Supply House Times offers a preview of the AMD/IPD study, which tells how to judge supplier excellence.

A joint project between the American Supply Association's Industrial Piping Division and Associate Member Division has identified 23 criteria for determining whether suppliers are doing all they should to help wholesalers drive costs out of the supply chain.

Study coordinator Peggy Tracy will give a full report at the upcoming ASA Convention at a program sponsored by IPD and AMD on Tuesday afternoon, Oct. 23. She will discuss its implications for the industry at the IPD breakfast meeting at the convention on Thursday, Oct. 25.

Meantime, here is a summary of the key criteria determined by the study:

Order management

Fill rate/Product availability - 98% of line items filled on the first pass and no more than two shipments to complete an order. Product availability should be visible on the Web site and be easy and fast to get to.

Shipping accuracy - 100% accuracy for every order picked, packed and shipped. The ultimate goal is for accuracy so high and so consistent that the need for checking upon receipt of goods is eliminated at the wholesaler warehouse.

Shipping timeliness/Lead times (from receipt of order to receipt of goods) - 100% compliance with agreed upon lead times for both standard products and nonstandard. Notice of lead times (original time plus any changes) is published on a secure Web site.

Invoice accuracy - 100% accuracy of agreed upon price.

Problem resolution - Order management problems (shipping errors, invoice problems, etc.) are formally tracked and resolved within 30 days of awareness of problem.

Electronic commerce

EDI - Receive 75% of wholesaler volume (not orders) via EDI. Proactively offer implementation assistance (phone/on-site) for those wholesalers who need it.

Barcodes - Barcode 100% of both finished goods and parts inventory.

Standard numbering system (e.g. UPC) - Register, assign and publish UPC codes for 100% of all products and parts.

Digital relational database for product sheets (can import data into others' databases) - Provide a database that wholesalers can import into their own databases; however, it must be a digital relational database. This can be provided from a Web site but preferably from Source ASA+.

Electronic secure account access for trading partners (pricing, check orders, CMTRs, etc.) - Provide secure electronic access so each trading partner can view own pricing, order status, backorder status, inventory availability, payment status, invoice reprint, link to carriers for real-time tracking, look up part number by wholesaler part number, e-mail various functions, submit request for quote. Ordering for stock inventory via each manufacturer's Web site is not the goal and is not included in this list; EDI is the preferred method for placing stock orders for medium/large wholesalers.

Inventory management

Notice of obsolescence - Provide wholesalers with reasonable notice of upcoming obsolescence to make prudent inventory decisions.

Notice of price change - Provide wholesalers with reasonable notice of upcoming price changes to make prudent inventory decisions and to inform customers where needed; price changes are provided electronically.

Stock balancing returns (saleable product) - Provide wholesalers with the opportunity to return saleable inventory in order to concentrate capital on the manufacturer's other faster-selling products.

Vendor-managed inventory - Receive at least 10% of wholesaler volume via VMI in order to reduce both wholesaler and manufacturer inventory. Actively promote and assist wholesalers with implementation of VMI where appropriate.

Communication of inventory optimization schemes - Actively reduce total chain inventory by working with wholesalers through a variety of means appropriate for each wholesaler. This requires honest and open communication between manufacturer and wholesaler about inventory levels, capabilities, etc.

Logistics management

Product return rates due to shipping damage - Less than 1% product return rate due to shipping damage. Continuously try to improve packaging and palletizing, and work with shippers to reduce damage claims.

Cycle time for delivery - 100% compliance with agreed upon delivery times and the delivery times are statistically the same every time. Cycle times are published on manufacturer's Web site with links provided to shippers for real-time delivery information.

Proof of delivery - Work with shippers to provide proof of delivery online. Ultimate goal is elimination of proof of delivery because shipper always delivers when promised.

Communicating logistics cost reduction schemes - Know the logistics issues of manufacturers and wholesalers and try to increase total supply chain efficiency through a variety of means including better shipping and ease of receiving.

Sales/support productivity

Pre-sales support - Provide qualified leads, sales literature, field support, training and other pre-sales programs/aids to help wholesalers improve sales growth. Provide a Web site that offers product specs, dealer locator, FAQs, MSDS, CMTRS. Know sales history, projected sales and assist in implementation of pre-sales programs where appropriate.

Post-sales support - Goal is to have 98% of wholesaler technical support calls resolved on the first call and all support calls resolved in 24 hours (resolution is defined as an agreed upon solution and not necessarily execution of the resolution). Provide responsive, knowledgeable technical support via the phone, fax and Internet including installation data, technical manuals, FAQs and troubleshooting. Provide opportunity to sell upgrades and service parts/kits where appropriate. Provide clear, written warranty response policy and comply with the policy 100% of the time. Provide clear, written defective product return resolution policy and comply with the policy 100% of the time. Communicate defective product problems immediately.

Marketing support - Provide competitively priced products, research on customers/markets, product breadth and depth, specific products/brands for specific channels where appropriate, brand support, etc. Conduct customer satisfaction surveys annually to gauge wholesaler satisfaction with programs, processes, products, support, etc.

Business support - Develop annual business plans with wholesaler partners, which are reviewed quarterly with mutually agreed upon goals. Have willingness and expertise to discuss industry issues such as supply chain activities, channel conflict, etc. Provide quarterly performance report card (fill rate, lead times, shipping accuracy, etc.) to wholesalers. Use companywide functional resources to support wholesalers (logistics, IT, etc.). Belong to and participate in ASA.

Links

• American Supply Association