More Related Content Similar to Supply Chain Insights' Financial Benchmarking Examples - 27 AUG 2013 (20) More from Lora Cecere (20) Supply Chain Insights' Financial Benchmarking Examples - 27 AUG 20132. Supply Chain Insights LLC Copyright Ā© 2013, p. 2
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3. Supply Chain Insights LLC Copyright Ā© 2013, p. 3
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4. Supply Chain Insights LLC Copyright Ā© 2013, p. 4
A Review of Industriesā
Progress on the Supply
Chain Effective Frontier and
the Supply Chain Index
2014 Publication
5. Supply Chain Insights LLC Copyright Ā© 2013, p. 5
We find that many companies are starting to work on
2014 planning. They are trying to understand:
ā¢ How is their company doing on balancing the trade-offs
between growth, profitability, cycles and complexity?
ā¢ How are they performing against peers? What is their
potential?
The goal of this deck is to give you insights on how we
can help.
Time for a Check-up?
6. Supply Chain Insights LLC Copyright Ā© 2013, p. 6
ļØ Perform better than peer group
ļØ Improve year-over-year results
ļØ Align internally on metrics
ļØ Deliver against the business strategy
ļØ Demonstrate consistency in results
ļØ Use innovation in supply chain processes
ļØ Balance. Be leaders in managing trade-offs
Our Point of View:
Definition of Supply Chain Excellence
7. Supply Chain Insights LLC Copyright Ā© 2013, p. 7
We Are Studying How Well Companies Have
Managed the Trade-offs in the Last Decade
The Supply Chain Effective Frontier
Managing Trade-offs
8. Supply Chain Insights LLC Copyright Ā© 2013, p. 8
ā¢ Each industry has a different pattern of trade-
offs of balancing growth, profitability, cycles and
complexity.
ā¢ Companies that are supply chain leaders have
very small movement at these intersections with
a balanced portfolio of metrics.
ā¢ Leaders show year-over-year improvement
against a supply chain strategy.
What Have We Learned?
10. Supply Chain Insights LLC Copyright Ā© 2013, p. 10
A Closer Look at Performance:
How to Read the Slides
12. Supply Chain Insights LLC Copyright Ā© 2013, p. 12
One Company: Two Metrics
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source
2002 2012
0
3
6
9
12
15
0 250 500 750 1,000 1,250
InventoryTurns
Revenue per Employee (K$)
The Dow Chemical Company
Best Scenario
DOW
999, 6.7Trace the line from
2002 point to 2012
point to follow the
performance over
time.
The diamond shows the companyās average over the period.
Ex: The Dow Chemical Company (DOW) has an average of 461
K$ for revenue per employee and 4.0 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)
13. Supply Chain Insights LLC Copyright Ā© 2013, p. 13
Three Company Comparison
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source
2002
2012
2002 2012
2002 2012
0
3
6
9
12
15
0 250 500 750 1,000 1,250
InventoryTurns
Revenue per Employee (K$)
Ashland Inc. E. I. du Pont de Nemours and Co. The Dow Chemical Company
Best Scenario
DD
461, 4.0
Average (Revenue per Employee, Inventory Turns)
DOW
999, 6.7
ASH
457, 10.5
Adding in two
more companies
allows
comparison
across the peer
group.
Each company presents a unique pattern of how they
have balanced the two metrics over the decade while
striving towards the upper right corner.
14. Supply Chain Insights LLC Copyright Ā© 2013, p. 14
Household Products
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
17. Supply Chain Insights LLC Copyright Ā© 2013, p. 17
Household Products: Cash-to-Cash Cycle
vs. Inventory Turns (2000-2012)
18. Supply Chain Insights LLC Copyright Ā© 2013, p. 18
Household Products: Inventory Turns
vs. Revenue per Employee (2002-2012)
19. Supply Chain Insights LLC Copyright Ā© 2013, p. 19
Household Products: Inventory Turns
vs. Operating Margin (2000-2012)
21. Supply Chain Insights LLC Copyright Ā© 2013, p. 21
Household Products:
Our Interpretation
ā¢ P&G has delivered more balanced results
with better year-over-year performance than
Unilever.
ā¢ While P&G is 21% larger in revenue than
Unilever, the average productivity is 48%
higher.
ā¢ Sector operating margin has decreased in
the last three years.
22. Supply Chain Insights LLC Copyright Ā© 2013, p. 22
Chemical
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
23. Supply Chain Insights LLC Copyright Ā© 2013, p. 23
An Example of Benchmarking for
Two Chemical Companies
25. Supply Chain Insights LLC Copyright Ā© 2013, p. 25
Chemical: Cash-to-Cash Cycle
vs. Inventory Turns (2000-2012)
26. Supply Chain Insights LLC Copyright Ā© 2013, p. 26
Chemical: Inventory Turns
vs. Revenue per Employee (2002-2012)
27. Supply Chain Insights LLC Copyright Ā© 2013, p. 27
Chemical: Inventory Turns
vs. Operating Margin (2000-2012)
29. Supply Chain Insights LLC Copyright Ā© 2013, p. 29
Chemical:
Our Interpretation
ā¢ Both companies struggled to maintain
balance in the Great Recession.
DuPont has been more resilient than
Ashland.
ā¢ Ashland historically pushed more
aggressive performance on supply
chain cycles, but was not able to
maintain these performance levels.
30. Supply Chain Insights LLC Copyright Ā© 2013, p. 30
Pharmaceutical
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
31. Supply Chain Insights LLC Copyright Ā© 2013, p. 31
An Example of Benchmarking for Two
Pharmaceutical Companies
33. Supply Chain Insights LLC Copyright Ā© 2013, p. 33
Pharmaceutical: Cash-to-Cash Cycle
vs. Inventory Turns (2000-2012)
34. Supply Chain Insights LLC Copyright Ā© 2013, p. 34
Pharmaceutical: Inventory Turns vs.
Revenue per Employee: (2002-2012)
35. Supply Chain Insights LLC Copyright Ā© 2013, p. 35
Pharmaceutical: Inventory Turns
vs. Operating Margin (2000-2012)
37. Supply Chain Insights LLC Copyright Ā© 2013, p. 37
Pharmaceutical:
Our Interpretation
ā¢ Bristol-Myers Squibb has the most
balanced performance of supply chain
metrics in the pharmaceutical industry.
ā¢ Pharmaceutical company performance
is less resilient than household
products.
38. Supply Chain Insights LLC Copyright Ā© 2013, p. 38
High-tech & Electronics
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
39. Supply Chain Insights LLC Copyright Ā© 2013, p. 39
An Example of Benchmarking for
Two High-tech Companies
41. Supply Chain Insights LLC Copyright Ā© 2013, p. 41
High-tech: Cash-to-Cash Cycle
vs. Inventory Turns (2000-2012)
42. Supply Chain Insights LLC Copyright Ā© 2013, p. 42
High-tech: Inventory Turns
vs. Revenue per Employee (2002-2012)
43. Supply Chain Insights LLC Copyright Ā© 2013, p. 43
High-tech: Inventory Turns
vs. Operating Margin (2000-2012)
45. Supply Chain Insights LLC Copyright Ā© 2013, p. 45
High-tech:
Our Interpretation
ā¢ The last decade for high-tech
companies have been rough and
turbulent. This has been to a greater
degree than other industries.
ā¢ Seagate has outperformed Western
Digital in their ability to balance supply
chain financial ratios in a tough market.
46. Supply Chain Insights LLC Copyright Ā© 2013, p. 46
Apparel
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
47. Supply Chain Insights LLC Copyright Ā© 2013, p. 47
Note: Zara is a brand of Inditex
An Example of Benchmarking for
Two Apparel Companies
49. Supply Chain Insights LLC Copyright Ā© 2013, p. 49
Apparel: Cash-to-Cash
vs. Inventory Turns 2001-2012
50. Supply Chain Insights LLC Copyright Ā© 2013, p. 50
Apparel: Inventory Turns
vs. Revenue per Employee (2003-2012)
51. Supply Chain Insights LLC Copyright Ā© 2013, p. 51
Apparel: Inventory Turns
vs. Operating Margin (2001-2012)
53. Supply Chain Insights LLC Copyright Ā© 2013, p. 53
Apparel:
Our Interpretation
ā¢ Both companies have out-performed their
peer group in operating margin and
under-performed in growth.
ā¢ At 1/20th the size of the supply chain
leader Inditex (the parent company of
Zara), Lululemon has balanced supply
chain ratios, showing year-over-year
improvement.
54. Supply Chain Insights LLC Copyright Ā© 2013, p. 54
Mass Merchandising Retail
Financial Benchmarking
Answering the Question,
āWhat Is the Role of Supply Chain Effectiveness in
Driving Corporate Performance?ā
55. Supply Chain Insights LLC Copyright Ā© 2013, p. 55
An Example of Benchmarking for
Two Retail Companies
57. Supply Chain Insights LLC Copyright Ā© 2013, p. 57
Retail: Cash-to-Cash Cycle
vs. Inventory Turns (2000-2012)
58. Supply Chain Insights LLC Copyright Ā© 2013, p. 58
Retail: Inventory Turns
vs. Revenue per Employee (2003-2012)
59. Supply Chain Insights LLC Copyright Ā© 2013, p. 59
Retail: Inventory Turns
vs. Operating Margin (2000-2012)
61. Supply Chain Insights LLC Copyright Ā© 2013, p. 61
Retail:
Our Interpretation
ā¢ Wal-Mart demonstrates greater
resiliency with better year-over-year
performance in their sector.
62. Supply Chain Insights LLC Copyright Ā© 2013, p. 62
Can We Help You?
We are working with many companies to help
them benchmark their financial data to better
understand corporate performance on the
Supply Chain Effective Frontier. This is helpful
to understand:
ā Supply chain potential
ā Industry patterns
ā Progress against peer group
ā Overall performance
We would love to help you and your team.
63. Supply Chain Insights LLC Copyright Ā© 2013, p. 63
Next Steps
Contact Regina Denman at Supply Chain
Insights to talk about your individual project.
Regina can be reached at:
Email: regina.denman@supplychaininsights.com
Phone: 617-410-8571
64. Supply Chain Insights LLC Copyright Ā© 2013, p. 64
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