Supply Chain Insights Webinar on Supply Chains to Admire

Supply Chains to Admire
September 25, 2014
#sciwebinar

The Research Team
Supply Chain Insights LLC Copyright © 2014, p. 2
Abby Mayer
Research Associate
Lora Cecere
Founder and CEO
Dr. George Runger
Professor, CIDSE, ASU
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Today’s Supply Chain is Stuck
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Industry Overview
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Why? Demand Growing as a Risk
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Why? The Long Tail of the Supply Chain:
Growing Complexity
Volume
Level of Predictability
Predictability based on forecast accuracy vs Actual Order Profiles
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Demand
Signal
Accurate
Weekly
Forecasting
is ...
Delay from
Purchase to
Signal
Why? Data Latency and Distortion
Across the Network
Red Represents Emerging Economies with Distributor Trade
Retailer DC
Easy
3-10 Days
7-20 Days
Manufacturer DC
Difficult
10-20 Days
20-45 Days
Suppliers
Almost
Impossible
20-50 Days
45-80 Days
Store
Trivial
Instant
Variable
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Fallacy #1: Functional Excellence
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Fallacy #2: A Project-based Focus
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Companies Get More Serious
With A Recession: But Cannot Sustain It
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What We Expected
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A Supply Chain
is a Complex System
with Complex
Processes
with Increasing
Complexity
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The Supply Chain Effective Frontier
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Orbit Chart: Wal-Mart
(Inventory Turns and Operating Margin)
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Orbit Chart: Apple
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Orbit Charts: Dow Chemical Company
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Orbit Chart: Procter & Gamble
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Orbit Charts: Mattel, Inc.
(Inventory Turns versus Operating Margin)
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Overall Network: Inventory Turns versus Operating
Margin 2006-2012
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Preliminary Research: Correlations to Market
Capitalization
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Deeper Study: Supply Chain Metrics That Matter
Reports
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The Supply Chain Index (Improvement)
The Supply ChAa nienw Iwnady etox measure relative
supply chain performance by
industry, based on the
components of balance, strength
and resiliency.
Overall Ranking per Company
• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory
• Strength: Inventory Turns & Operating Margin Vector Trajectory
• Resiliency: Inventory Turns & Operating Margin Mean Distance
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Mining 20 Years of Financial Data
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Balance, Strength & Resiliency
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Calculating the Index
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Index Factors by Industry
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Chemical 2006-2013
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Chemical 2009-2013
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Our Answer
+
Performance Improvement
Beats the industry
average for operating
margin, inventory turns
and ROIC for 2006-
2013
Ranks above peer
group average on
The Supply Chain
Index for 2006-2013
or 2009-2013
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Methodology
• Companies were grouped by peer group (at least six in peer group)
– Started with a database of all public companies (by definition this excludes
private companies)
– Conglomerates were excluded
– Recent M&A excluded
• Peer group averages for growth, operating margin, inventory turns and
ROIC were calculated
• The first screen was defined by the test of “Were companies doing better
than their peer group on this portfolio of metrics?”
• The second test was “Did the company do better than average within
their peer group for either period on driving supply chain improvement as
defined by the Supply Chain Index?”
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Supply Chains To Admire
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Retail
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Consumer Goods
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Food
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Beverage
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Apparel
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Chemical
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Pharmaceutical
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Medical Device
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Paper and Packaging
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Semiconductor
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Automotive
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Consumer Electronics
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Automotive Suppliers
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Supply Chains To Admire
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What Makes a Difference
• Leadership
• Building of talent
• Outside-in processes
• Horizontal process focus
• Active and intentional design
• Supply chain planning
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What Does Not Work
• A project-based focus
• Vertical excellence without an end-to-end
focus
• Unchecked complexity
• Big bang projects
• Pushing cost and waste backwards in the
value network
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Questions?

Countdown for Next Year’s Event
www.supplychaininsights.com
Global Summit
September 8th-10th, 2015
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About Lora Cecere
• Founder of Supply Chain Insights
• Invited to be a “LinkedIn Influencer”
• Invited to write a guest blog for Forbes
• Author of 2 books: Bricks Matter (2012) and
Metrics That Matter (to publish Fall of 2014)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner and
AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at
Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for
Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (6000 pageviews/month)
• Forbes: http://www.forbes.com/search/?q=lora+cecere
• Twitter: lcecere (4800 followers)
• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (7000 in the network)
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Supply Chain Insights Webinar on Supply Chains to Admire