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