The presentation given during the panel discussion of the Math Behind the Supply Chain Index at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 11, 2014 The panel included: Lora Cecere, Founder and CEO of Supply Chain Insights Dr. George Runger, Professor, School of Computing, Informatics and Decision Systems Engineering – Ira A. Fulton School of Engineering at Arizona State University Abby Mayer, Research Associate at Supply Chain Insights The Math Behind the Supply Chain Index Join this session to understand the math behind the newly launched Supply Chain Index. This data-driven analysis gives supply chain leaders a new way to measure supply chain improvement.

1. Lora Cecere, Supply Chain Insights
Dr. George Runger, Arizona State University
Abby Mayer, Supply Chain Insights
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2. Speakers
Lora Cecere
Supply Chain Insights
Founder and CEO
Dr. George Runger
Arizona State University
Professor, School of
Computing, Informatics and
Decision Systems Engineering
– Ira A. Fulton School of
Engineering
Abby Mayer
Supply Chain Insights
Research Associate
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3. The Supply Chain Effective Frontier
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4. Mining 20 Years of Financial Data
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5. Companies Get More Serious with a Recession
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6. Correlations to Market Capitalization
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7. The Promise
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8. Orbit Chart: Dow Chemical (Inventory Turns Vs. Operating Margin)
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9. Supply Chain Metrics That Matter Reports
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10. Operating Margin: Is Bigger Better?
Operating Margin for Years 2000-2012
Industry Segment
Companies between $1-5B
in Annual Revenue
Companies Greater than
$5B in Annual Revenue
Automotive .03 .04
Chemical .08 .10
Consumer Electronics .03 .03
Consumer Packaged Goods .11 .13
Contract Manufacturers .02 .04
Food and Beverage .08 .05
Hospitals .09 .14
Mass Retail .04 .03
Medical Device .15 .16
Pharmaceuticals .11 .19
Semiconductors .03 .04
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
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11. Inventory Turns: Is Bigger Better?
Inventory Turns for Years 2000-2012
Industry Segment
Companies between $1-5B
in Annual Revenue
Companies Greater than
$5B in Annual Revenue
Automotive 7.4 7.5
Chemical 5.3 4.6
Consumer Electronics 6.5 6.8
Consumer Packaged Goods 4.1 4.8
Contract Manufacturers 7.6 7.2
Food and Beverage 6.2 11.1
Hospitals 13.3 11.1
Mass Retailers 10.5 7.6
Medical Device 4.7 3.2
Pharmaceuticals 3.6 2.7
Semiconductor 7.6 6.5
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
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12. Our Answer? For Supply Chain Excellence?
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13. Supply Chain Index: A Measure of Supply Chain Improvement
Overall Ranking per Company
A new way to measure relative
supply chain performance by
industry, based on the
components of balance,
strength and resiliency.
• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory
• Strength: Inventory Turns & Operating Margin Vector Trajectory
• Resiliency: Inventory Turns & Operating Margin Mean Distance
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14. Supply Chain Index: A Measure of Supply Chain Improvement
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15. Do you think that the factors in the Supply Chain Index
(balance, strength and resiliency)
should be weighted equally?
a) Yes, weight them equally
b) No, weight them differently
c) Not sure – still thinking about it
To respond, go to www.scisummitpolling.cnf.io, select current session name
and choose your response. Aggregated responses will be shared at the end!
Polling sponsored by
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16. What Is Resiliency?
Resiliency =
Tightness of the pattern on
the orbit chart for operating
margin and inventory turns
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17. Resiliency 2000-2013
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18. Consumer Goods
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19. Chemical 2006-2013
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20. Chemical 2009-2013
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21. Summary
• Patterns are significantly different by industry.
• Many have exaggerated both supply chain
performance and improvement.
• Work on the Supply Chain Index is challenging
and evolving.
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