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At each company, there is a relationship between the metrics of growth, margin, inventory, customer service, and asset strategy. For the purpose of this article, I will use Return on Invested Capital (ROIC) as the proxy metric to discuss asset utilization.) Shown in Figure 2, we track the results for the period from 2006-to 2021.
It is now our fifth year of analyzing balance sheets to understand which companies are outperforming their peer groups on the metrics of growth, operating margin, inventory turns and Return on Invested Capital (ROIC) while driving improvement. Wal-Mart and TJX Orbit Chart for Operating Margin and Inventory Turns for the Period of 2006-2017.
As a result, the metrics have to be viewed together as a pattern over time. In the journey, the supply chain leader needs to improve the potential of a portfolio of metrics. The metrics of growth, Return on Invested Capital, Inventory Turns and Operating Margin have the highest correlation to market capitalization.
In my work tonight, I carefully studied 2006-2015 financial results to select the Supply Chains to Admire winners. The winners drive improvement while posting financial results in the Supply Chain Metrics That Matter ahead of the peer group. Higher percentage of growth than the industry average for the period of 2006-2015.
The companies were selected based on performance better than peer group for 2006-2013 and delivering better than average improvement within the peer group as determined by the Supply Chain Index. We find that companies will establish metric targets in isolation and throw the supply chain out of balance.
How aligned do you believe your organization is to drive these metrics? This research, completed in 2006, was during the transformation of multi-national to global supply chains. In assessing the health of the plan, what do you measure? Is your plan feasible? Did past plans prove valuable?) Were they used?
To make the argument, let’s look at industry orbit charts in aggregate for the period of 2006-2017 for the apparel and chemical companies. An orbit chart is a plotting of data at the intersection of two metrics. In this case, the metrics are operating margin and inventory turns. We are not improving balance sheets.
While the performance rankings were based on comparisons of inventory turns, operating margin and Return on Invested Capital (ROIC) for the periods of 2006-2013 and 2009-2013, the concept is that to be a supply chain leader you must outperform and drive improvement. Aligned Metrics. We find that this is true of too few companies.
While most companies have been able to make progress in one of these two critical metrics in the period of 2006-2013, they have not been able to make progress on both together. Today, 90% of publicly-traded companies are stuck at the intersection of operating margin and inventory turns.
In 2006, they made a decision to implement a supply chain planning solution. Integration of corporate social responsibility metrics in planning. There is a lack of clarity on what drives value and metrics are functional. Inventory is often focused on as a singular metric, not as part of a complex supply chain system.
It is a quest and the subject of my next book, Metrics That Matter , that will publish in September, 2014. We used the period of 2006 to 2012 to build the model and we used the formula to attempt to predict 2013. .” As I shuffle along, I am not sure. I shake my head. Why Does It Matter? The result is outlined in figure 1.
To help, in this post, we provide you with some insights for the period of 2006-2015. The supply chain is a complex system with finite, and non-linear relationships between supply chain metrics that drive balance sheet results. We find that companies can improve one, but not two of the metrics. A Look at History. Resiliency.
We have found that supply chain metrics are gnarly and complicated.During During the period of 2006-2012, Campbell Soup Company outperformed its peer group on the Supply Chain Index. Food and Beverage Company Performance on the Supply Chain Index for the Period of 2006-2012. Supply Chain Index Rankings for 2006-2013.
Cash-to-Cash Metrics. Cash-to-cash is a compound metric: (Days of Receivables+Days of Inventory)-Days of Payables=Cash Conversion Cycle. Note the elongation of the cash-to-cash cycle in the chemical industry of 38 additional days when comparing the 2014-2019 averages to the pre-recession period of 2004-2006.
It is for this reason, that we analyze the patterns of the Metrics That Matter using orbit charts over the period of 2006-2014. The analysis is designed to analyze supply chain leader success on a portfolio of metrics. Nine out of ten are stuck unable to make improvements in these Supply Chain Metrics That Matter.
The companies were selected based on performance better than peer group for 2006-2013 and delivering better than average improvement within the peer group as determined by the Supply Chain Index. How did you select the final list of fifteen companies ? Was the list of the Supply Chains to Admire hard to select?
The award, based on beating the industry peer group on rate of improvement on the key metrics of growth, operating margin, inventory turns, and Return on Invested Capital (ROIC) while outperforming their peer group, is tough to achieve. The orbit chart below illustrates L’Oréal’s performance at the intersection of two metrics.
In our work on the Supply Chains to Admire report , we tracked the progress of manufacturing, retailing and distribution companies for the period of 2006 to 2013 and 2009-2013. We then rated companies on their ability to manage and improve a portfolio of metrics: operating margin, inventory turns and Return on Invested Capital (ROIC).
Snow fell last night as I worked on my last Supply Chain Metrics That Matter report. The concept of the Effective Frontier is that best in class companies align functional metrics to balance growth, cost, inventory and Return on Invested Capital (ROIC) performance while balancing customer service metrics. The Effective Frontier.
We loaded 493 financial metrics from balance sheets and income statements for each company into the data lake for the period of 2004-2016 using YCharts data. Note the difference in patterns of the orbit chart of Bristol-Meyers Squibb and Merck for the period of 2006-2015. Correlations Between Survey Factors and Financial Metrics.
For the discrete industries we contrast the industry averages for growth, operating margins, inventory turns, cash-to-cash cycle, revenue per employee, and SG&A ratio for the periods of 2006-2014 and 2011-2014. For each metric we show the averages and the percent change from the beginning and end of the period. What can we learn?
For the past five years, the team at Supply Chain Insights identified Supply Chains to Admire Award Winners by analyzing performance by peer group on the key metrics of growth, operating margin, inventory turns and Return on Invested Capital (ROIC). Ernest Nicolas joined Rockwell Automation in 2006. Meet Ernest.
For the discrete industries, we contrast the industry averages for growth, operating margins, inventory turns, cash-to-cash cycle, revenue per employee and SG&A ratio for the periods of 2006-2014 and 2011-2014. For each metric was show the averages and the percent change from the beginning and end of the period. What can we learn?
Figure 1: Supply Chain Metrics Are a Balancing Act. The metrics shown in Figure 1 are difficult to improve together. Most companies improve singular metrics but are not able to drive portfolio. Here I show orbit chart comparisons at the intersection of operating margin and inventory turns for the period of 2006-2017.
When full-year public data becomes available in April, we take each industry and analyze results over the period of 2006-2015. We believe that supply chain excellence is driving improvement while averaging a higher level of performance in the Supply Chain Metrics That Matter. It is one of the reasons that I left Gartner in 2010.
I think about this discussion with Keith often as I work on the Supply Chain Index and edit the chapters of Metrics That Matter. In Figure 1, I share a composite orbit chart of progress of Cisco Systems, Intel, Samsung and Flextronics on the Effective Frontier at the intersection of inventory turns and operating margin for 2006-2012.
For the past five years, the team at Supply Chain Insights identified Supply Chains to Admire Award Winners by analyzing performance by peer group on the key metrics of growth, operating margin, inventory turns and Return on Invested Capital (ROIC). Ernest Nicolas joined Rockwell Automation in 2006. Meet Ernest.
The digital twin allows for internal operations as well as customers to view the various processes, along with detailed metrices throughout the facility. DB Group has set ambitious targets to reduce specific CO2 emission by 50% by 2030 compared to 2006. Another notable project launch is the DB Schenker’s digital twin.
Over the period of 2009-2015 only 88% of companies made improvement on the “Supply Chain Metrics That Matter.” (The The Supply Chain Metrics That Matter are a portfolio of metrics which correlate to higher market capitalization. Comparison of Performance and Improvement of Companies in the Chemical Industry for 2009-2015.
Space utilization, or vehicle fill, is a critical metric that can be measured in various ways: Pallet numbers and height: While common, this method can be misleading depending on cargo density. Two crucial measures applicable to this level of detail are space utilization and productive time. Indicators for Sustainable Transport. Mackie, P.
The report analyzes supply chain performance and improvement by the Consumer Products Leaders in the period of 2006-2014. In the selection of time frames to analyze, we look at the long-term view including the recessionary period of 2006-2009, the post recessionary period of 2009-2014 and the more recent time period of 2011-2014.
Supply chain leaders manage a complex system of non-linear, but very inter-connected metrics. Leaders need to balance a portfolio of metrics. Year-over-year Improvement at the Intersections of the Metrics. It is for this reason, that we are hard at work on the analysis of the Supply Chain Metrics That Matter series of reports.
I began analyzing correlations of groups of metrics to market capitalization and found that the most significant correlation was between market capitalization and growth. Initially, I worked with Arizona State statistics professors and graduate students to correlate market factors to 2006-2012 data.)
The “Top 15 Supply Chains to Admire” is the culmination of a two-year effort to evaluate supply chain performance and improvement for the years of 2006-2013 by industry by vertical for publicly-held companies.
The German team overcame disappointments in 2006 and 2010 to win the World Cup this year, while favorites Spain (the defending champion) and Brazil (the host country) were humbled by the competition. That was my opening question to the executives attending last month’s Elemica reveal 2014 Conference in Frankfurt.
The more that I work on supply chain metrics, the more that I believe that both the SCOR model and the Gartner Hierarchy of Supply Chain Metrics (which I worked on for the period of 2006-2010) reward functional, not end-to-end supply chain behavior. I see this as a problem. And, do you think that it takes a renegade?
I followed his journey during the period of 2006-2011, and wanted to check in with him to gain his insights on the selection of VTech as a finalist in the Supply Chains to Admire research. Over the period of 2009-2015, only 88% of companies made improvement on the Supply Chain Metrics That Matter. Let me give you a simple example.
Over the period of 2009-2015, only 88% of companies made improvement on the Supply Chain Metrics That Matter. (As As a group, these metrics have the highest correlation to market capitalization. As a group, public companies want to make progress to both drive and sustain metrics performance, but they cannot. Improvement.
This was not a trivial transition because the software industry, until relatively recently, was long fixated on measuring its health and success by new license revenue (sales of products) instead of customer-centric metrics, such as realization of ROI and payback objectives. Descartes Systems Group Revenue 2006-2018 (Source: macrotrends).
In studies from the periods of 2006-2008, there was slow adoption of 15-20%, and today, the supply chain leader prefers a cloud-based solution. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter , and is currently working on her third book, Leadership Matters. In 2002, there was no interest. The reason?
When we do these types of analysis, we look back at the data as far as we can reach (Y chart data is available only back to 2006 in a reliable form) and then we look at the period of 2006-2014 and the more recent period of 2011-2014. (This is an analysis of traditional retail minus eCommerce pure plays.) The difference?
The level of performance in 2015 is the same as 2006. Orbit Chart for Novo Nordisk at the Intersection of Operating Margin and Inventory Turns for the period of 2006-2015. In Figure 1 we track the year-over-year progress of these two pharmaceutical leaders. The patterns are circular. Sharing this story is the goal of this case study.
Moreover, they help them track their performance against key metrics and identify areas where they can improve. By focusing on these areas – collaboration, efficient practices, and optimized packaging – the freight industry can achieve substantial improvements in terms of cost, time, and environmental impact. McKinnon, A.
The new trend to be sustainable is part of the current category: Revenue Growth, so why add another category like CSR when we should be moving towards the core supply chain metrics of total delivered cost and customer service. This, my friends, is why we need to get back to CORE supply chain metrics when measuring the Top 25.
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