Supply Chains to Admire Webinar 2021

Supply Chains to Admire
RESEARCH 2021
Supply Chain Insights LLC Copyright © 2021
LORA CECERE, FOUNDER | lora.cecere@supplychaininsights.com

Introduction
Supply Chain Insights LLC. Copyright © 2020
S E C T I O N 1
2

1. A study of Supply Chain
Excellence
2. 600 Publicly-Traded Companies
in 26 Industry Sectors
3. Period of 2011-2020
4. Twenty companies outperform
their peer groups.
Introduction
3

4
Now in its 8th year, the Supply Chains to Admire
award analyzes public reporting for manufacturing and
retail companies for the period of 2011-2020.
The methodology evaluates companies against a peer
group for improvement, value, and performance using
the scorecard metrics of growth, operating margin,
inventory turns and Return on Invested Capital (ROIC).
Methodology Overview
I N T R O D U C T I O N

5
Why the
Supply
Chains to
Admire?
1. The goal is to define an objective measurement
of supply chain excellence for our research.
2. We want to share data to help supply chain
leaders objectively benchmark and build
balanced portfolios.
3. Our mission is to gain an understanding of how
fast supply chain actions translate to balance
sheet performance.
4. Together, we want to help supply chain leaders
talk the language of finance, and to help finance
teams understand what is possible in supply
chain.
5. In summary, the goal is to build an objective
standard that is data-driven.

6
What Is Supply
Chain
Excellence?
Resilience
Ability to drive consistent results year-
over-year and weather market factors.
Balance
Organizational alignment on a
balanced scorecard.
Performance
Outperforming industry peer group on
the key metrics.
Improvement
Driving year-over-year improvement.
Delivering Value
A shift from cost to value.

A Balanced
Scorecard
Focused on Value
7

Rewarding Companies
that Drive Improvement
and Value while
Outperforming Their
Peers
8

9
The Definition of Supply Chain
Excellence Requires Selecting
the Right Balance Between
Performance and Improvement
Improvement is fast when you have a lot to lose. However,
high-performing companies reach a level of performance
and then struggle to drive improvement. While low-
performing companies take four-to-five years to reach peer-
group performance. It is a balance requiring a clear strategy.

Rewarding
Companies that
Drive Improvement
and Value while
Outperforming
Their Peers
10
Supply Chain Index™: Measuring Improvement1
Driving Improvement at the
Intersection of Inventory Turns
and Operating Margin (A Vector
Analysis)
Driving Improvement at the
Intersection of Growth and
Return on Invested Capital
(A Vector Analysis)
Reliability of Results at the
Intersection of Inventory Turns
and Operating Margin
(Tightness of the Pattern)
The Supply Chain Index is a composite of three factors: strength, resiliency and balance. These are calculated based
on orbit chart patterns.
1Source: https://www.slideshare.net/loracecere/launch-of-the-supply-chain-index-webinar-slide-deck
Strength Resiliency Balance

The Challenges
S E C T I O N 2
11

Industries
Struggle with
Inventory
12

50%
50%
48%
35%
34%
31%
29%
25%
25%
24%
24%
22%
21%
18%
17%
16%
2%
Supply chain visibility
Cross-functional alignment
Demand and supply volatility
Ability to use data
Executive team understanding of the supply chain
Organizational change management
Availability of skilled people to do the job
Software usability
Increasing speed of business
Management of value network relationships
Innovation
Globalization
Product quality and supplier reliability
Risk management
Clarity of business strategy
Increasing regulations and compliance
Other
Top Five Elements of Business Pain for Respondents
Top
Elements
of Pain
13
Over the Decade, Same Problems With No Resolution
Source: Supply Chain Insights LLC, Sales & Operations Study (Mar-May, 2020
Base: HAVE A S&OP PROCESS -- Total (n=107)
Q37. When it comes to doing your job, which of the following are your top 5 elements of business pain? Please select no more than five.

14
Mistakes
Made
1. Too many measurements.
2. A focus on functional performance.
3. Singular cost goals with a short-term
focus.
4. Lack of awareness of industry
performance (what is possible).
5. Confusion between financial
reengineering and the delivery of
value.

The Winners
S E C T I O N 3
15

Supply Chains to Admire 2020: 22 Award Winners
Retail (3)
Process (5)
Discrete (14)
16

Supply Chains to Admire 2021: Returning to the Winners Circle
Retail (4)
Process (4)
Discrete (12)
17

Supply Chains to Admire 2021 Winners
Retail (4)
Process (4)
Discrete (12)
18

Award Winner Summary
19
Year 2014 2015 2016 2017 2018 2019 2020 2021
Retail 2 6 6 4 9 5 3 4
Process 4 5 3 4 11 6 5 4
Discrete 6 12 7 16 11 12 14 12
Total 12 23 16 24 31 23 22 20
Supply Chains To Admire Award Winners

Looking at the Patterns
S E C T I O N 4
20

21
Retail
Average
Revenue
(M$)
Year-over-
Year Growth
Inventory
Turns
Operating
Margin
Return on
Invested
Capital
Price to
Tangible
Value
Retail Winners
Restaurants 19 0 4923 4.9% 79.89 13.7% 17.5% 6.10
Apparel 20 1 8522 4.5% 4.58 9.5% 16.6% 4.65
Broadline 17 3 57287 4.8% 5.02 7.1% 14.2% 3.92
Drug 7 0 63924 8.9% 6.80 7.0% 14.1% 5.70
Home Improvement 7 0 27413 6.7% 5.77 6.8% 9.5% 5.27
Grocery 10 0 45838 2.7% 12.71 3.5% 11.6% 2.30
Number of
Companies Average for 2011-2020
5% Winners

Process
22
Average
Revenue
(M$)
Year-over-
Year Growth
Inventory
Turns
Operating
Margin
Return on
Invested
Capital
Price to
Book Value
Process Winners
Pharmaceuticals 32 1 23,984 5.7% 2.23 22.2% 11% 5.21
Beverages 21 0 13,264 4.9% 5.26 17.4% 10.4% 4.34
Consumer Nondurables 12 0 19,490 2.7% 4.88 16.1% 15.2% 32.60
Oil & Gas 39 0 28,821 1.9% 12.14 10.1% 2.3% 1.75
Chemical 40 3 8,908 1.3% 5.06 10.9% 8.2% 2.51
Personal Products 14 0 8,165 3.4% 2.81 11.3% 10.9% 4.01
Containers and Packaging 19 0 7,756 5.7% 6.49 10.0% 7.0% 3.82
Food Manufacturing 32 0 15,455 4.6% 6.32 9.9% 6.7% 2.71
Number of
2% Winners

23
Discrete
Average
Revenue
(M$)
Year-over-
Year Growth
Inventory
Turns
Operating
Margin
Return on
Invested
Capital
Price to
Book Value
Discrete Winners
Medical Device 29 1 6,079 6.91% 2.91 18.00% 10.88% 4.65
Semiconductor 33 3 11,261 10.0% 4.5 15.5% 9.8% 3.81
Diversified Industries 28 1 12,702 3.0% 5.00 14.0% 9.7% 2.78
Telecommunications 18 0 16,839 6.4% 10.24 11.7% 9.1% 1.80
Apparel 27 1 10,283 6.1% 3.05 11.1% 13.6% 3.90
Automotive Aftermarket 35 0 10,726 4.9% 7.45 10.0% 9.1% 2.43
Consumer Durables 17 0 14,465 1.8% 4.48 9.5% 9.4% 2.27
Tires 4 0 16,568 -1.7% 4.42 9.4% 9.3% 1.63
Aerospace & Defense 26 1 2,072 2.9% 7.19 8.8% 10.9% 3.20
Trucks and Heavy Equipment 17 1 14,778 2.5% 4.32 8.1% 7.2% 1.96
Furniture 16 2 15,455 4.3% 5.86 7.0% 9.8% 2.41
Automotive 21 0 80,590 3.7% 6.98 5.7% 6.1% 1.25
B2B Technologies 28 2 30,912 3.3% 6.63 4.5% 5.5% 2.29
Contract Manufacturing 11 0 7,756 4.1% 6.0 3.6% 6.1% 5.60
Number of
4% Winners

Example
L O O K I N G AT T H E PAT T E R N S

IMPROVEMENT
NAME 2020 REVENUE
SUPPLY CHAIN
INDEX
GROWTH (Year
Over Year
Revenue)
INVENTORY
TURNS
OPERATING
MARGIN
RETURN ON
INVESTED
CAPITAL
PRICE TO BOOK
MARKET
CAPITALIZATION
Bed Bath & Beyond Incorporated 11,159 17 3.8% 2.81 10.2% 15% 2.51 8,090
Best Buy Company 43,638 4 -1.0% 5.96 4.2% 14% 3.78 14,632
Big Lots 5,323 15 1.2% 3.57 5.1% 19% 2.72 1,853
Burlinton Stores Incorporated 7,286 1 7.0% 3.40 5.9% 14% 15.57 6,692
Costco Wholesale 166,761 3 8.0% 11.61 3.0% 14% 6.22 80,357
Dillard's Incorporated 6,343 16 1.0% 3.04 6.0% 9% 1.47 2,666
Dollar General Corporation 27,754 9 8.9% 4.63 9.3% 14% 4.38 25,562
Dollar Tree Stores 23,611 13 18.0% 4.75 9.8% 17% 5.63 17,628
Kohl's 19,974 11 1.5% 3.35 8.6% 10% 1.77 9,909
Macy's 25,331 10 0.8% 3.01 7.7% 9% 2.45 11,883
Office Depot Incorporated 9,710 6 -1.5% 7.01 2.6% 1% 1.28 2,090
Pricesmart Incorporated 3,329 12 9.3% 8.58 4.8% 12% 4.28 2,511
Target 78,112 5 1.8% 6.06 6.7% 9% 3.56 46,988
The Michaels Companies Incorporated 5,072 2 2.4% 2.35 13.1% 23% 0.01 2,349
Tractor Supply Company 10,620 7 11.5% 3.39 9.6% 27% 7.22 10,107
WalMart 523,964 8 2.5% 8.36 5.1% 11% 3.56 268,120
Williams-Sonoma Incorproated 5,898 14 6.7% 3.49 9.4% 22% 0.29 5,210
MEAN WITH OUTLIERS 4.8% 5.02 7.1% 14% 3.92 30,391
MEAN WITHOUT OUTLIERS 57,287 4.8% 5.02 7.1% 14% 3.92 11,211
INDUSTRY: Retail Broadline
COMPANY INFORMATION PERFORMANCE VALUE
2011 - 2020
Dollar General in Broadline Retail

[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE] [CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
4.0
4.5
5.0
5.5
0.05 0.07 0.09 0.11
Inventory
Turns
Operating Margin
Dollar General Broadline Retail Industry
Best Scenario
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2011-2020 from YCharts
Dollar General
0.09, 4.63
Broadline Retail
0.07, 5.05
Dollar General Operating Margin Versus Inventory Turns (2011 - 2020)

[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
4.0
4.5
5.0
5.5
0.08 0.09 0.10
Inventory
Turns
Operating Margin
Dollar General
Best Scenario
Dollar General
0.09, 4.63
Operating Margin vs. Inventory Turns (2011 - 2020)

[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE] [CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
0.08
0.13
0.18
0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 0.14
Return
on
Invested
Capital
(ROIC)
Growth
Dollar General Broadline Retail Industry
Best Scenario
Broadline Retail
0.05, 0.13
Average (Growth, Return on Invested Capital (ROIC))
Dollar General
0.09, 0.14
Growth vs. Return on Invested Capital (ROIC) (2011 - 2020)

Comparison
29
The Supply C hains t o A dmire A nalysis C ompared t o The
Ga rt ne r Top 2 5 f or 2 0 2 1

Comparison Gartner Top 25 Supply Chains to Admire™
Focus Fortune Global 500 and Forbes 2000 lists.
15$B minimum annual revenue. (roughly 300 companies)
All public companies by analyzed by industry
peer groups. 600 companies by 26 peer
groups. No revenue minimum.
No limit on the number of winners peer group.
Likewise, there may be no winner by industry.
Analysis 2018-2020 2011-2020
Calculation 50% Opinion: (Equally split between analyst and peer voting)
50% Quantitative Analysis:.
1, Return on Plant Assets (ROPA): ((2020 operating income / 2020 net property, plant,
equipment + year-end inventory)) *50%) + ((2019 operating income / 2019 net
property, plant, equipment + year-end inventory)) *30%) + ((2018 operating income /
2018 net property, plant, equipment + year-end inventory)) *20%). (20%)
2. Inventory (Average for 2018-2020) 5%
3. Revenue Growth: ((change in revenue 2020-2019) *50%) + ((change in revenue
2019-2018) *30%) + ((change in revenue 2018-2017) *20%). (10%)
4. ESG Component Score: Index of third-party environmental, social and governance
measures of commitment, transparency and performance.
Improvement: Top 2/3 ranking on the Supply
Chain Index.
Performance: At or above the industry mean
for:
• Year-over-year revenue growth.
• Operating margin.
• Inventory turns.
• Return on Invested Capital (ROIC).
Value: At or above the mean for Price-to-
Tangible Book or Market Capitalization.
Index Calculations: https://www.slideshare.net/loracecere/sci-summit-2014-math-behind-sc-
index?qid=27326733-0325-4ee7-aacd-e2827bd216de&v=&b=&from_search=11
History 17th Year 8th Year
Methodology Comparison: Gartner Top 25 and Supply Chains to Admire

Supply Chains to Admire
Data-driven
Comparison to Peer Group
Long View
31
Comparison

Companies We
Both Agree Are
Winners

33
Gartner Top 25
Comparison to Peer
Group for 2011-2020
• 75% underperformed
on growth
on margin
on inventory turns

Sample Orbit
Charts for
Gartner Top 25 Winners

Supply Chain Master P&G
Operating Margin vs. Inventory Turns (2011 – 2020)
[CELLRANGE]
[CELLRANGE]
[CELLRANGE] [CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CEL…
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
4.5
5.5
6.5
7.5
0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23
Inventory
Turns
Operating Margin
Procter & Gamble Household Non-Durable Industry
Best Scenario
Household Non-Durable
Industry
0.16, 5.27
Procter & Gamble
0.20, 6.52
P&G growth is -1%
against an industry
average of 2%

#1 Cisco
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 0.26 0.28 0.30
Inventory
Turns
Operating Margin
Cisco Systems Telecommunications Industry
Best Scenario
Telecommunications
0.12, 12.94
Cisco
0.24, 12.29
Growth significantly
below peer group.

#3 J&J
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[C…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[C…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[C…
[CELLRANGE]
[CELLRANGE]
[C…
[CELLRANGE]
2.3
2.8
3.3
0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.27 0.28 0.29 0.30
Inventory
Turns
Operating Margin
Johnson & Johnson Pharmaceutical Industry
Best Scenario
Pharmaceuticals
0.22, 2.58
Johnson & Johnson
0.26, 2.92
J&J growth is 3% while
the industry grew 6%

#4 Schneider Electric Orbit Chart
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE… [CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CEL…
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
4.2
4.7
5.2
5.7
0.11 0.12 0.13 0.14 0.15 0.16
Inventory
Turns
Operating Margin
Schneider Electric Diversified Industries
Best Scenario
Diversified Industries
0.14, 4.96
Schneider Electric
0.14, 5.14
Below industry
performance on growth
and inventory

#5 Nestle
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
[CELLRANGE]
[CE…
[CELLRANGE]
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
8.0
0.08 0.10 0.12 0.14 0.16 0.18 0.20 0.22 0.24 0.26 0.28 0.30
Inventory
Turns
Operating Margin
Nestle Food Manufacuring Industry
Best Scenario
Food Manufacturers
0.11, 6.72
Nestle
0.16, 5.13
1/5 the rate of growth of
peer group. Declining
inventory performance.

• Why do you not include customer service?
• Is there a reason that you do not include
corporate social responsibility data?
• Why not divide the companies into “Weight
Groups” like wrestling? (small, medium,
large)
• Why inventory turns versus working
capital?
• Growth? Should this be in a supply chain
assessment?
Frequent Questions
41

We Must Learn
to Unlearn and
Build Better
42

Start by Defining
Supply Chain
Excellence
43

01 There is no perfect method for determining
supply chain excellence.
02
Business leaders’ perceptions of corporate
performance are not in alignment with
balance sheet results.
03 Only 4% of companies outperform their
peer groups. Peer analysis matters.
Insights
44

Join the Guiding
Coalition for Change.
Imagine the Supply
Chain of the Future
with Peers.
Register for the Supply Chain Insights Global Summit. www.supplychaininsightsglobalsummit.com

Founded in February 2012 by Lora Cecere, Supply Chain
Insights LLC is in its eighth year of operation. The
Company's mission is to deliver independent, actionable,
and objective advice for supply chain leaders. Our goal is to
help leaders understand supply chain trends, evolving
technologies, and which metrics matter.
46

47
2 years Partner at Altimeter
Group (leader in open
research)
8 years Gartner and AMR
Research
8 years Experience in
Marketing and Selling
Supply Chain Software at
Descartes Systems Group
and Manugistics (now
JDA/Blue Yonder)
Who Is Lora?
Founder of Supply Chain
Insights
“LinkedIn Influencer”, Guest
blogger for Forbes, Author:
Bricks Matter (2012), Supply
Chain Metrics That Matter
(2014), and Shaman’s
Journal (2014-19)
15 Years Leading Teams in
Manufacturing and
Distribution for Clorox,
Kraft/General Foods,
Nestle/Dreyers Grand Ice
Cream and Procter &
Gamble.

Thank You…
LORA CECERE, FOUNDER | lora.cecere@supplychaininsights.com

Supply Chains to Admire Webinar 2021

Empfohlen

Empfohlen

Weitere ähnliche Inhalte

Was ist angesagt?

Was ist angesagt? (20)

Ähnlich wie Supply Chains to Admire Webinar 2021

Ähnlich wie Supply Chains to Admire Webinar 2021 (20)

Mehr von Lora Cecere

Mehr von Lora Cecere (20)

Kürzlich hochgeladen

Kürzlich hochgeladen (20)

Supply Chains to Admire Webinar 2021