Elemica Presentation in Frankfurt - October 9, 2013

Creating Market-driven Value Networks

Lora Cecere of Supply Chain Insights


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


18 Reports in 2012


Over 30 Reports Planned for 2013

#sciwebinar


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: 15 Five-Star Reviews on Amazon

Book can be ordered from Amazon.com in Hardcopy or Digital Format

BRICKSRight Use of Assets

Expansion into BRIC Countries (Brazil, Russia, India and China)

Supply Chain Process Knowledge


Publishing Two eBooks in 2013 on Supply Chain Metrics That Matter

– Consumer Value Networks– Industrial Value Networks

2013 Publications

#sciwebinar

Where are we on Delivering on Supply

Chain Excellence?


A Supply Chain

is a Complex System

with Complex Processes

with Increasing Complexity


The Supply Chain Effective Frontier


Mining 20 Years of Financial Data


Perform better than peer group

Improve year-over-year results

Deliver against the business strategy

Demonstrate consistency in results

Use innovation in supply chain processes

Balance. Be leaders in managing trade-offs

Our Point of View: Definition of Supply Chain Excellence


In a way that is:

Resilient and predictable

Balanced across the set of metrics to maximize value

Showing year-over-year improvement against peer group

To Drive Corporate Performance


Most Interesting Patterns

• Revenue per Employee versus Inventory Turns

• Operating Margin versus Inventory Turns

• Cash-to-Cash Cycle versus Inventory Turns


What Have We Learned?

• Each industry has a different pattern of trade-offs of balancing growth, profitability, cycles and complexity.

• Companies that are supply chain leaders have very small movement with a balanced portfolio of metrics.

• It is about MUCH more than Return on Assets (ROA), growth and inventory.


A Look at the Last Decade


Progress in Manufacturing Productivity


Productivity in Retail


Progress in Inventory Turns and Operating Margin


Impact of A Recession


0 250 500 750 1,000 1,2500

3

6

9

12

15

2002 2012

The Dow Chemical Company

Revenue per Employee (K$)

Inv

en

tory

Tu

rns

Visualizing the Patterns

Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source

Best Scenario

DOW999, 6.7

Trace the line from 2002 point to 2012 point to follow the performance over time.

The diamond shows the company’s average over the period. Ex: The Dow Chemical Company (DOW) has an average of 999 K$ for revenue per employee and 6.7 for inventory turns.

Ideally, companies are increasing inventory turns and revenue per employee, moving towards the upper right corner of the graph over time.

Here, we plot inventory turns (y-axis) vs. revenue per employee (x-axis).

Average (Revenue per Employee, Inventory Turns)


Corporate Summary


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


Corporate Summary


Cereal

Who Does Supply Chain Best?

October 2013


Corporate Summary


Cash-to-Cash Cycle (2000-2012)


CPG Ranking 2012


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


Inventory Turns vs. Operating Margin (2000-2012)


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

Who Does Supply Chain Best?

October 2013


Corporate Summary


Cash-to-Cash Cycle (2000-2012)


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


Inventory Turns vs. Operating Margin(2000-2012)


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


Case Study


Inventory Turns vs.

Operating Margin (2000-2012)


What Matters


Mean Absolute Percent Error & Value


Industry Progress


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.

#sciwebinar


• Supply chain is a complex system with increasing complexity.

• Different industries have different patterns, but the cash-to-cash metrics have the highest correlation to market capitalization with some of the poorest performance.

Wrap-up


1. Finish the work on the Supply Chain Index

2. Place the rankings on balance, strength and resilience into the Supply Chain Insights Community for Shaman Circle members to vote on supply chain excellence

3. Final analysis of companies to be revealed at the 2014 Supply Chain Insights Global Summit

Next Steps

Building Market-driven Value Networks


Process Evolution

Align:Market Driven

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

ResilientReliable

Adapt: Demand Driven

EfficientSense

Demandand Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Cost

Procure to pay/order to

cash


A network that senses demand with minimal latency to drive a near-real time response for

demand shaping and demand translation.

What Is a Demand-driven Value Network?


Rising Price of a Barrel of West Texas Intermediate (WTI)


Commodity Price Increases and Volatility


An adaptive network focused on a value-based outcome that senses and translates

market changes (buy and sell-side markets) bi-directionally with near-real time data latency to align sell, deliver, make and

sourcing operations.

What Is a Market-driven Value Network?


Current State


SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE

SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION

SHARED VISION

+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY

SHARED VISION

+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP =FALSE

STARTS

SHARED VISION

+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION

SHARED VISION

+ SKILLS + RESOURCES + PLAN + LEADERSHIP =GRADUAL CHANGE

Source: J.P. Kotter

Collaboration: The Right Stuff


Market-Driven Value Networks Characteristics


Demand-shaping Levers

New Product Launch

Marketing

Sales Incentives

Trade Promotions

Distributor Incentives

Assortment

Price

Run-out of obsolescence or mark-down strategies

Orchestration Levers

Market-driven Orchestration Levers

Price to Price Orchestration

Alternate Bill of Materials

Alternate Sourcing

Change in Assortment

Orchestration of Product Mix (Incent products with less commodity variability)

Changes in Demand Shaping Strategies

Commodity Hedging


Value Network 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


Building an Effective Center of Excellence

Race for Supply Chain 2020


Outside-In

Value-Based OutcomesDelivered by Value Networks

Supply Chain Excellence =

Supply Chain 2020 Tipping Points

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Talent Shortage

Compliance on Safe & Secure

Orchestration

Big Data Supply Chains

Internet of Things

Learning Supply Chains

Digital Manufacturing


Our Journey


Current State


Gap by Position


Definition

Challenges:• Transactional• Time phased data

Structured Data

• Social• Channel• Customer Service• Warranty

• Temperature• RFID• QR codes• GPS

• Mapping and GPS• Video• Voice• Digital Images

Unstructured Data

SensorData

NewDataTypes

Volume

Velocity

Variability


Focus


Connecting the Extended Supply Chain


• Outside-in• End-to-End Orchestration• Supply Chain Matters

Path Forward


Questions?


Save the Date!

Supply Chain Insights Global Summit 2014September 10-11, 2014

The Phoenician – Scottsdale, AZ USA


Public Training

www.supplychaininsights.com/training

#sciwebinar

November 11-12, 2013Chicago Illinois USA

January 16-17, 2014Atlanta, Georgia USA


PAST WEBINARS: ON DEMAND• From June 13, 2013: Sales and Operations

Planning: State of the Union

• From May 23, 2013: Supply Chain Index, Part II: How and Why?

• From May 17, 2013: How Do We Heal the Healthcare Value Chain?

• From August 17, 2013: Supply Chain Talent, the Missing Link

Free Webinars

www.supplychaininsights.com/upcoming-webinars

UPCOMING WEBINARS• October 11: Supply Chain Metrics that Matter

• November 14, 2013: Insights on Healthcare Value Networks

• December 12, 2013: Digital Manufacturing


Podcasts

www.supplychaininsights.com/podcast

Research Anytime, Anywhere!

Straight Talk with Supply Chain Insights is a fresh and engaging podcast series on supply chain research, blog posts, hot topics, and

current events plus interviews with supply chain professionals.


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.


Where Do You Find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (5000 pageviews/month)

Twitter: lcecere 4270 followers. Rated as the top rated supply chain social network user.

LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (5450 in the network)

Elemica Presentation in Frankfurt - October 9, 2013

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Transcript of Elemica Presentation in Frankfurt - October 9, 2013