presentation given at cscmp on september 22nd on the supply chain index

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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