supply chain insights global summit 2013 - supply chain financial benchmarking with lora cecere
DESCRIPTION
Supply Chain Metrics That Matter An overview of supply chain progress in the last decade. A look at companies' progress on the Supply Chain Effective Frontier.TRANSCRIPT
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Supply Chain Insights Global Summit #SCISummit September 2013, p.1TM
Lora CecereFounder and CEO
Supply Chain Insights
Supply Chain Financial Benchmarking
Answering the Question: What Is the Role of Supply Chain Effectiveness
in Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.2TM
Our Point of View: Definition of Supply Chain Excellence?
• 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
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Supply Chain Insights Global Summit #SCISummit September 2013, p.3TM September 2013, p.3TMSupply Chain Insights Global Summit #SCISummit
The Supply Chain Effective Frontier
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Supply Chain Insights Global Summit #SCISummit September 2013, p.4TM
Ratios Considered
Growth Profitability Cycle ComplexityR&D Margin Cash on Hand C2C Cycle Altman Z
R&D to COGS Ratio Free Cash Flow Ratio Days of Finished Goods Capital Turnover
SGA Margin Gross Margin Days of Inventory Current Ratio
SGA/COGS Net ProfitDays of Payables
OutstandingQuick Ratio
COGS as Percent of Net Sales
Operating Margin Days of Raw Materials Return on Assets
Pretax Margin (EBIT) Days of Sales Outstanding Return on Equity
YoY Sales Growth Days of Work in Progress Return on Invested Capital
Operating Margin DPO/DSO Return on Net Assets
Inventory Turns Revenue/Employee
Receivables Turns Cost of Sales
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Supply Chain Insights Global Summit #SCISummit September 2013, p.5TMSupply Chain Insights Global Summit #SCISummit September 2013, p.5TM
Household Products Supply Chain
Financial Benchmarking
Answering the Question:What Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.6TM
An Example of Benchmarking in Household Products
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Supply Chain Insights Global Summit #SCISummit September 2013, p.7TM
Household Products: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.8TM
Household Products: Inventory Turns vs. Revenue per Employee (2002-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.9TM
Household Products: Inventory Turns vs. Operating Margin (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.10TM
Household Products Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.11TM
Our Interpretation:Household Products Summary
• P&G has delivered a more balanced results performance with better year-over-year performance than Unilever.
• While P&G is 21% larger in revenue than Unilever, the average productivity is 48% higher.
• Sector operating margin has decreased in the last three years.
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Supply Chain Insights Global Summit #SCISummit September 2013, p.12TMSupply Chain Insights Global Summit #SCISummit September 2013, p.12TM
ChemicalSupply Chain
Financial Benchmarking
Answering the Question:What Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.13TM
An Example of Benchmarking for Two Chemical Companies
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Supply Chain Insights Global Summit #SCISummit September 2013, p.14TM
Chemical: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.15TM
Chemical: Inventory Turns vs. Revenue per Employee (2002-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.16TM
Chemical: Inventory Turns vs. Operating Margin (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.17TM
Chemical Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.18TM
• Chemical companies are less resilient than household products.
• Both companies struggled to maintain balance in the Great Recession. DuPont has been more resilient than Ashland.
• Ashland historically pushed more aggressive performance on supply chain cycles, but was not able to maintain these performance levels.
Our Interpretation:Chemical Summary
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Supply Chain Insights Global Summit #SCISummit September 2013, p.19TMSupply Chain Insights Global Summit #SCISummit September 2013, p.19TM
Pharmaceutical Supply Chain
Financial Benchmarking
Answering the Question:What Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.20TM
An Example of Benchmarking for Two Pharmaceutical Companies
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Supply Chain Insights Global Summit #SCISummit September 2013, p.21TM
Pharmaceutical: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.22TM
Pharmaceutical:Inventory Turns vs. Revenue per Employee: (2002-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.23TM
Pharmaceutical: Inventory Turns vs. Operating Margin (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.24TM
Pharmaceutical Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.25TM
Our Interpretation: Pharmaceutical Summary
• Bristol Myers Squibb has the most balanced performance of supply chain metrics in the pharmaceutical industry.
• Pharmaceutical company performance is less resilient than chemical companies.
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Supply Chain Insights Global Summit #SCISummit September 2013, p.26TMSupply Chain Insights Global Summit #SCISummit September 2013, p.26TM
High-tech & Electronics Supply Chain
Financial BenchmarkingAnswering the Question:
What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.27TM
An Example of Benchmarking for Two High-tech & Electronics Companies
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Supply Chain Insights Global Summit #SCISummit September 2013, p.28TM
High-tech & Electronics: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.29TM
High-tech & Electronics: Inventory Turns vs. Revenue per Employee (2002-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.30TM
High-tech & Electronics: Inventory Turns vs. Operating Margin (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.31TM
High-tech & Electronics Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.32TM
Our Interpretation:High-tech & Electronics Summary
• The last decade for high-tech companies have been rough and turbulent. This has been to a greater degree than other industries.
• Seagate has outperformed Western Digital in their ability to balance supply chain financial ratios in a tough market.
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Supply Chain Insights Global Summit #SCISummit September 2013, p.33TMSupply Chain Insights Global Summit #SCISummit September 2013, p.33TM
Apparel Retail Supply Chain
Financial Benchmarking
Answering the Question:What Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.34TM
Note: Zara is a brand of Inditex
An Example of Benchmarking forTwo Apparel Retail Companies
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Supply Chain Insights Global Summit #SCISummit September 2013, p.35TM
Apparel Retail: Cash-to-Cash Versus Inventory Turns 2001-2012
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Supply Chain Insights Global Summit #SCISummit September 2013, p.36TM
Apparel Retail: Inventory Turns vs. Revenue per Employee (2003-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.37TM
Apparel Retail: Inventory Turns vs. Operating Margin (2001-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.38TM
Apparel Retail Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.39TM
Our Interpretation:Apparel Retail Summary
• Both companies have outperformed their peer group in operating margin and under-performed in growth.
• At 1/20th the size of the supply chain leader Inditex (the parent company of Zara), Lululemon has balanced supply chain ratios showing year-over-year improvement.
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Supply Chain Insights Global Summit #SCISummit September 2013, p.40TMSupply Chain Insights Global Summit #SCISummit September 2013, p.40TM
Mass Merchant Retail Supply Chain
Financial BenchmarkingAnswering the Question:
What Is the Role of Supply Chain Effectiveness in Driving Corporate Performance?
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Supply Chain Insights Global Summit #SCISummit September 2013, p.41TM
An Example of Benchmarking for Two Mass Merchant Retail Companies
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Supply Chain Insights Global Summit #SCISummit September 2013, p.42TM
Mass Merchant Retail: Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.43TM
Mass Merchant Retail: Inventory Turns vs. Revenue per Employee (2003-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.44TM
Mass Merchant Retail: Inventory Turns vs. Operating Margin (2000-2012)
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Supply Chain Insights Global Summit #SCISummit September 2013, p.45TM
Mass Merchant Retail Comparison
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Supply Chain Insights Global Summit #SCISummit September 2013, p.46TM
Our Interpretation:Mass Merchant Retail Summary
• Each industry has a different pattern.
• Industry leaders have very tight patterns showing year-over-year improvement on a balanced portfolio of metrics.
• Leaders improve the potential of the supply chain and make conscious trade-offs.
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Supply Chain Insights Global Summit #SCISummit September 2013, p.47TM