Inventory Optimization 2015 Preliminary Summary Charts

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Lora Cecere

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Supply Chain Insights LLC Copyright © 2015, p. 1
Inventory Optimization
Study
Preliminary Summary Charts
February – May, 2015

Supply Chain Insights LLC Copyright © 2015, p. 2
Agenda
 Study Overview
 Inventory Optimization Software
 Inventory Management
 Team Alignment and Business Pain

Supply Chain Insights LLC Copyright © 2015, p. 3
Study Overview

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Most Respondents Are Manufacturers and
Most Work in a Process Industry

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The Most Common Industries Are CPG, Food & Beverage
and Chemical

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Company Revenue Is $6B on Average

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Most Respondents Work in a Supply Chain Role, Work at a
Director/Manager Level, and Are Based in US & Canada

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Agenda
 Study Overview
 Inventory Optimization Software
 Inventory Management
 Team Alignment and Business Pain

Supply Chain Insights LLC Copyright © 2015, p. 9
Inventory Optimization Provider Categorization

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Nearly Half Have Advanced Software
for Most Important; SAP Is Most Common Provider

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SAP Is Most Common Provider Overall and
for Advanced Software

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Nearly Half Are Satisfied with Their
Most Important Inventory Software

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Sample Responses for Why Satisfied with
Inventory Optimization Software

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Sample Responses for Why NOT Satisfied with
Inventory Optimization Software

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Nearly Two-Fifths Have Achieved ROI and Over
One-Quarter Can Match “Top-Down” and “Bottom-Up”

Supply Chain Insights LLC Copyright © 2015, p. 16
Most Common Way for Those with Advanced Software
to Improve Inventory Is Inventory Optimization Software

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For Those with Advanced Software, Supply Chain Group
Is Most Likely Sponsor and to Have within KPIs

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For Those with Advanced Software, Supply Chain Group
Is Most Likely to Have it within KPIs

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Agenda
 Study Overview
 Inventory Optimization Software
 Inventory Management
 Team Alignment and Business Pain

Supply Chain Insights LLC Copyright © 2015, p. 20
Half Consider Company to Be Effective at
Making Inventory Decisions

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Sample Responses for Why Effective
at Making Inventory Decisions

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Sample Responses for Why NOT Effective at
Making Inventory Decisions

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Nearly Half Reduced Inventory in 2014;
Primary Reason Is Greater Attention to Detail on
Inventory Performance

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Cycle Counting Is Most Common Way to Control
Inventory Accuracy

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Important Inventory Goals Needing Attention:
S&OP Maturity, Leadership Understanding, and
Adherence to Inventory Targets

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Maturity of S&OP Is Most Important Inventory Goal,
but Not Performing Well

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Maturity of S&OP Is Most Important Inventory Goal,
but Not Performing Well

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Chief SC Officers and Functional VPs Understand Inventory
Strategies Notably Better Than Do P&L Owners

Supply Chain Insights LLC Copyright © 2015, p. 29
Agenda
 Study Overview
 Inventory Optimization Software
 Inventory Management
 Team Alignment and Business Pain

Supply Chain Insights LLC Copyright © 2015, p. 30
Sales & Marketing Alignment Is Most Important and
Top Performing

Supply Chain Insights LLC Copyright © 2015, p. 31
Greatest Gaps in Alignment:
Operations & IT, Sales & Operations,
and Manufacturing & Procurement

Supply Chain Insights LLC Copyright © 2015, p. 32
Increasing Business Pain Expected for Speed of Business,
Risk, Talent, Value Networks, Globalization, and Innovation

Supply Chain Insights LLC Copyright © 2015, p. 33
Consistently High Pain Reported for Demand/Supply
Volatility and Cross-Functional Alignment

Supply Chain Insights LLC Copyright © 2015, p. 34
Overall Increases in Business Pain Expected Mostly for
Increasing Speed of Business, Risk Management, and Talent

Supply Chain Insights LLC Copyright © 2015, p. 35
Since Five Years Ago, Decreases in Business Pain Reported
for Clarity of Business Strategy and Software Usability

Supply Chain Insights LLC Copyright © 2015, p. 36
Increases in Business Pain Expected Mostly for Risk
Management, Innovation, and Increasing Speed of Business

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Executive Summary: Current State of Food and Beverage Industries Over the last decade, consumer confidence in the food and beverage industry supply chains has waned. Shopper distrust is high; and as a result, growth in many categories like carbonated beverages and cereals declined. While these two industries have similarities, there are different underlying dynamics in business drivers. The potential of the food supply chain is different than that of beverage. As a result, in this report, we share information on the two industries separately. For both industries, the last decade was a tough market. Despite attempts to stimulate demand through trade programs, new product launch, and product expansion into new continents, growth declined. In 2003-2006, growth in the food industry was 7% while in 2011-2014, year-over growth was 4%. In parallel, in 2003-2006, growth in the beverage industry was 22%; yet, in 2011-2014, it was 7%. As growth declined, supply chain maturity mattered more than ever. Most companies were not equal to the challenge. Traditional marketing tactics are not as effective in these two industries as they were a decade ago. To try to stimulate growth, 33% new items were introduced into the retail chain from these two industries. This rise in complexity reduced the effectiveness of the supply chain at a time of declining volumes. In Table 4, we profile the results in the food industry, while in Table 5 we portray the trends in the beverage industry. In both industries, operating margin declined despite improved productivity in revenue per employee. In parallel, despite multiple investments in technologies, inventory turns declined in the food industry. Companies were unable to balance metrics in times of declining volumes. The reason? Rising commodity costs and the slow development of supply chain skills. Companies that did the best in driving improvement in key metrics in times of declining volumes have seven characteristics: core competency in network design; strong capabilities in transportation management; a focus on inventory management; use of more advanced forms of supply chain planning; balance and understanding of the trade-offs of volume, price and mix; use of channel data; and continuity of leadership. Table 4. Progress on the Effective Frontier for Food Companies Table 5. Progress on the Effective Frontier for Beverage Companies When we compiled the Supply Chains to Admire Report in August 2014, two food and beverage companies—General Mills and ABInBev—made the list. To make the list, a company had to deliver performance (posting above-average results for the period of 2009-2013 when compared to their peer group on a portfolio of metrics including operating margin, inventory turns and Return on Invested Capital). They also had to drive supply chain improvement (based on the Supply Chain Index as defined in the Research Methodology section) faster than their peer group. We believe b

Supply Chain Metrics That Matter: A Focus on Food and Beverage Companies - 2015

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RESEARCH OVERVIEW: Report Details: This report is the result of six months of studying the emerging supply chain analytics technology market. This report is based on qualitative research completed in the period of January-July 2016. In this research effort, we interviewed thirty-five technology analytics providers to understand their solutions. This was followed by interviews with thirty innovative supply chain leaders. To support this research and take it one step further, we augment these qualitative insights with quantitative survey analysis collected in preparation for the Supply Chain Insights Global Summit. In this research, we share insights on the importance of supply chain analytics in Supply Chain 2030 strategies. Here we share these findings. Objective: To understand the changing role of supply chain analytics in supply chain strategy. Highlight: With the changing face of supply chain analytics companies have greater opportunities to drive insights and gain competitive advantage. This report is designed to help companies bridge traditional thinking on supply chain analytics while embracing emerging technologies. Executive Summary Supply chains are drowning in data, but are low on insights. While the cost of computing memory was once a barrier to executing an analytics strategy, this is no longer the case. The largest barrier is the understanding of new forms of analytics. Historically, the term supply chain analytics was used to describe reporting. This is no longer the case. Today there are more options and capabilities for supply chain analytics. There is a proliferation of new technologies flooding the market. Ironically, despite the explosion of options as shown in Figure 1, the supply chain operating team is more conservative. It is a skewed distribution. When it comes to decision support, the number of late adopters outnumber the early adopters three to one. The lack of early adopters, the rapid rate of change, and the conventional architectural definitions (primarily focused on Enterprise Resource Planning or ERP-based architectures) are barriers to the adoption of new forms of supply chain analytics.

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Supply chain management practices are thirty years old. Over the last decade, companies have invested in technology projects to improve financial outcomes (Technology investments over this period have averaged 1.7% of revenue). The ultimate goal was to reduce costs and improve inventory management. While many supply chain leaders believe that they delivered on these metrics, we find a less persuasive story. Through analysis of publically available balance sheet and income statement data, we find that 75% of companies in process industries lost ground on margins and only 5% of companies improved their positions on the number of days of inventory. The goal of this report is to answer the question “Why?” (For more on inventory and the Cash-to-Cash Cycle, see Supply Chain Metrics That Matter: The Cash-to-Cash Cycle.) To begin our analysis, we wanted to understand the general trends. In table 1, we share the differences in average values for the companies profiled in this report by industry for the period of 2000-2011. In general, we see a decline in operating margins (OM). There is an increase in selling, general & administrative Costs (SG&A) and revenue per employee performance. The industries have mixed results on return on assets (ROA).

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Executive Summary Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships. As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech. As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive. In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables. Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality. In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base. Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.

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Report Details: This report is based on analysis of financial balance sheet and income statement data within the Retail industry, for the period of 2006-2015. The data is collected from YCharts. Objective: To use financial balance sheet and income statement data to better understand the state of Grocery Retailers' and Mass Merchants' supply chains and to determine which companies’ supply chains did the best on the delivery of a portfolio of metrics over the last decade. Highlight: During the Great Recession retailers faced strong declines in spending. It was a critical time, but for many it was an opportunity to emerge stronger. Those who redefined their stores for the dollar-conscious customer or built new and innovative formats while driving supply chain innovation, drove strong balance sheet results. Others learned that doing traditional retail more efficiently was not enough.

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Executive Summary: Current State of the High-Tech Industry Globalization. Commodity inflation. Margin squeeze. Economic uncertainty. Warranty issues. Shortening product life cycles. Recalls. Labor arbitrage and outsourcing. The list of market pressures could go on and on, but one thing is clear: the high-tech industry was redefined over the course of the last decade. In Table 4 we show the progress of discrete industries for the periods of 2006-2014 and 2011- 2014. Notice there is more red (lack of progress) than green (progress) in the industry trends. Table 4. Supply Chain Performance by Industry within the Discrete Industries High-tech companies have the most advanced practices for inventory management, planning and analytics. They are just treading water (keeping slightly ahead of the market dynamics). The rate of change drives innovation. Within this industry there are more supply chain innovators taking a hard look and driving the adoption of prescriptive analytics and canonical value network infrastructures. Taking a closer view at the value chain of the sub-industries within high-tech, i.e. consumer electronics, B2B Electronics, and semiconductor industries, the impact of the industry drivers and the importance of supply chain performance becomes clearer. Table 5. Supply Chain Performance by Industry within the High-Tech Sector The entire value chain is struggling to maintain margins and improve inventory turns. For consumer electronics and B2B electronics, growth is down, operating margins are degrading and inventory turns worsening. Supply chain matters more than ever.

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Sales and Operations Planning processes are now in their fourth decade of maturity. The processes are growing more complex. Progress is slow. The infographic below shows the current state of the union of sales and operations into S&OP processes. In this world of uncertainty, good planning matters. Complexity and volatility are escalating. Improving S&OP in a systematic approach, focused on goal evolution and systemic process governance, makes a difference; but, it requires education. A barrier to improvement is the executive team not understanding the supply chain as a complex system. It is the goal of this report to help alleviate this problem.

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Executive Overview When we compiled the Supply Chains to Admire Report in August 2014, no pharmaceutical company made the list. To make the list, a company had to deliver performance (above average results for the period of 2009-2013 than their peer group on a portfolio of metrics including operating margin, inventory turns and Return on Invested Capital) and drive supply chain improvement (based on the Supply Chain Index) faster than their peer group. We believe both performance and improvement matter. In the pharmaceutical industry, we find most companies to be stuck. They have either regressed in supply chain performance or they are at the same point as they were a decade ago. For many supply chain leaders that attend conferences, this may seem unfathomable. There is an industry belief that companies have implemented new technologies, and evolved processes, and driven improved balance sheet results. As we will show in this report, as seen in Figure 4, this is not necessarily the case. On average, AstraZeneca has outperformed Bristol-Myers Squibb, and the industry as a whole, but they are not resilient. They have gone backwards in margin and not sustained inventory turn improvements. In contrast, Bristol-Meyers Squibb has not made progress in either performance or improvement and has remained at the same level of performance, without improvement, throughout the period.

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Executive Summary Supply chain management it is now three decades old. The processes are maturing. With the increase in complexity in markets and new product launch, supply chain excellence matters more than ever. Manufacturing and distribution companies are looking for insights on how to parlay advances in supply chain management into balance sheet results. This is the goal of this report. This report is a summary of research conducted during 2015. It provides a short summary of the major insights gathered from six quantitative and four qualitative studies. For more in-depth analysis reference the full reports outlined in the appendix.

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Survey Details: The research for this report was conducted from February 12 – October 8, 2015. Surveys were conducted among Manufacturers, Retailers, and Wholesalers/Distributors/Co-operatives with $250M+ in revenue and who use (and are familiar with) inventory optimization software (n=64). Respondents were evenly split between those using basic (ERP or ERP+APS) and advanced (software in addition to ERP/APS) software. All surveys were conducted by Supply Chain Insights. Objective: To understand the impact of inventory optimization software on supply chain excellence. NOTE: inventory optimization software was defined as “any form of ERP (Enterprise Resource Planning), APS (Advanced Planned Software), or sophisticated inventory planning tools.” Highlight: Companies who use advanced software are more likely to be satisfied with their software, to be effective at making inventory decisions and to drive a return on investment for their software.

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Executive Overview Supply chain performance matters. It can make or break corporate performance. Now 30-years old, the practice of supply chain management is still evolving. While companies speak of best practices, and boast about improvements in operating margin, inventory levels and asset management in conference after conference, we do not see it in our analysis of balance sheet information for any industry. By their nature, supply chain leaders are competitive. They want to drive performance improvements and increase corporate value. Their goal is to outpace competitors. The rate of business change is intense and the personal stakes are high. Day after day, leaders must answer questions like, “Which path should I to take? What are the best technologies to use? What is an acceptable rate of performance? How am I doing against my peer group? And, what can I learn from others that I can use to improve the performance of my own operation?” Until the development of the Supply Chain Index by Supply Chain Insights, there was no independent and objective data-driven methodology that could answer these questions. With the development of this methodology, there now is a way to gauge improvement. While it is easy to say the term supply chain excellence, it is difficult to define. Many people think that they know the definition, but there is no agreed-upon standard. The lack of a clear definition, and a methodology to measure improvement, makes progress hard to quantify and track. The Supply Chain Index is designed to help. It is an objective measurement of supply chain improvement. It enables the comparison of companies’ progress within a peer group for a given time period. The Index is based upon financial performance of companies on four metrics integral to supply chain operations: Year-over-Year Revenue Growth, Return on Invested Capital, Inventory Turns, and Operating Margin. In building the Supply Chain Index, we had three goals: 1. Quantify Levels of Supply Chain Improvement. The Index is a composite metric based on the calculation of balance, strength and resiliency factors for a given time period. Each factor is measuring the pattern of performance over time. In the analysis, there is an underlying assumption that the companies that can sustain the best improvement in these three areas are driving the highest rates of supply chain improvement. The input metrics of Year-over-Year Revenue Growth, Return on Invested Capital, Inventory Turns, and Operating Margin were selected in part due to their high correlation to market capitalization. 2. Bridge the Gap between Finance and Supply Chain. Our second goal is to bridge the gap between the supply chain organization and the financial team...

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Executive Overview Supply chain performance matters. It can make or break corporate performance. Now 30-years old, the practice of supply chain management is still evolving. While companies speak of best practices, and boast about improvements in operating margin, inventory levels and asset management in conference after conference, we do not see it in our analysis of balance sheet information. By their nature, supply chain leaders are competitive. They want to drive performance improvements and increase corporate value. Their goal is to outpace competitors. The rate of business change is intense and the personal stakes are high. Day after day, leaders must answer questions like, “Which path should I to take? What are the best technologies to use? What is an acceptable rate of performance? How am I doing against my peer group? And, what can I learn from others that I can use to improve the performance of my own operation?” Until the development of the Supply Chain Index by Supply Chain Insights, there was no independent and objective data-driven methodology that could answer these questions. With the development of this methodology, there now is. While it is easy to say the term supply chain excellence, it is difficult to define. Many people think that they know the definition, but there is no agreed-upon standard. The lack of a clear definition, and a methodology to gauge improvement, makes progress hard to quantify and track. The Supply Chain Index is designed to help. It is an objective measurement of supply chain improvement. It enables the comparison of companies’ progress within a peer group for a given time period. The Index is based upon financial performance of companies on four metrics integral to supply chain operations: inventory turns, operating margin, Return on Invested Capital and year-over-year revenue growth. There were three goals. 1. Quantify Levels of Supply Chain Improvement. The Index is a composite metric based on the calculation of balance, strength and resiliency factors for a given time period. In the analysis, there is an underlying assumption that the companies that can sustain the best improvement in these three areas are driving the highest rates of supply chain improvement. The input metrics of inventory turns, operating margin, ROIC and year-over-year revenue growth were selected in part due to their high correlation to market capitalization. 2. Bridge the Gap between Finance and Supply Chain. Our second goal is to bridge the gap between the supply chain organization and the financial team. While the financial team is often backwards-looking at transactions, the supply chain team is forward-looking based on flows. There is often a temptation to focus on a single financial ratio in isolation, like inventory turns, not realizing that the supply chain is a complex system with tightly interrelated relationships amongst metrics based on supply chain potential.

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Executive Overview Today data is everywhere: but, nowhere. The world’s per capita capacity to store information has doubled every 40 months since the 1980s; and as of 2012, every day globally, 2.5 exabytes of data are created . As a result, social and customer data piles on the doorstep of the corporation, and operational data sits in the creases and cracks between functions. While many companies invested in data warehouse technologies and advanced applications for optimization, a common complaint in qualitative interviews with business leaders is “I cannot get to my data.” One business leader likened it to a Hotel California where, “The data checks into the system, but does not check out.” In most companies with heterogeneous information technology landscapes, simple reporting is still a major problem. In the face of growing data, companies struggle with the basics. The question is, “Why pursue a big data and analytics strategy if the company cannot do basis reporting?” No doubt about it, the current state of analytics is a barrier to building supply chain excellence. It is hard to have a data-driven discussion if you can’t get access to data.

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Survey Details: The research for this report was conducted online from January 6 - September 14, 2015 by Supply Chain Insights. Surveys were conducted among Manufacturers and Wholesalers/Distributors/Co-operatives with $250M+ in revenue and who have at least one S&OP process (n=73). For the purpose of analysis, respondents were split between those with a self-reported "effective" S&OP (n=31) and those without (n=42). Objective: To understand the value proposition of an effective S&OP (Sales and Operations Planning) process. NOTE: An S&OP process was defined as a "tactical planning process to forecast sales and plan operations." Highlight: Companies with a more effective S&OP process are more aligned, agile and balanced, which leads to greater control and improved response.

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Race for Supply Chain 2020: Insights on S&OP and Agility

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Tsunamis, terrorist attacks, hurricanes, and volcanic eruptions have impacted the global economy in the last 10 years. The effects of a “discontinuity event” such as a natural disaster, geopolitical shifts, economic uncertainty and demand/supply volatility to your business can be significant, impacting suppliers, vendors and customers. In our new report, Supply Chain Risk Management, we address the need for companies to proactively prepare for the worst to protect their business operations and weather the storm of unforeseen events.

Supply Chain Risk Management 2015 Summary Charts

Lora Cecere

Presentation for the OM Partners Conference end of September

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Executive Summary Global trade is essential to growth, and it is growing more complex. Global Trade Management (GTM) software makes it easier to become a global shipper and ensures regulatory compliance. Success with GTM requires the careful selection and use of both the software and trade compliance content. The average study respondent is a supply chain professional in North America working for a manufacturer with $4.5 billion in revenue. Over 90% of the respondents import and export goods; however, the software is only used to manage trade for 11 out of 19 of countries involved in exports. The top countries for the respondents to export and manage shipments from are the United States, China, Mexico, Germany, and England. In the average company, there is not one solution; instead, the average company has solutions from three different providers. Unlike other software, there is a high satisfaction rate with GTM. In the study, 67% of users were satisfied with their GTM software, reporting a Return on Investment (ROI) of thirteen months with 70% of respondents stating that they had achieved a ROI. In summary, GTM is a mature supply chain software with high satisfaction and a strong ROI. Here we share the results.

Global Trade Management 2014-15 Summary Charts

Lora Cecere

Presentation for the Demand-Driven Institute Conference on Friday

Lora Cecere

Risks are higher in a global supply chain. To deal with these potential hazards, risk management has evolved beyond dealing with an issue when it’s about to happen to focus on prevention, early sensing, and coordinated execution to respond to an event. There are new strategies and technologies that can proactively formulate a plan to protect your business and operations from the storm of unforeseen events. But how do you get started? At Supply Chain Insights, it’s our mission to help you improve your operations. We tackled this issue in a panel based webinar on November 18, 2015 featuring Lora Cecere and Pierre Mitchell from Spend Matters to give you their perspective and answer your questions on how to include an effective risk management strategy. We are sharing the slides used as the foundation for this discussion between two distinguished experts to educate you about why this is important to your operations and how to prepare for an unknown future to safeguard your business from risk using business alignment and risk management tools.

Supply Chain Risk Management Study slide deck - 18 NOV 2015

Lora Cecere

Executive Summary Teams claim that they are building end-to-end supply chain processes; but we do not find that this is true. Despite the growing need to automate the extended supply chain, the focus of most companies is on enterprise automation. The process flows of the extended supply chain are dependent on spreadsheets and Electronic Data Interchange (EDI). It is not sufficient. Companies want better supply chain visibility. The gaps in current supply chain capabilities are large. While EDI is effective in moving transactional data, it is point to point lacking community interaction. Companies are seeking new and deeper forms of supply chain visibility through business networks. It takes many forms. It is foundational to deliver on the promise of agility. They want to be more agile and the current IT architectures are not meeting this need. High level survey findings are: • Outsourcing is a Reality. It is here to Stay. For the average company, outsourcing of manufacturing and transportation is a reality. In the study, approximately ninety percent of respondents report having some level of outsourcing. Thirty percent outsource forty percent or more of their manufacturing and fifty-five percent outsource at least forty percent of their logistics on a volume basis. • Supply Chain Visibility has Many Forms. Few are Being Delivered Well. The term supply chain visibility is a nebulous term with many meanings. There is no standard definition. In this report, we share insights on the forms of visibility and the issues with each. Visibility within the company is being addressed by current IT architectures; but B2B architectures to support emerging supply chain visibility requirements are evolving. • The Gaps in Supply Chain Visibility are Large. The Satisfaction with EDI is high. The Confidence in ERP to Close the Gap is Low. The average company with ERP has seven different ERP instances and forty-nine percent of respondents report ERP spending plays a major role in their IT budget. However, as shown in this report, the gaps for supply chain visibility are high and the confidence that ERP implementations can close the gaps is low. As a result, the extended supply chain runs on EDI and spreadsheets. In the words of one supply chain leader that we interviewed, “Today, it is much like chewing gum, bailing wire and a shoestring.” In this report, we give an overview of the current state of supply chain visibility--the different forms and the state of each-- and share insights on current levels of importance and performance. We then look critically at current efforts of IT investment/focus and give recommendations on how business users can work with IT teams to close these gaps.

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Lora Cecere

Supply Chain Planning: A look Back and a Look Forward

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Lora Cecere

Cscmp4

Lora Cecere

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How do you measure up?

Ki Bae Kim

Summary document on research from over 100 companies on the current state of Sales and Operations Planning. The average company has seven processes and feels significantly less satisfied in 2019 than in 2016. Business complexity outpaces process and technology evolution. Companies deploying SAP APO or IBP rate themselves significantly behind peer group due to the lack of what if modeling and modeling capabilities.

Current State of Sales and Operations Planning

Lora Cecere

How Do We Heal the Healthcare Value Chain? Over the last decade, as shown in figure 1, the hospital supply chain has been one of the few that has improved operating margin, reduced inventory and improved revenue/employee. In contrast, the manufacturing suppliers to the hospital organization have grown inventories and struggled to preserve margins. Across the value chain from the patient to the raw material suppliers, total inventories have grown and costs have escalated. With pending regulations, hospitals are being forced to rethink processes, redefine value and work more holistically to improve sourcing practices. The suppliers to the hospital systems are having to rethink their systems to rethink the customer (from selling to the physician to selling to a more formal buying organization based on patient outcomes) and adapt to the new processes within the hospital for value analysis. Supply chain processes within the hospitals have matured. Hospitals have made more progress on improving cash-to-cash cycles than their upstream manufacturing trading partners. They have reduced inventories and attempted to work with suppliers. As shown in figure 2, it is notable to see that this industry is one of the few where downstream trading partners have actually improved payable terms for their suppliers. The future lies before the healthcare provider. As the provider of patient care, they have the greatest potential to lead in the healthcare value chain’s redesign to improve value. They have come a long way, but the changes have been incremental. They have focused primarily on traditional sourcing techniques; not a redesign of the healthcare value chain from the outside in, and the redefinition of complex and antiquated processes.

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Lora Cecere

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Report Details: The research for this report was conducted via an online survey from January 16 – April 3, 2017. Surveys were conducted among a mix of manufacturers, retailers, and wholesalers/distributors/co-operatives (n=56). Objective: To understand the role of supply chain finance in determining supply chain strategy and gaining competitive advantage towards supply chain excellence. Highlight: Managing costs is a struggle for most companies. While 88% of companies have implemented Enterprise Resource Planning (ERP), the hard work of process evolution and maturity continues. In this report we share the current state of supply chains in managing costs, and then take a look at the processes and organizational design factors to evaluate the impact on cost management.

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A critical look at three years of supply chain disruption. Using quantitative and qualitative research, Lora Cecere, Founder of Supply Chain Insights, looks critically at the factors within companies that drove resilience and the factors less successful. Companies that won were aligned, used market signals, decreased process latency, used scenario planning, and implemented descriptive analytics. Those that fared worse, had tight integration of supply chain planning to ERP, were not aligned, and were focused on a digital transformation strategy.

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