What Is Supply Chain Excellence? What can we learn? What does it mean? Why should you care? Who did it best? How does supply chain performance effect corporate performance? Where are we on the evolution of Supply Chain Excellence?
A presentation by Lora Cecere, Founder of Supply Chain Insights on which metrics matter by industry, along with an assessment on where the industry subgroups are on improving performance on the Supply Chain Effective Frontier (the ability to drive growth, manage costs, and inventories while balancing complexity).
Lora Cecere, Founder of Supply Chain Insights LLC
9. Supply Chain Insights Global Summit #SCISummit September 2013, p.9TM
Need for Strategy
10. Supply Chain Insights Global Summit #SCISummit September 2013, p.10TM
Process Evolution
Align:
Market
Driven
Build Horizontal
Process Connectors
Continuously Test,
Learn & Improve
in Market
Orchestrate
Demand and Supply
Source: Supply Chain Insights LLC
Adapt:
Demand
Driven
Sense Demand
and Supply
Shape Demand
and Supply
Based on Market
Resilient
Absorb
Demand
Volatility
Absorb
Supply
Volatility
Reliable
Right Product
Right Place
Right Time
Right Cost
Efficient
Cost
Procure to pay/
order to cash
11. Supply Chain Insights Global Summit #SCISummit September 2013, p.11TM
What Is Supply Chain Excellence?
• Perform better than peer group
• Improve year-over-year results
• Align internally on metrics
• Deliver against the business strategy
• Demonstrate consistency in results
• Use innovation in supply chain processes
• Balance. Be leaders in managing trade-offs
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Supply Chain Insights Global Summit #SCISummit September 2013, p.12TM
• Defining Supply Chain Excellence
• Conquering the Effective Frontier
• The Supply Chain Index
• Imagine
Agenda
13. Supply Chain Insights Global Summit #SCISummit September 2013, p.13TM
Definitions
• Supply Chain Excellence: The behavior of companies working to
maximize value through the setting of targets for supply chain
financial ratios and aligning metrics that matter (tied to value
chain strategy).
• Supply Chain Effective Frontier: The balance of growth,
profitability, cycle and complexity metrics to deliver the supply
chain strategy. It may or may not maximize the company’s market
valuation.
• Supply Chain Index: A formulaic representation of supply chain
financial ratios correlated to stock market capitalization valuation.
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The Supply Chain Effective Frontier
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Mining 20 Years of Financial Data
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Most Interesting Patterns
• Cash to Cash versus Inventory Turns
• Revenue per Employee versus Inventory Turns
• Operating Margin versus Inventory Turns
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What Have We Learned?
• Each industry has a different pattern of trade-offs of
balancing growth, profitability, cycles and complexity.
• Companies that are supply chain leaders have very
small movement with a balanced portfolio of metrics.
• It is about MUCH more than Return on Assets (ROA),
growth and inventory.
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Productivity in Manufacturing
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Productivity in Retail
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Progress in Inventory Turns and Operating Margin
(2000-2012)
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Impact of A Recession
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2002 2012
0
3
6
9
12
15
0 250 500 750 1,000 1,250
InventoryTurns
Revenue per Employee (K$)
The Dow Chemical Company
Visualizing the Patterns
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source
Best Scenario
DOW
999, 6.7
Trace the line from
2002 point to 2012
point to follow the
performance over
time. The diamond shows the company’s average over the period.
Ex: The Dow Chemical Company (DOW) has an average of 461
K$ for revenue per employee and 4.0 for inventory turns.
Ideally, companies are increasing
inventory turns and revenue per
employee, moving towards the upper
right corner of the graph over time.
Here, we plot inventory turns (y-axis)
vs. revenue per employee (x-axis).
Average (Revenue per Employee, Inventory Turns)
28. Supply Chain Insights Global Summit #SCISummit September 2013, p.28TM
Comparison Chart (2000-2006, 2007-2009, 2010-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.29TM
• Defining Supply Chain Excellence
• Conquering the Effective Frontier
• The Supply Chain Index
• Imagine
Agenda
30. Supply Chain Insights Global Summit #SCISummit September 2013, p.30TM
September 2013, p.30TM
Supply Chain Insights Global Summit #SCISummit
A formulaic representation of
how companies are trading off
growth, profitability, cycle and
complexity performance on selected
supply chain financial metrics against
market valuation.
31. Supply Chain Insights Global Summit #SCISummit September 2013, p.31TM
Household & Personal Products Equation
Y = 2.93 – 0.01(DOI) + 0.02(DPO) + 0.01(DSO) + 3.07(FCF) –
0.93(ROIC) + 0.28(SGAC) – 4.10(WC)
Household & Personal Products Equation
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CPG Ranking 2012
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Supply Chain Insights Global Summit #SCISummit September 2013, p.35TM
• Defining Supply Chain Excellence
• Conquering the Effective Frontier
• The Supply Chain Index
• Imagine
Agenda
36. Supply Chain Insights Global Summit #SCISummit September 2013, p.36TM
Supply Chain Insights Global Summit #SCISummit September 2013, p.36TM
Digital
Manufacturing
Internet
of Things
Big Data
Digital Path
to Purchase
CSR as a Brand
Advantage
New Forms of
Analytics
Business
Networks
Inter-Enterprise
Systems of Record
3D Printing
Collaborative
Economy
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September 2013, p.43TM
Supply Chain Insights Global Summit #SCISummit
44. Supply Chain Insights Global Summit #SCISummit September 2013, p.44TM
Thanks to Our Sponsors!
45. Supply Chain Insights Global Summit #SCISummit September 2013, p.45TM
Visit the Supply Chain Insights Global Summit
website for all conference content:
Continue the Discussion
www.supplychaininsightsglobalsummit.com
46. Supply Chain Insights Global Summit #SCISummit September 2013, p.46TM
Save the Date!
Supply Chain Insights Global Summit 2014
September 10-11, 2014
The Phoenician – Scottsdale, AZ USA