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Lora Cecere “Market Driven Value Networks”

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Keynote Presentation from Elemica's inSIGHT 2013 Conference

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Lora Cecere “Market Driven Value Networks”

  1. 1. Creating Market-driven Value Networks Lora Cecere of Supply Chain Insights
  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 18 Reports in 2012
  4. 4. Supply Chain Insights LLC Copyright © 2013, p. 4 Over 30 Reports Planned for 2013 #sciwebinar
  5. 5. Supply Chain Insights LLC Copyright © 2013, p. 5 This is the new bible for all supply chain executives. It provides an insider’s perspective that will prove incredibly valuable to even the most grizzled supply chain veteran. This is the next must-have business book. --Bruce Richardson, Chief Enterprise Strategist, Salesforce.com Today, the worlds of social business and supply chain management have many degrees of separation. I enjoyed working with Lora to understand what the future transformation of digital marketing to digital business could look like. --Jeremiah Owyang, Research Director, Altimeter Second Printing of Bricks Matter: 17 Five-Star Reviews on Amazon Book can be ordered from Amazon.com in Hardcopy or Digital Format
  6. 6. Right Use of Assets Expansion into BRIC Countries (Brazil, Russia, India and China) Supply Chain Process Knowledge
  7. 7. Supply Chain Insights LLC Copyright © 2013, p. 7 Publishing Two eBooks in 2013 on Supply Chain Metrics That Matter – Consumer Value Networks – Industrial Value Networks 2013 Publications Publishing Two eBooks in 2013 on Supply Chain Metrics That Matter #sciwebinar
  8. 8. Where are we on Delivering on Supply Chain Excellence?
  9. 9. Supply Chain Insights LLC Copyright © 2013, p. 9 Current State
  10. 10. Supply Chain Insights LLC Copyright © 2013, p. 10 Agility
  11. 11. Supply Chain Insights LLC Copyright © 2013, p. 11 A Supply Chain is a Complex System with Complex Processes with Increasing Complexity
  12. 12. Supply Chain Insights LLC Copyright © 2013, p. 12 The Supply Chain Effective Frontier
  13. 13. Supply Chain Insights LLC Copyright © 2013, p. 13 Mining 20 Years of Financial Data
  14. 14. Supply Chain Insights LLC Copyright © 2013, p. 14  Perform better than peer group  Improve year-over-year results  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
  15. 15. Supply Chain Insights LLC Copyright © 2013, p. 15 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
  16. 16. Supply Chain Insights LLC Copyright © 2013, p. 16 Most Interesting Patterns • Revenue per Employee versus Inventory Turns • Operating Margin versus Inventory Turns • Cash-to-Cash Cycle versus Inventory Turns
  17. 17. Supply Chain Insights LLC Copyright © 2013, p. 17 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.
  18. 18. Supply Chain Insights LLC Copyright © 2013, p. 18 A Look at the Last Decade
  19. 19. Supply Chain Insights LLC Copyright © 2013, p. 19 Progress in Manufacturing Productivity
  20. 20. Supply Chain Insights LLC Copyright © 2013, p. 20 Productivity in Retail
  21. 21. Supply Chain Insights LLC Copyright © 2013, p. 21 Progress in Inventory Turns and Operating Margin
  22. 22. Supply Chain Insights LLC Copyright © 2013, p. 22 Impact of A Recession
  23. 23. Supply Chain Insights LLC Copyright © 2013, p. 23 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)
  24. 24. Supply Chain Insights LLC Copyright © 2013, p. 24 Corporate Summary
  25. 25. Supply Chain Insights LLC Copyright © 2013, p. 25 Inventory Turns vs. Revenue per Employee (2002-2012)
  26. 26. Supply Chain Insights LLC Copyright © 2013, p. 26 Corporate Summary
  27. 27. Supply Chain Insights LLC Copyright © 2013, p. 27 Cereal
  28. 28. Who Does Supply Chain Best? October 2013
  29. 29. Supply Chain Insights LLC Copyright © 2013, p. 29 Corporate Summary
  30. 30. Supply Chain Insights LLC Copyright © 2013, p. 30 Cash-to-Cash Cycle (2000-2012)
  31. 31. Supply Chain Insights LLC Copyright © 2013, p. 31 CPG Ranking 2012
  32. 32. Supply Chain Insights LLC Copyright © 2013, p. 32 Inventory Turns vs. Revenue per Employee (2002-2012)
  33. 33. Supply Chain Insights LLC Copyright © 2013, p. 33 Inventory Turns vs. Operating Margin (2000-2012)
  34. 34. Supply Chain Insights LLC Copyright © 2013, p. 34 Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  35. 35. Who Does Supply Chain Best? October 2013
  36. 36. Supply Chain Insights LLC Copyright © 2013, p. 36 Corporate Summary
  37. 37. Supply Chain Insights LLC Copyright © 2013, p. 37 Cash-to-Cash Cycle (2000-2012)
  38. 38. Supply Chain Insights LLC Copyright © 2013, p. 38 Inventory Turns vs. Revenue per Employee (2002-2012)
  39. 39. Supply Chain Insights LLC Copyright © 2013, p. 39 Inventory Turns vs. Operating Margin (2000-2012)
  40. 40. Supply Chain Insights LLC Copyright © 2013, p. 40 Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
  41. 41. Supply Chain Insights LLC Copyright © 2013, p. 41 Case Study
  42. 42. Supply Chain Insights LLC Copyright © 2013, p. 42 Inventory Turns vs. Operating Margin (2000-2012)
  43. 43. Supply Chain Insights LLC Copyright © 2013, p. 43 What Matters
  44. 44. Supply Chain Insights LLC Copyright © 2013, p. 44
  45. 45. Supply Chain Insights LLC Copyright © 2013, p. 45 Industry Progress
  46. 46. Supply Chain Insights LLC Copyright © 2013, p. 46 Introducing the Supply Chain Index A formulaic representation of how companies are trading off growth, profitability, cycle and complexity performance on selected supply chain financial metrics against market valuation. #sciwebinar A formulaic representation of how companies are trading off growth, profitability, cycle and complexity performance on selected supply chain financial metrics against market valuation.
  47. 47. Supply Chain Insights LLC Copyright © 2013, p. 47 • 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
  48. 48. Supply Chain Insights LLC Copyright © 2013, p. 48 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
  49. 49. Building Market-driven Value Networks
  50. 50. Supply Chain Insights LLC Copyright © 2013, p. 50 Process Evolution Align: Market Driven Building Horizontal Process Connectors Continuous Testing Learning Improving In Market Orchestrate Demand and Supply Resilient Reliable Adapt: Demand Driven Efficient Sense Demand and Supply Shape Demand and Supply based on Market Absorb Demand Volatility Absorb Supply Volatility Right Product Right Place Right Time Right Cost Cost Procure to pay/order to cash
  51. 51. Supply Chain Insights LLC Copyright © 2013, p. 51 A network that senses demand with minimal latency to drive a near-real time response for demand shaping and demand translation. What Is a Demand-driven Value Network?
  52. 52. Supply Chain Insights LLC Copyright © 2013, p. 52 Rising Price of a Barrel of West Texas Intermediate (WTI)
  53. 53. Supply Chain Insights LLC Copyright © 2013, p. 53 Commodity Price Increases and Volatility
  54. 54. Supply Chain Insights LLC Copyright © 2013, p. 54 An adaptive network focused on a value- based outcome that senses and translates market changes (buy and sell-side markets) bi-directionally with near-real time data latency to align sell, deliver, make and sourcing operations. What Is a Market-driven Value Network?
  55. 55. Supply Chain Insights LLC Copyright © 2013, p. 55 Current State
  56. 56. Supply Chain Insights LLC Copyright © 2013, p. 56 SHARED VISION + SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION SHARED VISION + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY SHARED VISION + SKILLS + INCENTIVE + RESOURCES + LEADERSHIP = FALSE STARTS SHARED VISION + SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION SHARED VISION + SKILLS + RESOURCES + PLAN + LEADERSHIP = GRADUAL CHANGE Source: J.P. Kotter Collaboration: The Right Stuff
  57. 57. Supply Chain Insights LLC Copyright © 2013, p. 57 Market-Driven Value Networks Characteristics
  58. 58. Supply Chain Insights LLC Copyright © 2013, p. 58 Demand-shaping Levers New Product Launch Marketing Sales Incentives Trade Promotions Distributor Incentives Assortment Price Run-out of obsolescence or mark- down strategies Orchestration Levers Market-driven Orchestration Levers Price to Price Orchestration Alternate Bill of Materials Alternate Sourcing Change in Assortment Orchestration of Product Mix (Incent products with less commodity variability) Changes in Demand Shaping Strategies Commodity Hedging
  59. 59. Supply Chain Insights LLC Copyright © 2013, p. 59 Value Network Strategy Supply chain strategy Business Strategy What are the right things to do to increase company value? Value-network Supply Chain Strategy What are the right ways to support the business strategy? What are the right trade-offs between value drivers for each value network? Right product platforms Design the supply response Build organizational systems and manage talent Align supply relationships Align demand relationships Effective Supply Networks Execution of buy- side strategies Continuous Improvement Capabilities Required Supply Chain Network Design Design Networks Innovation Methodologies Demand Networks Joint Value Creation Strategies Business Process How do I do the right things right? Source: Supply Chain Insights, LLC
  60. 60. Supply Chain Insights LLC Copyright © 2013, p. 60 Building an Effective Center of Excellence
  61. 61. Race for Supply Chain 2020
  62. 62. Supply Chain Insights LLC Copyright © 2013, p. 62 Outside-In Value-Based Outcomes Delivered by Value Networks Supply Chain Excellence = Supply Chain 2020 Tipping Points 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Talent Shortage Compliance on Safe & Secure Orchestration Big Data Supply Chains 2025 Internet of Things Learning Supply Chains Digital Manufacturing
  63. 63. Supply Chain Insights LLC Copyright © 2013, p. 63 Our Journey
  64. 64. Supply Chain Insights LLC Copyright © 2013, p. 64
  65. 65. Supply Chain Insights LLC Copyright © 2013, p. 65 Current State
  66. 66. Supply Chain Insights LLC Copyright © 2013, p. 66 Gap by Position
  67. 67. Supply Chain Insights LLC Copyright © 2013, p. 67 Big Data Definition Challenges:• Transactional • Time phased data Structured Data • Social • Channel • Customer Service • Warranty • Temperature • RFID • QR codes • GPS • Mapping and GPS • Video • Voice • Digital Images Unstructured Data Sensor Data New Data Types Volume Velocity Variability
  68. 68. Supply Chain Insights LLC Copyright © 2013, p. 68 Focus
  69. 69. Supply Chain Insights LLC Copyright © 2013, p. 69 Connecting the Extended Supply Chain
  70. 70. Supply Chain Insights LLC Copyright © 2013, p. 70 Connecting the Extended Supply Chain
  71. 71. Supply Chain Insights LLC Copyright © 2013, p. 71 • Outside-in • End-to-End Orchestration • Supply Chain Matters Path Forward
  72. 72. Supply Chain Insights LLC Copyright © 2013, p. 72 Questions?
  73. 73. Supply Chain Insights LLC Copyright © 2013, p. 73 Podcasts www.supplychaininsights.com/podcast Research Anytime, Anywhere! Straight Talk with Supply Chain Insights is a fresh and engaging podcast series on supply chain research, blog posts, hot topics, and current events plus interviews with supply chain professionals.
  74. 74. Supply Chain Insights LLC Copyright © 2013, p. 74 Save the Date! Supply Chain Insights Global Summit 2014 September 10-11, 2014 The Phoenician – Scottsdale, AZ USA
  75. 75. Supply Chain Insights LLC Copyright © 2013, p. 75 Public Training www.supplychaininsights.com/training #sciwebinar November 11-12, 2013 Chicago Illinois USA January 16-17, 2014 Atlanta, Georgia USA
  76. 76. Supply Chain Insights LLC Copyright © 2013, p. 76Supply Chain Insights LLC Copyright © 2013, p. 76 PAST WEBINARS: ON DEMAND • From June 13, 2013: Sales and Operations Planning: State of the Union • From May 23, 2013: Supply Chain Index, Part II: How and Why? • From May 17, 2013: How Do We Heal the Healthcare Value Chain? • From August 17, 2013: Supply Chain Talent, the Missing Link Free Webinars www.supplychaininsights.com/upcoming-webinars UPCOMING WEBINARS • October 11: Supply Chain Metrics that Matter • November 14, 2013: Insights on Healthcare Value Networks • December 12, 2013: Digital Manufacturing
  77. 77. Supply Chain Insights LLC Copyright © 2013, p. 77 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.
  78. 78. Supply Chain Insights LLC Copyright © 2013, p. 78 Where Do You Find Lora? Contact Information: lora.cecere@supplychaininsights.com Blog: www.supplychainshaman.com (5000 pageviews/month) Twitter: lcecere 4270 followers. Rated as the top rated supply chain social network user. LinkedIn: linkedin.com/pub/lora- cecere/0/196/573 (5450 in the network)

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