Supply Chain Insights Webinar on Supply Chain Excellence in the Process Industries

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A look at how process industries are conquering the Supply Chain Effective Frontier. Webinar to be presented on Monday at 1:00 PM EST.

A look at how process industries are conquering the Supply Chain Effective Frontier. Webinar to be presented on Monday at 1:00 PM EST.

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  • 1. Supply Chain Index Twenty Years in the Making: A Focus on Process Industries Webinar: September 24, 2012
  • 2. Our Presenters TodayLora Cecere Abby MayerFounder Research AssociateSupply Chain Insights Supply Chain Insights Supply Chain Insights LLC Copyright © 2012, p. 2
  • 3. BRICKS Book Publishes Matter December 2012 The Role of Supply Chains in Building Market-Driven Differentiation LORA M. CECERE CHARLES W. CHASE JR.
  • 4. Agenda Supply Chain Insights LLC Copyright © 2012, p. 4
  • 5. Evolving Practices Supply Chain Insights LLC Copyright © 2012, p. 5
  • 6. Problems in Benchmarking• Self-reported data• Peer group relevance• Congruency: – Point in time – Similar data models – Holistic Views. Metric understanding Supply Chain Insights LLC Copyright © 2012, p. 6
  • 7. Our ProcessInitial Data CollectionFebruary – May 2012 Evaluating the MetricsLocated annual reports May – August 2012back to 1990 Determining Industry PotentialBuilt spreadsheet Identified the metrics thatcomparisons by industry matter August 2012 - present Building the IndexExamined industry Analyzed by ratios to Charting industry trade-averages for: enable meaningful offs and evaluating the August 2012 - present-Inventory comparison in light of size impact and industry and currency differences Build an equation by potential-Year-over-Year Growth industry peer group to Characterized the ratios Personalized charts understand industry-Revenue per Employee by the drivers on the offered as a free service potential Effective Frontier in the SCI Community to Charted the intersections accelerate learning by 4 categories of metrics Examine the relationship Augment quantitative between supply chain surveys and maturity maturity and balance models with the data from sheet financials the Effective Frontier Supply Chain Insights LLC Copyright © 2012, p. 7
  • 8. Year-over-Year Sales Growth Supply Chain Insights LLC Copyright © 2012, p. 8
  • 9. Free Cash Flow Ratio Supply Chain Insights LLC Copyright © 2012, p. 9
  • 10. Average Days of Inventory by Year 250.0 200.0Days of Inventory 150.0 100.0 50.0 0.0 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 Source: Supply Chain Insights 2012 Supply Chain Insights LLC Copyright © 2012, p. 10
  • 11. Average Days of Working Capital by Industry 350.0 300.0 250.0Days of Working Capital 200.0 150.0 100.0 50.0 0.0 -50.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Consumer Packaged Goods -20.0 -8.0 -12.0 -2.0 -21.0 -23.0 -8.0 -18.0 -11.0 -10.0 -12.0 -13.0 Chemical 37.3 44.7 61.7 71.9 64.8 64.1 63.8 57.0 51.7 74.8 85.6 77.0 Pharma 64.1 56.4 48.4 56.2 71.8 94.1 92.6 88.1 87.1 111.0 116.0 113.2 High Tech 231.5 290.3 283.5 243.5 173.5 138.9 109.4 103.0 92.4 131.9 138.9 140.9 Average 78.2 95.9 95.4 92.4 72.3 68.5 64.5 57.5 55.1 76.9 82.1 79.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Source: Supply Chain Insights 2012 Supply Chain Insights LLC Copyright © 2012, p. 11
  • 12. Agenda Supply Chain Insights LLC Copyright © 2012, p. 12
  • 13. Supply Chain Management:Top 3 Elements of Pain for Respondent Supply Chain Insights LLC Copyright © 2012, p. 13
  • 14. Evolution of Supply Chain Process ExcellenceAlign:MarketDriven Resilient Efficient Cost Procure to pay/order to cash Supply Chain Insights LLC Copyright © 2012, p. 14
  • 15. Evolution of Supply Chain Process ExcellenceAlign:MarketDriven Adapt: Demand Reliable Driven Right Product Efficient Right Place Cost Right Time Procure to pay/order to Right Cost cash Supply Chain Insights LLC Copyright © 2012, p. 15
  • 16. Evolution of Supply Chain Process ExcellenceAlign:MarketDriven Adapt: Demand Resilient Reliable Driven Right Product Efficient Absorb Demand Volatility Right Place Cost Right Time Absorb Procure to Supply pay/order to Volatility Right Cost cash Supply Chain Insights LLC Copyright © 2012, p. 16
  • 17. Evolution of Supply Chain Process ExcellenceAlign:MarketDriven Adapt: Demand Resilient Reliable Driven Right Product Efficient Absorb Sense Demand Demand Volatility Right Place Cost and Supply Right Time Absorb Procure to Shape Supply pay/order to Demand and Volatility Right Cost cash Supply based on Market Supply Chain Insights LLC Copyright © 2012, p. 17
  • 18. Evolution of Supply Chain Process ExcellenceAlign: Continuous Testing Building Horizontal OrchestrateMarket Process Connectors Learning Improving Demand and Supply In MarketDriven Adapt: Demand Resilient Reliable Driven Right Product Efficient Absorb Sense Demand Demand Volatility Right Place Cost and Supply Right Time Absorb Procure to Shape Supply pay/order to Demand and Volatility Right Cost cash Supply based on Market Supply Chain Insights LLC Copyright © 2012, p. 18
  • 19. Supply Chain Excellence Supply Chain Insights LLC Copyright © 2012, p. 19
  • 20. What is a Supply Chain? A Supply Chain is a Complex System with Complex Processeswith Increasing Complexity Supply Chain Insights LLC Copyright © 2012, p. 20
  • 21. Typical Organization Supply Chain Insights LLC Copyright © 2012, p. 21
  • 22. Looking at Supply Chain as a Complex System Profitable Growth Revenue Cost of Goods Corporate Trade-offs Working Capital Corporate Social Responsibility Investment Trade-offs R&D Strategy and Investment Asset Strategy and Investment Forecast Accuracy Customer Service InventorySupply Chain Trade-offs Channel Strategy Product and Supplier Strategy Service Portfolio Sales Distribution Manufacturing Logistics ProcurementSupply Chain Policies Policies Policies Policies Policies Waste Returns Backorders First Pass Yield Empty Miles Material Yield Supply Chain Insights LLC Copyright © 2012, p. 22
  • 23. Metrics Supply Chain Insights LLC Copyright © 2012, p. 23
  • 24. What is Best in Class?• Performance better than peer group• Year-over-year improvements• Consistency in results• Leadership in managing trade-offs and expanding the limits of the Effective Frontier Supply Chain Insights LLC Copyright © 2012, p. 24
  • 25. Agenda Supply Chain Insights LLC Copyright © 2012, p. 25
  • 26. Corporate Summary Supply Chain Insights LLC Copyright © 2012, p. 26
  • 27. Metrics Included for Comparison Supply Chain Insights LLC Copyright © 2012, p. 27
  • 28. Cash-to-Cash Cycle vs. Gross Margin (2000-2003) Supply Chain Insights LLC Copyright © 2012, p. 28
  • 29. Cash-to-Cash Cycle vs. Gross Margin (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 29
  • 30. Cash-to-Cash Cycle vs. Gross Margin (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 30
  • 31. Cash-to-Cash Cycle vs. Gross Margin (2000-2011) SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 31
  • 32. Inventory Turns vs. Revenue per Employee (2002-2003) Supply Chain Insights LLC Copyright © 2012, p. 32
  • 33. Inventory Turns vs. Revenue per Employee (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 33
  • 34. Inventory Turns vs. Revenue per Employee (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 34
  • 35. Inventory Turns vs. Revenue per Employee (2002-2011) SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 35
  • 36. Audience PollWho is the supply chain leader?  Colgate  Kimberly Clark  Kraft Foods  Procter & Gamble  Unilever  Cannot tell. No leader. Supply Chain Insights LLC Copyright © 2012, p. 36
  • 37. Corporate Summary Supply Chain Insights LLC Copyright © 2012, p. 37
  • 38. Metrics Included for Comparison Supply Chain Insights LLC Copyright © 2012, p. 38
  • 39. Cash-to-Cash Cycle vs. Gross Margin (2000-2003) Supply Chain Insights LLC Copyright © 2012, p. 39
  • 40. Cash-to-Cash Cycle vs. Gross Margin (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 40
  • 41. Cash-to-Cash Cycle vs. Gross Margin (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 41
  • 42. Cash-to-Cash Cycle vs. Gross Margin (2000-2011) SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 42
  • 43. Inventory Turns vs. Revenue per Employee (2002-2003) Supply Chain Insights LLC Copyright © 2012, p. 43
  • 44. Inventory Turns vs. Revenue per Employee (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 44
  • 45. Inventory Turns vs. Revenue per Employee (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 45
  • 46. Inventory Turns vs. Revenue per Employee (2002-2011) SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 46
  • 47. Audience PollWho is the supply chain leader?  BASF  E I Du Pont  Dow Chemical  Cannot tell. No leader. Supply Chain Insights LLC Copyright © 2012, p. 47
  • 48. Corporate Summary Supply Chain Insights LLC Copyright © 2012, p. 48
  • 49. Metrics Included for Comparison Supply Chain Insights LLC Copyright © 2012, p. 49
  • 50. Cash-to-Cash Cycle vs. Gross Margin (2000-2003) Supply Chain Insights LLC Copyright © 2012, p. 50
  • 51. Cash-to-Cash Cycle vs. Gross Margin (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 51
  • 52. Cash-to-Cash Cycle vs. Gross Margin (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 52
  • 53. Cash-to-Cash Cycle vs. Gross Margin 2000-2011 SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 53
  • 54. Inventory Turns vs. Revenue per Employee (2002-2003) Supply Chain Insights LLC Copyright © 2012, p. 54
  • 55. Inventory Turns vs. Revenue per Employee (2004-2007) Supply Chain Insights LLC Copyright © 2012, p. 55
  • 56. Inventory Turns vs. Revenue per Employee (2008-2011) Supply Chain Insights LLC Copyright © 2012, p. 56
  • 57. Inventory Turns vs. Revenue per Employee (2002-2011) SUMMARY SLIDE Supply Chain Insights LLC Copyright © 2012, p. 57
  • 58. Audience PollWho is the supply chain leader?  Abbott Laboratories  Merck  Pfizer  Cannot tell. No leader. Supply Chain Insights LLC Copyright © 2012, p. 58
  • 59. Join Us!www.scicommunity.com Supply Chain Insights LLC Copyright © 2012, p. 59
  • 60. Agenda Supply Chain Insights LLC Copyright © 2012, p. 60
  • 61. Wrap-up• Supply chain management is thirty years old• The definition of supply chain excellence is evolving• Delivery can best be measured through the analysis of financial metrics and the balance sheet Supply Chain Insights LLC Copyright © 2012, p. 61
  • 62. Questions? Supply Chain Insights LLC Copyright © 2012, p. 62
  • 63. • Thank you so much for joining us today and we look forward to continuing the conversation on Twitter. Follow along and participate with hashtag #SCIWebinar.• Be sure to view the full research report, Conquering the Supply Chain Effective Frontier by Lora and Abby on our website under research at www.supplychaininsights.com• Also check out Loras blog Supplychainshaman.com and Abbys blog SupplyChainIndex.com• I invite you to friend me as well as Lora and Abby in the community at SCIcommunity.com. Lets continue this conversation there. I look forward to meeting you.• See you on October 26th for the next installment of our webinar series. Supply Chain Index: a Focus on Discrete Industries. Supply Chain Insights LLC Copyright © 2012, p. 63
  • 64. Who is Supply Chain Insights?Supply Chain Insights is focused on deliveringactionable advice for supply chain leaders.A company dedicated to research, turn to uswhen you want the latest insights on supplychain trends, technologies to know and metricsthat matter. Supply Chain Insights LLC Copyright © 2012, p. 64
  • 65. Metric Equations Supply Chain Insights LLC Copyright © 2012, p. 65