues are resolved during the initial call. All technical issues are resolved within 4 hours, and with a maximum of one call back. F ormal processes are in place to close the loop on issues and increase customer satisfaction. Customer Complaint Response T he source of complaint is recorded to track trends. F ast resolution of customer complaints leads to higher customer satisfactionwhich is periodically measured. Customer complaint tracking and reporting meets applicable regulatory (e.g., GMP/ GDP, consumer product safety) and reporting requirements. A formal process is in place that links customer complaints with corrective and preventive action teams.
5.2.3.2 Route Customer

Complaints (10398)
Resolve Customer 5.2.3.3 Complaints (10399)
5.2.3.4 Respond to
Customer Complaints (10400)
5.3 Measure and Evaluate Customer Service Operations (10380)

5.3.1 Measure Customer
Satisfaction with Customer Requests/ Inquiries Handling (10401)
Measuring Customer Service T he complaints analysis is used to highlight and resolve internal problems. A udits are conducted on customer-by-customer basis to identify internal improvements. T he sources of customer service complaints are recorded to track trends. Customer Satisfaction Reporting The performance to customer inquiries is reviewed internally on a quarterly basis. C ustomer satisfaction is measured or otherwise determined. M ajor complaints are tracked and categorized A ction is taken as management sees t, based on noise level.
Measure Customer 5.3.2 Satisfaction Customer Complaint Handling and Resolution (10402)
50
Customer SatisfactionComplaint Resolution C omplaint handling performance is reviewed internally on a quarterly basis to a set of KPIs.

5.3.3 Measure Customer
Satisfaction with Products and Services (10403)
Customer SatisfactionProducts and Services T he source of product complaint is recorded to track trends. A periodic survey of product and service satisfaction takes place. C ustomer satisfaction with products and services is measured in various ways, and the results are used to drive improvement. Information from product returns is used to reduce cost and recurrence. A third party may be used to conduct customer satisfaction audits. D ata from problem reporting is used to avoid repeating past product problems or defects. Some functional silos may still exist between customer service and product engineering or marketing with no formal feedback loop in place.
51
Develop and Manage Human Capital
Management and Support Processes

6.0 Develop and Manage Human Capital (10007)

6.3 Develop and Counsel Employees (10411)
6.3.2 Manage Employee
Performance (10470)
Employee Performance M eaningful measures are used to assess the effectiveness of the performance measurement system. The employee performance review infrastructure enables managers and their reports to communicate performance measurement information. Employee feedback and development of second tier employees becomes an important part of the talent development strategy. Technology is used to automate and streamline employee development and performance management processes. Employee Development L earning management systems are in place (customization is minimized). D evelopment of internal employees to meet talent demand of the enterprise is routine. L eaders take an active role in developing employees and making employees feel valued by the organization. Technology is used in the integration process of talent management. A formal process is in place to manage talent and to identify and develop successful employees. Training Plan F ormalized training plans and programs exist by function/role. T raining curriculums are routinely updated and are linked to strategic objectives. F ocus is on the training and support of rst level managers. A ccess to training and training information is widespread. T rain-the-trainer is the preferred mode of teaching. Training Program Appropriate workplace standards exist on safety, afrmative action, etc., and are part of new hire training. Safety teams exist and train co-workers. T here is a formalized training program by function/role. T raining and processes are tied to key performance indicators. M ost jobs have a cross-training plan used to develop multi-skilled employees. A large percentage of employees are cross-trained to perform additional jobsbut not with equal skill. Teams are beginning to be a part of the operational philosophy within the organization. S elf-directed work teams are currently being adopted within manufacturing and other functional areas.
6.3.4 Manage Employee

Development (10472)
Develop and Train 6.3.5 Employees (10473)
52
Develop and Manage Human Capital

Employee Communication A n ad hoc communication system helps ensure that all employees receive all of the information, news, and requirements they need to perform their duties. Open communication systems are being developed and deployed. E mployees generally feel they are getting the full picture, but there may be a hesitation to open up about real issues for fear of reprisal. Training of Customer Facing Employees A formal training program and manual for CSRs is supported by a minimum of one weeks training. CSRs receive basic training before an active assignment, and complete all required training within 60 days. Specications are in place to govern the minimum number of hours or days of training required. Training certication is managed by the department head. F ull (100%) product/service training requirements are dened for CSRs. K ey stakeholders have reviewed and approved training materials for all customer facing roles. Training materials are always accessible and up to date. Lean Training Leaders from major departments (nance, HR, IT, sales, marketing, manufacturing, distribution, etc.) are aware of the concept of Lean. Management and supervisory level employees have begun the educational and operational transition to the philosophy of Lean and are supportive of the plan, but are not yet completely aware of the their role. Operating departments have developed a Lean training plan and include training targets in the performance metrics. 6.4.1 Develop and
Manage Reward, Recognition, and Motivation Programs (10494)
Rewards and Recognition A formal program is in place for employees to participate in communities of practice. T he overall recognition program includes rewards for innovativeness.
6.6 Manage Employee Information (10414)

6.6.5 Develop and
Manage Employee Metrics (10526)
Employee Metrics A demonstrated accountability for employee measures and measurement systems exists. E mployee metrics are reviewed periodically to balance long-term strategic priorities with short-term issues.
53
Manage Information Technology
7.0 Manage Information Technology (10008)

7.1 Manage the Business of Information Technology (10563)
7.1.1 Develop the
Enterprise IT Strategy (10570)
T System Strategy I T he software has been substantially aligned with key business processes. A ppropriate process changes are made during systems implementation. E ffective IT governance is in place resulting in better decision making, reduced technology costs, and increased protability. A combination of legacy and best-of-breed technology is applied throughout the organization. Systems Integration Different systems and/or databases are combined (using batched processes) to meet current needs. Differing systems exist at multiple sites but are aligned to support the business. C ritical data is updated and backed up daily. S ystems are moderately scalable. I nter-systems data integration is accomplished through batch EDI processing for order and shipment transactions (or other enterprise-wide data). IT systems integrate operations and support nancial, operational, sales, and marketing decisions. Data Management Standards The enterprise is a member of trade associations and/or other industry bodies that are active in standards making efforts. There is some use and support of industry standard formats and standards (EDI, XML, etc.) for the electronic exchange of primary business documents (order, invoice, etc.). Data accuracy exceeds 96% across all systems. A continuous improvement process is in place to increase data accuracy. F inancial data accuracy complies with requirements of Sarbanes-Oxley Public Accounting & Investor Protection Act. IT Systems Support Good systems support results in infrequent disruptions. T he system is supported 24/7/365 with onsite personnel during business hours and on-call personnel outside of business hours. Employees are well trained in current system functionality. T he system is backed up daily at an offsite location. T he system is secure.
7.3 Manage Business Resiliency and Risk (11216)

7.3.1 Develop and
Manage Business Resilience (11217)
Business Continuity Planning T here is an outline available for an effective crisis reaction approach. S cenario plans are developed for alternative situations. Disaster Recovery Documented system disaster recovery plan is in place and communicated. D ata les are backed up daily and kept in secure offsite storage.
54
Manage Information Technology

7.3.4 Develop and
Implement Security, Privacy, and Data Protection Controls (11220)
Security and Data Protection A ll system access is controlled by username and password. C ustomers and suppliers cannot access data which supports other customers or suppliers. Internal systems are not directly accessible from the Internet. N ormal industry practices are in place to support transaction security. Privacy Control A privacy strategy and program is in place for the enterprise. T he privacy program is published and describes actionable procedures for stakeholders. U ser and operator classications have been developed for sensitive information (roles) including supply chain partners. Sensitive information is protected with physical, technical, and procedural safeguards.
7.4 Manage Enterprise Information (10565)

7.4.1 Develop
Information and Content Management Strategies (10583)
Master Data Management M aster data management success depends upon data stewards made up of crossfunctional teams to enact quality standards. The senior management team understands and supports data management and commits personnel and resources as required. Executive level management sees data management as a strategic asset (to some extent). D ata management goals are shifting from problem management to problem prevention and may be viewed at an enterprise level. Business rules are standardized and enforced at the department level. There are some enterprise-wide business rules. Business rules capture documented processes. Data Quality Data quality processes are focused on near real-time activities and preventative data quality rules. Ongoing data monitoring is conducted. T ools are in place to audit and analyze data. A dened proling process is in place. Data Accuracy Management Measures Data metrics are captured and compared to historical values and targets. Metrics may be compared to industry standards. Metrics are captured and used for improvement. D ata accuracy exceeds 96% across all systems.
55
Manage Financial Resources
8.0 Manage Financial Resources (10009)

8.2 Perform Revenue Accounting (10729)
Credit (10742)
8.2.1 Process Customer
Customer Credit Processing C ustomers are billed accurately and on time (as appropriate). F inancial incentives and performance goals support collaboration between sales and credit functions. Credit management software is used to reduce time and expense of credit processing. C redit memos are issued in a timely manner after full inspection of returned products. Payment Processing T here is the capability to receive payment by check, wire transfer, or electronic funds transfer (EFT). Payments are applied to accounts within one business day. A ll payment and transaction information is kept secure and condential.
8.2.3 Process Accounts

Receivable (AR) (10744)
8.6
Process Accounts Payable and Expense Reimbursements (10733)

Payable (AP) (10756)
8.6.1 Process Accounts
Accounts Payable Process M onthly consolidated invoicing is against blanket orders. T here is pay on receipt and self billing for a selected number of high transaction suppliers. Accounts payable (AP) systems are integrated with other systems. S tandardized systems and policies are in place providing one face to the customer.
56
Manage Environmental and Health Safety
10.0 Manage Environmental Health and Safety (EHS) (11179)

10.2 Develop and Execute Health, Safety, and Environmental Program (11181)
10.2.4 Record and Manage
EHS Events (11191)
Security N ormal security precautions are effective in protecting customer and enterprise materials and intellectual property. Employees are reasonably safe and secure in the workplace. N o signicant security issues or events exist. R easonable steps are taken to ensure that employee, customer, and supplier material and property are protected. Use of video surveillance in critical areas, to include live monitoring and recording. Safety Safety is integrated into most aspects of the business, and most employees recognize the importance of safety in the workplace. The level of OSHA reportable accidents is 3-5 and lost workday index is .3-.5. A safety committee exists at the corporate level, but may not be widely supported at the department level. Annual re and safety drills occur. Risk Management Normal business risks are anticipated and addressed. T he enterprise is compliant in all local and regional regulations and reporting.
10.5 Ensure Compliance with Regulations (11184)

10.5.3 Comply with
Regulatory Stakeholders Requirements (11200)
Environmental Compliance Environmental controls are integrated into most aspects of the business and most employees recognize the importance of control or elimination of hazardous waste in the workplace. Actions are underway to become ISO 14001-2004 compliant and to implement new controls to minimize the opportunity for an EPA listed incident. No EPA listed incidents have occurred/been reported in the past two years.
57
Manage Knowledhe, Improvement, and Change
12.0 Manage Knowledge, Improvement, and Change (10013)

12.1 Create and Manage Organizational Performance Strategy (11071)
12.1.1 Create Enterprise
Measurement Systems Model (11075)
Measurement Model A ll stakeholders are involved in the development of corporate performance measures to achieve buy-in. A measurement system is developed with accuracy and ease of use as primary objectives. Measures that are used can be collected easily and are understood by all stakeholders. T he measurement system is embedded into daily operations. E mployees are trained to understand the linkage between outcome measures and the work they do daily. The enterprise measures what matters. T he number of measures tracked is limited to the higher levels and to the essential few. T he performance measurement system is linked to other programs, such as compensation, rewards, and recognition. The importance of the measurement system is effectively communicated throughout the organization. Executive level support for the measurement system demonstrates its importance to the enterprise. A balanced scorecard approach is used to measure progress against the strategic plan. Process Metrics B asic productivity and customer metrics are taken and used to improve products and services. Measures are only collected when the results are used to drive improvement. E mployees control the results of their measures. D ata is converted to information, following analysis of trends and unusual variation. Effects are tied to causes. Action is taken to remove or avoid chronic problems. M etrics are used by key employees and managers to drive the business. T echnology appropriate to the enterprise and the task is used to collect, analyze, and report metric data.
12.1.2 Measure Process

Productivity (11076)
12.2
Benchmark Performance (11072)

Performance Assessments (11083)
12.2.1 Conduct
Audits and Assessment T he quality department facilitates regularly scheduled internal audits using crossfunctional teams with varying degrees of auditing expertise.
58
Manage Knowledge Improvement, and Change

12.2.3 Conduct Process
Benchmarking (11085)
Benchmarking Process S enior management supports benchmarking. T he scope and objectives of the benchmarking effort are clearly dened. T he enterprise has a good foundation of data in the areas to be benchmarked and the team understands historic performance. The communication process is regular and frequent. B enchmarking teams have adequate resources. R ecommendations are developed broadly, with all operating processes involved. Process Benchmarking T he enterprise recognizes internal process best practicesome sharing across enterprisealthough the methodology for sharing may not be formalized. There is a dened process to gather external process benchmark data. Internal best in class processes are turned into standard work instructions used to turn tacit knowledge into institutional knowledge.
Conduct 12.2.4 Competitive Benchmarking (11086)
Competitive Product Benchmarking T here is a dened process to identify competitors. C ompetitor capabilities are well understood and considered during the new product design and introduction process. Current products are clearly positioned relative to the competition. T he enterprise uses benchmarking data from industry groups. S enior management understands the enterprises performance in terms of their competitors performance. The enterprise looks outside of their industry for examples of world class performance at the process level. The enterprise participates anonymously to support industry level benchmarking. Customer Benchmarking Enterprise performance is benchmarked to customer expectations. C ustomers may participate in the benchmarking process. P erformance gaps are identied and closed.
12.3 Develop Enterprise-Wide Knowledge Management (KM) Capability (11073)

12.3.5 Manage the KM
Project Life-Cycle (11099)
Procedures A ll key processes and subordinate work instructions are fully documented. I SO 9001:2008 or other suitable standards form the basis of the process viability. A well-dened, documented, and followed escalation path is in place for all functions. All regulatory standards are met or exceeded. P rocess documentation and recordkeeping complies with requirements of SarbanesOxley Public Accounting & Investor Protection Act.
59
Manage Knowledhe, Improvement, and Change

Process Control A robust system for the use of a variety of process control tools by operations and the quality organization is in place. Data drives the continuous improvement effort. P rocesses are fully documented. P rocess documents and ancillary illustrations or owcharts are actively used to direct delivery of products and services. A good system exists for ensuring that only the most recent document versions are available. Records are generally accessible, but are not always efciently and quickly located. T he system used to manage the process has version control functionality. Process Validation Cross-functional teams have the freedom and tools to identify, prioritize, and solve critical problems. Data integrity is established and an effort is made to ensure that the right things are being done in the right ways.
12.4 Manage Change

12.4.3 Implement Change (11136) 12.4.4 Sustain
Improvement (11137)
Quality Manual A comprehensive quality manual is controlled and updated regularly, and is readily available to all employees. The quality manual is tied to business processes and work documentation. T he quality manual is frequently used in orientation, training, and to direct work. Quality Policy A strong quality policy has been cooperatively developed and prominently displayed. T he quality policy focuses on meeting and/or exceeding customer requirements and needs. The quality policy engages everyonemost employees can express the policy in their own words. Quality Planning A comprehensive, measured, cross-functionally developed quality plan is in place covering critical aspects of product, service, and operations. Quality Deployment The quality function manages formal cross-functional teams with all areas represented and participating. Formal criteria are in place for the escalation of problems. T he quality function has authority to direct, access, and manage all quality related functionsincluding quality systems, quality processes, measurement, regulatory compliance, ISO, and process quality engineering. Resistance is moderate.
60
Manage Knowledge Improvement, and Change

Quality Training A formal system of quality training has been dened for at least upper level managers and employees. Detailed training records are current and available. R equired skills for each position are documented and employees are required to certify competence against these skills. CommunicationQuality A formal (but not necessarily extensive) communication process is used to reach custom ers, suppliers, employees, and the community. Employee feedback mechanisms exist. Corrective Action A corrective action reporting system exists for tracking problems. A ctions are taken on major recurring issues. Preventive Action Focus is on learning from mistakes and on preventing past problems from recurring. Continuous Improvement Ad hoc teams attack chronic problems or focus on xing individual processes.
61
LiST Of CONTRibUTORS
The Council of Supply Chain Management Professionals and Supply Chain Visions thanks the following organizations that provided resources for the development and review of these standards: AGTA Altos Management Partners Applica Consumer Products, Inc. APQC ARC Advisory Group Arvato Auburn University C.F. Lynch & Associates California Manufacturing Technology Consulting Cellstar Central Michigan University Chain Connectors Chain Link Research Chagrin Consulting Associates Computer Sciences Corporation CTSI Cummins, Inc. Decision Wise Deloitte Exel Expeditors Freese & Associates Georgia Southern University Gold & Domas Research Gulfstream Gross and Associates IBM Infor Global Solutions International Paper Intuit KB Ackerman Company Kuehne & Nagel Lead Logistics Massachusetts Institute of Technology McHale Quality Systems Menlo Logistics Michigan State University Murphy Warehouse Company Oracle Ozburn-Hessey Logistics Parts River Pennsylvania State University Radio Systems Corp (PetSafe) River Oaks Resources Saddle Creek Sonoco Summit Concept Supply Chain Insights, LLC The Coca-Cola Company The Ohio State University The University of Tennessee Tranzact Technologies University of South Florida Voluntary Inter-Industry Commerce Standards Association Welchs Western Electronics WMH Tool Group
The Council of Supply Chain Management Professionals (CSCMP) is the preeminent worldwide professional association of supply chain management professionals. Our mission is to lead the evolving supply chain management profession by developing, advancing, and disseminating supply chain knowledge and research. We provide opportunities for supply chain professionals to communicate in order to develop and improve their supply chain management skills, identify and conduct research which adds to the knowledge base of supply chain theory and practice, and create awareness of the signicance of supply chain to business and to the economy. CSCMP is a not-for-prot corporation founded in 1963. APQC is a leading resource for performance analytics, best practices, process improvement, and knowledge management worldwide. Our research studies, benchmarking databases, and renowned Knowledge Base provide managers with intelligence that they can use to transform their organizations for better results. Spearheaded by APQC, the global Process Classication FrameworkSM (PCF) and Open Standards Benchmarking CollaborativeSM (OSBC) research helps executives benchmark comparable business processes. APQC is a member-based nonprot founded in 1977. Supply Chain Visions is a specialized consulting rm dedicated to assisting companies with supply chain strategy development, implementation, and education. Our expert advice and collaborative approach help clients develop solutions that are strategic as well as practical, cost effective, and focused on driving measurable performance improvements. Blending true thought leadership with real world experience, we help clients nd answers to questions. Supply Chain Visions is a certied womanowned S-Corp, founded in 2002.
The Worlds Leading Source for the Supply Chain Profession.
62

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What is the purpose of developing benchmarking standards?

What is the purpose of developing benchmarking standards?

What organizations contributed to developing these standards?

What organizations contributed to developing these standards?

Develop Vision and Strategy Develop and Manage Products and Services

CSCMP Suggested Minimum Supply Chain Benchmarking Standards

CSCMP Suggested Minimum Supply Chain Benchmarking Standards

Created and Compiled by Supply Chain Visions and CSCMP

CSCMP Suggested Minimum Supply Chain Benchmarking Standards

USiNG THE CSCMP SUGGESTED MiNiMUM SUppLY CHaiN BENCHMaRKiNG STaNDaRDS

PROCESS CLaSSifiCaTiON FRaMEWORKSM (PCF)

MANAGEMENT and Support Services

UNDERSTaNDiNG THE PCF NUMbERiNG SCHEME

THE STaNDaRDS THE STRUCTURE Of THE STaNDaRDS

TabLE 1: STaNDaRDS EXaMpLE

1.0 Develop Vision and Strategy

PROCESS OR aCTiViTY (X.X.X or X.X.X.X)

Descriptions of Suggested Minimum Standard for the Process or Activity.

THE LiNK TO APQCS OSBC SURVEY aND METRiCS

Develop Vision and Strategy

1.0 Develop Vision and Strategy

1.1.3  Perform Internal

1.1.4  Establish Strategic

1.2 Develop Business Strategy

Develop Vision and Strategy

SUGGESTED MiNiMUM PROCESS STaNDaRD

Develop Global 1.2.2.4  Support and Shared Services Strategy (14190)

Develop Vision and Strategy

SUGGESTED MiNiMUM PROCESS STaNDaRD

Develop Vision and Strategy

SUGGESTED MiNiMUM PROCESS STaNDaRD

1.2.4  Coordinate and

Create 1.2.5  Organizational Design (Structure, Governance, Reporting, etc.) (10041)

1.2.6  Develop and Set

1.2.7  Formulate Business

1.3 Manage Strategic Initiatives

Develop and Manage Products and Services

SUGGESTED MiNiMUM PROCESS STaNDaRD

2.0 Develop and Manage Products and Services (10003)

Perform Discovery 2.1.3  Research (10065)

Conrm Alignment 2.1.4  of Product/Service Concepts with Business Strategy (10066)

Manage Product 2.1.5  and Service LifeCycle (10067)

Develop and Manage Products and Services

SUGGESTED MiNiMUM PROCESS STaNDaRD

2.2 Develop Products and Services (10062)

Develop and Manage Products and Services

SUGGESTED MiNiMUM PROCESS STaNDaRD

2.2.3  Prepare for

Market and Sell Products and Services

SUGGESTED MiNiMUM PROCESS STaNDaRD

3.0 Market and Sell Products and Services (10004)

3.3 Develop Sales Strategy (10103)

Develop Sales 3.3.2  Partner/Alliance Relationships (10130)

Market and Sell Products and Services

Manage Sales Orders (10185) 3.5.4 

3.5.4.1  Accept and

Market and Sell Products and Services

SUGGESTED MiNiMUM PROCESS STaNDaRD

Determine Stock 3.5.4.3  Availability (10196)

Determine 3.5.4.4  Logistics and Transportation (10197)

1.1.3 Perform Internal

1.1.4 Establish Strategic

Develop Global 1.2.2.4 Support and Shared Services Strategy (14190)

1.2.4 Coordinate and

Create 1.2.5 Organizational Design (Structure, Governance, Reporting, etc.) (10041)

1.2.6 Develop and Set

1.2.7 Formulate Business

Perform Discovery 2.1.3 Research (10065)

Conrm Alignment 2.1.4 of Product/Service Concepts with Business Strategy (10066)

Manage Product 2.1.5 and Service LifeCycle (10067)

2.2.3 Prepare for

Develop Sales 3.3.2 Partner/Alliance Relationships (10130)

Manage Sales Orders (10185) 3.5.4

3.5.4.1 Accept and

Determine Stock 3.5.4.3 Availability (10196)

Determine 3.5.4.4 Logistics and Transportation (10197)

3.5.4.5 Enter Orders

3.5.4.7 Handle Order

Dene Labor 4.1.1.2 and Materials Policies (10230)

Dene 4.1.1.3 Outsourcing Policies (10231)

4.1.2.1 Develop Baseline

4.1.2.3 Develop Consensus

4.1.2.4 Allocate Available

Monitor Activity 4.1.2.5 Against Forecast and Revise Forecast (10239)

Evaluate and 4.1.2.6 Revise Forecasting Approach (10240)

4.1.2.7 Measure Forecast

Collaborate 4.1.3.2 with Supplier and Contract Manufacturers (10243)

Identify Critical 4.1.3.3 Materials and Supplier Capacity (10244)

4.1.3.4 Monitor Material

Generate 4.1.3.5 Constrained plan (10246)

4.1.3.6 Dene Production

Manage Work-in4.1.4.2 Progress Inventory (10248)

Collaborate with 4.1.4.3 Suppliers (10249)

4.1.4.4 Generate and

Plan Distribution 4.1.5 Requirements (10225)

Establish Inventory 4.1.6.2 Management Constraints (10268)

Establish 4.1.6.3 Transportation Management Constraints (10269)

Review Distribution 4.1.7 Planning Policies (10227)

4.1.9.1 Establish Quality

4.1.9.2 Develop Standard

Communicate 4.1.9.3 Quality Specications (10373)

4.2.1.2 Clarify Purchasing

4.2.1.5 Analyze Companys

Seek Opportunities 4.2.1.6 to Improve Efciency and Value (10286)

4.2.1.7 Collaborate with

Select Suppliers and Develop/Maintain Contracts (10278) 4.2.2

4.2.2.1 Select Suppliers

4.2.2.2 Certify and

4.2.2.4 Manage Contracts

4.2.3 Order Materials and Services (10279) 4.2.3.1 Process/Review

Approve 4.2.3.2 Requisitions (10293)

4.2.3.5 Expedite Orders

4.2.4.4 Monitor Quality of

4.3 Produce/Manufacture/Deliver Product (10217)