supply chain insights webinar on supply chains to admire

Supply Chains to AdmireSeptember 25, 2014

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Supply Chain Insights LLC Copyright © 2014, p. 2

Abby MayerResearch Associate

Lora CecereFounder and CEO

Dr. George RungerProfessor, CIDSE, ASU

The Research Team

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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 PredictabilityPredictability 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

Store

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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 (Inventory Turns and Operating Margin)

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Orbit Charts: Dow Chemical Company

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Orbit Chart: Procter & Gamble(Inventory Turns and Operating Margin)

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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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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

The Supply Chain IndexA new way to measure relative supply chain performance by industry, based on the components of balance, strength and resiliency.

The Supply Chain Index (Improvement)

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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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• 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?”

Methodology

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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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• Leadership• Building of talent• Outside-in processes• Horizontal process focus• Active and intentional design• Supply chain planning

What Makes a Difference

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• 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

What Does Not Work

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Questions?

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Countdown for Next Year’s Event

www.supplychaininsights.com

Global SummitSeptember 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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