Weights and Measures

A SPEAKER AT A RECENT CONFERENCE described a benchmarking survey that his research firm had sent to leading retailers. At over 75 pages in length, and containing hundreds of questions in dozens of categories, the survey sought results that would be the definitive encyclopedia of best practices in retailing. Few of us can afford to even think about doing anything so ambitious vis-à-vis benchmarking. But here are some vital measurements that AMR Research Inc. suggests you take:

  • Perfect order: An order that’s complete, accurate, on time, and in perfect condition, unmarred by stock-outs, late shipment, delivery delays, poor quality, or damage in transit.
  • Demand forecast accuracy: The difference between projected and actual demand.
  • Cash-to-cash cycle time: A composite of the time taken from shipment of finished goods to delivery at the customer’s address, time between raw material receipt and payment (days payables outstanding), average days of inventory on hand, and average collection period from invoicing to cash receipt (days sales outstanding).
  • Supply chain management costs: Total SCM operating costs, comprised of the operational expenses of direct purchasing, manufacturing, transportation, warehousing/distribution, inventory holding, and customer service.