Launch of the Supply Chain Index webinar Slide Deck

  • 1,770 views
Uploaded on

This is a new ranking system and benchmarking tool for companies to use to evaluate supply chain excellence. To build the index, we have taken the long view. The Index is based upon financial …

This is a new ranking system and benchmarking tool for companies to use to evaluate supply chain excellence. To build the index, we have taken the long view. The Index is based upon financial performance of companies from 2006 forward. Using market valuations of publically traded companies, we have built a formulaic representation of supply chain excellence using supply chain ratios (e.g., ratios like Days of Inventory, Operating Margin, Revenue/Employee, Altman Z). Building a great supply chain is not something that can be done with a short-term project approach. Excellence comes in small steps over a sustained long-term period. The Supply Chain Index allows companies to better understand the relationship between supply chain ratios and financial (market capitalization) performance. In the webinar, companies will be able to understand which metrics correlate strongly with market capitalization growth. Come listen to this webinar to understand who has done it best and the lessons learned.
https://supplychaininsights.webex.com/supplychaininsights/lsr.php?AT=pb&SP=EC&rID=6764712&rKey=dcea792f1c22013d

More in: Business , Technology
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
No Downloads

Views

Total Views
1,770
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
122
Comments
0
Likes
3

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Supply Chain IndexApril 25, 2013#sciwebinar
  • 2. Supply Chain Insights LLC Copyright © 2013, p. 2Supply Chain Insights is focused on deliveringindependent, actionable and objective advicefor supply chain leaders. A company dedicated toresearch, turn to us when you want the latestinsights on supply chain trends, technologies toknow and metrics that matter.About Us#sciwebinar
  • 3. Supply Chain Insights LLC Copyright © 2013, p. 3PresentersAbby MayerResearch AssociateLora CecereFounder and CEO#sciwebinar
  • 4. Supply Chain Insights LLC Copyright © 2013, p. 418 Reports in 2012#sciwebinar
  • 5. Supply Chain Insights LLC Copyright © 2013, p. 5Over 30 Reports Planned for 2013#sciwebinar
  • 6. Supply Chain Insights LLC Copyright © 2013, p. 6This is the new bible for all supply chainexecutives. It provides an insider’sperspective that will prove incrediblyvaluable to even the most grizzled supplychain veteran. This is the next must-havebusiness book.--Bruce Richardson, Chief EnterpriseStrategist, Salesforce.comToday, the worlds of social business andsupply chain management have manydegrees of separation. I enjoyed workingwith Lora to understand what the futuretransformation of digital marketing to digitalbusiness could look like.--Jeremiah Owyang, Research Director, AltimeterSecond Printing of Bricks Matter:13 Five-Star Reviews on Amazon#sciwebinar
  • 7. Supply Chain Insights LLC Copyright © 2013, p. 7Publishing Two eBooks in2013 on Supply ChainMetrics That Matter– Consumer Value Networks– Industrial Value Networks2013 Publications#sciwebinar
  • 8. Supply Chain Insights LLC Copyright © 2013, p. 8Supply Chain Metrics That Matter ReadershipFocus of Report Date of Publication Readership (as of 4-15-2013)Retail August 2012 1,420Consumer Products September 2012 983Chemical Industry November 2012 600The Cash-to-Cash Cycle November 2012 1,620Pharmaceutical Industry December 2012 1,095Driving Reliability in Margins January 2013 1,180Hospitals January 2013 657Brick & Mortar Retail February 2013 366Medical Device Manufacturers February 2013 458Consumer Electronics April 2013 199Supply Chain Metrics that Matter:Reports#sciwebinar
  • 9. Supply Chain Insights LLC Copyright © 2013, p. 9Our Focus2-DAY PUBLICTRAININGDallas – May 6-7Princeton – June 24-25Minneapolis – August 8-9$1500GLOBALSUMMITPODCASTSwww.supplychaininsights.com#sciwebinar
  • 10. Supply Chain Insights LLC Copyright © 2013, p. 10 What Is Supply Chain Excellence? Understanding the Supply Chain as a ComplexSystem Which Companies Have Maximized MarketValuation Through Supply Chain Excellence? Using the InsightsAgenda#sciwebinar
  • 11. Supply Chain Insights LLC Copyright © 2013, p. 11 Perform better than peer group Improve year-over-year results Alignment in metrics Delivery of performance againstthe business strategy Consistency in results Be a leader in managing trade-offsWhat Is Best in Class?#sciwebinar
  • 12. Supply Chain Insights LLC Copyright © 2013, p. 12 What is Supply Chain Excellence? Understanding the Supply Chain as aComplex System Which Companies Have Maximized MarketValuation Through Supply Chain Excellence? Using the InsightsAgenda#sciwebinar
  • 13. #sciwebinarA Supply Chainis a Complex Systemwith Complex Processeswith Increasing Complexity
  • 14. Supply Chain Insights LLC Copyright © 2013, p. 14Profitable GrowthRevenue Cost of GoodsWorking CapitalCorporate Social ResponsibilityR&D Strategy and Investment Asset Strategy and InvestmentForecast Accuracy Customer Service InventoryChannel Strategy Product andService PortfolioSupplier StrategySalesPoliciesDistributionPoliciesManufacturingPoliciesLogisticsPoliciesProcurementPoliciesReturns Backorders First Pass Yield Empty Miles Material YieldThe Supply Chain Effective Frontier:First Representation#sciwebinar
  • 15. Supply Chain Insights LLC Copyright © 2013, p. 15Mining 20 Yearsof Financial Ratio DataFinancial MetricsGrowth Profitability Cycle ComplexityCommon Shares Cash Cash-to-Cash Cycle Altman ZEmployee Growth Cash Change in Period Days of Finished Goods Capital TurnoverEmployees Cash on Hand Days of Inventory Current RatioMarket Capitalization Cash Ratio TTM Days of Payables Outstanding Quick RatioR&D Margin Cash Ratio Quarter Days of Raw Materials Return on AssetsR&D Ratio Cash Ratio Year Days of Sales Outstanding Return on EquityR&D to COGS Ratio Cost of Goods Sold Days of Work in Progress Return on Invested CapitalRevenue EBITDA DPO/DSO Return on Net AssetsRevenue Growth Free Cash Flow Ratio Finished Goods Inventory Revenue per EmployeeRevenue Growth TTM Gross Margin Inventory Working Capital RatioRevenue TTM Gross Profit Inventory TurnsSG&A Margin Net Profit Margin Receivables TurnsSG&A Ratio Operating Cash Flow Ratio Raw Materials InventorySG&A to COGS Ratio Operating Margin Work in Progress InventoryOPEX RatioPretax Margin#sciwebinar
  • 16. Supply Chain Insights LLC Copyright © 2013, p. 16The Supply Chain Effective Frontier:Second Representation#sciwebinar
  • 17. Supply Chain Insights LLC Copyright © 2013, p. 17• Supply Chain Index: A formulaic representation ofsupply chain financial ratios correlated to stockmarket capitalization valuation.• Supply Chain Effective Frontier: The balance ofgrowth, profitability, cycle and complexity metrics todeliver the supply chain strategy. It may or may notmaximize the company’s market valuation.• Supply Chain Excellence: The behavior ofcompanies working to maximize value through thesetting of targets for supply chain financial ratios andaligning metrics that matter (tied to value chainstrategy).Definitions#sciwebinar
  • 18. Supply Chain Insights LLC Copyright © 2013, p. 18A Look at History: Progress in Productivity#sciwebinar
  • 19. Supply Chain Insights LLC Copyright © 2013, p. 19Cross Industry View: (2000-2011)#sciwebinar
  • 20. Supply Chain Insights LLC Copyright © 2013, p. 20Company Performance within anIndustry Sector: (2000-2011)#sciwebinar
  • 21. Supply Chain Insights LLC Copyright © 2013, p. 21Competitive Analysis: (2006-2011)#sciwebinar
  • 22. Supply Chain Insights LLC Copyright © 2013, p. 22Peer Group Analysis: (2000-2012)#sciwebinar
  • 23. Supply Chain Insights LLC Copyright © 2013, p. 23Healthcare Value Chain:Financial Metrics#sciwebinar
  • 24. Supply Chain Insights LLC Copyright © 2013, p. 24 What Is Supply Chain Excellence? Understanding the Supply Chain as a ComplexSystem Which Companies Have Maximized MarketValuation Through Supply ChainExcellence? Using the InsightsAgenda#sciwebinar
  • 25. Supply Chain Insights LLC Copyright © 2013, p. 25Introducing theSupply Chain IndexA formulaic representation ofhow companies are trading offgrowth, profitability, cycle andcomplexity performance onselected supply chain financialmetrics against marketvaluation.#sciwebinar
  • 26. Supply Chain Insights LLC Copyright © 2013, p. 261. To better understand which supply chain metricsmatter to corporate balance sheet performance inpublic markets. We want to help leaders better alignsupply chain and financial performance.2. To create an objective system for evaluating andranking supply chains by industry peer group.3. To connect financial performance with supply chainexcellence as measured through quantitativesurveys in an effort to better identify and define bestpractices across industry groups.Why Did We Do This?#sciwebinar
  • 27. Supply Chain Insights LLC Copyright © 2013, p. 27• What it is: A way to understand the impact ofcompanies’ supply chain (relative to peerswithin an industry sector) to marketcapitalization based a set of preselected supplychain ratio metrics.• What it is NOT: A way to evaluate overallcompany performance or compare the modelresults to actual market capitalization.What It Is. What It Is Not.#sciwebinar
  • 28. Supply Chain Insights LLC Copyright © 2013, p. 28• April 25th: introduction of the Index and theapplication to 3 Morningstar sectors• May: release of results for additional industriesand discussion in Supply Chain InsightsCommunity• May, June, July, August: monthly reports andpublication of additional industries• September 11-12th: 1st annual Global Summitwith speakers selected based on IndexperformanceNow and Then#sciwebinar
  • 29. Supply Chain Insights LLC Copyright © 2013, p. 29Step 1: Located data sourcesStep 2: Selected core supply chain ratios from over 50 financial metricsStep 3: Identified meaningful metrics per industry using regression analysisamong selected ratiosStep 4: Constructed industry equation based on correlation of industrymetrics to market capitalization valuesStep 5: Determined company rankings within industry by applying 2012company results to industry equationStep 6: Analysis of peer group companies over the last decadeStep 7: Correlations to supply chain practices, technologies andorganizational designSupply Chain Index Methodology#sciwebinar
  • 30. Supply Chain Insights LLC Copyright © 2013, p. 30– Market capitalization data of public companies(Ycharts.com)– Industry peer groups defined by Morningstar Sector(36)– Financial ratios built from balance sheet and incomestatement data collected from OneSource– Analysis of quarterly data using R (frequency 2006Q1to 2012Q4)Step 1: Located Data Sources#sciwebinar
  • 31. Supply Chain Insights LLC Copyright © 2013, p. 31Step 2: Selected 14 CoreSupply Chain Ratios to StudyFinancial MetricsGrowth Profitability Cycle ComplexityCommon Shares Cash Cash-to-Cash Cycle Altman ZEmployee Growth Cash Change in Period Days of Finished Goods Capital TurnoverEmployees Cash on Hand Days of Inventory Current RatioMarket Capitalization Cash Ratio TTM Days of Payables Outstanding Quick RatioR&D Margin Cash Ratio Quarter Days of Raw Materials Return on AssetsR&D Ratio Cash Ratio Year Days of Sales Outstanding Return on EquityR&D to COGS Ratio Cost of Goods Sold Days of Work in Progress Return on Invested CapitalRevenue EBITDA DPO/DSO Return on Net AssetsRevenue Growth Free Cash Flow Ratio Finished Goods Inventory Revenue per EmployeeRevenue Growth TTM Gross Margin Inventory Working Capital RatioRevenue TTM Gross Profit Inventory TurnsSG&A Margin Net Profit Margin Receivables TurnsSG&A Ratio Operating Cash Flow Ratio Raw Materials InventorySG&A to COGS Ratio Operating Margin Work in Progress InventoryOPEX RatioPretax MarginSource: Supply Chain Insights LLC#sciwebinarSelected Ratios
  • 32. Supply Chain Insights LLC Copyright © 2013, p. 32Step 3: Identified Industry Metrics#sciwebinarMarket Capitalization vs. Revenue GrowthInsight: Forexample,growth didnot correlatefor chemicalcompanies.
  • 33. Supply Chain Insights LLC Copyright © 2013, p. 33Step 3: Identified Industry MetricsMetrics That Matter by IndustryMass Retail IndustryConsumer PackagedGoods IndustryChemical IndustryOperating Margin Operating Margin Operating MarginDays of Inventory Days of Inventory Days of InventoryDPO/DSODays of PayablesOutstandingDays of PayablesOutstandingReturn on Invested Capital Return on Invested Capital Return on AssetsWorking Capital Ratio Current RatioFree Cash Flow RatioSG&A to COGS Ratio#sciwebinar
  • 34. Supply Chain Insights LLC Copyright © 2013, p. 34Step 4: Mass Retail Equation#sciwebinarLn(market cap) = 10.41 + 52.67(OM) -34.72(WC) - 16.02(ROIC)– 0.09(DPODSO) + 0.02(DOI)Mass Retail Industry Equation
  • 35. Supply Chain Insights LLC Copyright © 2013, p. 35Step 5: Determined Rankings by IndustryMass Retail Industry (2012)#sciwebinar
  • 36. Supply Chain Insights LLC Copyright © 2013, p. 36Top Ranked Mass Retail Industry (2012)#sciwebinar
  • 37. Supply Chain Insights LLC Copyright © 2013, p. 37Step 3: Identified Industry Metrics#sciwebinarMetrics That Matter by IndustryMass Retail IndustryConsumer PackagedGoods IndustryChemical IndustryOperating Margin Operating Margin Operating MarginDays of Inventory Days of Inventory Days of InventoryDPO/DSODays of PayablesOutstandingDays of PayablesOutstandingReturn on Invested Capital Return on Invested Capital Return on AssetsWorking Capital Ratio Current RatioFree Cash Flow RatioSG&A to COGS Ratio
  • 38. Supply Chain Insights LLC Copyright © 2013, p. 38Step 4: Consumer Packaged Goods(CPG) Equation#sciwebinarLn(market cap) = 3.37 + 2.11(OM) + 1.62(FCF) – 1.29(ROIC) –1.17ln(CR) + 0.25(SGAC) + 0.02(DPO) – 0.01(DOI)CPG Industry Equation
  • 39. Supply Chain Insights LLC Copyright © 2013, p. 39Step 5: Determined Rankings by IndustryCPG Industry (2012)#sciwebinar
  • 40. Supply Chain Insights LLC Copyright © 2013, p. 40Top Ranked CPG Industry (2012)#sciwebinar
  • 41. Supply Chain Insights LLC Copyright © 2013, p. 41Step 3: Identified Industry Metrics#sciwebinarMetrics That Matter by IndustryMass Retail IndustryConsumer PackagedGoods IndustryChemical IndustryOperating Margin Operating Margin Operating MarginDays of Inventory Days of Inventory Days of InventoryDPO/DSODays of PayablesOutstandingDays of PayablesOutstandingReturn on Invested Capital Return on Invested Capital Return on AssetsWorking Capital Ratio Current RatioFree Cash Flow RatioSG&A to COGS Ratio
  • 42. Supply Chain Insights LLC Copyright © 2013, p. 42Step 4: Chemical Industry Equation#sciwebinarLn(market cap) = 7.85(OM) – 4.84(ROA) + 1.81ln(DPO) +0.01(DOI)Chemical Industry Equation
  • 43. Supply Chain Insights LLC Copyright © 2013, p. 43Step 5: Determined Rankings by IndustryChemical Industry (2012)#sciwebinar
  • 44. Supply Chain Insights LLC Copyright © 2013, p. 44Top Ranked Chemical Industry (2012)#sciwebinar
  • 45. Supply Chain Insights LLC Copyright © 2013, p. 45In ProgressFood Industry#sciwebinarLn(market cap) = 5.57 +15.56(OM) – 7.50(ROIC) – 4.13(ROA) +2.74(RONA) + 0.61(Z) + 0.04(DPO) – 0.04(DSO)Food Industry Equation
  • 46. Supply Chain Insights LLC Copyright © 2013, p. 46 What Is Supply Chain Excellence? Understanding Supply Chain as a ComplexSystem Which Companies Have Maximized MarketValuation Through Supply Chain Excellence? Using the InsightsAgenda#sciwebinar
  • 47. Supply Chain Insights LLC Copyright © 2013, p. 47Value Chain RelationshipsRetail(MassMerchant)CPG ChemicalEquations:Ln(market cap) =10.41+ 52.67(OM)-34.72(WC)- 16.02(ROIC)-0.09(DPODSO)+ 0.02(DOI)3.37+ 2.11(OM)+ 1.62(FCF)- 1.29(ROIC)- 1.17ln(CR)+ 0.25(SGAC)+ 0.02(DPO)– 0.01(DOI)7.85(OM)- 4.84(ROA)+ 1.81ln(DPO)+ 0.01(DOI)True collaboration only happens when there isa sustaining win-win value proposition.
  • 48. Supply Chain Insights LLC Copyright © 2013, p. 48Step 1: Located data sourcesStep 2: Selected core supply chain ratios from over 50 financial metricsStep 3: Identified meaningful metrics per industry using regression analysisamong selected ratiosStep 4: Constructed industry equation based on correlation of industrymetrics to market capitalization valuesStep 5: Determined company rankings within industry by applying 2012company results to industry equationStep 6: Analysis of peer group companies over the last decadeStep 7: Correlations to supply chain practices, technologies andorganizational designOur Next Steps: Supply Chain IndexMethodology#sciwebinar
  • 49. Supply Chain Insights LLC Copyright © 2013, p. 49• What drives value in each industry is different.• Public markets reward supply chain balance andalignment.• The supply chain is a complex system. Supplychain excellence must be carefully defined.• Trading relationships should recognize thedifferences between the definitions of valuewithin an industry to define win-win relationships.• There is no substitute for leadership.• Supply chain excellence matters.Summary#sciwebinar
  • 50. Supply Chain Insights LLC Copyright © 2013, p. 501. Join the Supply Chain Index Group in the SupplyChain Insights Community for Peer Review andDiscussion: www.scicommunity.com2. Gain Insights from Supply Chain Leaders at theGlobal Summit www.supplychaininsightsglobalsummit.com3. Build the Next Generation of Supply ChainResearch Using the Index4. Leverage the Index to Connect Supply ChainProcesses, People and Technology Decisions toBalance Sheet ResultsWhat You Can Do#sciwebinar
  • 51. Supply Chain Insights LLC Copyright © 2013, p. 51PAST SUPPLY CHAIN INDEX WEBINARS:AVAILABLE ON DEMAND• From September 24, 2012:The Supply Chain Index, 20 Years in the Making:A Focus on Process Industries• From October 26, 2012:The Supply Chain Index, 20 Years in the Making:A Focus on Discrete IndustriesWebinarswww.supplychaininsights.com/upcoming-webinars#sciwebinarUPCOMING WEBINARS• May 9th: How Do We Heal the Healthcare ValueChain? Part II• June 13th: Sales and Operations Planning: Stateof the Union• July 11th: Big Data Supply Chains and the Futureof Analytics• August 15th: State of Supply Chain Talent:Missing Link in the Supply Chain• August 29th: Digital Manufacturing
  • 52. Supply Chain Insights LLC Copyright © 2013, p. 52Private NetworkingChief Supply Chain Officer Chief Information OfficerCIO’sCorner#sciwebinar
  • 53. Supply Chain Insights LLC Copyright © 2013, p. 53Superheroes 2013:Coming Soon#sciwebinar
  • 54. Supply Chain Insights LLC Copyright © 2013, p. 54Supply Chain Insights Community#sciwebinar
  • 55. Supply Chain Insights LLC Copyright © 2013, p. 55Who Is Lora?• Founder of Supply Chain Insights• Partner at Altimeter Group (leader in openresearch)• 7 years of Management Experience leadingAnalyst Teams at Gartner and AMR Research• 8 years Experience in Marketing and SellingSupply Chain Software at Descartes SystemsGroup and Manugistics (now JDA)• 15 Years Leading teams in Manufacturing andDistribution operations for Clorox, Kraft/GeneralFoods, Nestle/Dreyers Grand Ice Cream andProcter & Gamble.#sciwebinar
  • 56. Supply Chain Insights LLC Copyright © 2013, p. 56Where Do You Find Lora?Contact Information:lora.cecere@supplychaininsights.comBlog: www.supplychainshaman.com(4000 pageviews/month)Twitter: lcecere 3850 followers. Rated as a toprated supply chain social network user.LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (3750 in the network)#sciwebinar
  • 57. Supply Chain Insights LLC Copyright © 2013, p. 57Where Do You Find Abby?#sciwebinarContact Information:abby.mayer@supplychaininsights.comBlog: www.supplychainindex.com(2500 pageviews/month)Twitter: @indexgirlLinkedIn: www.linkedin.com/pub/abby-mayer/40/941/972