Friday, May 23, 2014

Supply Chain Benchmarks for Chemical Companies

A 2013 PwC report (click here to read the report – PDF file) offers 2 benchmark metrics for chemical companies – inventory turns and percentage of time in which deliveries are on time and in full (OTIF).   The authors used earnings before interest and taxes (EBIT) as a percentage of sales (EBIT margins); revenue growth; inventory turns; and OTIF to group survey-responding companies into leaders or laggards with respect to the companies’ supply chain performance.  (OTIF and other information were obtained from a survey of 503 supply chain executives)

Included in the survey respondents were responses from approximately 75 chemical and process industry companies.  For these 75 companies, the PwC report shows the leader group had an average 17.3 inventory turns and the laggards 6.5.   For OTIF values, the report shows that leaders had on time, in full (OTIF) deliveries 97.5 % of the time versus 80.2% for laggards.  These metrics (inventory turns and OTIF percentages) for chemical and other processing companies can serve as excellent benchmarking goals for individual chemical companies.

Other survey respondents came from the automotive, industrial products, pharmaceutical, retail and consumer goods, technology and telecom sectors in addition to the chemical and other processing companies sector.  The survey obtained not only OTIF metrics but also responses on what companies believe work best and are most needed for good supply chain performance.   The report provides an analysis of these responses.


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