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Collaboration? When It Comes to Cash-to-Cash, We Don’t Know How to Walk the Talk

Supply Chain Shaman

Inventory, in this time of uncertainty, is the organization’s most important buffer to protect against variability. However, organizations are not good at managing inventory. Cash-to-cash is a compound metric: (Days of Receivables+Days of Inventory)-Days of Payables=Cash Conversion Cycle. Inventory. My takeaway?

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Provoking the Industry to Move Past Incrementalism

Supply Chain Shaman

When we study 600 public companies by peer group, at the intersection of inventory turns and operating margin, only 5% drive improvement. 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. In February 2014, the price was $103.40.

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Holding Ourselves Accountable for Business Results

Supply Chain Shaman

Orbit Chart of Four Industry Sectors at the Intersection of Operating Margin and Inventory Turns (Year-over-Year Averages for the Sector). Enterprise resilience–the ability to have consistent balance sheet returns despite market volatility– decreased starting in 2014. The reality is very different. There are many reasons.

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Don’t Perpetuate the Hoax of the Gartner Top 25

Supply Chain Shaman

Inventory Turns (15%) (based on 2014 results). Growth 10% (Year-over-Year comparison of 2013 versus 2014). As a result, when the spreadsheet is sorted, a chemical company is stack-ranked against a retail player, and a high-tech company against a food distributor. A Three-year Weighted Return on Assets (ROA) Number (25%).

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Lifting The Gray Curtain

Supply Chain Shaman

Similarly, after the conference, I started working with a chemical company to formulate a supply chain strategy. This is despite the purchase of Terra Technology Demand Sensing and Multi-tier Inventory Management (MEIO) in 2014 for 12-14M$ (including implementation). Let’s look at the past to forecast the future: Phase 1.

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Announcing the Supply Chains to Admire 2015

Supply Chain Shaman

It is for this reason, that we analyze the patterns of the Metrics That Matter using orbit charts over the period of 2006-2014. In this analysis, we evaluate relative performance and improvement of a company on the supply chain metrics of growth, operating margin, inventory turns and ROIC within its peer group. What Have I Learned?

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What About the Supply Chain Index?

Supply Chain Shaman

It is a quest and the subject of my next book, Metrics That Matter , that will publish in September, 2014. A chemical company just should not be compared to a high-tech company using this methodology. And, recently, Procter & Gamble is more focused on improving inventory turns. Why Does It Matter? What did we learn?

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