Presentation for the Integrated Supply Chain Management Conference in Turkey on April 29th, 2015. An analysis of the current state of supply chains in the market-driven world. Data from four years of research on the progress of supply chain management.

1. Supply Chain Metrics that
Matter in the Market driven
World

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Disclaimer: I am a Skeptic

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A Curmudgeon of sorts…

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A Fortune-teller….

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My Point of Reference
Self-published
September 2014
Wiley
December 2014
Wiley
December 2012

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Get Prepared

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8. Today’s Reality

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Today’s Supply Chain is Stuck

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Progress: All Industries
Industry Snapshots (2006-2013)
Industry
Year –over-
Year
Revenue
Growth
Operating
Margin
Inventory
Turns
Cash-to-
Cash
Cycle
Revenue
per
Employee
(K$)
SG&A
Ratio
Retail Apparel Industry
18%
39%
0.39
27%
05
05%
68
26%
325
18%
27%
05%
Apparel Manufacturing Industry
14%
82%
0.12
32%
05
68%
150
08%
400
355%
27%
63%
Mass Retail Industry
09%
50%
0.06
20%
06
06%
03
148%
350
48%
23%
6%
Beverage Industry
09%
61%
0.19
16%
02
04%
53
46%
512
NC
24%
16%
Pharmaceutical Industry
08%
47%
0.23
29%
03
16%
155
47%
572
32%
27%
08%
Chemical Industry
08%
45%
0.10
10%
06
04%
87
23%
557
23%
14%
27%
Medical Device Industry
06%
38%
0.14
32%
02
13%
206
16%
351
12%
34%
04%
Grocery Retail Industry
06%
31%
0.03
37%
17
01%
10
50%
405
54%
14%
06%
Consumer Packaged Goods
05%
25%
0.14
73%
08
482%
72
17%
333
14%
26%
09%
Food Industry
05%
55%
0.10
19%
07
17%
40
04%
534
55%
20%
18%
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2013
Industry Average comprised of public companies (combined food & beverage industry: NAICS 3112% where % is any number from 0-9, 311320, 311520, 311821, 311941 &
312111), (chemical: NAICS 325188 & 325998), (consumer packaged goods: NAICS 3256% where % is any number from 0-9), (medical device industry: NAICS 339112),
(pharmaceutical industry: NAICS 325412) reporting in One Source with 20123annual sales greater than $1billion
NC=no change

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Why?

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Demand
Signal
Accurate Weekly
Forecasting is ...
Delay from
Purchase to
Signal
What is Demand?
* Represents emerging markets

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Consumer-driven Supply Networks: Defined by P&G in the 1990s
as a shelf-driven, outside-in process defined by successful execution
of the two moments of truth.
Demand-driven Supply Networks: As defined by AMR Research in
2004: a supply chain that senses and translates market signals in
real time.
Demand-driven Value Networks: As defined by AMR Research in
2007: A network that senses demand with minimal latency to drive a
near-real time response to shape and translate demand.
Market-driven Value Networks: As defined by Supply Chain
Insights in 2010: an adaptive network focused on a value-based
outcomes that senses, translates, and orchestrates market changes
(buy and sell-side markets) bi-directionally with near-real time data to
align sell, deliver, make and sourcing organizations outside-in.
Evolution of Demand-driven Concepts

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Fallacy #1: Functional Excellence
#sciwebinar

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Fallacy #2: A Project-based Focus
#sciwebinar

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What We Expected

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A Supply Chain
is a Complex System
with Complex
Processes
with Increasing
Complexity
What we Learned….
#sciwebinar

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The Supply Chain Effective Frontier
#sciwebinar

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Correlations to Market Capitalization
#sciwebinar

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Orbit Chart: Wal-Mart
(Inventory Turns and Operating Margin)
#sciwebinar

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Orbit Chart: Apple
(Inventory Turns and Operating Margin)
#sciwebinar

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Orbit Charts: Dow Chemical Company
#sciwebinar

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Orbit Charts: Mattel, Inc.
(Inventory Turns versus Operating Margin)
#sciwebinar

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Orbit Chart: Procter & Gamble
(Inventory Turns and Operating Margin)
#sciwebinar

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Overall Network: Inventory Turns versus
Operating Margin 2006-2012
#sciwebinar

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Measuring Supply Chain Improvement
Overall Ranking per Company
• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)
• Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score)
• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)

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Supply Chains to Admire Methodology
Performance
Beats the industry
average for operating
margin, inventory turns
and ROIC for 2006-
2014 and 2009-2014
Improvement
Ranks above peer
group average on
The Supply Chain
Index for 2006-
2014 or 2009-2014
+

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An Example: Food

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Automotive

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Annual Study: Supply Chains To Admire
Supply Chains to Admire 2015 to be Announced at the Supply
Chain Insights Global Summit on September 9th and 10th

31. Driving Results

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• Leadership
• Building of talent
• Outside-in processes
• Horizontal process focus
• Active and intentional design
• Supply chain planning
What Makes a Difference

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Right Stuff?

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Growing Talent Gap

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Losing Ground

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What does this Say to You?

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State of IT Systems

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The Role of ERP

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IT Systems:
Importance & Satisfaction by Role & Supply Chain

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State of Planning

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Get Prepared

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• It is not an evolution
• We are defining new
practices
• Learn, to unlearn, to relearn
Get Prepared

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Questions?

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Founder: Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 3 books: Bricks Matter (2012), Shaman’s Journal (2014)
and Supply Chain Metrics That Matter (December 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: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (6000 pageviews/month)
• Forbes: http://www.forbes.com/search/?q=lora+cecere
• Twitter: lcecere (5900 followers)
• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (42,000 followers)