Supply chain index webinar june 11 final

Consumer Value Networks: How Do You Measure UP?

The Supply Chain Index

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Supply Chain Insights LLC Copyright © 2014, 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

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Why It Matters To You

What's Next?

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To develop a methodology to help supply chain leaders define supply chain improvement. To be effective, it had to:• Evaluate progress over time by peer group.• Be objective and data driven.• Compare progress of companies across currencies. • Enable the comparison of progress of companies regardless of size:

very large to mid-market companies.• Connect supply chain performance to corporate performance.• Use standardized, and available data.

Our Vision


Today’s Supply Chain

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Supply Chain Risk

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A Supply Chain is a Complex System

with Complex Processes

with Increasing Complexity

Our Belief

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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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While we like this framework, there is no good source of consistent and accurate data for:

– Forecast Accuracy– Case Fill Rate– Corporate Social Responsibility

Problem with this Framework

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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.


Industry Overview: 2006-2012

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Intersection of Operating Margin and Inventory Turns

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Companies Get More Serious With A Recession

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Agenda

Vision

History of Our Work


Supply Chain Index

What's Next?

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Mining 20 Years of Financial Data

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Correlations to Market Capitalization

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How to Read an Orbit Chart

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Supply Chain Metrics That Matter Reports

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Agenda

Vision

History of Our Work


Supply Chain Index

What's Next?

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Supply Chain Metrics That Matter Reports

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What is Resiliency?

Tightness of the Pattern on the Orbit Chart for Operating Margin and Inventory Turns


Resiliency 2000-2012

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Agenda

Vision

History of Our Work


Supply Chain Index

What's Next?

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Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)• Strength: Inventory Turns & Operating Margin 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: balance, strength, resiliency and peer rankings.

Supply Chain Index: A Measure of Supply Chain Improvement

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The Index Framework

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Supply Chain Index

30% 30% 30% 10%

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What is the right weighting? What is the right time period?


An exclusive, invitation-only group of senior supply chain leaders (330 at present):• Two private networking events/year• One-on-one networking as needed• Invitations to rank companies for the

Supply Chain Index (one per company)• Monthly calls on specific topics

Shaman’s Circle

Retail


Supply Chain Index: Retail2006-2012

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Wal-Mart and Target(2000-2012)

Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012

0.05 0.06 0.07 0.085

6

7

8

9

10

2000

2012

20002012

Target Corporation Wal-Mart Stores, Inc.

Operating Margin

Inv

en

tory

Tu

rns

Best Scenario

TGT0.06, 6.2

WMT0.06, 7.8

Average (Operating Margin, Inventory Turns)


CVS and Walgreens2000-2012


Retail Index:2009-2012


• Drug channel rises.• Kroger and Target make progress. Sainsbury and Costco fall.

Retail Summary

Consumer Packaged Goods


Supply Chain Index: Consumer Products2006-2012

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Colgate and P&G(2000-2012)


0.10 0.15 0.20 0.254

5

6

7

2000

2012 2000

2012

Colgate-Palmolive Company Procter & Gamble Company

Operating Margin

Inv

en

tory

Tu

rns

Best Scenario

CL0.21, 5.7

PG0.18, 5.7



P&G and Unilever2000-2012


Supply Chain Index: Consumer Products2009-2012

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• Beauty category gains ground. Heavier CPG products lose ground as the cost of transportation increases.

• L’Oreal, Beiersdorf and Unilever improve. Colgate falls.

Consumer Products Comparison

Food and Beverage


Supply Chain Index: Food and Beverage2006-2012

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Campbell Soup and Hershey(2000-2013)


General Mills and Kellogg’s2000-2012


Supply Chain Index: Food and Beverage2009-2012

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• Nestle, Smuckers, PepsiCo, Inbev and Conagra make significant gains.

• General Mills and Coca-Cola Enterprises fall.

Food and Beverage Comparison

Chemical


Supply Chain Index: Chemical2006-2012

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Inventory Turns vs. Operating Margin(2000-2012)


0.00 0.10 0.20 0.303

4

5

6

7

8

2000

2012

2000

2012

BASF SE E. I. du Pont de Nemours and Company

Operating Margin

Inv

en

tory

Tu

rns

Best Scenario

BAS0.10, 5.3

DD0.10, 4.0



Supply Chain Index: Chemical2009-2012

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• BASF and Dow Chemical move up the stack. • Dow improves post Rohm and Haas acquisition.• DuPont, FMC and Ecolab drop in the rankings.

Insights on Chemical

Apparel


Supply Chain Index: Apparel2006-2012

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VF and Hanes Brands


Supply Chain Index: Apparel2009-2012


• Hanes, Nike and Columbia Sportswear rise in the ranking. VF falls due to M&A and coalition rationalization strategies.

Insights on Apparel


• Retail: Dollar General and Kohl’s• CPG: L’Oreal, Beiersdorf and Estee Lauder• Food: Campbell’s, Hershey and Nestle• Chemical: Lanxess, Monsanto, and BASF• Apparel: Hanes, Columbia Sportswear and VF

Our Winners Circle


• Nine out of ten companies are stuck on the Effective Frontier. The project approach versus a clear operating strategy is detrimental.

• Supply chain resiliency is improving. However, the lack of resiliency of contract manufacturing and 3PLs should be a risk concern for manufacturers.

• The Index favors companies with a high ROIC. Companies that have increased complexity, lost margin and have not more fully utilized assets are penalized in the rankings.

What Have We Learned?

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Agenda

Vision

History of Our Work


Supply Chain Index

What's Next?

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Next Steps

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• Supply Chain Index Webinars• July 17- Healthcare Value Network• August 12- Industrial Value Network

• Monthly Research Reports• June 17- Consumer Value Network• July 22- Healthcare Value Network• August 19- Industrial Value Network

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

Questions?

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Annual Event


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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Business

Supply chain index webinar june 11 final