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Average Customer Wait Time:
A Supply Chain Performance Indicator

Projecting and sustaining forces hinges on successfully establishing and managing air, ground, and sea lines of communication. These lines of communication represent the pipelines through which all classes of supply flow and often are referred to as supply chains because of the numerous links between the various nodes. Timely flow of supplies through these chains is critical to providing combat, life, and humanitarian support to the customer. In fact, speed of delivery is becoming a key indicator of logistics success. The dynamic nature of current and future operations requires constant analysis of medical materiel—down to the individual item level—transiting this pipeline. Measuring the performance of the supply chain is critical to identifying troubled segments, determining success, and assessing operational capabilities. Measuring performance requires a metric that measures the time from demand creation to demand fulfillment at the customer level.

The U.S. Army Medical Materiel Center, Europe (USAMMCE), located in Pirmasens, Germany, currently tracks average customer wait time (ACWT) for key customers deployed in remote locations such as Iraq, Qatar, and Afghanistan. Tracking this performance has provided critical information for identifying distribution challenges and supply chain bottlenecks. Once bottlenecks are identified, logisticians can take the corrective actions needed to unclog the flow of materiel and increase supply chain velocity.

Current medical materiel management systems allow for the measurement of ACWT by line item; however, no regulatory guidance delineates how to compute this metric for a supply chain. In fact, volume alone complicates this process since thousands of items flow through a supply chain on any given day. There are always exceptions to the process, and current technology that requires human interface creates circumstances that can threaten the validity of the measurement, such as receipts being processed late or not at all. Since multiple items transit a supply line, measuring a supply chain’s performance requires the use of averages. It also requires active participation by users throughout the supply chain for the measurements to be accurate. Eventually, technology will allow the use of passive processes to feed the supply tracking systems and provide more accurate real-time data. Before discussing how AWCT for a supply chain should be computed, it is important to understand how customer wait time is currently measured for an individual medical item.

Computing Customer Wait Time

Customer wait time (CWT) is measured by calculating the time between the date a requisition is created and the date that it is closed out at the same point of entry. The requisition creation date is determined by the Julian date in the document number.

CWT computation is different for stocked and nonstocked lines and will vary based on the requisition’s point of origin, flow, special handling requirements, mode of transportation, and other factors. The overall CWT can be broken down by the times associated with the various functions in the supply chain. For example, the “customer processing time” is measured from the date the requisition originates until the date the requisition is entered into the Theater Army Medical Management Information System (TAMMIS). Another timeframe, the “supply activity processing time,” represents the period between the reception of the requisition and the processing of the requisition by the supply activity. The “transportation time” is measured from the time the requisition is processed by the supply activity to the time the customer closes out the requisition.

Each of these processes can be segregated further, based on system capabilities, to track subprocesses that are associated with dates. Examples include the time from requisition receipt in TAMMIS until the time a materiel release order (MRO) is produced, the time from MRO issue to actual transport, and the time the order spends in the transportation system until it is closed out by the receiving customer. This measurement must be made for each requisition, and measurements for all requisitions must be combined to generate a perspective of supply chain trends. Combining the measurements of more than one requisition, more than one type of requisition, or more than one customer changes the CWT metric to an ACWT metric.

Computing ACWT

To compute the ACWT for stocked and nonstocked requisitions, begin by computing the CWT for each stocked item. To do this, subtract the Julian date of the original document number from the Julian date the order was received by the customer. (This date may

not be accurate if customers delay processing receipts.) To calculate the ACWT, total the CWTs for all stocked item receipts according to Department of Defense Activity Address Code (DODAAC) and divide by the total number of stocked item requisitions for the measured period. The same process is used for nonstocked items.

Once ACWT numbers are produced for stocked and nonstocked item requisitions, they must be combined proportionately to accurately represent an ACWT metric for a given customer. The formula for computing an ACWT that represents both stocked and nonstocked item requisitions for a given customer is shown in the chart above. Although the formula may appear intimidating, it simply uses a weighted average to adjust the metric by the proportion of stocked versus nonstocked items.

Computing ACWT for Two Customers

Computing the ACWT for two or more customers requires proportionate combining of stocked requisitions and nonstocked requisitions. This may be practical when customers are collocated and using the same distribution channel. A combined ACWT provides perspective on the supply chain’s performance; however, without computation of customer and transportation processing times, sluggish segments in the supply chain may be overlooked.

Start by combining the customers’ ACWTs using the following steps—

1. Compute ACWT for each customer’s stocked (S) and nonstocked (NS) item requisitions separately.

2. Combine customer “a’s” total number of stocked item requisitions with customer “b’s.”
S a+b = 5+6 = 11
NS a+b = 4+4 = 8

3. Divide customer “a’s” total number of stocked item requisitions by the total number of stocked item requisitions for customers “a” and “b.” This produces customer “a’s” percent of the total.
a = 5 = .45
a+b 11

4. Multiply customer “a’s” percent from step 3 by customer “a’s” ACWT for stocked items.
.45 x 5 = 2.25

5. Perform steps 3 and 4 for customer “b” by dividing customer “b’s” total number of stocked item requisitions by the total number of stocked item requisitions for customers “a” and “b.” This produces customer “b’s” percent of the total.
b = 6 = .56
a+b 11

6. Multiply customer “b’s” percent from step 5 by customer “b’s” ACWT for stocked items.
.56 x 10 = 5.60

7. Total the results from steps 4 and 6 to get an
ACWT for two customers’ stocked item requisitions.
2.25 + 5.60 = 7.85

8. Repeat steps 1 through 7 using the nonstocked item requisition figures for customers “a” and “b” to compute the combined ACWT for nonstocked items.
NS ACWT for a and b = 20

Using the ACWTs calculated above, use the formula below to combine the AWCTs for stocked and nonstocked items.

The following procedures demonstrate how to compute the combined ACWT using the formula above.

1. Combine customer “a’s” stocked item requisitions with customer “b’s” stocked item requisitions.
S a + b = 5 + 6 = 11

2. Combine customer “a’s” nonstocked item requisitions with customer “b’s” nonstocked item requisitions.
NS a + b = 4 + 4 = 8

3. Divide the answer from step 1 by the total number of requisitions (step 1 + step 2). This provides the percent of stocked item requisitions of the total.
11 = 11 = .58
11 + 8 19

4. Multiply the percent from step 3 by the ACWT for all stocked items.
.58 x 7.85 = 4.55

5. Divide the answer from step 2 by total number of requisitions (step 1 + step 2). This provides the percent of nonstocked item requisitions of the total.
8 = .42

6. Multiply the percent from step 5 by the ACWT for all nonstocked items.
.42 x 20 = 8.40

7. Add the answer from step 4 with the answer from step 6 to get a combined ACWT for two customers’ stocked and nonstocked item requisitions.
4.55 + 8.40 = 12.95

This procedure attributes a proportional component of the calculation to each customer’s stocked and nonstocked item requisitions. Although this metric will demonstrate the average amount of time taken to originate and submit a request, fill the order, and transport and receive an item, the computation still merely reflects an average. Computing the variance or standard deviation for the data used to get these computations will provide a measure of consistency. Combining customer requisitions from significantly different locations, where transportation timeframes are not completely congruent, will make the computed average less useful for measuring timely supply chain distribution.

Improving the supply chain depends on accurately measuring performance. Performance must be measured down to the individual customer level by type of supply and by procurement proponent. The ACWT metric can be used at all levels in the supply chain to track performance and, more importantly, to provide logisticians information about where to troubleshoot and alleviate bottlenecks in the supply chain. When used as a composite measure, it can provide decisionmakers a measure of support that can be critical in determining operational capabilities.

The ACWT computation can be used separately to determine the performance of a specific vendor from factory to warehouse or to measure performance from factory or distribution center down to the customer. It also can show delays in customer processing, indicating where training may be required. Computing ACWT is the first step in determining where problems are in order to focus corrective initiatives.

The next challenge is defining the ACWT standards for the different links in the supply chain and then meeting, exceeding, or improving those standards. The steps outlined above can be followed to compute the ACWT standards automatically with minimal user interface. Currently, USAMMCE computes ACWT monthly and inputs the data into a Microsoft Excel spreadsheet for computation. Ideally, future automation platforms will incorporate scanning or other technologies that allow ACWT computation to take place passively, without user interface. This will allow logisticians at all levels to track and measure supply chain success more accurately. ALOG

Major David R. Gibson is a medical logistician with the U.S. Army Medical Materiel Center, Europe. He has a bachelor’s degree in business from the University of Central Oklahoma, a master’s degree in public administration from Murray State University in Kentucky, and two master’s degrees in construction management and business administration and finance from the University of Denver. He is a graduate of the Army Medical Department Officer Basic and Advanced Courses, the Combined Arms and Services Staff School, and the Army Command and General Staff College.