presentation at cscmp chicago roundtable event on april 8, 2014
DESCRIPTION
Presentation at CSCMP Chicago Roundtable event on April 8, 2014 - slide deck discussing the new Supply Chain Index. Metrics That Matter is the new book due to be published in Q3 2014TRANSCRIPT
Metrics That MatterLora Cecere
Supply Chain Insights LLC Copyright © 2013, p. 2
Supply Chain Insights is focused on delivering independent, actionable and objective
advice for supply chain leaders. A company dedicated to research,
turn to us when you want the latest insights on supply chain trends, technologies to know
and metrics that matter.
About Us
Supply Chain Insights LLC Copyright © 2013, p. 3
• To Launch in May 2014– All industries– All company sizes– Three ratios: Strength, Resiliency, and Balance– Augmented by Peer Input
Supply Chain Index
Supply Chain Insights LLC Copyright © 2013, p. 4
Supply Chain Index= .33(Strength Ranking)+.33(Resiliency Ranking)+.33(Balance Ranking)+.10 (Peer Assessment Ranking)
Calculation
NAICS Code
Strength Ratio
Strength Ranking
Resiliency Ratio
Resiliency Ranking
Balance Ratio
Balance Ranking
Peer Rating
Peer Ranking
Total Score
Supply Chain Insights LLC Copyright © 2013, p. 5
Resilience: Mean Distance Analysis of Orbit Charts
Supply Chain Insights LLC Copyright © 2013, p. 6
A Supply Chain
is a Complex System
with Complex Processes
with Increasing Complexity
Supply Chain Insights LLC Copyright © 2013, p. 7
The Supply Chain Effective Frontier
Supply Chain Insights LLC Copyright © 2013, p. 8
Source: Supply Chain Insights 2012
Average Days of Inventory by Year
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Consumer Packaged Goods
59 57 62 64 67 67 68 70 70 64 64 67
Chemical
71.5 71.9 78.2 75.1 62 70.3 68.1 64.3 64.3 78.6 72.9 72.8
Pharma
122.236691097
87
133.699100562
175
190.147616165
968
170.986522478
989
184.342617399
859
175.550260476
877
167.799951139
247
149.815153981
283
154.915781882
591
198.663134119
976
154.313480863
244
131.819794240
294
High Tech
93.1 57.6 46.5 48.5 35.9 37.3 43.8 36.8 34.6 41.3 34.8 30.4
Average
86.4591727744
674
80.0497751405
437
94.2119040414
919
89.6466306197
473
87.3106543499
647
87.5375651192
192
86.9249877848
117
80.2287884953
207
80.9539454706
477
95.6407835299
941
81.5033702158
11
75.5049485600
736
25.0
75.0
125.0
175.0
225.0
Da
ys
o
f In
ve
nto
ry
Supply Chain Insights LLC Copyright © 2013, p. 9
The Efficient Supply Chain is not Effective
Supply Chain Insights LLC Copyright © 2013, p. 10
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
Our Point of View: Definition of Supply Chain Excellence
Supply Chain Insights LLC Copyright © 2013, p. 11
In a way that is:
Resilient and predictable
Balanced across the set of metrics to maximize value
Showing year-over-year improvement against peer group
To Drive Corporate Performance
Supply Chain Insights LLC Copyright © 2013, p. 12
Mining 20 Years of Financial Data
Supply Chain Insights LLC Copyright © 2013, p. 13
Most Interesting Patterns
• Cash-to-Cash Cycle versus Inventory Turns
• Revenue per Employee versus Inventory Turns
• Operating Margin versus Inventory Turns
Supply Chain Insights LLC Copyright © 2013, p. 14
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.
Supply Chain Insights LLC Copyright © 2013, p. 15
A Look at the Last Decade
Supply Chain Insights LLC Copyright © 2013, p. 16
Progress in Manufacturing Productivity
Supply Chain Insights LLC Copyright © 2013, p. 17
Productivity in Retail
Supply Chain Insights LLC Copyright © 2013, p. 18
Progress in Inventory Turns and Operating Margin
Supply Chain Insights LLC Copyright © 2013, p. 19
Impact of A Recession
Supply Chain Insights LLC Copyright © 2013, p. 20
0 250 500 750 1,000 1,2500
3
6
9
12
15
2002 2012
The Dow Chemical Company
Revenue per Employee (K$)
Inv
en
tory
Tu
rns
Visualizing the Patterns
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source
Best Scenario
DOW999, 6.7
Trace the line from 2002 point to 2012 point to follow the performance over time.
The diamond shows the company’s average over the period. Ex: The Dow Chemical Company (DOW) has an average of 999 K$ for revenue per employee and 6.7 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)
Supply Chain Insights LLC Copyright © 2013, p. 21
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 22
Inventory Turns vs. Revenue per Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 23
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 24
Operating Margin vs. Revenue per Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 25
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 26
Operating Margin vs. Revenue per Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 27
Inventory Turns vs. Revenue per Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 28
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 29
Inventory Turns vs. Revenue per Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 30
Inventory Turns vs. Operating Margin (2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 31
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 32
Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 33
Inventory Turns vs. Revenue per Employee (2003-2012)
Supply Chain Insights LLC Copyright © 2013, p. 34
Inventory Turns vs. Operating Margin (2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 35
Corporate Summary
Supply Chain Insights LLC Copyright © 2013, p. 36
Cash-to-Cash Cycle (2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 37
Inventory Turns vs. Revenue per Employee(2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 38
Inventory Turns vs. Operating Margin(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 39
Cash-to-Cash Cycle vs. Inventory Turns(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 40
Case Study
Supply Chain Insights LLC Copyright © 2013, p. 41
Inventory Turns vs.
Operating Margin (2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 43
• Supply chain is a complex system with increasing complexity.
• Different industries have different patterns, but the cash-to-cash metrics have the highest correlation to market capitalization with some of the poorest performance.
Wrap-up
Supply Chain Insights LLC Copyright © 2013, p. 44
1. Finish the work on the Supply Chain Index
2. Place the rankings on balance, strength and resilience into the Supply Chain Insights Community for Shaman Circle members to vote on supply chain excellence
3. Final analysis of companies to be revealed at the 2014 Supply Chain Insights Global Summit
Next Steps
Supply Chain Insights LLC Copyright © 2013, p. 45
PAST WEBINARS: ON DEMAND
• From August 29, 2013: Supply Chain Index, Overview
• From August 15, 2013: Supply Chain Talent: The Missing Link
• From July 25, 2013: What is the Role of the Store
Webinars
www.supplychaininsights.com/upcoming-webinars
UPCOMING WEBINARS
• November 13, 2013: Shaman’s Circle
• November 14, 2013: Healthcare Value Chain
• December 12, 2013: Digital Manufacturing & 3D Printing
• January 23, 2014: Voice of the Supply Chain
Supply Chain Insights LLC Copyright © 2013, p. 46
Global Summit 2014 Registration is Now Open
Supply Chain Insights Global Summit 2014September 10-11, 2014
The Phoenician – Scottsdale, AZ USAwww.supplychaininsightsglobalsummit.com
Supply Chain Insights LLC Copyright © 2013, p. 47
Upcoming Corporate TrainingChicago, IL and Atlanta, GA
November 11-12, 2013Chicago, IL USA
January 16-17, 2014Atlanta, GA USA
www.supplychaininsights.com/training
Supply Chain Insights LLC Copyright © 2013, p. 48
Questions?
Supply Chain Insights LLC Copyright © 2013, p. 49
Who is Lora?
• Founder of Supply Chain Insights
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.
Supply Chain Insights LLC Copyright © 2013, p. 50
Where Do You Find Lora?
Contact Information: [email protected]
Blog: www.supplychainshaman.com (5000 pageviews/month)
Twitter: lcecere 5200 followers.
LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (5450 in the network)