Improving supply chain strength resiliency webinar lora final_loras comments2

Improving Supply Chain Strength and Resiliency

WebinarApril 24, 2014

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Supply Chain Insights LLC Copyright © 2013, p. 2

Supply Chain Insights is focused on delivering independent, actionable and objective

advice for supply chain leaders.

A company dedicated to research, turn to us when you want the latest insights on supply chain trends, technologies to know

and metrics that matter.

About Us

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Presenters

Abby MayerResearch Associate

Lora CecereFounder and CEO

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Dr. George RungerProfessor, CIDSE, ASU


Agenda

Supply Chain Index Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Why It Matters To You

What's Next?

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A Supply Chain is a Complex System

with Complex Processes

with Increasing Complexity

Our Belief

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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

Our Point of View: Definition of Supply Chain Excellence

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Resilient and predictable

Balanced across the set of metrics to maximize value

Showing year-over-year strength against peer group

Desired Corporate Performance

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The Supply Chain Effective Frontier:First Representation

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The Supply Chain Effective Frontier: Second Representation

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In most supply chains, complexity has risen throwing the supply chain out of balance. We find that nine out of ten companies are stuck at the intersection of inventory turns and operating margin.


Supply Chain FinanceIs a Barrier for Most

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Today’s Supply Chain

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A Business Continuity Risk

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Overall Ranking per Company• Strength: Inventory Turns & Operating Margin Vector Trajectory (30%)• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)• Peer: Peer Rankings by Industry (10%)

The Supply Chain IndexA new way to measure relative supply chain performance by industry, based on 4 components: strength, balance, resiliency and peer rankings.

Supply Chain Index

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Supply Chain Index= .3(Ranking on Growth/ROIC)+.3(Ranking on Operating Margin/Inventory)+.3(Resiliency Ranking)+.1 (Peer Assessment Ranking)

Supply Chain Index Calculation

NAICS Code

Growth/ROIC)Value

BalanceRanking

Operating Margin/Inventory Value

Strength Ranking

Resiliency Value

Resiliency Ranking

Peer Rating Peer Ranking

Total Score

For the period of 2006-2013

Lora

make this nicer, but include this chart


Agenda


History of Our Work



What's Next?

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Mining 20 Years of Financial Data

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How to Read an Orbit Chart

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Available at www.supplychaininsights.com/report-archives

Supply Chain Metrics That Matter Reports

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* Reports look at industry performance of a small peer group on growth, profitability, cycle and complexity metrics

* Includes cross industry analysis of cash-to-cash cycle, operating margin and resiliency

*19 reports to date

http://www.supplychaininsights.com/report-archives

http://www.supplychaininsights.com/report-archives


Supply Chain Metrics That Matter Reports


Agenda


History of Our Work



What's Next?

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Considerations

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Resiliency

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A Look at Medical Device Companies:Inventory Turns vs. Operating Margin

(2000-2012)

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Lora

I arranged these in the order of resiliency


Medical Device Company Resiliency

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Inventory Turns vs. Operating Margin (2000-2012)


Consumer Products Resiliency

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A Look at Chemical Companies:Inventory Turns vs. Operating Margin

(2000-2012)

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Chemical Company Resiliency

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A Look at Food:Inventory Turns vs. Operating Margin

(2000-2012)

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Food Products Resiliency

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Consumer Electronics: Inventory Turns vs. Operating Margin (2000-2012)


Consumer Electronics Resiliency

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Company Panasonic Samsung Sanyo Harman LG Electronics

Sony

Resiliency .51 .59 .68 .93 1.12 1.46

Lora

Make this a consistent format to the other industries


Strength & Balance

• Strength: Inventory Turns & Operating Margin Vector Trajectory (30%)

• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)

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Agenda


History of Our Work



What's Next?

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Why It Matters

Company Average Operating Margin

Average Inventory Turns

Average Days of Payables

Resiliency Ranking

BASF SE 0.10 5.3 39 .0.55

E. I. du Pont de Nemours and Co.

0.10 4.0 56 .0.67




Resiliency Ranking

Samsung Electronics Co., Ltd.

0.11 8.3 35 0.59

LG Electronics Inc. 0.04 6.7 49 1.13




Resiliency Ranking

Procter & Gamble Co. 0.18 5.6 55 .0.52

Unilever N.V. 0.13 5.3 93 0.74

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Lora

These should always follow the order of the effective frontier. operating margin before cycles


• Benchmark against peers.• Improve reliability of inventory turns &

operating margin performance.• Understand that industries with high variability

pose risk to your supply chain.• Measure progress in centimeters, not

kilometers.

What Can You Do?

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Agenda


History of Our Work



What's Next?

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1. Finalize Strength & Balance metrics

2. Supply Chain Index methodology report in May

3. Consumer, Healthcare and Industrial Value Network reports through the summer

4. Final analysis of companies to be revealed at the 2014 Supply Chain Insights Global Summit

Next Steps

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Metrics That Matter

• Lora Cecere’s 2nd book: Metrics That Matter

• To publish in Fall 2014

http://tinyurl.com/metricsthatmatter

Pre-orders available on Amazon:

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What’s Happening at Supply Chain Insights?

www.supplychaininsights.com

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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: [email protected]• 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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Questions?

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