supply chain metrics that matter

Supply Chain MattersUnderstanding the Link between Supply

Chain and Corporate PerformanceWebinar: August 30, 2013

Supply Chain Insights LLC Copyright © 2013, p. 2#sciwebinar

Presenters

Lora CecereFounder and CEO,

Supply Chain Insights

Philippe LambotteSVP Supply Chain

Merck


Supply Chain Insights is focused on delivering independent, actionable and objective advice for supply chain leaders. A company dedicated to research, turn to us when you want the latest insights on supply chain trends, technologies to know and metrics that matter.

About Us


This is the new bible for all supply chain executives. It provides an insider’s perspective that will prove incredibly valuable to even the most grizzled supply chain veteran. This is the next must-have business book.

--Bruce Richardson, Chief Enterprise Strategist, Salesforce.com

Today, the worlds of social business and supply chain management have many degrees of separation. I enjoyed working with Lora to understand what the future transformation of digital marketing to digital business could look like.

--Jeremiah Owyang, Research Director, Altimeter

Second Printing of Bricks Matter: 16 Five-Star Reviews on Amazon

The book can be ordered from Amazon.com in hardcopy or digital format


2014 Publication

A Review of Progress of Industries on the Supply Chain Effective Frontier and the Supply Chain Index


18 Reports in 2012


19 Reports So Far for 2013


Need for Strategy

Supply chain strategy

Business StrategyWhat are the right things to do to increase company value?

Value-network Supply Chain StrategyWhat are the right ways to support the business strategy?

What are the right trade-offs between value drivers for each value network?

Right productplatforms

Design the supply

response

Build organizational systems and

manage talent

Align supply relationships

Align demandrelationships

Effective Supply Networks

Execution of buy-side strategies

Continuous Improvement

Capabilities RequiredSupply Chain

Network Design

Design Networks

Innovation Methodologies

Demand Networks

Joint Value Creation Strategies

Business ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC


Metrics That Matter


Industry Averages


What Is Best in Class?

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


The Supply Chain Effective Frontier


Definitions

• Supply Chain Index: A formulaic representation of supply chain financial ratios correlated to stock market capitalization valuation.

• Supply Chain Effective Frontier: The balance of growth, profitability, cycle and complexity metrics to deliver the supply chain strategy. It may or may not maximize the company’s market valuation.

• Supply Chain Excellence: The behavior of companies working to maximize value through the setting of targets for supply chain financial ratios and aligning metrics that matter (tied to value chain strategy).


Connecting Supply Chain Financial Ratios to Corporate Performance

Financial Metrics

Growth Profitability Cycle ComplexityCommon Shares Cash Cash-to-Cash Cycle Altman Z

Employee Growth Cash Change in Period Days of Finished Goods Capital Turnover

Employees Cash on Hand Days of Inventory Current Ratio

Market Capitalization Cash Ratio TTM Days of Payables Outstanding Quick Ratio

R&D Margin Cash Ratio Quarter Days of Raw Materials Return on Assets

R&D Ratio Cash Ratio Year Days of Sales Outstanding Return on Equity

R&D to COGS Ratio Cost of Goods Sold Days of Work in Progress Return on Invested Capital

Revenue EBITDA DPO/DSO Return on Net Assets

Revenue Growth Free Cash Flow Ratio Finished Goods Inventory Revenue per Employee

Revenue Growth TTM Gross Margin Inventory Working Capital Ratio

Revenue TTM Gross Profit Inventory Turns

SG&A Margin Net Profit Margin Receivables Turns

SG&A Ratio Operating Cash Flow Ratio Raw Materials Inventory

SG&A to COGS Ratio Operating Margin Work in Progress Inventory

OPEX Ratio

Pretax Margin

Source: Supply Chain Insights LLC

Selected Ratios


Introducing the Supply Chain Index

A formulaic representation of how companies are trading off growth, profitability, cycle and

complexity performance on selected supply chain financial

metrics against market valuation.


Y-Intercept & Value


A Look at History: Progress in Productivity in Manufacturing


A Look at History: Progress in Productivity in Retail


Beverage


Cereal


Consumer Products


Consumer Products: A Different Strategy


Bristol-Myers Squibb and Merck


Corporate Summary


Metrics Included for Comparison


Cash-to-Cash Cycle vs. Inventory Turns (2000-2012)


Inventory Turns vs. Revenue per Employee (2002-2012)


Inventory Turns vs. Operating Margin (2000-2012)


Average Performance

Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012


Kraft Foods Inc. & Nestlé S.A.


Corporate Summary


Metrics Included for Comparison


Cash-to-Cash Cycle vs. Inventory Turns (2000-2011)


Inventory Turns vs. Revenue per Employee (2000-2012)


Inventory Turns vs. Operating Margin (2000-2012)


Average Performance


Summary

• Supply chain matters.• Have self-awareness. Keep a long-term

perspective. Eliminate the white noise.• Understand the potential. Drive

leadership in making trade-offs.


Join Us!

www.supplychaininsightsglobalsummit.com

#sciwebinar


Upcoming Corporate Training Chicago, Illinois and Atlanta, Georgia

www.supplychaininsights.com/training

#sciwebinar

November 11-12, 2013Chicago Illinois USA

January 16-17, 2014Atlanta, Georgia USA


PAST WEBINARS: ON DEMAND• From August 2013 Supply Chain Talent, The

Missing Link

• From July 2013: What is the Role of the Store

• From June 2013: Big Insights From Big Data

Our Webinar Series

www.supplychaininsights.com/upcoming-webinars

UPCOMING WEBINARS• September 26, 2013 Post Global Summit Recap:

Hear from Guest Panelists

• October 10, 2013 Metrics That Matter

• November 14, 2013 Healthcare Value Chain


Get Custom Financial Benchmarking

www.supplychaininsights.com/custom-benchmarking


Who Is Lora?

• Founder of Supply Chain Insights

• 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. #sciwebinar


Where Do You Find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (4000 pageviews/month)

Twitter: lcecere 3850 followers. Rated as a top rated supply chain social network user.

LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (3750 in the network)

#sciwebinar

supply chain metrics that matter

Business

supply chain leaders

supply chain management

supply chain trends

supply chain matters

supply chain executives

supply chain excellence

supply relationships

supply response