Tompkins Supply Chain Consortium Gets Supply Chain Management Update

Among some of the more revealing responses contained in the Tompkins Supply Chain Consortium Survey, is that nearly one-third of distribution centers (DCs) are entirely outsourced.

But the survey-based “Supply Chain Metrics Report” also suggests that supply chain managers may be expecting too much from transportation providers.

“Supply Chain Consortium data indicates that while many companies continue to have their own DCs staffed by their own employees, there is an upward trend in the percentage of DC buildings and labor being outsourced in the past two years,” said Bruce Tompkins, Executive Director of the Consortium and author of the report. “This increase signifies that more organizations are considering outsourced DCs over ones that are company-owned and operated.”

With responses from more than 100 companies across nine industries, the report reveals key metrics on annual logistics costs, DC operations, finished goods inventory turns, on-time delivery, transportation sourcing solutions and more.

Additional findings include:

• Inbound transportation metrics average 4.7 percent as a percentage of cost of goods sold and 2.4 percent as a percentage of net sales;
• Total annual logistics cost as a percentage of net sales ranges from 4.1 percent to 10.0 percent;
• On-time delivery by mode ranges from 79 percent for ocean to 97 percent for parcel and air freight; and
• Most companies have more than half of their total logistics resources in distribution, customer service and transportation.

Chris Ferrell, Director of the Tompkins Supply Chain Consortium, noted that for him, one of the key takeaways was in transportation service “variability.”

“The on-time variability in all modes, came as something of a surprise,” he said in an interview. “Irrespective of mode, carriers don’t seem to care what they are hauling. Even with air cargo, shippers are paying a premium for service they are just not getting.”

He said that shippers are partly to blame, as they do not spend enough time measuring the performance of their providers, or evaluating hidden contracting costs.

“Many of those who responded to our survey were unable to describe ‘step change’ improvements in any aspect of transport efficiency,” he said.

Additional metrics and topics will be presented during the 2012 Supply Chain Leadership Forum, August 27-29, in Denver.

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