I am convinced that we know supply chain management matters, but that we do not have hardcore data to support it. I also believe that the supply chain is a complex system with complex processes with increasing complexity. The system has finite trade-offs that companies know empirically, but don’t understand mathematically. The supply chain index is designed to help companies better understand the effective frontier. To better understand supply chain excellence, we are doing three things:1) Financial Data. When I started Supply Chain Insights, I hired a researcher to collect and harmonize balance sheet data for the key industries for the last twenty years. This is easier said than done. Abby Mayer is leading this effort and will be writing on the blog Supply Chain Index. She has collected twenty years of balance sheet data from ten industries and continues to collect the rest.2) Analysis. Our next step is to take this data and run analysis and develop core analytics. Based on the three qualitative surveys that we have completed, we have information on the maturity of companies on four supply chain models. We will be using this data on maturity to look at the metrics and to understand how different companies have unconsciously defined their own “effective frontier.” We will report on how this is changing by industry. Using R, our summer intern, Alex Miles, will be doing this analysis. Alex and Abby are both hard at work and I am excited to see the output. I cannot wait to see a mathematical equation that represents the supply chain effective frontier. We define this as the supply chain index.3) Your Voice. As we do the research, let us know your thoughts. And, if there is an analysis that you would like to see, let us know! We want to understand the numbers better. Your insights can help us.
I fundamentally believe that supply chain excellence CANNOT be defined by putting all industries into a spreadsheet and shaking them up. I also do not believe that it can be defined by one year snapshots. Instead, I think that it is driving year-over-year progress on the effective frontier. We will be running statistical analysis by industry group and by maturity to understand how different industries have made trade-offs. Look for this analysis throughout the summer.
Also, if you get the time, check out our new Supply Chain Wiki. It is our first step in delivering on our vision for the supply chain community.
Lora Cecere
Founder of Supply Chain Insights