Outsourcing
OUTSOURCING of logistics func-tions
continues to grow globally. Here in the Philippines
the same thing is happening. Companies are getting convinced
more and more that it is better to leave logistics to
the experts. In addition, the prospects of capital release
from disposal of fixed assets, and of reduced costs,
are great incentives to outsource. Players in the TPL
sector are being subjected to different forces. On one
hand, more new TPL providers are setting up shop, and
in the Philippines, foreign TPL providers continue to
come in. On the other hand, a global trend is causing
TPL numbers to reduce. Benjamin Gordon of BG Strategic
Advisors (Florida) mentions seven Mega-Trends changing
the logistics industry. He lists as one of these trends
the increasing level of mergers and acquisitions activity
in the logistics sector, citing 2005 as experiencing
an all-time record high in mergers and acquisitions
activity. One of the high profile acquisitions in 2005
was that of Tibbett and Britten by Exel. No doubt, global
mergers and acquisitions will also be reflected locally.
Another Mega-Trend mentioned by Gordon is the powerful
growth exhibited by the asset-light forwarding sector.
Looking at the growth of logistics service providers,
different companies go the outsourcing route for different
reasons. Maurice Greaver, in his book called "Strategic
Outsourcing", lists various reasons. These include,
in his own words:
-
Obtain expertise, skills and technologies that
would not otherwise be available
-
Increase flexibility to meet changing business
conditions, demand for products/services, and technologies.
-
Improve operating performance.
-
Reduce costs through superior provider performance
and the provider's lower cost structure.
-
Enhance effectiveness by focusing on what you do
best.
-
Transform the organization
-
Reduce investments in assets, freeing up these
resources for other purposes
-
Improve risk management
-
Gain market access and business opportunities through
the provider's network
-
Improve management and control
-
Improve credibility and image by associating with
superior providers
-
Expand sales and production capacity during periods
when such expansion could not be financed
-
Turn fixed costs into variable costs
-
Commercially exploit the existing skills
-
Acquire innovative ideas
-
Give employees a stronger career path
-
Increase commitment and energy in non-core areas
-
Generate cash by transferring assets to the provider
-
Accelerate expansion by tapping into the provider's
capacity, processes, and system
Increase product and service value,
customer satisfaction, and shareholder value Not armed
with a survey, I would consider as the main incentives
of Philippine companies to outsource logistics those
factors which are related to:
-
Assets (reduce investments in assets)
-
Cost (turn fixed costs into variable costs, reduce
costs through superior provider performance)
Operating performance (improve operating
performance by focusing on what you do best) In the
area of performance measures, Greaver emphasizes that
performance measures must be directly related to the
reasons to outsource. He concedes that different organizations
use different measures, but considers the following
generic measures as typical and recommended for inclusion
in the portfolio of measures.
-
Productivity: measuring outputs vs inputs
-
Quality: measuring correctness, accuracy, lack
of errors/waste/rework
-
Timeliness: measuring the ability to meet deadlines
-
Cycle time: measuring elapsed time to render service
-
Utilization: measuring time invested in a specific
activity vs total time available
-
Creativity: measuring artistic achievement or the
generation of new ideas, discoveries, new products
-
Outputs: measuring the results of activities
-
Financial: measuring the achievement of financial
objectives (cost as % of sales, economic value added,
earnings per share, etc)
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New Lineup
DMAP induction
DMAP's induction of 2006 officers,
originally scheduled on Feb. 3, has been re-scheduled
to Feb. 17. To be inducted are the following: Directors
and Officers President & Director Cora Curay XVC
Logistics Vice Pres. & Director John Guillermo CDO
Foodsphere Secretary & Director Ana Rose Ochoa J
& J Treasurer & Director Gerry Ong Cheng Ban
Yek Auditor & Director Pio Bernardo Megavia Corp.
PRO & Director Ninoy Rollan TNT Express Director
Jun Gabrino Splash Director Oliver Caday Nestle Director
Danny Cabrera Zuellig Pharma Director Joseph Luat Loscam
Phils. Committee Chairpersons Sea Transport & Ports
Alain Ison Colgate Palmolive Land & Air Transport
Dina Pilapil IDS Logistics Warehousing Tino Calimon
Kraft Membership Ike Avenido Wyeth Phils. Finance Elsie
Oafallas Sr. Marketing Special Projects Joseph Luat
Loscam Academe Relations Jun Tejano Del Monte Ike Castillo
Avon The new lineup of Directors is not so new, as all
but two were among last year's Directors or Committee
Chairs. Only Oliver Caday of Nestle and Pio Bernardo
of Megavia Corp. (a Philip Morris distributor) are newcomers.
Even then, Pio Bernardo is not new, having served as
DMAP Director and Secretary during my term in 1993,
when Pio was still with San Miguel Foods. Among the
newcomers, Dina Pilapil, Tino Calimon, Ike Avenido and
Jun Tejano are first timers. Thus, the lineup provides
both new blood and good continuity from last year. Cora
Curay, of course, is a multiple Past President, dating
back to her years with Coca-Cola (when we used to call
her "Coca Cora"), up to the present time,
now that she has put up her own logistics company. Cora
provides very able leadership in all aspects of DMAP
activities. Again, DMAP has proved its flexibility and
willingness to change to suit changing needs. I am referring
to Cora's election as officer. Last year this was not
possible as the By-Laws prohibited the election of anyone
from a logistics service company as an officer of DMAP.
A recent charter change made this possible. In earlier
years, there was also a charter change (year 2000) that
allowed service provider companies to become members,
something not allowed before, as only cargo owners (manufacturers
and distributors) used to be admitted as members. As
usual, friends and business partners are invited to
the event. Expected attendees are from the shipping
lines, truckers' groups, conference sponsors, industry
allies and colleagues, the academe and government. Keynote
speakers have not yet been announced. DMAP Seminars
The schedule of seminars for the year has just been
released. It is similar to last year's schedule, except
that the Basic Warehousing Seminar has been re-named
Warehousing Seminar I and the Advanced Warehouse Management
Seminar has been re-named Warehousing Seminar II. The
reason for the re-naming is that, even though Warehousing
Seminar I contains basic warehousing material, there
are topics which are not so basic. Here is the schedule,
including the annual conference. As in the past, speakers
come from DMAP's roster of experienced practitioners,
most of whom are past Presidents of DMAP, as well as
from industry and government. Introduction to SCM Feb
23-24 Basic Shipping Course March 17 Measuring SC Performance
April 21 Shipping Immersion Course May 5-7 Warehousing
Seminar I June 15-16 Warehousing Seminar II July 21
Annual Logistics Conference Sept 14-15 The first seminar
is a short version of the Intro to SCM module given
in the DMAP-DLSU program. Expected to be speakers are
Ike Castillo, Malou Santos, Norman Adriano, all past
DMAP Presidents. In addition to the above, seminars
on Finance in Logistics and Outsourcing in Logistics
are being developed. Address inquiries and comments
to Ed Sanchez at tel. 671-8670, fax 671-4793, cell 0918-914-1689,
or email dmap@i-manila.com.ph. Those interested in DMAP
training and other activities are requested to send
their e-mail addresses.
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DMAP
Update, Service Study
DMAP Induction As an-nounced in the
last issue, DMAP's induction of Year 2006 directors,
officers and committee chairpersons will be on Feb.
17. This will be at EDSA Shangri-La. Batangas Rep. Hermilando
Mandanas and UA&P President Dr. Emil Antonio have
been invited to be the guest speakers and inducting
officers. DMAP Seminars As also announced in the last
issue, DMAP's schedule of seminars and the conference
is also repeated below, together with a few added seminars.
Introduction to SCM Feb 23-24 Basic Shipping Course
March 17 Measuring SC Performance Apr 21 Shipping Immersion
Course May 5-7 Warehousing Seminar I June 15-16 Warehousing
Seminar II July 21 Finance in Logistics August 18 Annual
Logistics Conference Sept 14-15 Outsourcing in Logistics
Oct 20 Trucking Issues Nov 24 The first seminar is a
short version of the Intro to SCM module given in the
DMAP-DLSU program. Speakers will be Ike Castillo, Malou
Santos, Norman Adriano, all past DMAP Presidents. A
Manning and Service Time Study I discuss below a recent
study that I conducted for a fast food client. It illustrates
the benefits of combining two separate studies and deriving
added value not possible with two separate studies,
let alone the cost savings by simultaneous conduct of
the two studies. The first study is a manning study
done with the use of work sampling, and the other is
a service time study. A tool that measures the % distribution
of time among different activities can be a valuable
tool for improving productivity. An example of this
is where the entities observed are workers, and the
activities are productive activities, as well as idle
time/break time. One application is that the measurements
can help set appropriate manning levels. The tool is
popular with industrial engineers and called work sampling.
If the observed share of a workers's non-productive
activities exceeds the allowed break time, then the
person is under-worked. Thus work sampling can be used
by service organizations, such as fast food shops, banks,
supermarkets, or other kinds of stores. The tool can
be quite useful where customer volumes and arrival patterns
vary day to day, and at different times of the day.
Work measurement can also be used to check if the distribution
of time among different activities is in accordance
with a desired distribution. If not, adjustments are
in order. The observations can be at pre-specified times,
or randomly determined during the period. The first
is simpler, while the second may require a random alarm
mechanism. As long as there is no bias in the pre-specified
observation times, then such option is good enough.
In the study mentioned, we determined that the client
had already been doing effective manpower reduction.
Workers had little or no non-productive slack time.
They had improved considerably vs. 8 years before where
a similar study revealed more slack time. Manpower reduction
tools used by the company were multi-tasking to make
employees more interchangeable, and use of part timers,
agency hires and sliding schedules to match customer
arrivals. An interesting observation was that no instances
were recorded with any worker using a cell phone, implying
that the company rule on cell phones was being followed.
It can be seen from the above that it was useful to
register observations about the number of customer in
the shop during the observation times. We observed the
customer volumes at different times of the day, which
could help in manning deployment. We produced customer
pattern graphs for weekdays, as opposed to weekends.
Another important tool is the measurement of customer
cycle time and customer service time. In the case of
a fast food shop, the cycle time would mean the time
elapsed from the time the customer enters, to the time
the customer leaves the stores. The customer service
time would be from the time the customer enters the
store, to the time he is about to eat. The service time
measurements could be benchmarked vs. competitors (something
that we did in 1997, but not this time), and also vs.
past observations (to see if there are improvements
or not). By themselves, the time measurements were valuable
enough, the total cycle time being relevant to the shop
facilities - tables and chairs, and the service time
important to the customers. The added value we derived
by doing "just a bit more" included the following
examples. ¥ We gathered data about utilization of
facilities, % of seats occupied and related these to
day of the week and time segment. On hind sight, we
felt that usage of tables would have been better to
record. ¥ We calculated productivity in terms of
Customers to Staff ratios for different days and time
segments. ¥ We related customer service time to
customer volume (and time segment). We noted that service
is affected by customer volume. Customer service time
during peak hours was 3.8 times the service time during
the low volume segment (before 11:30 am). Address inquiries
and comments to Ed Sanchez at tel 671-8670, fax 671-4793,
cell 0918-914-1689, or email demap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their email addresses.
Back to
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DMAP
Activities GMM
DMAP's first general membership meeting
for year 2006 was held last Feb. 16. "Balikbayan"
President Cora Curay intro-duced the new Board, Officers
and Committee Chairpersons to the members. She explained
the thrusts for 2006, namely ¥ Education & Competency
¥ Cost Efficiency & Effectiveness ¥ Rationalization,
Expansion and Regionalization of Membership ¥ Collaboration
Cora also reported on certain key events and activities,
such as the ongoing discussion with the North Harbor
truckers. Committee Chairpersons and Directors presented
the 2006 plans of the different committees and gave
updates. DMAP also launched its 2006 Conference Theme
Contest. Special talks were delivered by : Sabin Aboitiz
of Aboitiz 2Go - update about their services Ramil Maravillon
of Business Profiles Inc. - security Induction DMAP's
induction of Year 2006 Directors, Officers and Committee
Chairpersons was held last February 17 at EDSA Shangri-La.
Batangas Congressman Hermilando Mandanas and UA&P
President Dr. Emil Antonio were the guest speakers and
inducting officers. Dr. Antonio delivered an interesting
presentation of the real brighter score about the economy,
as differentiated from bleak perceptions. He also compared
the regimes of GMA with those of Marcos, Cory, Ramos
and Erap. Incoming President Cora's talk focused on
the thrusts for 2006, already listed above. Seen at
the event were friends and partners from industry. From
the shipping industry were Col. Odo–o (PISA),
Jordan Go and Samson Ang (Sulpicio), Mario Arnaiz and
Dino Diaz (Lorenzo), Jun Tan, Jonathan Tiu and Angela
Lauchengco (Solid), Toto Umali and Sally Go (NMCCLI),
and 'Barangay Negros' - J. Manalang, L. Galido, M. Imphang,
R. Alcazar, C. Domingo, J. Valdez. Representing the
truckers were Col. Rudy de Ocampo (CTAP), Teddy Gervacio
and Ed Gaerlan (INHTA). DTI-PSB was represented by Director
Pete Mendoza and Clem Paylangco. Other DMAP friends
included Prof. Henry Basilio and Jenny Llarena (UA&P),
DMAP Consultant Tet Gambito, lawyers Jannette B. Chua,
Rod Domingo, Ma. Theresa Leonardo and Ronnie Rodillas.
Joaquin Sulit represented Cong. Ed Zialcita. Also present
were sponsors Ric Nimo & Jane Ocava (Boeing), Roland
Ramos (Loscam), Anthony Beltran (Maxima), Arnel Bongco
(SSI Schaefer), Aniec Dungog (Fast Logistics), Dong
Lara (Jugro), Jovic Pellosis and Belen Quiambao (Nonpareil),
Cecille Sibayan (ABM-Computech), Narciso Reyes &
Gina Orlanes (Monheim), Jun Gatchalian & Cynthia
Villanueva (PISM), Christopher Paringit (PortCalls).
Seminars There has been a hitch in DMAP's schedule of
seminars. The first, a seminar called Introduction to
SCM, scheduled for Feb 23-24, has been postponed. The
postponement is due to email communication and scheduling
problems. The new schedule will be announced later.
Meanwhile the next scheduled seminar is the Basic Shipping
Course scheduled on March 17.
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A
Different Kind of Distribution Problem
NOT long before he died three years
ago, my older brother Bobbit and I had a short debate
about the problems of the Philippines. He said to me
that the greatest problem of the Philippines was overpopulation,
which was why there were so many people below the poverty
line.I said that I did not agree, and that the greatest
problem of the Philippines was not overpopulation, but
the lopsided distribution of wealth. Even if we could
cut the population in half overnight, we would still
have a lot of people below the poverty line, as long
as the distribution of wealth continued to be lopsided,
whichI think it would.All this is, of course, hypothetical,
and a lot would depend on how we "cut" the
population; nevertheless, we could imagine that the
question would be similar to the following question:
What would happen if the total wealth available for
distribution to the population were doubled overnight?What
I believe is likely to happen is that not everyone would
suddenly double his wealth, thereby allowing a lot of
people to climb over the poverty level marker.All our
economic, social and political systems favor the biggies
and powerful against the small, poor and disadvantaged.
These systems all move towards concentration of wealth
in a few big and powerful companies and families.There
are several groups of structures or systems that work
to perpetuate and worsen the distribution of wealth.
They work in two ways:-Diminish the total wealth to
be distributed.-Cause concentration of wealth in a few.
These structures or systems include: -Economies of scale.
-Bias in favor of biggies. Control by biggies over mechanisms
that spread wealth. -Investors that bring out wealth.
-Monopolies and cartels, including laws that support
them, and the lack of laws to control and prevent them.
- Crooks¥ InheritanceEconomies of scale are a natural
advantage of the big. Economies of scale result from
the spreading of fixed costs over a big volume.In addition
to the natural advantage of economies of scale, structures
and systems favor the big.In business, big businesses
have more access to funds and at lower interest cost.
Money begets money, therefore biggies have more opportunities
to make money grow. Big bank deposits earn more interest.
Many kinds of profitable business need big investments.Big
businesses and rich individuals can reduce taxes and
other payments legally or illegally; legally by hiring
tax consultants and lawyers, illegally by bribery, regulatory
capture, use of dummies or other illegal means.Business
also always decides against the small wage earners whenever
the question of a wage increase comes up. Wage increase
is always a last priority. Whereas wage increases are
a way of distributing wealth, and should help develop
the markets for goods, they receive little support from
business owners.The phenomenon of malls is another example
of wealth concentration. The small sari-sari stores
are disappearing. Wealth is being concentrated in the
mall owner, not the store owners, whose revenues are
milked via 'hard wiring' to their cash registers. Many
investors, both foreign and domestic based, bring out
huge amounts for deposit in foreign bank accounts. I
fail to understand the frequently used scare of driving
away the foreign investors in order not to give wage
increases. All foreign investors always intend to take
out of the country more than they bring in. There are
also domestic-based investors that bring out wealth
for deposit in foreign bank accounts.There are also
crooks who act to concentrate wealth in a few (themselves).
Some of these crooks are part of big business, some
are part of the government, some are in the military.Big
companies in an industry can get together and form a
cartel to control the industry, as done, for example,
in the oil, pharma and shipping industries. There have
been laws that encourage monopolies, even create them.
During the Marcos years, Marcos issued a PD giving the
PPA extraordinary powers, such as having a cut in the
rates it regulates. Erap tried to set up a cargo handling
monopoly in the North Harbor via EO59. The shipping
lines cartel continues.There is no effective anti-trust
law. Bills on competition have not succeeded in the
legislature. Many of the legislators have business interests
to protect. Regulatory capture also perpetuates cartels.Probably
the biggest force that perpetuates concentration of
wealth in a few is inheritance. For some undeserved
reason, newborn scions of the rich get a huge head start,
inheriting riches without lifting a finger.As we can
see, the lopsided distribution will continue. There
are very few forces that push for distribution, such
as wage orders and lotteries. They are too weak and
their effect is too small. Technology has been helping
the small as "equalizer" (cell phones, internet)
but the effects are too small. It seems that there is
a need for a giant Robin Hood who will do things legally.This
is indeed a different kind of distribution problem.
Can logistics and SCM principles help?Address in! quiries
and comments to Ed Sanchez at tel. 671-8670, fax 671-4793,
cell 0918-914-1689, or email dmap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their e-mail addresses.
Back to
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Reverse
Logistics
AN area of logistics often overlooked
and not given the importance it deserves is Reverse
Logistics, also called Returns Management. It can actually
be a source of competitive advantage.Reverse logistics
probably occurs in all forward logistics systems. Different
reverse logistics processes are present depending on
the type of returned materials or items. There are at
least three types. Defective, Damaged, Dangerous Materials.
Returned materials are no longer in their useable state
and cannot be used anymore in their intended destinations.
Marketing or Logistics Returns. Returned materials remain
in useable form but are in excess in their forward locations.
Returnable Items. Returned materials are returnable
items which are part of the total logistics system.The
first group includes consumer returns (due to defects),
product recalls, damaged products, and environmental
returns. Items may lose a large part or all of their
value, leaving scrap value. The total cost impact can
range from relatively small to huge.Consumer returns
are initiated by product users. Defect can be specific
to one piece of merchandise, or a batch, or a model.
Damage returns are typically initiated by retailers
and damage may occur in transit or during storage. Thus
damage is typically specific to one or a few items of
merchandise. Product recalls and environmental returns
are initiated by the manufacturer. Product recalls are
initiated because of a safety or quality issue. Environmental
returns involve the disposal of hazardous materials
to abide by environmental regulations. Thus product
recalls and environmental returns can affect a whole
manufacturing batch, or even a model or formulation.
Recall can be a massive operation.The second group includes
situations where products have to be moved back in order
to reposition them, for example, due to low sales. The
products retain their value.The third group includes
returnable packaging and containers (bottles, plastic
cases, pallets). These are sometimes called asset returns.Returnables
are the most predictable type of returns as they are
part of the normal logistics process. One of the important
aspects of returnable systems is the determination of
the optimal quantity of circulating inventory, which
will be the basis of replenishment / additional quantities
for volume growth and replacement for losses, breakage,
damage and attrition. A key problem is how to establish
inventory figures.Manufacturers of beer, soft drinks
and other users of returnables have been facing this
estimation problem for decades. In my own experience,
they have been tackling this problem going back to the
1960s. I recall two examples in my own experience from
the 1960s. One was the beer bottle forecasting model
of San Miguel, and the other was when I was at Anheuser-Busch,
where I had to estimate the necessary population of
cooperage (stainless steel kegs) for Budweiser draught.
The first step was to establish the actual population
by means of a survey of some 1,000 wholesalers all over
the US.Administration of these different types of returns
requires different actions, focuses, and techniques.The
costs associated with the administration of these reverse
logistics processes differ among return types. No Agreement
on Trucking RatesI had already released my PortCalls
write-up on March 17, when something came up about the
agreement with INHTA. There was a misunderstanding,
so there was no agreement. This was why PortCalls published
my column on March 20 stating that there had been an
agreement, and a separate news item on March 22 also
stating that an agreement had been reached. After that,
PLSA President Joy Maitim came up with a proposal to
save the day. While the proposal was basically acceptable
to DMAP, there has been no response from INHTA. So,
up to now, there is no agreement. Basic Shipping Course
- Last CallLast call for this seminar. the Basic Shipping
Course, scheduled on April 21. This will be a classroom
seminar. Speakers will be from both government and the
private sector (shipping lines and shippers). Among
these are: Mr. Ric Romero from DOTC, Mr. Hector Miole
from PPA, Col. L. Odono from PISA, Ms. Joy Maitim from
PLSA., Cora Curay from XVC, Oliver Caday from Nestle.
Topics to be covered include:¥ Intro to logistics
and shipping, shipping decisions, cost impact of shipping
on logistics cost. Domestic shipping industry, statistics,
regulations, why shipping costs are high¥ Ports,
regulations, rates, international best practices. Shipping
operations, liners, trampers, impact of RA 9295, other
matters from ship owners perspective¥ Shipper's
experience with RORO shipping, collaboration initiatives.
Cargo owners perspective, bus allocation to shipping
lines, performance measurement, latest issues, trucking
component of door to door shipping. Additional reasons
why shipping costs are high.
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Cash-to-Cash
Since 1998 we have been holding an annual
forum on measuring logistics performance. Last year
we renamed our forum to measuring supply chain performance,
as we
expanded our scope from logistics to SCM.
But as early as our first seminar on measuring logistics
performance in 1997 for the SMC Group, we already mentioned
a performance measure called cash-to-cash cycle time.
Cash-to-cash cycle time actually goes beyond logistics.
The inventories element is clearly logistics, but the
payables and receivables elements are not. While payment
terms are an aspect dealt with in purchasing, which
is a traditional part of logistics, the subject of payables
is more commonly taken up under financial management.
Receivables are even more removed from logistics than
payables.
Let us review the definition.
Days of Accts Receivable = Accounts Receivable x 365
/ Sales
Days of Inventory = Inventory x 365 / Cost of Goods
Sold
Days of Accts Payable = Accounts Payable x 365 / Cost
of Goods Sold
Cash-to-Cash Cycle Time = Days of Accounts Receivable
+ Days of Inventory - Days of Accounts Payable
In fact, the cash-to-cash concept is closely related
to and similar to the concept of net working capital.
The only difference is that net working capital is
measured in absolute money terms, while cash-to-cash
is measured in days.
Net Working Capital = Accounts Receivable + Inventory
- Accounts Payable
Clearly Net Working Capital is a financial management
measure, indicating how much money is tied up in working
capital, net of payables. It indicates how well a company
uses money in its day to day operations. The longer
a company can defer payment to its suppliers, the lower
the net working capital figure; likewise the cash-to-cash
cycle time.
Cash-to-cash cycle time is a financial management metric.
But it is also a true supply chain metric. It involves
three links in the supply chain.
In the classification of logistics and supply chain
metrics that we have been advocating in our forums,
cash-to-cash cycle time belongs in the second group.
Cost
Time (Responsiveness)
Customer Satisfaction / Service Quality (Reliability)
Resources Management / Productivity
Cash-to-cash cycle time measures how fast cash paid
for raw materials gets converted into finished products,
gets sold and gets converted back to cash. It measures
time like the other time or responsiveness measures,
such as the order delivery cycle, customer inquiry response
time, and supply chain response time.
Cash-to-cash cycle time is attractive to use because
it is easy to understand and is easy to compute, with
most data needed generally available. In addition, benchmarking
across a wide range of industries is directly possible
because it only uses one unit, days.
M. Theodore Farris (University of Texas) has written
a number of papers on the cash-to-cash metric and has
been pushing this metric as the new supply chainmanagement
metric. He cites the following figures for all US industries
from 1986 to 2001.
Element 1986 2001 Improvement
Accounts Receivable 57.8 days 61.0 days ( 3.2 days)
Inventories 79.5 days 62.4 days 17.1 days
Accounts Payable 39.0 days 51.0 days 12.0 days
Cash-to-cash 98.3 days 72.4 days 25.9 days
The 3-day degradation in receivables is more than covered
by large reductions in inventories (due to logistics
success stories in the 1990s) and also in accounts payable.
Farris further reports the industries with the longest
and shortest cash-to-cash cycles.
Longest 168.3 days Construction Shortest (8.2 days)
Eating and Drinking Places
Locally the same industries might also be the worst
and best industries; but perhaps Motels will outdo Eating
and Drinking Places. If we can get hold of their financial
statements.
Farris also mentions the amazing improvements achieved
by Dell Computer.
Element 1987 2004 Improvement
Accounts Receivable 37 days 31 days 6 days
Inventories 13 days 4 days 9 days
Accounts Payable 54 days 71 days 17 days
Cash-to-cash (4 days) (36 days) 32 days
Thus Dell gets paid by its customers 36 days before
it has to pay its suppliers!!!
Basic Shipping Course - Last Call
Last call for the Basic Shipping Course, scheduled on
April 21. This will be a classroom seminar. Speakers
will be from both government and the private sector
(shipping lines and shippers). Among these are: Mr.
Ric Romero from DOTC, Mr. Hector Miole from PPA, Col.
L. Odono from PISA, Joy Maitim or Jun Tan from PLSA.,
Cora Curay from XVC.
Topics to be covered include:
* Intro to logistics and shipping, shipping decisions,
cost impact of shipping on logistics cost
* Domestic shipping industry, statistics, regulations,
why shipping costs are high
* Ports, regulations, rates, international best practices
* Shipping operations, liners, trampers, impact of RA
9295, other matters from ship owners perspective, update
on PLSA
* Shipper's experience with RORO shipping, collaboration
initiatives
* Cargo owners perspective, business allocation to shipping
lines, performance measurement, latest issues, trucking
component of door to door shipping
* Additional reasons why shipping costs are high
Back
to top
Address inquiries and comments to Ed Sanchez at tel.
671-8670, fax 671-4793, cell 0918-914-1689, or email
dmap@i-manila.com.ph.
Those interested in DMAP training and other activities
are requested to send their e-mail addresses.
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