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Debra Hofman

Managing Vice President

Supply Chain Research

Gartner Supply Chain Top 25: Insights From Leaders

1

Agenda

• Defining Supply Chain Leadership

• Distinguishing Characteristics of Leaders

• Leaders’ Focus Areas

2

From Supply Chain to Demand Driven Value Network

From

Innovation an Externality

Assembly Line Supply

Demand Point a Given

To

Embedded Innovation

Networked Supply

Demand Management

3

Demand-Driven Value Network

Product

Demand Supply

Sense Shape Profitable

Response

Innovation

4

Operations and innovation drive value

Higher cash flow, profits, p/e

Operational

Excellence (Perfect Order,

Total Supply

Chain Cost)

Leader

Leader Laggard

Laggard

Innovation Excellence (Time to Value, Return on R&D)

Winners

Losers

Demand Supply

Product

P

D

S

5

Financials 50%

Opinion 50% 25% Peer vote

25% Analyst vote

25% ROA

10% Revenue growth

15% Inventory

turns

The Supply Chain Top 25 Methodology

6

2013

7

What distinguishes leaders: cross-industry themes

• Outside-in focus

• Embedded innovation

• Extended supply chains

• Vision & Execution

• Excellence Addicts

Supply chains that are…

• Predictable and reliable

• Flexible

…and have:

• Profitable demand response

• Sustainable growth

• Satisfied customers

Outcome

8

Best Practices: Managing Performance

Supplier Quality

Supplier On-Time

Purchase Costs

Dir Mtl Costs

RM Inv

Cost Detail

Production Schedule Variance

Plant Utilization

WIP + FG Inventory

Order Cycle Time

Perfect Order Detail

Correct

Diagnose AP AR

Inventory Total

Cash-to-Cash

Assess

Demand Forecast

SCM Cost

Perfect Order

The Hierarchy of Supply Chain Metrics

9

Best Practices: Managing Performance

Supplier Quality

Supplier On-Time

Purchase Costs

Dir Mtl Costs

RM Inv

Cost Detail

Production Schedule Variance

Plant Utilization

WIP + FG Inventory

Order Cycle Time

Perfect Order Detail

Correct

Diagnose AP AR

Assess

Demand Forecast

SCM Cost

Perfect Order

Inventory Total

Cash-to-Cash

The Hierarchy of Supply Chain Metrics

10

Best Practices: Managing Performance

Supplier Quality

Supplier On-Time

Purchase Costs

Dir Mtl Costs

RM Inv

Cost Detail

Production Schedule Variance

Plant Utilization

WIP + FG Inventory

Order Cycle Time

Perfect Order Detail

Correct

Diagnose AP AR

Assess

Demand Forecast

SCM Cost

Perfect Order

Inventory Total

Cash-to-Cash

The Hierarchy of Supply Chain Metrics

11

On par

Below par

Above par

Key:

Supplier Quality

Supplier On-Time

Purch Costs

Dir Mtl Costs

Cost Detail

Production Sched

Variance

Plant Utilization

Order Cycle Time

AP AR Inventory

Total

Cash-to-Cash

Perfect Order

SCM Cost

Demand Forecast

WIP + FG

Inventory

Perfect Order Detail

What Does Good Look Like?

12

What distinguishes leaders: cross-industry themes

• Outside-in focus

• Embedded innovation

• Extended supply chains

• Vision & Execution

• Excellence Addicts

Supply chains that are…

• Predictable and reliable

• Flexible

…and have:

• Profitable demand response

• Sustainable growth

• Satisfied customers

Outcome

Orchestrators

13

Trends

SC Talent

SC as Growth

Enabler

Simplification &

Segmentation

Multi-Local

Strategies

Analytics

14

Thank You!

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