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For over a decade, since founding Supply Chain Insights in 2012, I have pounded the keyboard, asking business leaders to think more holistically about the impact of supply chain decisions on the firm’s value, the improvement of a value chain, and the impact on the environment. Functional Metrics and the Lack of Alignment to Strategy.
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.) As shown in Figure 1, the results for the period of 2012-2021 tell the story.
In 2012, I placed the first alignment study in the field. In the supply chain team analysis, note the 21% gap between procurement and manufacturing teams, the 35% gap between sales and operations and the 21% gap between finance and operations. Organizational Alignment 2012. Functional Metrics. Organizational Alignment.
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.
When I started my business in 2012, I frequently wrote about the future using the moniker of Supply Chain 2020. The first story is about a large regional food manufacturer. The second story is about a regional beverage manufacturer. At that time, Supply Chain 2020 seemed so far away. My focus was simple. The answer?
The industry first started speaking of digital in 2012, but today, it is still an amorphous concept. (My My first digital supply chain presentation was in Milan at an SAP Insider conference in 2012.) The fear is the readiness of adoption of a laggard industry where only 3% of manufacturers are early adopters.
While many employers would have penalized the employees for tablet breakage , Peggy explored the world of wearables to enable her digital manufacturing transformation. AGCO’s culture of innovation policy deployment enabled employees to pioneer a technology solution for manufacturing. Improvement in Digital Manufacturing.
We founded Supply Chain Insights on February 9th, 2012. Over the course of 2012, I feel that we made a lot of progress. This will be a monthly public two-day training course in manufacturing centers in Europe and the United States. It has been one year. One year later, we are an eight person team. The work has been hard.
Bottom Line: Manufacturers are reaching a new level of results in 2018 because they have clearer, more actionable insights based on real-time manufacturing and quality metrics than ever before. Quality Metrics Enable Customer-Driven Manufacturing Networks. What Success Looks Like In A Customer-Driven Manufacturer.
“The idea of the value chain is based on the process view of organizations, the idea of seeing a manufacturing (or service) organisation as a system, made up of subsystems each with inputs, transformation processes and outputs. ” Institute for Manufacturing, 2013. __. Tipping points are fascinating to watch.
The manufacturing-centric company is used to strangling suppliers and demanding terms. The low Return on Invested Capital (ROIC) and the growth below the industry average comes from the lack of network design and organizational alignment between new product development, manufacturing, and procurement. So, you might ask, why?
Abby and Mikey on my team have built a database of financial ratios from publicly available balance sheets from 1995-2012. We are trying to understand how supply chain leaders have raised the bar at the intersection of these four sets of metrics on the supply chain effective frontier. reference Carbon Disclosure Project 2012).
Based on literature review by Behdani et al 2012 called " How to Handle Disruptions in Supply Chains – An Integrated Framework and a Review of Literature ", academic articles in this area is centered around 2 themes, namely, Risk Management (before disaster strikes) and Disruption Management (after disaster strikes). Literature Review.
Which supply chain metrics correlate to market capitalization by Morningstar sector? In 2012, supply chain process evolution was thirty years old, and I wanted to use the book, Bricks Matter, as a litmus test to tell the story of success. Which companies have made year-over-year improvements? Results of the Supply Chain Index.
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. We named it the Supply Chain Index.
One of my favorite interviews on this topic, that I recently completed for my upcoming book Metrics That Matter , was with Amway’s Chief Supply Chain Officer George Calvert. We produce there because the regulations say that you need to manufacture there to sell there. Service level is our most important metric.
I have taken myself off the road to write the book Metrics That Matter. Because he had reduced his buffers—both inventory and manufacturing—and had built a push-based supply chain using a forecasted demand signal, he was failing in many markets. It is a slow week. Most of my friends are on vacation. It is tedious. Related.
The most popular posts are on demand management and Supply Chain Metrics that Matter. In 2012, I am proud that we have published 24 reports, completed 14 quantitative research studies and have had over 72,000 views of our work on Slideshare. Over the course of 2012, I feel that we made a lot of progress.
My first training in 2012 was with Ideo. Remember the need for goal clarity, rules, and clear metrics in my opening paragraph? In the design thinking workshops for multiple manufacturers, these were conspicuously absent. Lessons Learned From Design Thinking.
The global manufacturing sector has seen an upswing, a technological renaissance of sorts. Since the start of 2012, more people graduating from college and universities are entering the engineering/manufacturing fields. Big data The use of big data is increasing in manufacturing. Breaking it down In the U.S.
It started in manufacturing and spread, step by step, to improvements in the way the company runs its supply chain. This manufacturer already has business continuity plans in place. They built them between 2012 and 2014, and then enhanced them when better supply chain risk management solutions became available. It takes time.
To make the point, let us start with a discussion on Consumer Products manufacturing. P&G lacks a tactical supply plan to manage load across factories and contract manufacturing to effectively communicate to suppliers and underperforms on ROIC. Comparison of Industry Players Within Consumer Goods for the Period of 2012-2021.
In the Supply Chain Metrics that Matter table, we can clearly see that “operating margin” and “inventory turns” matter to public financial performance. Each faces four years of deterioration on this important supply chain metric. Why it Matters. An Interview with Rick Sather.
These examples point to a key metric that’s emerging for quantifying the value of social networking : Time-to-Resolution. According to a McKinsey & Company report from July 2012 , “[social networking technologies], which create value by improving productivity across the value chain, could potentially contribute $900 billion to $1.3
As I’ve commented in previous postings, if you are a 3PL or transportation company and you’re not involved in cross-border shipping with Mexico, then you are missing out on a growing business opportunity (see Reuters article from December 2012).
A balance sheet analysis shows that 95% of publicly traded manufacturers are stuck (when compared to peer group) at the intersection of growth and margin, margin and inventory turns, and Return on Invested Capital (ROIC) and growth. We don’t have a clear industry definition of supply chain excellence.
Comparison of Owens Illinois Versus Sonoco Products for the Period of 2000-2012. Alignment on a Metrics Portfolio. OI) is a $7 billion manufacturer of glass bottles while Sonoco Products is a $5 billion manufacturer of paper packaging. Each of the supply chains had a different target in the metrics portfolios.
Comparison of Owens Illinois Versus Sonoco Products for the Period of 2000-2012. Alignment on a Metrics Portfolio. OI) is a $7 billion manufacturer of glass bottles while Sonoco Products is a $5 billion manufacturer of paper packaging. Each of the supply chains had a different target in the metrics portfolios.
The selection of metrics is based on prior work with Arizona State University to understand which metrics, in combination, correlate to market capitalization and price to book value. We calculate the results based on public data from the period 2012-2021. Why do we spend four months doing this? Congrats to all. Industry Bias.
Overall Results on the Supply Chain Metrics That Matter. With a strong manufacturing culture, much of the focus was on lean production systems. I was challenged on this in 2012 by a client, and it forced me to do deeper research. I started this research in 2012 with the writing of Bricks Matter , and it continues today.
performance metrics to influence vendor behavior and impact sourcing choices. As performance reporting metrics capture vendor performance, the company can substantiate penalties for noncompliance and poor performance, recognize or reward high performers, and incent positive results and consistent behavior. Sourcing uses P.O.
When Cisco saw news of wildfires in Colorado in 2012, it wasn’t concerned, because it had no manufacturing or suppliers in the area. The post Guest Post: Ignoring this Performance Metric is Risky appeared first on Connect Blog by TMC, a division of C.H. This post is credited to Dr. Yossi Sheffi.
Three weeks is substantial and may tip the hand to reshore more manufacturing into North America. In July 2012, E2open went public with a market capitalization of 442M. He advised that it will take an average of three additional weeks for container unloading for the west coast ports throughout 2015. Here at home, things are busy.
49% of respondents were from the manufacturing industry, 16% from the mechanical engineering sector, and 11% from the automotive market. Within a week of Russian troops crossing into Ukraine, the benchmark for thermal coal prices reached a record high of $446 per metric ton. a bushel, the highest price since July 2012.
Chainalytics Creates New Metrics for Demand Planning Consortium. Descartes’ GLN, route planning and transportation management solutions and deep domain expertise can help our retail, distribution and manufacturing customers in managing their global and local inbound logistics and delivery operations.”. .
Over the period of 2009-2015, only 88% of companies made improvement on the Supply Chain Metrics That Matter. To meet the criteria for The Supply Chains to Admire for 2016, companies needed to score better than their peer group average for performance metrics, while driving a higher level of improvement than 2/3 of their industry peer group.
The adoption of Terra’s products were brisk until 2011, but during 2012-2014 sales softened, resulting in employee layoffs and downsizing. In July 2012 E2open went public on the NASDAQ; and in March 2015, after a series of financial earnings disappointments, Insight Venture Partners funded E2open to become private.
In 2012 I built on these concepts to define the market-driven value network. Instead, companies link suppliers to multiple signals: manufacturing production plans; distribution requirements; and current inventory positions, to help suppliers better plan for supply. Market-Driven Processes.
Former McKinsey analyst Markus Zils adds, “The circular economy aims to eradicate waste — not just from manufacturing processes, as lean management aspires to do, but systematically, throughout the life cycles and uses of products and their components. It is important not to confuse those metrics with the circular economy.
She joined Novo Nordisk in 2012. Given the level of industry maturity within pharmaceutical manufacturing, Novo Nordisk has a strong foundation in manufacturing. In addition, manufacturing and supply management processes are quite centralized which allows faster execution, focused vision and clear control and accountability.
I was guilty of this from time to time when I led a demand-planning group because we were evaluated on forecast accuracy as one of our key metrics. Forecasts need to be set and left unchanged to facilitate stable and efficient downstream purchasing, inventory management, and manufacturing capabilities.
Mariotti states that you first have to measure it, and he outlines several metrics and techniques in the book, including ranking customers by annual sales, profit, and gross margin percentage. How do you reduce supply chain complexity, or at least slow its growth?
The majority of manufacturing and retail companies want better performing supply chains. In the building of global supply chains, in the last decade, across value networks, outsourcing to third-party logistics, and contract manufacturing accelerated. A Critical Review of the Contract Manufacturing Model. There are many reasons.
He explains, “Many of the materials that are utilized during manufacturing exist solely within the confines of the supply chain and never exit it in the form of the product or packaging. As the name implies, a circular economy is one in which the loop between manufacturers and consumers is closed. ”[4]. ”[4].
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