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