MANAGING SUPPLY CHAIN PERFORMANCE

Transcription

1 MANAGING SUPPLY CHAIN PERFORMANCE

2 RIRL Bordeaux September 30th & October 1st, 2010 RIRL 2010 The 8th International Conference on Logistics and SCM Research BEM Bordeaux Management School September 29, 30 and October 1st 2010 Managing the Supply Chain Using the Cash-to-Cash Metric Ted Farris University of North Texas, United States Farris@unt.edu Franz Staberhofer FH OÖ Upper Austria University of Applied Sciences, Austria Franz.Staberhofer@fh-steyr.at Heimo Losbichler FH OÖ Upper Austria University of Applied Sciences, Austria Heimo.Losbichler@fh-steyr.at Abstract There are many metrics available within a firm which may be used to help manage the firm toward achieving its objectives. Firms seeking supply chain improvements must develop metrics between firms. This paper provides an overview of the cash-to-cash concept. It begins by explaining how to calculate cash-to-cash. It then addresses the research question How can the cash-to-cash metric be used to help improve the profitability of the supply chain? First, it discusses how to leverage the three key variables to improve cash-to-cash performance. It considers the link between cash-to-cash performance and firm profitability as well as how to benchmark using the metric. Finally it identifies the premise behind WACC or inventory arbitrage and offers managerial considerations. Key words: cash conversion cycle, cash-to-cash, measurement, cash flow

3 RIRL Bordeaux September 30th & October 1st, : GENERAL OVERVIEW OF THE CASH-TO-CASH CONCEPT The concept of cash-to-cash is a basic financial concept. Cash-to-cash (C2C), or cash conversion cycle, is a composite metric that has been described as the average days required to turn a dollar invested in raw material into a dollar collected from a customer. (Stewart, 1995). Put another way, C2C is the length of time a company s cash is tied up in working capital before that money is finally returned when customers pay for the products sold or services rendered (Churchill & Mullins, 2001). C2C is a unique financial performance metric that indicates how a firm is managing their capital across the supply chain. 2: THE IMPORTANCE OF THE CASH-TO-CASH CONCEPT Companies are increasingly turning to inter-organizational alliances as a key business strategy to gain competitive advantages over traditional businesses attempting to go it alone. This trend, combined with the timeless challenge of effective cash flow management, motivates this assessment of cash-to-cash (C2C) strategies in a supply chain environment. This paper addresses the research question: How can the cash-to-cash metric be used to help improve the profitability of the supply chain? The cash-to-cash metric is important from both accounting and supply chain management perspectives: It can be used for accounting purposes in the determination of firm liquidity and organizational valuation. A shorter cash conversion cycle, implying that fewer days cash are tied up in working capital and not offset by "free" financing in the form of deferred payments, results in more liquidity for the firm (Soenen 1993). Also, a shorter conversion cycle results in a higher present value of net cash flows generated by the assets and therefore, a higher firm value. For supply chain management activities, the metric serves as a universal measurement bridging the processes into and out of the firm using common accounting measurements. As the management of the supply chain evolves managers will seek metrics that measure more than just dyadic relationships. The cash-to-cash metric involves three links in the supply chain. It bridges across inbound material or finished goods activities with suppliers, through manufacturing, wholesale and distribution operations, and continues through the outbound sales activities with customers bridges material activities with 2

4 RIRL Bordeaux September 30th & October 1st, 2010 suppliers, production operations, distribution functions, and outbound sales activities; it becomes one of the first multiadic metrics that may be used to further supply chain management. Todd Ackerman, director of the Performance Management Group states, "We find this metric of great value, and we emphasize it. Only one-third of the companies I encounter have any notion of it at all. The Chief Information Officer can use it to help create a dashboard, a series of metrics that drives the organizational behavior required to optimize the business model." (Slater 2000 Over the years, there have been several research studies that have examined C2C and its utilization by firms: Promoting Management Awareness - Beed (1981) suggests using the metric to spot inventory and accounts receivables problems. Byers et al, (1997) support using cash-tocash to manage operating assets. Hutchison and Farris (Today s CPA, 2004) and Hutchison et al, (CPA Journal, 2007) use it to guide accountants toward awareness. Performance and Benchmarking Indicator - Phillips (1999) cites cash-to-cash as an important key performance indicator. Farris & Hutchison (2002) proposed opportunities for extending cash-to-cash as a benchmark for supply chain management then (Hutchison & Farris 2003) compare cash-to-cash performance for benchmarking purposes for 5,884 companies across 31 industries. They also identified clear industry-wide changes within a petroleum supply chain (Hutchison & Farris, 2004) and Farris et al, (2005) used it to benchmark the retailing industry. Randall and Farris (2009) proposed opportunities for extending cash-to-cash as a benchmark for supply chain management. Link to Profitability and Creating Shareholder Value Soenen (1993), Ward (2004) and Skomorowsky (1988) linked cash-to-cash to profitability, earnings, and net income, respectively. Farris & Hutchison (2003) also identify the linkage. Losbichler, et al, (2008) blend cash-to-cash with EVA to identify how it may be used to create shareholder value. Optimizing Supply Chain Management - Hutchison et al, (2009) introduce what is now known as "WACC (weighted average cost of capital) or inventory arbitrage" to begin utilizing the cash-to-cash variables to help benefit the entire supply chain. Randall & 3

5 RIRL Bordeaux September 30th & October 1st, 2010 Farris (2009) further the arbitrage argument with examples using each of the key variables. This paper provides an overview of the cash-to-cash concept. It begins by explaining how to calculate cash-to-cash. It then begins to address the research question: How can the cash-tocash metric be used to help improve the profitability of the supply chain? by discussing how to leverage the three key variables to improve cash-to-cash performance. It considers the link between cash-to-cash performance and firm profitability as well as how to benchmark using the metric. Finally it identifies the premise behind WACC or inventory arbitrage and offers managerial considerations. 3: HOW TO CALCULATE CASH-TO-CASH Cash-to-cash is comprised of data readily available from publicly traded companies. The information can be gleaned from the firm s balance sheet and income statement such as the 2009 figures for Wal*Mart and Tesco shown in Table One. Table One Key Financial Figures Wal*Mart and Tesco FY2009 ($ Million) Wal*Mar Tesco t Annual Sales $408,214 $82,452 COGS $304,657 $76,051 Payables $30,451 $7,452 Inventory $33,160 $4,051 Receivables $4,144 $2,093 There are three key variables involved in the calculation of cash-to-cash: Accounts Payable, Inventory, and Accounts Payable. To calculate the measurement, first convert accounts payable, inventory, and accounts receivable into a common measurement represented in days. To convert accounts payable multiply dollars of accounts payable times the number of days in a year and then divide by the cost of goods sold. The result will be the number of days of accounts payable. Days of A/P = Accounts Payable x 365 = 30,451 x 365 = 36.5 days 4

6 RIRL Bordeaux September 30th & October 1st, 2010 COGS 304,657 Convert inventories using the same logic and the result will be the average number of days of inventory in your system. Days of Inventory = Inventory x 33,160 x = COGS 304,657 = 39.7 days To convert accounts receivable multiply dollars of accounts receivable times the number of days in a year and then divide by sales. Keep in mind that your receivables are based on the sales price but the payables and inventories are based on the cost of goods sold sans profit. Days of A/R = Accounts Receivable x 4,144 x = Sales 408,214 = 3.7 days Use these converted variables to calculate cash-to-cash by adding days of accounts receivables to days of inventories and subtracting days of accounts payable. Days of A/R + Days of Inventory Days of A/P = Days of Cash-to-Cash 3.7 Days Days 36.5 days = 7.0 Days of Cash-to-Cash The result standardizes the data into days and may be either a positive or a negative number. A positive result indicates the number of days your cash is used to finance inventory. A negative result indicates the number of days you have received cash from sales before supplier payment for inventory is required. Ultimately, the goal for most firms is a C2C as close to zero (or negative) as reasonable for a company in that particular industry. A lower C2C suggests that a firm is more efficient, since it turns its working capital over more times per year and generates more sales per money invested. It should be noted that the C2C calculation assumes that cycle time may be shortened without a resulting increase in costs or decrease in sales (Soenen 1993). Cash-to-cash may be depicted graphically as shown in Figure One. Both firms shown have almost the same number of days payables (Tesco 35.8 days; Wal*Mart 36.5 days). Even though it takes longer to receive payment from its customers, Tesco is able to offset this difference by conducting its business with half of the inventories of Wal*Mart. The net C2C situation is 14.1 days better for Tesco and a higher profit margin. Since each variable must be 5

7 RIRL Bordeaux September 30th & October 1st, 2010 viewed in the context of a firm s mission and market, interpretation of these results is limited; yet examining all three variables in combination provides a clear understanding of C2C for a company. 6

8 RIRL Bordeaux September 30th & October 1st, 2010 Figure One Graphic Representation of Cash-to-Cash 4: MANAGING WITH CASH-TO-CASH Many firms are aware of the merits of computing their C2C. The underlying attraction of improving C2C is that a reduction in C2C days will lead to operational and financial improvement. Each firm seeks to obtain a proper mix between the amount of resources deployed to working capital and those to capital investments. Thus, there is an on-going trade-off between operational decisions to lengthen the C2C cycle (which increases liquidity required), and financial decisions to shorten the cycle (which decreases liquidity required). There are many managerial implications to using the C2C metric. First, it serves as a measure of change across time for variables that reach across functional silos. Dell Computer Company reports C2C changes in the company quarterly financial reports to the stockholders. Second, it can be beneficial as a means of setting goals for improvement within the firm and the supply chain. Third, it may be beneficial as a means of setting cross-functional goals for the company. Fourth, it is critical for the manager to understand the company s performance relative to companies within the same industry. Fifth, understanding how the metric has changed over the years, offers insights about which variables offer the greatest leverage 7

9 RIRL Bordeaux September 30th & October 1st, 2010 points and opportunities for improvement. Even if an individual company does not manage its C2C, their suppliers and customers may use it and their actions will directly impact the firm that does not. Managing the C2C cycle involves an effort that should have both a crossfunctional approach within the company and a collaborative approach between the company, immediate customers, and immediate suppliers. Many of the successful management techniques to improve C2C are a result of implementing basic principles. The biggest concern of cash-to-cash management is the potential for one firm to suboptimize the supply chain by improving their cash-to-cash numbers at the expense of trading partners. Doing so may threaten the financial livelihood of the partners, by increasing their costs or potentially driving them into bankruptcy. It is important, therefore, to collaboratively utilize this metric through such activities as WACC or inventory arbitrage for the good of the supply chain to drive down costs, share risk, and increase profitability. There are three primary leverage points to manage cash-to-cash: extending Accounts Payable days, reducing Inventory days, and reducing Accounts Receivable collection days. Adjustments to these variables must be considered collectively, since changes in one variable do not have a one-to-one day relationship with the others. In today s highly competitive global supply chains, enlightened managers recognize that actions which do not consider the ethical and financial consequences of their decisions may lead to adverse consequences ranging from adverse publicity to having suppliers and customers abandon them. 4.1: Extend Average Accounts Payable One approach to improving the cash-to-cash metric is to extend average accounts payable associated with inventory and therefore, obtain interest-free financing. There are many ways to accomplish this. A firm can utilize electronic payment for raw materials, inventory, wages, and expenses so that payment is made at the last possible date. A firm may also make scheduled partial payments rather than one full payment. Consider changing the frequency of employee payroll payments from weekly to monthly. An additional idea would be to extend payments by utilizing interest-free credit cards or lines of credit. Finally, sales commissions could be credited when accounts receivables are paid rather than at point of sale (Walz 1999). The goal 8

10 RIRL Bordeaux September 30th & October 1st, 2010 of all the strategies is to control and limit disbursement of cash until the last possible moment. See Boardman & Ricci (1985), Schaeffer (2007), and Bates et al, (2009) for further opportunities. 4.2: Reduce Inventory Days of Inventory Many outside the firm view inventory as a barometer of efficiency. Specifically, evaluations should be made regularly regarding Reorder Points (ROP) and Economic Order Quantities (EOQ). Many inventory strategies can be utilized to improve this variable for the C2C model. These include: real-time inventory tracking, Collaborative Planning, Forecasting, and Replenishment (CPFR), and synchronizing supply/demand planning. For example, using advanced technology such as RFID and its associated hardware and software to provide realtime inventory information throughout the supply chain can be a win-win for all members. Not only can total inventory in the system be reduced, but sales can grow as the in-stock rate increases. Consider the overall supply chain impact of shifting inventory in the supply chain. 4.3: Reduce Average Accounts Receivable Expediting receivables collections is the final leverage point for improving the cash-to-cash metric. While the objective with accounts payable was to control and limit the expenditure of cash until the last possible moment, the goal with accounts receivable is to speed cash collection. The days-sales-outstanding term captures the ratio of accounts receivable to average-daily sales and thus provides a "days" measure of outstanding receivables (Stewart 1995). To encourage faster payments, discount terms appear to be the one of the most effective mechanisms to increase receivables collection (Boardman and Ricci, 1985). There is also evidence that companies with low days-sales-outstanding tend to follow up quickly on delinquent accounts (Stewart 1995). Further, interest could be assessed on delinquent accounts and future orders for delinquent customers could require COD (Cash On Delivery) payments. Other approaches for expediting receivables include using lock boxes, where post office boxes are obtained in close proximity to customers, the boxes are serviced daily, and deposits made with banks to company accounts. Another idea is to require full payment at time of 9

11 RIRL Bordeaux September 30th & October 1st, 2010 order or to require a large deposit. Acceptance of electronic payments from customers allowing for automatic deposit of payments would also expedite receivables. Or in today s environment, require electronic transfer so there is no float. Additionally, customers could be provided pre-addressed, stamped envelopes (Walz 1999). While these suggestions for improving the C2C variables are not all-inclusive, implemented separately or together they can improve cash-to-cash. Firms are encouraged to determine their own approaches to improving C2C and its variables within the context of their firm s mission and market. 5: CASH-TO-CASH AND PROFITABILITY Soenen (1993), Ward (2004) and Skomorowsky (1988) linked cash-to-cash to profitability, earnings, and net income, respectively. Farris & Hutchison (2003) also identify the linkage. Losbichler et al, (2008) blend cash-to-cash with EVA to identify how it may be used to create shareholder value. Preliminary work by the author investigating the relationship between cash-to-cash performance and profitability has determined that 20 out of 30 industries investigated had a direct relationship where better cash-to-cash performance directly correlated to higher profitability. Seeking to determine causes, the author initially considered those industries where there is not a direct correlation. The industry with the best cash-to-cash performance, Eating and Drinking Places, did not have a direct correlation of profitability to performance. It can be conjectured that the reason behind this lack of relationship is that due to the nature of the industry all participants operate utilizing the same logistics model; food needs to be fresh (thus lower inventories), receivables tend to be handled the same regardless of the level or prestige of the restaurant, and the traditional invoice-check accounts payable system is universal. Further investigation in this area is merited to draw more concrete conclusions. 6.0 BENCHMARKING USING CASH-TO-CASH The C2C measures may also offer useful and readily available benchmarking data. Farris & Hutchison (2002) proposed opportunities for extending cash-to-cash as a benchmark for 10

12 RIRL Bordeaux September 30th & October 1st, 2010 supply chain management then (Hutchison & Farris 2003) compare cash-to-cash performance for benchmarking purposes for 5,884 companies across 31 industries. They also identified clear industry-wide changes within a petroleum supply chain (Hutchison & Farris, 2004). Farris et al, (2005) used it to benchmarking the retailing industry. Randall & Farris (2009) proposed opportunities for extending cash-to-cash as a benchmark for supply chain management. Firms in the past had difficulty obtaining financial data from other companies and coming up with benchmarks. The earliest known compilation of benchmark C2C measurements features data from a study by Pitiglio, Rabin, Todd, & McGrath (2000) which summarized the metric for more than 320 technology-based companies. Today, data is readily available and computer technology expedites the computation of any public firm s C2C. Data may also be obtained from trade organizations such as WERC (Food Logistics, 2008). Professionals seeking to improve the supply chain with their suppliers and customers may use C2C as a benchmark to begin investigation of opportunities. The process for improvement as described in Hutchison et al, (2007) includes: Step 1: Step 2: Step 3: Step 4: Step 5: Step 6: Determine C2C variables for the company as well as competitors in the same industry. Benchmark company position relative to their respective industry. Compare company performance and determine where there are large differences from industry leaders. Quantify the value of changing one day for each variable. Determine C2C variables for key suppliers and key customers. Identify where there are significant differences between trading partners for offsetting variables (Accounts Receivable vs. Accounts Payable). Determine the financial impact of aligning (changing) the offsetting variables and seek a gain/gain share with trading partners. 6.1: Benchmarking By Industry Each industry will differ in their cash-to-cash performance. It is possible to group some industries based upon each specific variable. (See Farris & Hutchison 2003 for groupings). 11

13 RIRL Bordeaux September 30th & October 1st, 2010 For example, the Construction Industry has a high number of days of inventory (time to construct a building can accumulate inventories for up to 6 months), low accounts payable (since work crews tend to be paid on a weekly or sometimes daily basis) and low accounts receivable (builder is paid quickly by the finance company after the sale is completed). The industry with the best cash-to-cash performance is Eating and Drinking Places with the shortest average cash-to-cash performance of any industry at -8.2 days. The reason is the nature of the business; most restaurants have fresh food so the average days of supply of inventory are low. Customers tend to pay for meals with cash or credit cards so accounts receivables are low, and suppliers are paid through the traditional invoice-check method. 6.2: Benchmarking By Company One may drill down even further to investigate how a company is performing within a specific industry. Consider where your company is positioned overall in the industry and seek out primary difference between the better performers and your company as an indicator of potential changes in your business practice. 7: GUIDING SUPPLY CHAIN MANAGEMENT MANAGERIAL IMPLICATIONS As management of the supply chain continues to evolve, the cash-to-cash metric is one of the currently available measurement tools to transform the relationships between firms and functions of the supply chain into a value chain by helping to synergistically optimize the entire process through a systems approach. One of the most important aspects of supply chain management involves increasing the efficiency of financial (funds) flows throughout the chain. The quicker goods move through the supply chain, the faster members will be paid, which increases cash flow. To examine this process in more detail, the C2C process needs to be further understood. Hutchison et al, (2009) introduce what is now known as "WACC or inventory arbitrage" to begin utilizing the cash-to-cash variables to help benefit the entire supply chain. Randall & Farris (2009) further the arbitrage argument with examples using each of the key variables. Because chain members have differing cost and revenue structures, they also have heterogeneous gains in capturing benefits from collaboration (Lee 2000). Using the precept that one company s accounts payable is another company s account receivable, and that each 12

14 RIRL Bordeaux September 30th & October 1st, 2010 company holds inherent advantages (such as lower weighted average cost or lower inventory carrying cost), there are opportunities to further manage the supply chain. Through proper management of these relationships, these inherent advantages can be used to the benefit of both trading partners. By working in an integrated fashion to shift costs to the company with the inherent advantage, profits are increased for all companies, and total supply chain costs can be reduced. In addition, new delivery channels for remittances (Isaacs 2009), online, prepaid cards, and mobile, offer additional use of technology to manage faster payment. If used properly, the cash-to-cash metric may result in reduced supply chain structure costs, increasing profitability for supply chain partners, and potentially driving out cost for the end consumer. 8: SUGGESTIONS FOR FUTURE RESEARCH There are many research questions that may be addressed to assist firm management and enhance C2C. An important research question would be to determine how outside influences such as technology and the economy have influenced improvements of the key variables of C2C. Future analysis within industries themselves may also offer further knowledge into developing realistic expectations of the C2C metric based on a particular industry, type of supply chain or business process, product value, and size of a company. As C2C permeates through the supply chain, there are also research questions to explore concerning power in the channel and the influence of cash management on a trading partner s C2C cycle and profitability. For companies that appear to be very successful in terms of their C2C cycles, case based research could provide insights beyond that gained from analysis financial data. 9: CONCLUSIONS The cash-to-cash metric is becoming an important measure as it bridges across inbound material activities with suppliers, through operations, and the sales and outbound logistics activities with customers. This paper provided an overview of the cash-to-cash concept. It began by explaining how to calculate cash-to-cash then addressed the research question: How can the cash-to-cash metric be used to help improve the profitability of the supply chain? It discussed how to leverage the three key variables to improve cash-to-cash performance. It considered the link between cash-to-cash performance and firm profitability 13

15 RIRL Bordeaux September 30th & October 1st, 2010 as well as how to benchmark using the metric. Finally it identified the premise behind WACC or inventory arbitrage and offered managerial considerations. Research suggests that each firm may possess comparative advantage in its weighted average cost of capital (WACC) or inventory carrying cost (ICC), that may be exploited synergistically throughout the supply chain (Moss & Stine, 1993).Cash-to-cash may be used as the primary driver to identify opportunities. By sharing data, all trading partners may realize efficiencies that ultimately improve their cash flows and profitability. 10: ENDNOTES Warehouse Metrics Study Available From WERC, Food Logistics, June 2008, Issue 105, p.8. Bates, Thomas W., Kahle, Kathleen M., and Rene M. Stulz, (2009) Why Do U.S. Firms Hold So Much More Cash than They Used To? Journal of Finance, October, Volume 64 Issue 5, pp Beed, Teresa, (1981) Using Operating Cycle Figures To Spot Inventory And Accounts Receivable Problems, Montana Business Quarterly, Volume 19, No 3 (Autumn), p. 23. Boardman, Calvin M. and Kathy J. Ricci, (1985) Defining Selling Terms: Economics Of Delaying Payment-How Does Your Industry Compare?, Credit & Financial Management, Volume 87, No. 3, pp Byers, Steve S., John C. Groth, and Marilyn K. Wiley, (1997) Managing Operating Assets To Create Value, Management Decision, Volume 35, No. 2, p.133. Churchill, Neil C., and John W. Mullins, (2001) How Fast Can Your Company Afford To Grow? Harvard Business Review, May, pp Farris II, M. Theodore and Paul D. Hutchison, (2002) Cash-To-Cash: The New Supply Chain Management Metric, International Journal of Physical Distribution & Logistics Management, Volume 32, No s 3-4, pp Farris II, M. Theodore and Paul D. Hutchison, (2003) Measuring Cash-To-Cash Performance, The International Journal of Logistics Management, Volume 14, No. 2, pp Farris, M. Theodore, Paul D. Hutchison, and Ronald W. Hasty, (2005) Using Cash-to-Cash To Benchmark Service Industry Performance Journal of Applied Business Research. Volume 21, No. 2, pp H. L. Lee, (2000) Creating value through supply chain integration, Supply Chain Management Review, September/October, pp.30-36; as cited in T. M. Simatupang and R. Sridharan. (2005) An integrative framework for supply chain collaboration, The International Journal of Logistics Management, Volume 16, No. 2, pp Hutchison, Paul and M. Theodore Farris II, (2003) Cash-to-Cash In The Oil Industry: Assessment and Benchmarks, Oil, Gas, and Energy Quarterly, Volume 51, No. 3, pp

16 RIRL Bordeaux September 30th & October 1st, Hutchison, Paul D. and M. Theodore Farris II, (2004) Managing The Cash-To-Cash Cycle To Increase Firm Value, Today s CPA, Volume 31, No. 5 (March/April), pp Hutchison, Paul D., M. Theodore Farris, and Susan B. Anders, (2007) Cash-to-Cash Analysis and Management, CPA Journal. August, pp Hutchison, Paul D., Farris II, M. Theodore, and Gary M. Fleischman (2009) Supply Chain Cash-to-Cash, Strategic Finance, July, Volume 91 Issue 1, pp Isaacs, Leon (2009) New delivery channels for remittances: Where do the opportunities lie? How will new technologies change the face of this rapidly expanding market? Journal of Payments Strategy & Systems, August, Volume 3 Issue 3, pp Losbichler, Heimo, Mahmoodi, Farzadand Markus Rothboeck (2008) Creating Greater Shareholder Value from Supply Chain Initiatives, Supply Chain Forum: International Journal, Volume 9 Issue 1, pp Moss, J.D. and Stine, B. (1993), "Cash conversion cycle and firm size: a study of retail firms", Managerial Finance, Volume 19 No. 8, pp Pitiglio, Rabin, Todd, & McGrath (PRTM), (2000) PRTM Survey: Top Performers Cut SCM Costs To 4% Of Sales, MDM 29.16, Aug The Performance Measurement Group, LLC (PMG), a subsidiary of management consultants PRTM, released results of the first survey in its online Supply-Chain Management Benchmarking Series ( Randall, Wesley S. and M. Theodore Farris, (2009) Supply Chain Financing: Using Cash-to- Cash Variables to Help Align the Supply Chain The International Journal of Physical Distribution & Logistics Management. Volume 39, No. 8, pp Randall, Wesley S., and M. Theodore Farris, (2009) Utilizing Cash-to-Cash to Benchmark Company Performance Journal of Benchmarking, Volume 16, Issue 4, pp Schaeffer, Mary S, (2007) Using accounts payable to improve cash flow, Journal of Corporate Accounting & Finance, November/December, Volume 19 Issue 1, pp Skomorowsky, Peter, (1988) The Cash To Cash Cycle And Net Income, The CPA Journal, Volume 58, No. 12 (December), pp Slater, Derek, (2000) By The No s, Supply Chain Best Practices Issue of CIO Magazine, Volume 13, No. 16 (June 1), p.34. Soenen, Luc A., (1993) Cash Conversion Cycle And Corporate Profitability, Journal Of Cash Management, Volume 13, No.. 4, p.53. Stewart, Gordon, (1995) Logistics Supply Chain Performance Benchmarking Study Reveals Keys To Supply Chain Excellence, Information Management Volume 8, No.. 2, pp Walz, D., (1999) On-Line Lecture, ( Ward, Peter, (2004) Cash-To-Cash Is What Counts, Journal of Commerce, (February 16), p.1. 15

17 RIRL Bordeaux September 30th & October 1st, 2010 RIRL 2010 The 8th International Conference on Logistics and SCM Research BEM Bordeaux Management School September 29, 30 and October 1st 2010 Mesures d évaluation de la performance sur la différenciation retardée: études de cas dans les industries alimentaires Karine Araújo Ferreira Université Fédérale de Ouro Preto (UFOP) - Brésil karine@decea.ufop.br Rosane Lúcia Chicarelli Alcântara Université Fédérale de São Carlos (UFSCAR) - Brésil rosane@dep.ufscar.br Gisele de Lorena Diniz Chaves Université Fédérale du Espírito Santo (CEUNES/UFES) - Brésil giselechaves@ceunes.ufes.br Résumé La différenciation retardée, qui consiste à repousser la configuration finale et/ou le déplacement de produits jusqu à ce que la commande du consommateur soit reçue, est une stratégie qui a connue une montée en puissance ces dernières années. Ce travail cherche comment la différenciation retardée est appliquée dans les entreprises de l industrie alimentaire et quelles sont les mesures de performance passibles d être utilisées afin d évaluer les résultats de son application. A cette fin, six études de cas ont été menées dans des entreprises productrices de jus et de fruits en conserves. Parmi les résultats obtenus, il est décrit les mesures de performance identifiées dans l évaluation de la différenciation retardée. Mots-clés: mesures de performance, différenciation retardée, industrie alimentaire. 1

18 RIRL Bordeaux September 30th & October 1st, Introduction Le milieu socio-économique actuel mondial exige des chaînes d approvisionnement d être capables de s adapter et de répondre rapidement aux marchés caractérisés par des exigences telles que : minimisation des coûts, différenciation des produits, fiabilité, réduction des délais de livraison, amélioration du contrôle de la qualité, grande flexibilité et diversité. Dans ce sens, la gestion de la chaîne d approvisionnement ou Supply Chain Management (SCM) se distingue en introduisant des nombreuses initiatives et pratiques qui ont changé les façons de faire et de gérer les processus des affaires tout au long de la chaîne d approvisionnement. Parmi ces initiatives et pratiques vérifiées, se trouve la différenciation retardée, qui consiste à retarder au maximum la configuration finale et / ou déplacement de produits et services, jusqu à ce que la demande soit connue. L objectif est d avoir un produit commun (ou base) dans la chaîne d approvisionnement pour la phase de production poussée et de procéder à la différenciation au plus près possible de la production tirée. Ces dernières années, le sujet a attiré l attention de nombreux chercheurs et professionnels de pays différents. Depuis que le concept de différenciation retardée à été défini dans la littérature de marketing par Alderson en 1950, plusieurs travaux traitant du sujet peuvent être rencontrés dans divers secteurs comme la logistique, la production, le projet de produit et plus récemment, dans la chaîne d approvisionnement (YANG et al., 2004a). Malgré l attention croissante apportée au sujet, son application pratique est encore réduite et la plupart des études se limitent à des révisions théoriques ou à l élaboration de modèles mathématiques et de simulation. De plus, les résultats de son application sont peu connus, et plus particulièrement dans l industrie alimentaire brésilienne où le concept est encore peu discuté. Une des principales causes de cette méconnaissance des impacts stratégiques est due, entre autre, au manque de mesure de performance pour évaluer la différenciation retardée dans les entreprises. Malgré les recherches de nombreux auteurs décrivant les différentes mesures d évaluation de la performance logistique et de la chaîne d approvisionnement, il existe peu de travaux qui préconisent l utilisation de mesures adéquates pour évaluer l impact sur des stratégies comme la différenciation retardée. Ainsi cette étude cherche à répondre comment la stratégie de différenciation retardée est appliquée dans les entreprises de l industrie alimentaire et quelles mesures de performance peuvent être utilisées pour évaluer les résultats de son application. Pour atteindre les objectifs de cette recherche, six études de cas exploratoires ont été menées dans des entreprises de fabrication de jus et de fruits en conserves, sachant que trois d entre elles ont comme principale activité la fabrication de jus d orange et trois autres, la fabrication de dérivés de 2

19 RIRL Bordeaux September 30th & October 1st, 201 tomate. Des entrevues personnelles ont été réalisées dans chaque entreprise, la plupart avec les responsables des activités des secteurs de la production et de la logistique. La deuxième partie de cet article présente les principaux concepts et variantes de différenciation retardée identifiés par la révision de la littérature. Ensuite, dans une troisième partie, il est décrit l évaluation de la performance de la différenciation retardée, détaillant les principales mesures de performance pour évaluer cette stratégie, identifiées dans la littérature. Les résultats de ces études de cas réalisées dans les six entreprises de jus et de fruits en conserve sont analysés dans une quatrième partie. Enfin seront présentées les considérations finales du travail, et suivront les références bibliographiques. 2 Différentiation retardée : définition et variantes La différenciation retardée est une pratique de plus en plus répandue dans la littérature académique et dans ses applications pratiques. Le concept fut initialement proposé par Alderson (1950) comme une solution pour changer la forme, l identité ou la localisation de produits le plus tard possible dans les processus de fabrication et de distribution physique. L objectif était de réduire les risques liés à la manutention des produits en les centralisant jusqu au dernier instant possible ou en les maintenant indifférenciés jusqu au dernier point du flux des marchandises. Ainsi, retarder le déplacement du produit fut appelé «différenciation retardée dans le temps» (time postponement), alors que dans le cas du produit elle fut nommée «différenciation retardée de la forme» (form postponement). En 1965, Bucklin incorpora plus de détails au travail d Alderson, il a étudié les limites de l application de la stratégie et créa le concept opposé à la différenciation retardée, le Principe de la Spéculation (Principle of Speculation). Le principe consiste à finaliser les opérations le plus tôt possible dans le procédé de fabrication (BUCKLIN, 1965). Les travaux d Alderson et Bucklin sur la différenciation retardée étaient visionnaires à l époque, mais les lead times de la production et de la distribution ont rendu difficile l application du concept et n ont pas reçu toute l attention méritée des industriels de l époque. Après 1965, peu de travaux ont traité le sujet, et le thème a été traité seulement à partir des années 80 par Zinn et Bowersox (1988) qui proposèrent que la différenciation retardée soit séparée en cinq éléments distincts, chacun avec sa propre structure. En plus de la différenciation retardée dans le temps, l auteur formalise quatre types de différenciations retardées de la forme, à savoir : 3

20 RIRL Bordeaux September 30th & October 1st, 201 Différenciation retardée d étiquetage : dans cette stratégie, les produits sont stockés sans étiquette identifiant la marque. Celle-ci est seulement fixée une fois que le produit est vendu sous une des différentes marques que l entreprise possède. Différenciation retardée d emballage : le produit n est emballé qu après avoir été vendu, selon sa taille, la quantité ou le type d emballage. Différenciation retardée du montage : dans ce cas, ce n est pas seulement l emballage, le montage du produit est lui aussi retardé jusqu à ce que l entreprise reçoive la commande du client. Différenciation retardée de la fabrication : seule la fabrication est réalisée après la réception de la commande. Bowersox et Closs (1996) définissent deux types de différenciation retardée : la différenciation retardée de fabrication (ou de la forme) et la différenciation retardée logistique (dans le temps). La première consiste à fabriquer un produit de base ou standard en quantité suffisante pour réaliser des économies d échelle, et à réaliser les caractéristiques finales à partir des commandes passées par les consommateurs. Le deuxième type consiste lui à centraliser les stocks des différents types de produits finis, et lorsque la commande est passée, les produits sont transportés directement au distributeur ou au consommateur. Pagh et Cooper (1998) s accordèrent sur quatre stratégies de différenciation retardée, pour la chaîne de distribution, dans une matrice 2x2 (Figure 1). Cette matrice, différenciation retardée de la forme, est appelée différenciation retardée de fabrication (manufacturing postponement) et différenciation retardée dans le temps est appelée différenciation retardée logistique (logistics postponement). Ces quatre stratégies sont donc une combinaison entre la différenciation retardée de fabrication et de la logistique appelée également de différenciation retardée totale, dans le cas contraire elle sera nommée de stratégie de spéculation complète. Il est important de préciser que le choix de la meilleure stratégie est contraint par la position du Point de Pénétration de Commande. LOGISTIQUE Spéculation Stocks décentralisés Différenciation retardée Stocks centralisés et distribution directe FABRICATION Spéculation Fabrication sur stock Différenciation retardée Fabrication sur commandes Stratégie de spéculation totale Stratégie de différenciation retardée de fabrication Stratégie de différenciation retardée logistique Stratégie de différenciation retardée totale 4