Presentation prepared for the CSCMP Barcelona event on Customer-centric Supply Chains. Covers the principles of cost-to-serve, demand-driven value networks, and use of unstructured data to listen. Steps to build a customer-centric Supply Chains.
Get ready for 2014 planning by benchmarking the financial performance of your supply chain. Using a database of over 50 metrics with 20 years of data, the Supply Chain Insights team can help you better understand your supply chain potential. This analysis enables visualization of company performance on managing the trade-offs of growth, profitability, inventory/cash cycles and complexity.
We find that each company has a unique pattern in how they managed trade-offs. The analysis helps you benchmark against your peer group and make a conscious choice. Through a deeper understanding of industry averages and outliers, this type of study helps you to better understand your supply chain potential. While many companies have used this service to understand public performance, many leaders have taken it one step further to benchmark divisions or product groups within their companies.
Conquering the Supply Chain Effective FrontierLora Cecere
Conquering the Supply Chain Effective Frontier - A Handbook for the Value Chain Leader to Manage Trade-offs in Defining Supply Chain Excellence
Supply chain practices are nearing their third decade of maturation. The term supply chain excellence is bandied about by leaders, consultants and technology providers, but there is no alignment on what it means.
Conventional systems of measurement for supply chain excellence are problematic. In this report, we share insights gained during interviews with 75 supply chain pioneers. Based on their feedback we created a new framework, that we define here as the Supply Chain Effective Frontier, for supply chain leaders to use to determine supply chain excellence. This methodology is based on publicly available financial balance sheet data grouped into four sets of supply chain ratios: growth, profitability, cycle, and complexity.
We believe that supply chain excellence is best defined as the alignment of the supply chain team to deliver results to meet and exceed the requirements of the business strategy. This requires a clear vision and cross-functional coordination and alignment over a multi-year road map. It needs to be holistic. A supply chain is a complex system with increasing business complexity. The analysis needs to facilitate a clear understanding of trade-offs embedded in day-to-day decision making. It is this clarity that we find missing in many teams that we work with, and it is for this reason we wrote this report.
Supply Chain Metrics That Matter: A Focus on Apparel - 9 May 2013Lora Cecere
Different industries are making progress on supply chain excellence at different rates. In the writing of the Supply Chain Metrics That Matter series of reports, we see that the consumer electronics industry is one of the only sectors making consistent and sustainable progress in balancing growth, profitability, cycles and complexity. We also see that many other industries—chemical, consumer products, pharmaceutical and medical device—are stuck on a horizontal plateau. They are treading water with no company able to move forward. In contrast, we see that the apparel industry is trending backwards.
When we analyze progress in the apparel industry over the last decade, we see a degradation of results on the Supply Chain Effective Frontier: days of inventory are flat or increasing and three of the six companies show flat or decreasing performance on operating margin. This is the sharpest reversal in progress on supply chain excellence that we have seen in the Supply Chain Metrics That Matter series (for a complete series listing see the Appendix).
Figure 1 illustrates the intersection of inventory turns and revenue per employee over the preceding decade. Ideally, companies would be moving consistently from the lower left to the upper right as they increased both inventory turns and revenue per employee performance. Instead, we see inconsistency, a lack of resiliency and stagnancy across the industry.
Supply Chain Metrics That Matter: Driving Reliability in Margins - 6 JAN 2013Lora Cecere
Supply chain management practices are thirty years old. Over the last decade, companies have invested in technology projects to improve financial outcomes (Technology investments over this period have averaged 1.7% of revenue). The ultimate goal was to reduce costs and improve inventory management. While many supply chain leaders believe that they delivered on these metrics, we find a less persuasive story. Through analysis of publically available balance sheet and income statement data, we find that 75% of companies in process industries lost ground on margins and only 5% of companies improved their positions on the number of days of inventory. The goal of this report is to answer the question “Why?” (For more on inventory and the Cash-to-Cash Cycle, see Supply Chain Metrics That Matter: The Cash-to-Cash Cycle.)
To begin our analysis, we wanted to understand the general trends. In table 1, we share the differences in average values for the companies profiled in this report by industry for the period of 2000-2011. In general, we see a decline in operating margins (OM). There is an increase in selling, general & administrative Costs (SG&A) and revenue per employee performance. The industries have mixed results on return on assets (ROA).
Sales & Operations Planning - The State of the Union - 10 June 2013Lora Cecere
Sales and Operations Planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is slow. The infographic below shows the current state of the union of sales and operations into S&OP processes. In this world of uncertainty, good planning matters. Complexity and volatility are escalating. Improving S&OP in a systematic approach, focused on goal evolution and systemic process governance, makes a difference; but, it requires education. A barrier to improvement is the executive team not understanding the supply chain as a complex system. It is the goal of this report to help alleviate this problem.
Retail Scorecards Study 2014 - Summary Charts Lora Cecere
Executive Overview
Retail scorecards are now more than a decade old. The companies in this study had an average of more than five years of experience using retail scorecards. Buyers and suppliers now manage multiple scorecards simultaneously (in the same relationship) in trading partner communications. The most common scorecards are focused in the areas of supply chain.
As with any relationship, there is always a carrot and a stick. A carrot, or an incentive to do better, is a positive reward system given to affirm good behavior; while a stick is a punitive action for an unwanted behavior. Today, in the administration of retail scorecards, they are more focused on deductions and the withholding of payment.
The primary value of the retail scorecard is the improvement of on-time and in-full shipments. Both parties have the opportunity to use the scorecard to improve assortment and reduce total costs. Today, these opportunities are aspirational. Here we share the insights from the study and end with recommendations for both trading partners.
Get ready for 2014 planning by benchmarking the financial performance of your supply chain. Using a database of over 50 metrics with 20 years of data, the Supply Chain Insights team can help you better understand your supply chain potential. This analysis enables visualization of company performance on managing the trade-offs of growth, profitability, inventory/cash cycles and complexity.
We find that each company has a unique pattern in how they managed trade-offs. The analysis helps you benchmark against your peer group and make a conscious choice. Through a deeper understanding of industry averages and outliers, this type of study helps you to better understand your supply chain potential. While many companies have used this service to understand public performance, many leaders have taken it one step further to benchmark divisions or product groups within their companies.
Conquering the Supply Chain Effective FrontierLora Cecere
Conquering the Supply Chain Effective Frontier - A Handbook for the Value Chain Leader to Manage Trade-offs in Defining Supply Chain Excellence
Supply chain practices are nearing their third decade of maturation. The term supply chain excellence is bandied about by leaders, consultants and technology providers, but there is no alignment on what it means.
Conventional systems of measurement for supply chain excellence are problematic. In this report, we share insights gained during interviews with 75 supply chain pioneers. Based on their feedback we created a new framework, that we define here as the Supply Chain Effective Frontier, for supply chain leaders to use to determine supply chain excellence. This methodology is based on publicly available financial balance sheet data grouped into four sets of supply chain ratios: growth, profitability, cycle, and complexity.
We believe that supply chain excellence is best defined as the alignment of the supply chain team to deliver results to meet and exceed the requirements of the business strategy. This requires a clear vision and cross-functional coordination and alignment over a multi-year road map. It needs to be holistic. A supply chain is a complex system with increasing business complexity. The analysis needs to facilitate a clear understanding of trade-offs embedded in day-to-day decision making. It is this clarity that we find missing in many teams that we work with, and it is for this reason we wrote this report.
Supply Chain Metrics That Matter: A Focus on Apparel - 9 May 2013Lora Cecere
Different industries are making progress on supply chain excellence at different rates. In the writing of the Supply Chain Metrics That Matter series of reports, we see that the consumer electronics industry is one of the only sectors making consistent and sustainable progress in balancing growth, profitability, cycles and complexity. We also see that many other industries—chemical, consumer products, pharmaceutical and medical device—are stuck on a horizontal plateau. They are treading water with no company able to move forward. In contrast, we see that the apparel industry is trending backwards.
When we analyze progress in the apparel industry over the last decade, we see a degradation of results on the Supply Chain Effective Frontier: days of inventory are flat or increasing and three of the six companies show flat or decreasing performance on operating margin. This is the sharpest reversal in progress on supply chain excellence that we have seen in the Supply Chain Metrics That Matter series (for a complete series listing see the Appendix).
Figure 1 illustrates the intersection of inventory turns and revenue per employee over the preceding decade. Ideally, companies would be moving consistently from the lower left to the upper right as they increased both inventory turns and revenue per employee performance. Instead, we see inconsistency, a lack of resiliency and stagnancy across the industry.
Supply Chain Metrics That Matter: Driving Reliability in Margins - 6 JAN 2013Lora Cecere
Supply chain management practices are thirty years old. Over the last decade, companies have invested in technology projects to improve financial outcomes (Technology investments over this period have averaged 1.7% of revenue). The ultimate goal was to reduce costs and improve inventory management. While many supply chain leaders believe that they delivered on these metrics, we find a less persuasive story. Through analysis of publically available balance sheet and income statement data, we find that 75% of companies in process industries lost ground on margins and only 5% of companies improved their positions on the number of days of inventory. The goal of this report is to answer the question “Why?” (For more on inventory and the Cash-to-Cash Cycle, see Supply Chain Metrics That Matter: The Cash-to-Cash Cycle.)
To begin our analysis, we wanted to understand the general trends. In table 1, we share the differences in average values for the companies profiled in this report by industry for the period of 2000-2011. In general, we see a decline in operating margins (OM). There is an increase in selling, general & administrative Costs (SG&A) and revenue per employee performance. The industries have mixed results on return on assets (ROA).
Sales & Operations Planning - The State of the Union - 10 June 2013Lora Cecere
Sales and Operations Planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is slow. The infographic below shows the current state of the union of sales and operations into S&OP processes. In this world of uncertainty, good planning matters. Complexity and volatility are escalating. Improving S&OP in a systematic approach, focused on goal evolution and systemic process governance, makes a difference; but, it requires education. A barrier to improvement is the executive team not understanding the supply chain as a complex system. It is the goal of this report to help alleviate this problem.
Retail Scorecards Study 2014 - Summary Charts Lora Cecere
Executive Overview
Retail scorecards are now more than a decade old. The companies in this study had an average of more than five years of experience using retail scorecards. Buyers and suppliers now manage multiple scorecards simultaneously (in the same relationship) in trading partner communications. The most common scorecards are focused in the areas of supply chain.
As with any relationship, there is always a carrot and a stick. A carrot, or an incentive to do better, is a positive reward system given to affirm good behavior; while a stick is a punitive action for an unwanted behavior. Today, in the administration of retail scorecards, they are more focused on deductions and the withholding of payment.
The primary value of the retail scorecard is the improvement of on-time and in-full shipments. Both parties have the opportunity to use the scorecard to improve assortment and reduce total costs. Today, these opportunities are aspirational. Here we share the insights from the study and end with recommendations for both trading partners.
How Do We Heal the Healthcare Value Chain?
Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis.
Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers.
The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.
Supply Chain Metrics That Matter: A Focus on the Retail Industry - 16 FEB 2017Lora Cecere
Report Details: This report is based on analysis of financial balance sheet and income statement data within the Retail industry, for the period of 2006-2015. The data is collected from YCharts.
Objective: To use financial balance sheet and income statement data to better understand the state of Grocery Retailers' and Mass Merchants' supply chains and to determine which companies’ supply chains did the best on the delivery of a portfolio of metrics over the last decade.
Highlight: During the Great Recession retailers faced strong declines in spending. It was a critical time, but for many it was an opportunity to emerge stronger. Those who redefined their stores for the dollar-conscious customer or built new and innovative formats while driving supply chain innovation, drove strong balance sheet results. Others learned that doing traditional retail more efficiently was not enough.
Supply Chain Metrics That Matter: A Focus on Food and Beverage Companies - 2015Lora Cecere
Executive Summary: Current State of Food and Beverage Industries
Over the last decade, consumer confidence in the food and beverage industry supply chains has waned. Shopper distrust is high; and as a result, growth in many categories like carbonated beverages and cereals declined.
While these two industries have similarities, there are different underlying dynamics in business drivers. The potential of the food supply chain is different than that of beverage. As a result, in this report, we share information on the two industries separately.
For both industries, the last decade was a tough market. Despite attempts to stimulate demand through trade programs, new product launch, and product expansion into new continents, growth declined. In 2003-2006, growth in the food industry was 7% while in 2011-2014, year-over growth was 4%. In parallel, in 2003-2006, growth in the beverage industry was 22%; yet, in 2011-2014, it was 7%. As growth declined, supply chain maturity mattered more than ever. Most companies were not equal to the challenge.
Traditional marketing tactics are not as effective in these two industries as they were a decade ago. To try to stimulate growth, 33% new items were introduced into the retail chain from these two industries. This rise in complexity reduced the effectiveness of the supply chain at a time of declining volumes. In Table 4, we profile the results in the food industry, while in Table 5 we portray the trends in the beverage industry.
In both industries, operating margin declined despite improved productivity in revenue per employee. In parallel, despite multiple investments in technologies, inventory turns declined in the food industry. Companies were unable to balance metrics in times of declining volumes. The reason? Rising commodity costs and the slow development of supply chain skills.
Companies that did the best in driving improvement in key metrics in times of declining volumes have seven characteristics: core competency in network design; strong capabilities in transportation management; a focus on inventory management; use of more advanced forms of supply chain planning; balance and understanding of the trade-offs of volume, price and mix; use of channel data; and continuity of leadership.
Table 4. Progress on the Effective Frontier for Food Companies
Table 5. Progress on the Effective Frontier for Beverage Companies
When we compiled the Supply Chains to Admire Report in August 2014, two food and beverage companies—General Mills and ABInBev—made the list. To make the list, a company had to deliver performance (posting above-average results for the period of 2009-2013 when compared to their peer group on a portfolio of metrics including operating margin, inventory turns and Return on Invested Capital). They also had to drive supply chain improvement (based on the Supply Chain Index as defined in the Research Methodology section) faster than their peer group. We believe b
Driving a Customer-Centric Supply Chain - 7 NOV 2016Lora Cecere
Report Details: The research for this report was conducted via an online survey from August 12 - October 14, 2016. Surveys were conducted among Manufacturers, Wholesalers/Distributors/Co-operatives and Third-Party Logistics Providers (n=56).
Objective: To determine how companies build a customer-centric supply chain and how well it is working for them.
Highlight: In this study, 80% of companies have a customer-centric strategy; yet the majority (54%) state that there is room for improvement to drive performance changes in their supply chain. Companies struggle to drive alignment and build constancy of purpose.
Supply Chain Metrics That Matter: A Focus on RetailLora Cecere
■Survey Details: The basis of this report is publically available information from corporate annual reports from the period of 2000-2012. In this report, we use this data to understand the past trends and future projections of retail industry supply chains. To drive insights, we augment this financial data with information that we have obtained through interactions with retail clients and recent insights from our quantitative research studies.
■Objective: To use financial balance sheet data coupled with recent research to better understand the state of retail supply chains.
■Hypothesis: With the shifts in the channel, the role of the store has changed, and there is a need to redefine value in the value chain.
Research Overview:
Details: The research for this report is based on twenty-eight surveys fielded during the period of January 2012 – December 2015. The research was a progressive set of studies to understand supply chain excellence. In the report, we use responses from over 2000 respondents to understand the characteristics of a supply chain that is working well.
Objective: To better understand the levers and actions that are the most impactful for supply chain leaders to take to improve supply chain excellence.
Highlights: While many claim that consolidation of ERP instances will improve supply chain excellence, we find in this report that companies that report that their supply chains are working well have designed organizations to centralize reporting with manufacturing reporting to the supply chain leader In addition, these leaders invested in supply chain visibility, have a clearer definition of supply chain strategy to improve alignment and agility, and are better at delivering on technology projects to deliver software usability.
Improving Supplier Reliability -15 June 2016 - ReportLora Cecere
Executive Summary
Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships.
As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech.
As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive.
In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables.
Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality.
In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base.
Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.
What Drives Supply Chain Excellence? A Look Back and a Look ForwardLora Cecere
This report is based on analysis of financial balance sheet and income statement data for the period of 2000-2012, quantitative survey research results, and interactions with clients in various industries in supply chain strategy sessions. We examine the performance of companies in a cross-section of industries on various metrics. We find that most companies and most industries are stuck in an environment of low results, with the exception of the hi-tech & electronics industry. Finally, we offer our perspective and advice on advancing supply chain excellence and moving the needle for better supply chain performance across company and industry lines.
Highlights
• A project-based approach has failed. Our gains are much lower than we believed in inventory management and a long-term perspective is needed to drive permanent and sustainable improvements.
• The hi-tech industry is the only of the six industries profiled to drive sustained gains across most metrics considered during the time period.
• The definition of supply chain excellence is still evolving as companies move through different maturity stages. Industrial and pharmaceutical companies are mainly stuck at low levels of maturity and could benefit greatly from applying lessons learned in other industries to their own supply chains.
Research Results
Full report
Supplier Development Study - Feb-May 2016 - Summary ChartsLora Cecere
Executive Summary
Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships.
As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech.
As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive.
In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables.
Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality.
In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base.
Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.
Executive Summary
No two supply chains are alike, but supply chain leaders across all industries face common challenges. The supply chain is becoming more strategic—an engine of growth and the driver of new business models—to drive new opportunities. For supply chain leaders, it is no longer just a discussion of cost and inventory management.
However, frustration abounds. Companies struggle to improve balance sheet results in the face of rising complexity and slowing growth. While all companies have improved revenue per employee, this efficiency improvement has not translated into operating margin improvements; and while cash-to-cash cycles have improved, it is not due to improvements in inventory positions. Most companies feel stuck, as if they are being held hostage by traditional supply chain practices.
Table 1. Industry Progress Across the Last Decade
In this report, we highlight the current state of supply chains—the supply chain organization, technologies, and process evolution—to enable supply chain leaders to take the next step in their strategy development. This report reflects the current state of supply chains, and is designed as a foundational document for supply chain leaders to build their 2015 strategies.
Understanding the Supply Chain Organization
Improving corporate performance is the driver of today’s supply chain organization. Increasingly, supply chain leaders are adopting new business models—ecommerce, digital business, and growth in new economies—to drive the top line.
Today, for the leader, it is about more than cost management. Instead, it is about the management of a portfolio of metrics to drive corporate performance. The supply chain is a complex system, with increasing complexity, and an increasing importance of driving balance sheet results. It is not easy. Improvement is hard work, and many are stuck. When we analyze financial balance sheet performance for the period of 2000-2013, we find that nine out of ten companies are stuck at the intersection of the two critical metrics of operating margin and inventory turns. Cash flow has been improved through elongating payables, and most companies are struggling to improve inventory in the face of complexity. This is an area of frustration and disappointment for business leaders who want to leverage supply chain technologies and processes to deliver both growth opportunities along with cash and cost savings to the organization.
The reason why? Today, the supply chain organization is traditional, tactical and cautious (see Figure 2). Most leaders would like to have a supply chain that is more agile and proactive. This is not possible with the current state of technologies and processes. To make the shift, companies need to reinvent the supply chain. The processes need to be redesigned outside-in with open sharing through business networks. These new forms of business networks, with many-to-many data models supported by canonical infrastructure, a
Supply Chain Metrics That Matter: A Focus on Hospitals - 6 JAN 2013Lora Cecere
Executive Overview
Growth is slowing. Profitability is tougher. Compliance mandates are growing. How do companies balance the goals for value-based outcomes for health and wellness with costs? In this environment, supply chain matters more than ever.
In this report, we share insights on healthcare supply chains. Grown out of the offices of procurement, the supply chain function of the hospital is still in its infancy; but based on increasing business requirements and complexity, it is only beginning to show its true potential.
Growth: Futures are Uncertain.
The hospital administrator is facing many challenges. Growth is slowing and pressures are growing. The question is how to balance patient outcomes with better cost management. How does a hospital move forward with an uncertain future? And, what will be the impact of healthcare reform?
In table 1, we list top line growth over the past decade for four companies operating within the hospital industry. While there are ups and downs, the general trend is downward.
Supply Chain Metrics That Matter - A Focus on Chemical Companies - 28 May 2015Lora Cecere
The basis of this report is publicly available information from corporate annual reports from the period of 2006-2014 for publicly-owned companies in the chemical industry. The methodology to understand supply chain performance and improvement is based on three years of data mining of supply chain financial ratios. In Table 1, we share the supply chain ratios we analyzed to understand the trends in the Supply Chain Metrics That Matter report series
Table 1. Financial Ratios Considered in the Development of the Supply Chain Index
While there are other measurements which we believe are important in the determination of supply chain excellence—forecast accuracy, case fill rate, carbon footprint, and inventory write-offs—we cannot find a reliable and consistent source of data for these metrics that covers all industries and the years studied. While these metrics are valuable, we find that the industry data sources are spotty and largely inaccurate due to the self-reporting of data. Without a consistent data source across the industries, we cannot include these factors even though we believe that they are important.
The Supply Chain Index methodology was built on the belief that the supply chain is a complex system with increasing complexity. We believe it is the supply chain leader’s role to build and manage supply chain performance to drive year-over-year improvements which are balanced, strong and resilient. We find that most companies throw the system out of balance and are able to drive progress only on a single metric, not a metrics portfolio. To illustrate this point, in the development of the Supply Chains to Admire Report, we studied public manufacturing and retail companies for the period of 2006-2013, and we found that only 21 of the companies in the study group performed better than their peer group on the portfolio of metrics of operating margin, inventory turns and Return on Invested Capital (ROIC).
In our review of the data in this report with supply chain leaders, we found that most companies are not aware of how they rate relative to their peer group, and many have driven a singular metric as opposed to a balanced portfolio.
In the management of the supply chain, there are many metrics. In fact, we find that most supply chain leaders measure too many, which drives confusion. Our first goal in the research was to determine which metrics should be tracked in the portfolio analysis. To understand the relationship between supply chain performance and market capitalization, we calculated the correlation of seven years of financial ratios (based on quarterly reporting) to market capitalization (the number of outstanding shares multiplied by the share price) on a quarterly basis. The results of this study on the correlation to market capitalization are presented in Table 2. Our goal was to select a portfolio of metrics that could be meaningful to all industries.
S&OP and Agility Study- Summary Charts - May 2013Lora Cecere
Sales and Operations Planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is slow. The infographic below shows the current state of the union of sales and operations into S&OP processes. In this world of uncertainty, good planning matters. Complexity and volatility are escalating. Improving S&OP in a systematic approach, focused on goal evolution and systemic process governance, makes a difference; but, it requires education. A barrier to improvement is the executive team not understanding the supply chain as a complex system. It is the goal of this report to help alleviate this problem.
Integrated Demand Management-When Will We Start Using Downstream Data-7 Nov 2012Lora Cecere
For the purposes of this report, downstream data is defined as data that originates downstream on the demand side of the value chain. It can include point-of-sale data, T-log data, distributor data, social and unstructured data sources, retail withdrawal data and retail forecasts. Integrated demand signal management is the use of this data in a more holistic and integrated demand management process.
The use of channel data is evolving and this report is designed to give the industry an update on progress. Data for this report is based on two inputs: quantitative survey data from twenty-nine respondents (manufacturers) that use downstream data for integrated demand signal management, and qualitative input from attendees at an Integrated Demand Signal Management event that was attended by eleven manufacturers and four retailers. Data was collected in the fall of 2012.
While the study demographic is a small number, the respondents represent an experienced panel group. In the study, 90% of the respondents were using downstream data. The average time of usage is four years.
Supply Chain Metrics That Matter: A Focus on the High-Tech Industry - 2015Lora Cecere
Executive Summary: Current State of the High-Tech Industry
Globalization. Commodity inflation. Margin squeeze. Economic uncertainty. Warranty issues. Shortening product life cycles. Recalls. Labor arbitrage and outsourcing. The list of market pressures could go on and on, but one thing is clear: the high-tech industry was redefined over the course of the last decade. In Table 4 we show the progress of discrete industries for the periods of 2006-2014 and 2011- 2014. Notice there is more red (lack of progress) than green (progress) in the industry trends.
Table 4. Supply Chain Performance by Industry within the Discrete Industries
High-tech companies have the most advanced practices for inventory management, planning and analytics. They are just treading water (keeping slightly ahead of the market dynamics). The rate of change drives innovation. Within this industry there are more supply chain innovators taking a hard look and driving the adoption of prescriptive analytics and canonical value network infrastructures.
Taking a closer view at the value chain of the sub-industries within high-tech, i.e. consumer electronics, B2B Electronics, and semiconductor industries, the impact of the industry drivers and the importance of supply chain performance becomes clearer.
Table 5. Supply Chain Performance by Industry within the High-Tech Sector
The entire value chain is struggling to maintain margins and improve inventory turns. For consumer electronics and B2B electronics, growth is down, operating margins are degrading and inventory turns worsening. Supply chain matters more than ever.
How Do We Heal the Healthcare Value Chain? - 9 MAY 2013Lora Cecere
Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis.
Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers.
The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.
S&OP Study Prelim Summary Charts used in the Why Is S&OP So Hard? report
Executive Overview
Sales and Operations Planning (S&OP), the cross-functional process to align the commercial processes of sales and marketing with the operational processes of supply and manufacturing, is having a renaissance. It is not a new process. Companies have worked on these processes for over 35 years; but today, only one out of two companies believes that their processes are effective.
Why is it so hard? Answering this question is the goal of this report.
Figure 3. Sales & Operations Planning Process Overview
A mature S&OP process improves organizational agility and alignment; but, this requires focus and clear leadership over a period of at least three to five years. A higher level of success happens when the S&OP processes report to a profit center manager and decision making is aligned to the commercial processes. With one in two companies aligning S&OP to product line production, not to commercial processes, it is difficult to drive maturity. Ideally, the leader of the S&OP process understands both the commercial drivers, and the supply constraints, and can make the pivot; but this is seldom the reality.
Today, due to popularity, companies have more than one S&OP process. In this research, a multinational company will have four to six separate and distinct S&OP processes with different maturity levels. While many will try to drive improvements with big technology initiatives, based on a decade of research on the topic, we recommend starting by tackling the change management issues. In this report, we share five barriers, and four misconceptions while giving supporting research to challenge change in the organization.
At one time, the physical store defined the retailer. It was the brand. Today, this has changed. Now the store is a part of a cross-channel experience. It is a combination of goods and services. The impact of the change is different by retail sector, but it is pervasive.
While changes in other industries have happened incrementally through continuous improvement and process innovation, retail has been transformed by new business models. The pace is faster and the customer demands higher.
Redefining the role of the store is critical. It requires partnerships of both retailers and manufacturers. It is for this reason that we wrote this report.
Presentation on the Future of Supply Chains at Transplace Conference in San A...Lora Cecere
Presentation on the future of #supplychain management given at the Transplace conference in San Antonio, TX in May 2016. Research on the future of supply chain analytics.
How Do We Heal the Healthcare Value Chain?
Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis.
Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers.
The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.
Supply Chain Metrics That Matter: A Focus on the Retail Industry - 16 FEB 2017Lora Cecere
Report Details: This report is based on analysis of financial balance sheet and income statement data within the Retail industry, for the period of 2006-2015. The data is collected from YCharts.
Objective: To use financial balance sheet and income statement data to better understand the state of Grocery Retailers' and Mass Merchants' supply chains and to determine which companies’ supply chains did the best on the delivery of a portfolio of metrics over the last decade.
Highlight: During the Great Recession retailers faced strong declines in spending. It was a critical time, but for many it was an opportunity to emerge stronger. Those who redefined their stores for the dollar-conscious customer or built new and innovative formats while driving supply chain innovation, drove strong balance sheet results. Others learned that doing traditional retail more efficiently was not enough.
Supply Chain Metrics That Matter: A Focus on Food and Beverage Companies - 2015Lora Cecere
Executive Summary: Current State of Food and Beverage Industries
Over the last decade, consumer confidence in the food and beverage industry supply chains has waned. Shopper distrust is high; and as a result, growth in many categories like carbonated beverages and cereals declined.
While these two industries have similarities, there are different underlying dynamics in business drivers. The potential of the food supply chain is different than that of beverage. As a result, in this report, we share information on the two industries separately.
For both industries, the last decade was a tough market. Despite attempts to stimulate demand through trade programs, new product launch, and product expansion into new continents, growth declined. In 2003-2006, growth in the food industry was 7% while in 2011-2014, year-over growth was 4%. In parallel, in 2003-2006, growth in the beverage industry was 22%; yet, in 2011-2014, it was 7%. As growth declined, supply chain maturity mattered more than ever. Most companies were not equal to the challenge.
Traditional marketing tactics are not as effective in these two industries as they were a decade ago. To try to stimulate growth, 33% new items were introduced into the retail chain from these two industries. This rise in complexity reduced the effectiveness of the supply chain at a time of declining volumes. In Table 4, we profile the results in the food industry, while in Table 5 we portray the trends in the beverage industry.
In both industries, operating margin declined despite improved productivity in revenue per employee. In parallel, despite multiple investments in technologies, inventory turns declined in the food industry. Companies were unable to balance metrics in times of declining volumes. The reason? Rising commodity costs and the slow development of supply chain skills.
Companies that did the best in driving improvement in key metrics in times of declining volumes have seven characteristics: core competency in network design; strong capabilities in transportation management; a focus on inventory management; use of more advanced forms of supply chain planning; balance and understanding of the trade-offs of volume, price and mix; use of channel data; and continuity of leadership.
Table 4. Progress on the Effective Frontier for Food Companies
Table 5. Progress on the Effective Frontier for Beverage Companies
When we compiled the Supply Chains to Admire Report in August 2014, two food and beverage companies—General Mills and ABInBev—made the list. To make the list, a company had to deliver performance (posting above-average results for the period of 2009-2013 when compared to their peer group on a portfolio of metrics including operating margin, inventory turns and Return on Invested Capital). They also had to drive supply chain improvement (based on the Supply Chain Index as defined in the Research Methodology section) faster than their peer group. We believe b
Driving a Customer-Centric Supply Chain - 7 NOV 2016Lora Cecere
Report Details: The research for this report was conducted via an online survey from August 12 - October 14, 2016. Surveys were conducted among Manufacturers, Wholesalers/Distributors/Co-operatives and Third-Party Logistics Providers (n=56).
Objective: To determine how companies build a customer-centric supply chain and how well it is working for them.
Highlight: In this study, 80% of companies have a customer-centric strategy; yet the majority (54%) state that there is room for improvement to drive performance changes in their supply chain. Companies struggle to drive alignment and build constancy of purpose.
Supply Chain Metrics That Matter: A Focus on RetailLora Cecere
■Survey Details: The basis of this report is publically available information from corporate annual reports from the period of 2000-2012. In this report, we use this data to understand the past trends and future projections of retail industry supply chains. To drive insights, we augment this financial data with information that we have obtained through interactions with retail clients and recent insights from our quantitative research studies.
■Objective: To use financial balance sheet data coupled with recent research to better understand the state of retail supply chains.
■Hypothesis: With the shifts in the channel, the role of the store has changed, and there is a need to redefine value in the value chain.
Research Overview:
Details: The research for this report is based on twenty-eight surveys fielded during the period of January 2012 – December 2015. The research was a progressive set of studies to understand supply chain excellence. In the report, we use responses from over 2000 respondents to understand the characteristics of a supply chain that is working well.
Objective: To better understand the levers and actions that are the most impactful for supply chain leaders to take to improve supply chain excellence.
Highlights: While many claim that consolidation of ERP instances will improve supply chain excellence, we find in this report that companies that report that their supply chains are working well have designed organizations to centralize reporting with manufacturing reporting to the supply chain leader In addition, these leaders invested in supply chain visibility, have a clearer definition of supply chain strategy to improve alignment and agility, and are better at delivering on technology projects to deliver software usability.
Improving Supplier Reliability -15 June 2016 - ReportLora Cecere
Executive Summary
Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships.
As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech.
As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive.
In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables.
Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality.
In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base.
Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.
What Drives Supply Chain Excellence? A Look Back and a Look ForwardLora Cecere
This report is based on analysis of financial balance sheet and income statement data for the period of 2000-2012, quantitative survey research results, and interactions with clients in various industries in supply chain strategy sessions. We examine the performance of companies in a cross-section of industries on various metrics. We find that most companies and most industries are stuck in an environment of low results, with the exception of the hi-tech & electronics industry. Finally, we offer our perspective and advice on advancing supply chain excellence and moving the needle for better supply chain performance across company and industry lines.
Highlights
• A project-based approach has failed. Our gains are much lower than we believed in inventory management and a long-term perspective is needed to drive permanent and sustainable improvements.
• The hi-tech industry is the only of the six industries profiled to drive sustained gains across most metrics considered during the time period.
• The definition of supply chain excellence is still evolving as companies move through different maturity stages. Industrial and pharmaceutical companies are mainly stuck at low levels of maturity and could benefit greatly from applying lessons learned in other industries to their own supply chains.
Research Results
Full report
Supplier Development Study - Feb-May 2016 - Summary ChartsLora Cecere
Executive Summary
Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships.
As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech.
As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive.
In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables.
Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality.
In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base.
Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.
Executive Summary
No two supply chains are alike, but supply chain leaders across all industries face common challenges. The supply chain is becoming more strategic—an engine of growth and the driver of new business models—to drive new opportunities. For supply chain leaders, it is no longer just a discussion of cost and inventory management.
However, frustration abounds. Companies struggle to improve balance sheet results in the face of rising complexity and slowing growth. While all companies have improved revenue per employee, this efficiency improvement has not translated into operating margin improvements; and while cash-to-cash cycles have improved, it is not due to improvements in inventory positions. Most companies feel stuck, as if they are being held hostage by traditional supply chain practices.
Table 1. Industry Progress Across the Last Decade
In this report, we highlight the current state of supply chains—the supply chain organization, technologies, and process evolution—to enable supply chain leaders to take the next step in their strategy development. This report reflects the current state of supply chains, and is designed as a foundational document for supply chain leaders to build their 2015 strategies.
Understanding the Supply Chain Organization
Improving corporate performance is the driver of today’s supply chain organization. Increasingly, supply chain leaders are adopting new business models—ecommerce, digital business, and growth in new economies—to drive the top line.
Today, for the leader, it is about more than cost management. Instead, it is about the management of a portfolio of metrics to drive corporate performance. The supply chain is a complex system, with increasing complexity, and an increasing importance of driving balance sheet results. It is not easy. Improvement is hard work, and many are stuck. When we analyze financial balance sheet performance for the period of 2000-2013, we find that nine out of ten companies are stuck at the intersection of the two critical metrics of operating margin and inventory turns. Cash flow has been improved through elongating payables, and most companies are struggling to improve inventory in the face of complexity. This is an area of frustration and disappointment for business leaders who want to leverage supply chain technologies and processes to deliver both growth opportunities along with cash and cost savings to the organization.
The reason why? Today, the supply chain organization is traditional, tactical and cautious (see Figure 2). Most leaders would like to have a supply chain that is more agile and proactive. This is not possible with the current state of technologies and processes. To make the shift, companies need to reinvent the supply chain. The processes need to be redesigned outside-in with open sharing through business networks. These new forms of business networks, with many-to-many data models supported by canonical infrastructure, a
Supply Chain Metrics That Matter: A Focus on Hospitals - 6 JAN 2013Lora Cecere
Executive Overview
Growth is slowing. Profitability is tougher. Compliance mandates are growing. How do companies balance the goals for value-based outcomes for health and wellness with costs? In this environment, supply chain matters more than ever.
In this report, we share insights on healthcare supply chains. Grown out of the offices of procurement, the supply chain function of the hospital is still in its infancy; but based on increasing business requirements and complexity, it is only beginning to show its true potential.
Growth: Futures are Uncertain.
The hospital administrator is facing many challenges. Growth is slowing and pressures are growing. The question is how to balance patient outcomes with better cost management. How does a hospital move forward with an uncertain future? And, what will be the impact of healthcare reform?
In table 1, we list top line growth over the past decade for four companies operating within the hospital industry. While there are ups and downs, the general trend is downward.
Supply Chain Metrics That Matter - A Focus on Chemical Companies - 28 May 2015Lora Cecere
The basis of this report is publicly available information from corporate annual reports from the period of 2006-2014 for publicly-owned companies in the chemical industry. The methodology to understand supply chain performance and improvement is based on three years of data mining of supply chain financial ratios. In Table 1, we share the supply chain ratios we analyzed to understand the trends in the Supply Chain Metrics That Matter report series
Table 1. Financial Ratios Considered in the Development of the Supply Chain Index
While there are other measurements which we believe are important in the determination of supply chain excellence—forecast accuracy, case fill rate, carbon footprint, and inventory write-offs—we cannot find a reliable and consistent source of data for these metrics that covers all industries and the years studied. While these metrics are valuable, we find that the industry data sources are spotty and largely inaccurate due to the self-reporting of data. Without a consistent data source across the industries, we cannot include these factors even though we believe that they are important.
The Supply Chain Index methodology was built on the belief that the supply chain is a complex system with increasing complexity. We believe it is the supply chain leader’s role to build and manage supply chain performance to drive year-over-year improvements which are balanced, strong and resilient. We find that most companies throw the system out of balance and are able to drive progress only on a single metric, not a metrics portfolio. To illustrate this point, in the development of the Supply Chains to Admire Report, we studied public manufacturing and retail companies for the period of 2006-2013, and we found that only 21 of the companies in the study group performed better than their peer group on the portfolio of metrics of operating margin, inventory turns and Return on Invested Capital (ROIC).
In our review of the data in this report with supply chain leaders, we found that most companies are not aware of how they rate relative to their peer group, and many have driven a singular metric as opposed to a balanced portfolio.
In the management of the supply chain, there are many metrics. In fact, we find that most supply chain leaders measure too many, which drives confusion. Our first goal in the research was to determine which metrics should be tracked in the portfolio analysis. To understand the relationship between supply chain performance and market capitalization, we calculated the correlation of seven years of financial ratios (based on quarterly reporting) to market capitalization (the number of outstanding shares multiplied by the share price) on a quarterly basis. The results of this study on the correlation to market capitalization are presented in Table 2. Our goal was to select a portfolio of metrics that could be meaningful to all industries.
S&OP and Agility Study- Summary Charts - May 2013Lora Cecere
Sales and Operations Planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is slow. The infographic below shows the current state of the union of sales and operations into S&OP processes. In this world of uncertainty, good planning matters. Complexity and volatility are escalating. Improving S&OP in a systematic approach, focused on goal evolution and systemic process governance, makes a difference; but, it requires education. A barrier to improvement is the executive team not understanding the supply chain as a complex system. It is the goal of this report to help alleviate this problem.
Integrated Demand Management-When Will We Start Using Downstream Data-7 Nov 2012Lora Cecere
For the purposes of this report, downstream data is defined as data that originates downstream on the demand side of the value chain. It can include point-of-sale data, T-log data, distributor data, social and unstructured data sources, retail withdrawal data and retail forecasts. Integrated demand signal management is the use of this data in a more holistic and integrated demand management process.
The use of channel data is evolving and this report is designed to give the industry an update on progress. Data for this report is based on two inputs: quantitative survey data from twenty-nine respondents (manufacturers) that use downstream data for integrated demand signal management, and qualitative input from attendees at an Integrated Demand Signal Management event that was attended by eleven manufacturers and four retailers. Data was collected in the fall of 2012.
While the study demographic is a small number, the respondents represent an experienced panel group. In the study, 90% of the respondents were using downstream data. The average time of usage is four years.
Supply Chain Metrics That Matter: A Focus on the High-Tech Industry - 2015Lora Cecere
Executive Summary: Current State of the High-Tech Industry
Globalization. Commodity inflation. Margin squeeze. Economic uncertainty. Warranty issues. Shortening product life cycles. Recalls. Labor arbitrage and outsourcing. The list of market pressures could go on and on, but one thing is clear: the high-tech industry was redefined over the course of the last decade. In Table 4 we show the progress of discrete industries for the periods of 2006-2014 and 2011- 2014. Notice there is more red (lack of progress) than green (progress) in the industry trends.
Table 4. Supply Chain Performance by Industry within the Discrete Industries
High-tech companies have the most advanced practices for inventory management, planning and analytics. They are just treading water (keeping slightly ahead of the market dynamics). The rate of change drives innovation. Within this industry there are more supply chain innovators taking a hard look and driving the adoption of prescriptive analytics and canonical value network infrastructures.
Taking a closer view at the value chain of the sub-industries within high-tech, i.e. consumer electronics, B2B Electronics, and semiconductor industries, the impact of the industry drivers and the importance of supply chain performance becomes clearer.
Table 5. Supply Chain Performance by Industry within the High-Tech Sector
The entire value chain is struggling to maintain margins and improve inventory turns. For consumer electronics and B2B electronics, growth is down, operating margins are degrading and inventory turns worsening. Supply chain matters more than ever.
How Do We Heal the Healthcare Value Chain? - 9 MAY 2013Lora Cecere
Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis.
Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers.
The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.
S&OP Study Prelim Summary Charts used in the Why Is S&OP So Hard? report
Executive Overview
Sales and Operations Planning (S&OP), the cross-functional process to align the commercial processes of sales and marketing with the operational processes of supply and manufacturing, is having a renaissance. It is not a new process. Companies have worked on these processes for over 35 years; but today, only one out of two companies believes that their processes are effective.
Why is it so hard? Answering this question is the goal of this report.
Figure 3. Sales & Operations Planning Process Overview
A mature S&OP process improves organizational agility and alignment; but, this requires focus and clear leadership over a period of at least three to five years. A higher level of success happens when the S&OP processes report to a profit center manager and decision making is aligned to the commercial processes. With one in two companies aligning S&OP to product line production, not to commercial processes, it is difficult to drive maturity. Ideally, the leader of the S&OP process understands both the commercial drivers, and the supply constraints, and can make the pivot; but this is seldom the reality.
Today, due to popularity, companies have more than one S&OP process. In this research, a multinational company will have four to six separate and distinct S&OP processes with different maturity levels. While many will try to drive improvements with big technology initiatives, based on a decade of research on the topic, we recommend starting by tackling the change management issues. In this report, we share five barriers, and four misconceptions while giving supporting research to challenge change in the organization.
At one time, the physical store defined the retailer. It was the brand. Today, this has changed. Now the store is a part of a cross-channel experience. It is a combination of goods and services. The impact of the change is different by retail sector, but it is pervasive.
While changes in other industries have happened incrementally through continuous improvement and process innovation, retail has been transformed by new business models. The pace is faster and the customer demands higher.
Redefining the role of the store is critical. It requires partnerships of both retailers and manufacturers. It is for this reason that we wrote this report.
Presentation on the Future of Supply Chains at Transplace Conference in San A...Lora Cecere
Presentation on the future of #supplychain management given at the Transplace conference in San Antonio, TX in May 2016. Research on the future of supply chain analytics.
Redefining the Supply Chain OpportunityLora Cecere
Presentation at the Warwick School of Business on March 16 to #supplychain leaders. The presentation shares research on progress on supply chain excellence, organizational alignment, supply chain visibility, making the digital pivot and the Supply Chain Metrics That Mattter.
Supply Chain Metrics that Matter in Market-driven WorldLora Cecere
Presentation for the Integrated Supply Chain Management Conference in Turkey on April 29th, 2015. An analysis of the current state of supply chains in the market-driven world. Data from four years of research on the progress of supply chain management.
Big Data Analytics and the Supply Chain OpportunityLora Cecere
Presentation on analytics and shifts in supply chain processes given at the CSCMP Peru event on June 24, 2016. Focus on the Supply Chain Metrics That Matter, the shifts in analytics, the building of horizontal processes and the future of analytics.
Using New Forms of Analytics - Slide DeckLora Cecere
There is no debate that the amount of data collected by companies is increasing. By tracking transactions, customer data, supplier costs, and other business metrics companies can understand what’s really happening inside the organization. But how do you ensure you’re tracking the right data, and in the right way to create a winning strategy? In this webinar we spoke with Kyle Hamm, VP, Chief of Staff to CSCO and EVP GSC at Schneider Electric, where he shared his thoughts around maximizing the value of big data.
Where Are We on the Demand-Driven Journey? A Look Back and a Look Forward.Lora Cecere
When the P&G team shared insights on out-of-stocks with A. G. Lafley, he said “I have discovered a new billion dollar brand opportunity.” The goal was to orchestrate the supply chain to better deliver on the first moment of truth—having the item in stock on the shelf when the customer wanted to purchase the product. Jake Barr shares insights on the evolution of this strategy and then brings Lora Cecere and Carol Ptak to the stage to discuss two complimentary, but different views of demand-driven strategies.
Jake Barr, CEO of BlueWorld Supply Chain Consulting; Carol Ptak, Partner at the Demand-driven Institute; and Lora Cecere, Founder of Supply Chain Insights.
A presentation from the 2015 Supply Chain Insights Global Summit
Presentation for the Upcoming Llamasoft Event Summercon. Looking forward to discussing the evolution of value networks and the use of network design technologies at this event on June 20th in Ann Arbor, MI.
Supply Chain Metrics That Matter: A Focus on the Consumer Products Industry 2...Lora Cecere
Supply Chain Metrics That Matter will be a series of reports published intermittently throughout the year by Supply Chain Insights LLC. Within the world of Supply Chain Management (SCM), each industry is unique. To help companies understand differences, each report is a deep dive on a different industry.
While we find it useful to understand the evolution of supply chain excellence by comparing industries, we feel that the true stories of supply chain excellence can only be really understood by comparing what happened within a period by peer group. The goal of this series is to share these insights. These reports are intended for you to read, share and use to improve your supply chain decisions.
The average Consumer Products (CP) company is stronger in the execution of supply chain management practices than their retail or pharmaceutical counterparts, but as companies will see in later reports, CP progress has not been equal to that of High-tech and Electronics manufacturers.
CP companies (including both consumer packaged goods (CPG) and food & beverage companies) tend to be marketing-driven. They are struggling to understand the differences between new market-driven, and their well-oiled marketing-driven, supply chains. With a strong legacy in building persuasive marketing programs, the companies have leveraged a global “one-size-fits-all” push-based supply chain strategy. These traditional supply chain management (SCM) definitions have produced supply chains that respond, but don’t sense. They are efficient, but not adaptive. They tend to be long (greater than twenty weeks) with waste pockets between nodes.
The landscape of the industry has been greatly affected by mergers and acquisitions. In the past decade, 57 companies were absorbed into ten. The industry is still digesting this change. While most companies have 150 unique systems, the manufacturers in this industry will often have five times the industry average. Getting to the right data to improve decision making continues to be a challenge.
Update on the progress of supply chain leaders on progress on the Supply Chain Effective Frontier (balancing growth, profitability, cycles and complexity). Philippe Lambotte, SVP of Merck, recommends a seat at the table, focus on supply chain strategy, eliminate the white noise, and stay the course.
Presentation at the Chief Supply Chain Officer Conference on June 19thLora Cecere
Presentation given at the CSCO conference in Chicago on June 19th. Discussion on why companies are stuck on the Effective Frontier of balancing growth, profitability, cycles and complexity. The answer lies in redesigning the processes outside-in and orchestrating demand and supply in market-driven processes through new forms of technology. We need to embrace the new and learn from the old while holding ourselves accountable to the balance sheet.
Supply Chain Insights Webinar on the Supply Chain Index on May 23rdLora Cecere
Second presentation on the Supply Chain Index. The Supply Chain Insights team is working on building formulaic representations of supply chain excellence by industry. This is a second in a series of webinars where the team explains which metrics matter by industry.
Similar to Presentation on Customer-Centric Supply Chains for Barcelona CSCMP Event in May 2016 (20)
A critical look at three years of supply chain disruption. Using quantitative and qualitative research, Lora Cecere, Founder of Supply Chain Insights, looks critically at the factors within companies that drove resilience and the factors less successful. Companies that won were aligned, used market signals, decreased process latency, used scenario planning, and implemented descriptive analytics. Those that fared worse, had tight integration of supply chain planning to ERP, were not aligned, and were focused on a digital transformation strategy.
River of Demand - ALL RIVERS with QR.pdfLora Cecere
Drawings of demand as a river depicting the issues with flow with the voice overlay of the planner. To hear the voice, scan the QR code at the bottom of the drawing.
Presentation was given at the Longbow presentation on the future of supply chain management and the value of changing processes to make decisions a the speed of business decisions
At the Supply Chain Insights Global Summit, we challenged the audience to think about "social tokens" using this presentation from Luke Layden of Coin Desk.
Today's supply chain processes are inside-out. Outside-in processes, using channel and market data, improve the time to respond. This presentation reflects two years of testing using machine learning to understand the impact on the bullwhip effect and Forecast Value Added.
Now in its ninth year, the Supply Chains to Admire analysis is a study of the progress of each industry sector on the balanced scorecard of growth, operating margin, inventory turns, and Return on Invested Capital (ROIC). Twenty-two companies outperform their peer group, defining and exemplifying supply chain excellence.
Supply Chains to Admire Analysis 2022_2022 presentation.pptxLora Cecere
Supply Chains to Admire is a data-driven analysis based on public reporting of manufacturing and retail companies. The research evaluates which public companies drove improvement while outperforming their peer groups on performance metrics and value for the ten-year period of 2012-2021. The 25 winners are a testimonial to supply chain resilience.
The Role of Analytics In Defining The Art Of The PossibleLora Cecere
Analytics capabilities are evolving faster than organizations can adopt them into their processes. Here we share the research of 92 respondents in their journey to use new forms of analytics in their digital transformation journey.
Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
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Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
Personal Brand Statement:
As an Army veteran dedicated to lifelong learning, I bring a disciplined, strategic mindset to my pursuits. I am constantly expanding my knowledge to innovate and lead effectively. My journey is driven by a commitment to excellence, and to make a meaningful impact in the world.
Affordable Stationery Printing Services in Jaipur | Navpack n PrintNavpack & Print
Looking for professional printing services in Jaipur? Navpack n Print offers high-quality and affordable stationery printing for all your business needs. Stand out with custom stationery designs and fast turnaround times. Contact us today for a quote!
Premium MEAN Stack Development Solutions for Modern BusinessesSynapseIndia
Stay ahead of the curve with our premium MEAN Stack Development Solutions. Our expert developers utilize MongoDB, Express.js, AngularJS, and Node.js to create modern and responsive web applications. Trust us for cutting-edge solutions that drive your business growth and success.
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32. Many Barriers To Adoption
In The End To End Supply Chain
Channels & Customers Inside The Enterprise Suppliers & Service Providers
Reluctance To Share
Data
Immature &
Inadequate Systems
Slow Internal
Processes
Many Battlefronts
Win-Lose Mentality
Metrics Split, Conflicting
Rewards Based On
Legacy Drivers
Petty Kingdoms & Perks
Slow/No Information
Sharing
Attitudes Stuck In The
Past
Silos Of Optimization
Reluctance To Share
Data
Immature &
Inadequate Systems
Slow Internal
Processes
Many Battlefronts
Win-Lose Mentality
Channels &
Customers
Product
Marketing
Supply Chain
Planning
Finance
Sales
R&D
Logistics
Manufacturing
& Operations
Suppliers &
Service Providers
Sourcing &
Procurement
37. Cost-to-serve analysis calculates
the profitability of products,
customers and routes to market -
and to give a fact-based focus for
decision making -- on service mix
and operational changes for each
customer.