SIM Value
The Value of Supply and Inventory Management (SIM) Services (small)
Researcher:
Partner:
Kuehne + Nagel Management AG
Financed by:
Kuehne + Nagel Management AG
Motivation:
Not considered as a core competence, manufacturers are outsourcing their supporting functions such as the management of warehouses and logistical activities, and are starting to outsource tactical demand and supply planning. This has resulted in a stronger orientation of logistics service providers towards the customer benefit, taking over the responsibility for the availability of material in the customer's supply chain. This kind of service is also known as lead logistics services. It represents a new form of cooperation, leading to the situation that there are only few and very limited approaches to assess the economic value which is generated by managed integrated solutions for the service-consuming company.
Objectives and Results:
SIM Value closed this practical and research gap by developing a method to quantify the economic value for the service consumer. A developed excel tool and the corresponding project documentation display and describe a comprehensive method to show and calculate the influence of SIM services on a customer’s supply chain costs and (current) assets. Using the structure of an industry-accepted metric, the Economic Value Added (EVA), all requirements of the different target groups can be
met. This is strongly supported by the use of a reference process model for the method development. The use of the Supply Chain Operations Reference (SCOR-) Model ensured a comparable and comprehensive evaluation of the influence of SIM services on a supply chain.
Activities completed:
Several workshops have been held. A standardization of the different service modules was conducted by representing the activities using the Supply Chain Operations Reference (SCOR) Model. The interrelations with the different elements of working capital were shown. A generic approach for linking process performance to effects on working capital was developed. Sample cases were developed for a verification of the concept.