presentation given at cscmp on september 22nd on the supply chain index
DESCRIPTION
Overview of a two year research project to evaluate supply chain performance and improvement by industry.TRANSCRIPT
The Supply Chain Index
Lora Cecere
Abby Mayer
Abby MayerResearch Associate
Lora CecereFounder and CEO
Dr. George RungerProfessor, CIDSE, ASU
The Research Team
Today’s Supply Chain is Stuck
Industry Overview
Why? Demand Growing as a Risk
Why? The Long Tail of the Supply Chain: Growing Complexity
Volume
Level of PredictabilityPredictability based on forecast accuracy vs Actual Order Profiles
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
Fallacy #1: Functional Excellence
Fallacy #2: Project-based Focus
#sciwebinar
Companies Get More Serious With A Recession: But Cannot Sustain It
#sciwebinar
What We Expected
A Supply Chain is a Complex System
with Complex Processes
with Increasing Complexity
Our Model: The Supply Chain Effective Frontier
Orbit Chart: Wal-Mart(Inventory Turns and Operating Margin)
Orbit Chart: Apple (Inventory Turns and Operating Margin)
Orbit Charts: Dow Chemical Company
Orbit Chart: Procter & Gamble(Inventory Turns and Operating Margin)
Orbit Charts: Mattel, Inc.(Inventory Turns versus Operating Margin)
Overall Network: Inventory Turns versus Operating Margin 2006-2012
Preliminary Research: Correlations to Market Capitalization
Supply Chain Metrics That Matter Reports
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 Index A new way to measure relative supply chain performance by industry, based on the components of balance, strength and resiliency.
The Supply Chain Index (Improvement)
Mining 20 Years of Financial Data
Balance, Strength & Resiliency
Chemical 2006-2013
Chemical 2009-2013
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
Consumer Value Networks
Industrial Value Networks
Supply Chains to Admire
Retail
Consumer Goods
Food
Beverage
Apparel
Chemical
Pharmaceutical
Medical Device
Paper and Packaging
Semiconductor
Automotive
Consumer Electronics
Automotive Suppliers
Consumer Value Networks
Industrial Value Networks
Supply Chains to Admire
• Leadership• Building of talent• Inside-out processes• Horizontal process focus• Active and intentional design• Supply chain planning
What Makes a Difference
• 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
Questions?
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