Breaking the supply chain language barrier

Even the most common words in a supply chain manager's vocabulary may not hold the same meaning for everyone. Differences in national languages, industries, and individual companies' internal cultures are just some of the factors that influence what we mean when we use such terms as "cash-to-cash cycle time" or "in-transit visibility."

That's why more than 20 supply chain practitioners, consultants, and academics came together earlier this year to develop mutually agreed definitions for a number of supply chain metrics.

APQC (previously known as the American Productivity & Quality Center) sponsored the summit. "The purpose of this project was to take some of the pain out of trying to define processes by bringing in experts to help define a baseline," said John Tesmer, a manager for APQC, in announcing the new definitions. "We chose to pilot the supply chain section … because it was the most commonly used area and faces increasing market pressure to extract greater value."

Project members developed a comprehensive listing of each supply process with definitions and corresponding key performance indicators. Some of the processes studied included supply chain planning, procurement of materials and services, production and delivery of product, and management of logistics and warehousing.

APQC hopes that the definitions will allow organizations to clearly understand each other when discussing supply chain issues and tasks. "With the diversity and complexity of global supply chains, we often find organizations aren't on the same page when it comes to talking about even the most common processes and measurements, like inventory turns or days sales outstanding," said Karen Butner, global supply chain leader, IBM Institute for Business Value. "This project helps solve the problem of the supply chain language barrier."

The definitions are available free of charge at www.apqc.org/pcf/sc.