SCDigest Editorial Staff
The Perfect Order has been around for a long time, but a new study shows that many challenges remain in the quest for “perfection” in the consumer goods-to-retail supply chain.
The study was performed by Kate Vitasek of Supply Chain Visions, a well-known consultant and educator on supply chain performance measurement (and SCDigest blogger), on behalf of VCF (formerly the Vendor Compliance Federation). The full report is available from SCDigest: Benchmarking the Perfect Order.
The report provides an update to a similar study based on 2005 data from five retailers, across multiple segments. Those retailers allowed VCF to analyze their data, based on almost 200,000 purchase orders, with regard to key measures of the Perfect Order.
While there are many definitions of “Perfect Order,” the most common includes four metrics:
- On-Time Delivery
- Complete/In Full
- Zero Damage
- All Documentation and Labeling Complete and Accurate
By combining those four metrics in an equation, a “Perfect Order Index” (POI) can be created: percent on time X percent complete X percent no damage X percent all documentation and labeling.
The Perfect Order is challenging because the measures are “binary” – that is, each metric for an order is perfect or it isn’t. In other words, an order that is 99% complete still fails because the order is not perfect.
In addition, the multiplicative nature of the POI equation means even small to mid-sized misses in an overall metric quickly generate very low overall scores.
(Distribution and Materials Handling Article - Continued Below)