Metrics That Matter
Lora Cecere
Supply Chain Insights LLC Copyright © 2013, p. 2
Supply Chain Insights is focused on delivering
independent, actionable an...
Supply Chain Insights LLC Copyright © 2013, p. 3
• To Launch in May 2014
– All industries
– All company sizes
– Three rati...
Supply Chain Insights LLC Copyright © 2013, p. 4
Supply Chain Index= .33(Strength Ranking)+.33(Resiliency
Ranking)+.33(Bal...
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...
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...
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
 Alig...
Supply Chain Insights LLC Copyright © 2013, p. 11
In a way that is:
 Resilient and predictable
 Balanced across the set ...
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
• ...
Supply Chain Insights LLC Copyright © 2013, p. 14
What Have We Learned?
• Each industry has a different pattern of
trade-o...
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
2002 2012
0
3
6
9
12
15
0 250 500 750 1,000 1,250
InventoryTurns
Revenue...
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.
• Differe...
Supply Chain Insights LLC Copyright © 2013, p. 44
1. Finish the work on the Supply Chain Index
2. Place the rankings on ba...
Supply Chain Insights LLC Copyright © 2013, p. 45
PAST WEBINARS: ON DEMAND
• From August 29, 2013: Supply Chain Index,
Ove...
Supply Chain Insights LLC Copyright © 2013, p. 46
Global Summit 2014
Registration is Now Open
Supply Chain Insights Global...
Supply Chain Insights LLC Copyright © 2013, p. 47
Upcoming Corporate Training
Chicago, IL and Atlanta, GA
November 11-12, ...
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 G...
Supply Chain Insights LLC Copyright © 2013, p. 50
Where Do You Find Lora?
Contact Information:
lora.cecere@supplychaininsi...
Presentation at CSCMP Chicago Roundtable event on April 8, 2014
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Presentation at CSCMP Chicago Roundtable event on April 8, 2014

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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 2014

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Presentation at CSCMP Chicago Roundtable event on April 8, 2014

  1. 1. Metrics That Matter Lora Cecere
  2. 2. 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
  3. 3. 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
  4. 4. 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
  5. 5. Supply Chain Insights LLC Copyright © 2013, p. 5 Resilience: Mean Distance Analysis of Orbit Charts
  6. 6. Supply Chain Insights LLC Copyright © 2013, p. 6 A Supply Chain is a Complex System with Complex Processes with Increasing Complexity
  7. 7. Supply Chain Insights LLC Copyright © 2013, p. 7 The Supply Chain Effective Frontier
  8. 8. 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 59.0 57.0 62.0 64.0 67.0 67.0 68.0 70.0 70.0 64.0 64.0 67.0 Chemical 71.5 71.9 78.2 75.1 62.0 70.3 68.1 64.3 64.3 78.6 72.9 72.8 Pharma 122.2 133.7 190.1 171.0 184.3 175.6 167.8 149.8 154.9 198.7 154.3 131.8 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 86.5 80.0 94.2 89.6 87.3 87.5 86.9 80.2 81.0 95.6 81.5 75.5 0.0 50.0 100.0 150.0 200.0 250.0 DaysofInventory
  9. 9. Supply Chain Insights LLC Copyright © 2013, p. 9 The Efficient Supply Chain is not Effective
  10. 10. 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
  11. 11. 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
  12. 12. Supply Chain Insights LLC Copyright © 2013, p. 12 Mining 20 Years of Financial Data
  13. 13. 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
  14. 14. 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.
  15. 15. Supply Chain Insights LLC Copyright © 2013, p. 15 A Look at the Last Decade
  16. 16. Supply Chain Insights LLC Copyright © 2013, p. 16 Progress in Manufacturing Productivity
  17. 17. Supply Chain Insights LLC Copyright © 2013, p. 17 Productivity in Retail
  18. 18. Supply Chain Insights LLC Copyright © 2013, p. 18 Progress in Inventory Turns and Operating Margin
  19. 19. Supply Chain Insights LLC Copyright © 2013, p. 19 Impact of A Recession
  20. 20. Supply Chain Insights LLC Copyright © 2013, p. 20 2002 2012 0 3 6 9 12 15 0 250 500 750 1,000 1,250 InventoryTurns Revenue per Employee (K$) The Dow Chemical Company Visualizing the Patterns Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source Best Scenario DOW 999, 6.7 Trace the line from 2002 point to 2012 point to follow the performance over time. The diamond shows the company’s average over the period. Ex: The Dow Chemical Company (DOW) has an average of 999 K$ 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)
  21. 21. Supply Chain Insights LLC Copyright © 2013, p. 21 Corporate Summary
  22. 22. Supply Chain Insights LLC Copyright © 2013, p. 22 Inventory Turns vs. Revenue per Employee (2002-2012)
  23. 23. Supply Chain Insights LLC Copyright © 2013, p. 23 Corporate Summary
  24. 24. Supply Chain Insights LLC Copyright © 2013, p. 24 Operating Margin vs. Revenue per Employee (2002-2012)
  25. 25. Supply Chain Insights LLC Copyright © 2013, p. 25 Corporate Summary
  26. 26. Supply Chain Insights LLC Copyright © 2013, p. 26 Operating Margin vs. Revenue per Employee (2002-2012)
  27. 27. Supply Chain Insights LLC Copyright © 2013, p. 27 Inventory Turns vs. Revenue per Employee (2002-2012)
  28. 28. Supply Chain Insights LLC Copyright © 2013, p. 28 Corporate Summary
  29. 29. Supply Chain Insights LLC Copyright © 2013, p. 29 Inventory Turns vs. Revenue per Employee (2002-2012)
  30. 30. Supply Chain Insights LLC Copyright © 2013, p. 30 Inventory Turns vs. Operating Margin (2000-2012)
  31. 31. Supply Chain Insights LLC Copyright © 2013, p. 31 Corporate Summary
  32. 32. Supply Chain Insights LLC Copyright © 2013, p. 32 Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  33. 33. Supply Chain Insights LLC Copyright © 2013, p. 33 Inventory Turns vs. Revenue per Employee (2003-2012)
  34. 34. Supply Chain Insights LLC Copyright © 2013, p. 34 Inventory Turns vs. Operating Margin (2000-2012)
  35. 35. Supply Chain Insights LLC Copyright © 2013, p. 35 Corporate Summary
  36. 36. Supply Chain Insights LLC Copyright © 2013, p. 36 Cash-to-Cash Cycle (2000-2012)
  37. 37. Supply Chain Insights LLC Copyright © 2013, p. 37 Inventory Turns vs. Revenue per Employee (2002-2012)
  38. 38. Supply Chain Insights LLC Copyright © 2013, p. 38 Inventory Turns vs. Operating Margin (2000-2012)
  39. 39. Supply Chain Insights LLC Copyright © 2013, p. 39 Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  40. 40. Supply Chain Insights LLC Copyright © 2013, p. 40 Case Study
  41. 41. Supply Chain Insights LLC Copyright © 2013, p. 41 Inventory Turns vs. Operating Margin (2000-2012)
  42. 42. 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
  43. 43. 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
  44. 44. 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
  45. 45. Supply Chain Insights LLC Copyright © 2013, p. 46 Global Summit 2014 Registration is Now Open Supply Chain Insights Global Summit 2014 September 10-11, 2014 The Phoenician – Scottsdale, AZ USA www.supplychaininsightsglobalsummit.com
  46. 46. Supply Chain Insights LLC Copyright © 2013, p. 47 Upcoming Corporate Training Chicago, IL and Atlanta, GA November 11-12, 2013 Chicago, IL USA January 16-17, 2014 Atlanta, GA USA www.supplychaininsights.com/training
  47. 47. Supply Chain Insights LLC Copyright © 2013, p. 48 Questions?
  48. 48. 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.
  49. 49. Supply Chain Insights LLC Copyright © 2013, p. 50 Where Do You Find Lora? Contact Information: lora.cecere@supplychaininsights.com Blog: www.supplychainshaman.com (5000 pageviews/month) Twitter: lcecere 5200 followers. LinkedIn: linkedin.com/pub/lora- cecere/0/196/573 (5450 in the network)
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