"Ties That Bind"

David Drickhamer

Industry Week

January 2004, pp. 49-58

This article reports the results of a value chain study conducted for Industry Week. Surveys were mailed out to 25,000 individuals, and there were 1,461 completed questionnaires returned. This is an overall response rate of 5.9%, so the results must be interpreted with caution. However, the article provides some useful benchmark data, as it provides results for the sample median and the top quartile of respondents on a number of variables:

• Cash-to-cash cycle time—median 56 days; top quartile 30 days.
• Total inventory turn rate—median 6.0; top quartile 10.0.
• Production schedule attainment—median 80 %; top quartile 87%.
• Cost of quality (as percent of annual revenues)—median 0.7 %; top quartile 0.1 %.
• Percentage of sales from products launched previous year—median 15%; top quartile 25%.
• Time to market—median 150 days; top quartile 60 days.
• Products launched on budget—median 75%; top quartile 90%.
• Products launched on time—median 60%; top quartile 86%.
• Percent R&D cost for new products—median 25%; top quartile 50%.
• Supplier lead time—median 14 days top quartile 7 days.
• On-time delivery—median 90%; top quartile 95%.
• Percentage of purchases from certified vendors—median 75%; top quartile 90%.
• Percentage of total sales orders that require no manual intervention—median 0%; top quartile 30%.
• Percentage of annual orders not fulfilled due to stockouts—median 2%; top quartile 0%.
• Customer retention rate over last 3 years—median 80%; top quartile 86%.
• Customer order-to-delivery time—median 7 days; top quartile 3 days.
• Supplier delivery dock-to-stock cycle time—median 4 hours; top quartile 2 hours.
• Customer order pick-to-ship cycle time—median 4 hours; top quartile 2 hours.
• Order fill rate—median 97.7%; top quartile 99%.
• Total logistics cost as a percentage of sales—median 4.3%; top quartile 2.0%.

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