A Perfect Order?

Four industry associations have joined forces to create a set of metrics for gauging the performance of execution in production plants and warehouses.

The associations are the Manufacturing Enterprise Solutions Association (MESA) International; Order Fulfillment Council (OFC); Supply Chain Execution Systems and Technologies Group (SCE Group) of the Material Handling Industry of America (MHIA); and Warehousing Education and Research Council (WERC).

The group’s first paper was a report, “Improving Order Execution Performance: A Holistic View of Metrics across Plant and Warehouse,” which introduces the framework that the four associations will benchmark.

The framework categorizes the metrics in six major performance areas:

Customer Metrics

1. order fulfillment

2. mass customization (flexibility)

Internal Metrics

3. inventory management

4. execution productivity

General Metrics

5. quality and compliance

6. business and financial

According to the collaborative paper from the group, a perfect order index is a compilation score which measures the result of each of four major components of a perfect order:

  • delivered on-time (% of orders arriving at final destination at agreed upon time)
  • shipped complete (% of orders shipped with all lines and units)
  • shipped damage free (% of orders shipped in good and usable condition)
  • correct documentation (% of orders with accurate invoice and required documents)

The perfect order index is computed by multiplying each component for a total score, e.g., if the score is 95% for each of the four components, then the perfect order index would be 81.5%.

MESA, OFC, SCE and WERC said they will start using these metrics in 2009. The resulting research will be an extension of the current WERC Watch benchmarking studies, as well as, MESA’s Metrics that Matter series.

The paper is available to members of the four organizations and can be purchased by non-members. You can find the links for MESA, OFC and SCE at MHIA, and WERC at the Links page of the Whittington & Associates web site.