Supply Chain Insights Global Summit 2013 - Supply Chain Financial Benchmarking with Lora Cecere

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Supply Chain Metrics That Matter …

Supply Chain Metrics That Matter
An overview of supply chain progress in the last decade. A look at companies' progress on the Supply Chain Effective Frontier.

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  • 1. Supply Chain Insights Global Summit #SCISummit September 2013, p.1TM
  • 2. Supply Chain Insights Global Summit #SCISummit September 2013, p.2TM Our Point of View: Definition of 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
  • 3. Supply Chain Insights Global Summit #SCISummit September 2013, p.3TM September 2013, p.3TM Supply Chain Insights Global Summit #SCISummit The Supply Chain Effective Frontier
  • 4. Supply Chain Insights Global Summit #SCISummit September 2013, p.4TM Ratios Considered Growth Profitability Cycle Complexity R&D Margin Cash on Hand C2C Cycle Altman Z R&D to COGS Ratio Free Cash Flow Ratio Days of Finished Goods Capital Turnover SGA Margin Gross Margin Days of Inventory Current Ratio SGA/COGS Net Profit Days of Payables Outstanding Quick Ratio COGS as Percent of Net Sales Operating Margin Days of Raw Materials Return on Assets Pretax Margin (EBIT) Days of Sales Outstanding Return on Equity YoY Sales Growth Days of Work in Progress Return on Invested Capital Operating Margin DPO/DSO Return on Net Assets Inventory Turns Revenue/Employee Receivables Turns Cost of Sales
  • 5. Supply Chain Insights Global Summit #SCISummit September 2013, p.5TM Supply Chain Insights Global Summit #SCISummit September 2013, p.5TM Household Products Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 6. Supply Chain Insights Global Summit #SCISummit September 2013, p.6TM An Example of Benchmarking in Household Products
  • 7. Supply Chain Insights Global Summit #SCISummit September 2013, p.7TM Household Products: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  • 8. Supply Chain Insights Global Summit #SCISummit September 2013, p.8TM Household Products: Inventory Turns vs. Revenue per Employee (2002-2012)
  • 9. Supply Chain Insights Global Summit #SCISummit September 2013, p.9TM Household Products: Inventory Turns vs. Operating Margin (2000-2012)
  • 10. Supply Chain Insights Global Summit #SCISummit September 2013, p.10TM Household Products Comparison
  • 11. Supply Chain Insights Global Summit #SCISummit September 2013, p.11TM Our Interpretation: Household Products Summary • P&G has delivered a more balanced results performance with better year-over-year performance than Unilever. • While P&G is 21% larger in revenue than Unilever, the average productivity is 48% higher. • Sector operating margin has decreased in the last three years.
  • 12. Supply Chain Insights Global Summit #SCISummit September 2013, p.12TM Supply Chain Insights Global Summit #SCISummit September 2013, p.12TM Chemical Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 13. Supply Chain Insights Global Summit #SCISummit September 2013, p.13TM An Example of Benchmarking for Two Chemical Companies
  • 14. Supply Chain Insights Global Summit #SCISummit September 2013, p.14TM Chemical: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  • 15. Supply Chain Insights Global Summit #SCISummit September 2013, p.15TM Chemical: Inventory Turns vs. Revenue per Employee (2002-2012)
  • 16. Supply Chain Insights Global Summit #SCISummit September 2013, p.16TM Chemical: Inventory Turns vs. Operating Margin (2000-2012)
  • 17. Supply Chain Insights Global Summit #SCISummit September 2013, p.17TM Chemical Comparison
  • 18. Supply Chain Insights Global Summit #SCISummit September 2013, p.18TM • Chemical companies are less resilient than household products. • Both companies struggled to maintain balance in the Great Recession. DuPont has been more resilient than Ashland. • Ashland historically pushed more aggressive performance on supply chain cycles, but was not able to maintain these performance levels. Our Interpretation: Chemical Summary
  • 19. Supply Chain Insights Global Summit #SCISummit September 2013, p.19TM Supply Chain Insights Global Summit #SCISummit September 2013, p.19TM Pharmaceutical Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 20. Supply Chain Insights Global Summit #SCISummit September 2013, p.20TM An Example of Benchmarking for Two Pharmaceutical Companies
  • 21. Supply Chain Insights Global Summit #SCISummit September 2013, p.21TM Pharmaceutical: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  • 22. Supply Chain Insights Global Summit #SCISummit September 2013, p.22TM Pharmaceutical: Inventory Turns vs. Revenue per Employee: (2002-2012)
  • 23. Supply Chain Insights Global Summit #SCISummit September 2013, p.23TM Pharmaceutical: Inventory Turns vs. Operating Margin (2000-2012)
  • 24. Supply Chain Insights Global Summit #SCISummit September 2013, p.24TM Pharmaceutical Comparison
  • 25. Supply Chain Insights Global Summit #SCISummit September 2013, p.25TM Our Interpretation: Pharmaceutical Summary • Bristol Myers Squibb has the most balanced performance of supply chain metrics in the pharmaceutical industry. • Pharmaceutical company performance is less resilient than chemical companies.
  • 26. Supply Chain Insights Global Summit #SCISummit September 2013, p.26TM Supply Chain Insights Global Summit #SCISummit September 2013, p.26TM High-tech & Electronics Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 27. Supply Chain Insights Global Summit #SCISummit September 2013, p.27TM An Example of Benchmarking for Two High-tech & Electronics Companies
  • 28. Supply Chain Insights Global Summit #SCISummit September 2013, p.28TM High-tech & Electronics: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  • 29. Supply Chain Insights Global Summit #SCISummit September 2013, p.29TM High-tech & Electronics: Inventory Turns vs. Revenue per Employee (2002-2012)
  • 30. Supply Chain Insights Global Summit #SCISummit September 2013, p.30TM High-tech & Electronics: Inventory Turns vs. Operating Margin (2000-2012)
  • 31. Supply Chain Insights Global Summit #SCISummit September 2013, p.31TM High-tech & Electronics Comparison
  • 32. Supply Chain Insights Global Summit #SCISummit September 2013, p.32TM Our Interpretation: High-tech & Electronics Summary • The last decade for high-tech companies have been rough and turbulent. This has been to a greater degree than other industries. • Seagate has outperformed Western Digital in their ability to balance supply chain financial ratios in a tough market.
  • 33. Supply Chain Insights Global Summit #SCISummit September 2013, p.33TM Supply Chain Insights Global Summit #SCISummit September 2013, p.33TM Apparel Retail Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 34. Supply Chain Insights Global Summit #SCISummit September 2013, p.34TM Note: Zara is a brand of Inditex An Example of Benchmarking for Two Apparel Retail Companies
  • 35. Supply Chain Insights Global Summit #SCISummit September 2013, p.35TM Apparel Retail: Cash-to-Cash Versus Inventory Turns 2001-2012
  • 36. Supply Chain Insights Global Summit #SCISummit September 2013, p.36TM Apparel Retail: Inventory Turns vs. Revenue per Employee (2003-2012)
  • 37. Supply Chain Insights Global Summit #SCISummit September 2013, p.37TM Apparel Retail: Inventory Turns vs. Operating Margin (2001-2012)
  • 38. Supply Chain Insights Global Summit #SCISummit September 2013, p.38TM Apparel Retail Comparison
  • 39. Supply Chain Insights Global Summit #SCISummit September 2013, p.39TM Our Interpretation: Apparel Retail Summary • Both companies have outperformed their peer group in operating margin and under-performed in growth. • At 1/20th the size of the supply chain leader Inditex (the parent company of Zara), Lululemon has balanced supply chain ratios showing year-over-year improvement.
  • 40. Supply Chain Insights Global Summit #SCISummit September 2013, p.40TM Supply Chain Insights Global Summit #SCISummit September 2013, p.40TM Mass Merchant Retail Supply Chain Financial Benchmarking Answering the Question: What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
  • 41. Supply Chain Insights Global Summit #SCISummit September 2013, p.41TM An Example of Benchmarking for Two Mass Merchant Retail Companies
  • 42. Supply Chain Insights Global Summit #SCISummit September 2013, p.42TM Mass Merchant Retail: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  • 43. Supply Chain Insights Global Summit #SCISummit September 2013, p.43TM Mass Merchant Retail: Inventory Turns vs. Revenue per Employee (2003-2012)
  • 44. Supply Chain Insights Global Summit #SCISummit September 2013, p.44TM Mass Merchant Retail: Inventory Turns vs. Operating Margin (2000-2012)
  • 45. Supply Chain Insights Global Summit #SCISummit September 2013, p.45TM Mass Merchant Retail Comparison
  • 46. Supply Chain Insights Global Summit #SCISummit September 2013, p.46TM Our Interpretation: Mass Merchant Retail Summary • Each industry has a different pattern. • Industry leaders have very tight patterns showing year- over-year improvement on a balanced portfolio of metrics. • Leaders improve the potential of the supply chain and make conscious trade-offs.
  • 47. Supply Chain Insights Global Summit #SCISummit September 2013, p.47TM