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Elephant in the Room: Thoughts on Metrics That Matter in Semiconductor and Hard Disk Drives

Kinaxis

Supply Chain Insights recently published a Metrics That Matter report covering both the Semiconductor and Hard Disk Drive (HDD) industries. Semiconductor is poised to consolidate, which will have huge impact on the metrics. With China already a source for semiconductor raw materials and the China/India end consumer market growing, there will be pressure to supply chips and hard drives to local China/India OEM’s first. by CJ Wehlage.

Your supply chain is costing you money – Reason #10 Failure to adequately train your supply chain planning staff

Kinaxis

Reason #6 Not effectively managing inventory. Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. A bad decision can result in missed orders, significant inventory, or scrapped materials. They do their jobs moving inventory from here to there, opening orders that the system says should be opened, cancelling orders that the system says should be cancelled, yet never questioning why or whether it makes sense.

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What the Analysts Are Saying About…A&D Supply Chains

Kinaxis

Even if you’re not you should check out Supply Chain Insights, Supply Chain Metrics That Matter. I spread my Supply Chain wings at an Aerospace company and since Aerospace and Defense is a key vertical market for Kinaxis, the recent Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report was downloaded on my laptop to read on my next flight. Think about those design, sourcing and delivery challenges. by Bill DuBois.

Let the Qs Begin

Supply Chain Shaman

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. Do you actively design networks with a focus on form and function of inventory? How do you balance the trade-offs between source, make and deliver?

Q&A on the Supply Chains to Admire

Supply Chain Shaman

Here we share the answers to the questions that we get the most often about this research: What is the source of data? We placed them in the industry that they were the most like, e.g., the primary source of revenue. Nineteen of the 200 companies met the performance criteria of improving operating margin, inventory turns, and ROIC together in concert for the years of 2006-2013 or 2009-2013. There are a lot of misconceptions about inventory.

Misnomer

Supply Chain Shaman

The team was organized around the functional silos of source, make and deliver. I also believed that this company would have the best inventory and customer service. Instead, we found that the companies with the lowest total supply chain cost (a total of source, make and deliver) had average costs in manufacturing and distribution. Today, 60% of sourcing organizations and 45% of manufacturing organizations report through the supply chain organization.”

Q&A on the Supply Chains to Admire

Supply Chain Insights

Here we share the answers to the questions that we get the most often about this research: What is the source of data? The data analyzed to compile the Supply Chains to Admire 2014 report came from publicly-available information from balance sheets and income statements. We placed them in the industry that they were the most like, e.g., the primary source of revenue. Today we published a new report, Supply Chains to Admire.

Throwing Down the Gauntlet

Supply Chain Shaman

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. However, no company in this chart is on a linear path towards improving both margin and inventory turns.

Supply Chain Management Services

LeanCor

When sourcing supply chain management services, think about the provider’s approach to people and processes. Focus on total logistics cost reduction (transportation, warehousing, and inventory). Choosing the right target means defining your metrics, such as measuring carrier performance. Here are some general questions to ask when sourcing supply chain management services: Does the 3PL provide the services required? 3 Tips in Choosing Supply Chain Management Services.

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Supplier Quality Management: What it is, 5 Key Metrics to Know & a 4 Step Supplier Evaluation Process

Cerasis

The next posts in the series will break down metrics and issues to consider in SQM by industry and conclude with a case study on the application of SQM. 5 Key Metrics to Use for Scoring Supplier Quality Management (From LNS Research ). The definition of this metric is similar to the way it sounds. Quality affects many different parts of the business, so it is critical to establish a comprehensive metric that provides visibility into the most important areas of operations.

Time for a Mea Culpa?

Supply Chain Shaman

I have taken myself off the road to write the book Metrics That Matter. On the 2nd of April, I sat before a board discussing how a company could exceed expectations in the delivery of Return on Invested Capital (ROIC) and superior operating margins and fail at the delivery of customer service and inventory. 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.

How Does Procurement Create Value? Insights from CPO Speakers at Zycus Horizons Conference

Supply Chain View from the Field

I was attending the Zycus Horizons 2014 conference at Amelia Island today, listening to speakers. And we follow a pattern: you do an assessment, a sourcing wave, build a process, and do it over and over. A second response was provided by Niklas Hamnstedt Chief Procurement Officer at TE Connectivity: “I would like to see a stronger rating of supply risk and a supply risk metric.

Raise a Toast to Digital Business!

Supply Chain Shaman

At the end of 2014, many leaders that I work with are preparing their 2015 strategies. Here are some insights from our recent research: Digital Path to Purchase: In a study on trade promotion management in early 2014, we find that 60% of marketing teams within consumer packaged goods companies are working on a digital path to purchase strategy. Too few companies understand the differences between syndicated data sources and the use of channel data.

Global Luxury Management “Lifestyle” brands require push supply chain design customization

Supply Chain View from the Field

This is a challenging sourcing base, and global luxury brands must also pay attention to general labor and supply chain compliance policies. The entire apparel supply chain is driven by these financial metrics. A lot of the supply chain behaviors are driven by these financial measures, compensation systems, and bonuses are based on that metric.

SCRC Student Project Lineup Off to a Great Start…

Supply Chain View from the Field

Students will learn core processes around initial exploration and assessment of supply chain relationships, establishing metrics/expectations for the relationship, crafting and managing contracts, and sustaining continuous performance improvement in sourcing, logistics and operations. NC State kicked off classes last week, and as usual our incoming group of MBA students were lined up with projects as part of their entry class into supply chain management, MBA 541.

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Do No Harm…

Supply Chain Shaman

Despite two decades of advancement in supply chain technologies, companies are struggling to gain balance at the intersection of operating margin, inventory turns and case fulfillment. I have learned that supply chain systems are more complex than I originally thought, and that the relationships between supply chain metrics are nonlinear. Recently, I spoke to a major European retailer that lost 5% of their grocery revenues to Amazon in the first quarter of 2014.

Defining and Measuring Fast Fashion

The UCLA Anderson Global Supply Chain Blog

  In a previous blog we looked at online sources to determine which retailers are fast fashion and which are not. These last two elements are particularly important from an operations and supply chain perspective and we postulate metrics to measure their effectiveness.   Since the purpose of quick response is to reduce markdowns and stockouts, its effective implementation should lead to a better gross margin and less inventory.

Building a Triple A Supply Chain: Ten Tactics That Work

Supply Chain Shaman

” Hau Lee, October 2014. Over the last six years, we studied the connection between business results (growth, operating margin, inventory turns and Return on Invested Capital (ROIC)) and the link to company characteristics. Reward teams for cross-functional metrics. We like the metrics of growth, on-time and in-full orders, operating margin, inventory turns, and Return on Invested Capital (ROIC). Focus functional metrics to improving reliability.

Recasting the Retail Supply Chain

Supply Chain Nation

In research conducted by respected sources, key metrics such as product availability at the consumption point, the supporting inventory across the network and taming the ripple effect of demand variability have seen little improvement over years. While the advent and use of the human baby incubator is immediately evident, outside of Neonatology it is likely less well known how enormous an impact the technology has made on infant mortality rates.

New Survey Says Alignment of Supply Chain and Business Strategies Is Critical to Success

Tompkins Blog

RALEIGH, NC, April 15, 2014 — Is it important to connect your supply chain strategy with your business strategy? We found that the better the level of alignment, the more likely it is that companies are achieving their objectives for cost reduction, customer service, and other metrics,” explains Bruce Tompkins, executive director of the Consortium and author of the report.

How to measure the performance of a manufacturing plant?

Infosys Supply Chain Management

There are some important metrics which help make informed decisions on improvement initiatives. A basic yet powerful metric that usually is a good indicator of operating performance of a manufacturing business is the cycle time. This metric serves to enhance overall customer experience which comprises other key metrics - some of which are discussed here. A simple metric to start with would be to determine the On-time delivery to commit.

Manufacturing Gains From Machine Learning

IQMS

Source: Smartening up with Artificial Intelligence (AI) – What’s in it for Germany and its Industrial Sector? (52 Asset Management, Supply Chain Management, and Inventory Management are the hottest areas of artificial intelligence, machine learning and IoT adoption in manufacturing today. Source: Technology and Innovation for the Future of Production: Accelerating Value Creation (38 pp., Source: Digital Factories 2020: Shaping the future of manufacturing (48 pp.,

Made in “I Really Don’t Know”

Talking Logistics

As first reported by Fairfax Media , a factory in North Korea has been making high-priced surf and snow gear for Australian surfwear company Rip Curl since at least 2014, with the garments labeled “Made in China.” As reported in USA Today : [In a sourcing practice nicknamed “China plus one”], big brands like Rip Curl send their specifications — what they want made and how much they’re willing to pay for it — to sourcing agents, who find factories that agree to fulfill them.

Five Reflections From Supply Chain Planning Benchmarking

Supply Chain Shaman

In most ‘benchmarking activities’, self-reported data is the most common source. However, for elements like forecast error, customer service and slow-moving inventory self-reported data is not sufficient. We assumed that we did not know what the connection was between the views of supply chain planners, supply chain leaders, financial data, and planning system output (forecast error, bias, inventory targets, and slow-moving inventory).

Renegade Riposte

Supply Chain Shaman

We developed the Supply Chain Index in 2014 as a way to measure supply chain improvement at a balance sheet level. After, I explained this, I granted Peter permission for the council to use the Index (the use of the Supply Chain Insights content follows the principles of open source), I then said to Peter, “I am glad that you called. I get called frequently to talk to supply chain leadership teams about inventory.

Supply Chain: The True Game of Risk

Supply Chain Shaman

The rising complexity of items sold decreases the organization’s ability to forecast, and the longer lead times across multiple tiers of sourcing and supply, increases the bullwhip impact (distortion of the demand signal across multiple tiers of the value network). In 2014, 70% of companies experienced three business discontinuity events with at least one resulting in a material impact to the balance sheet resulting in financial reporting. Focus on Multi-Tier Inventory Management.

A “Swiss Army Knife” of Supply Chain Talent Requirements: Views from a Former Wolfpack Student

NC State SCRC

He became a director at that point, working with sales planning, inventory planning, and financial planning, and pulling together the Sales and Operations Planning team, as well as introducing new products and eliminating obsolescence. By 2014 and 2016 revenue was back up to almost its previous high point. In 2013 we had $8M of raw material inventory – due to poor purchasing, poor safety stock decisions, and a lot of WIP in the system.

Top 10 Supply Chain Innovations of 2018

Material Handling and Logistics

Top 10 Supply Chain Innovations of 2014 : hybrid DCs, 3-D prototypes, location-based inventory system, and more. Source ID. Source ID. Source ID. The retail giant plans to take out 50 million metric tons (MMT) by 2030, which is equivalent to the emissions associated with the average annual electricity consumption of 40 million Chinese households. Source ID. Source ID. Source ID. Source ID. Source ID. Source ID.

VTech: A Story of a Supply Chain Leader

Supply Chain Shaman

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. Inventory Turns. Better performance in inventory turns than the peer group average for the period studied.

Taking the Hill

Supply Chain Shaman

This week, at Supply Chain Insights LLC, we published our 11th report in the series titled Supply Chain Metrics That Matter. We do not believe that there is much value in putting all companies into a spreadsheet and shaking them up… or looking at singular metrics without analyzing the intricate trade-offs of the supply chain when viewed as a complex system. When companies look at singular metrics (labor costs or inventory), they have moved backwards.

Conquering the Explosion of Supply Chain Planning Data

Logility

Structured and unstructured data including that from social media, Internet of Things (IoT) and Blockchain sources continue to stream in but much is left untouched. and up to date transaction data (order status, inventory positions, shipment tracking, etc.) Key Performance Metrics: The ability to identify and measure KPIs will help prioritize and measure transformation efforts. Accenture, 2014.

Supply chain risks in the spotlight: Effects of Hanjin Shipping filing bankruptcy protection

Kinaxis

According to sources, Stevedores are demanding advance payment in cash. There is a constant push to free up working capital by leaning down on the inventories. However, a 2014 report by University of Tennessee on managing risk in global supply chains points out that 90% of the firms surveyed do not quantify risk when outsourcing production! How long will you be able to recover your supply through alternate sources or from the impacted supplier?

Using Modeling and Analytics to Design a Resilient Supply Chain

Talking Logistics

You can use network design models, company KPIs and other metrics to get a holistic look at your supply chain. Examples: moving inventory to alternate locations, changing supplier relationships. This provides high-level metrics for evaluating risk in the supply chain. This data can be viewed in time-series reports showing missed orders, inventory levels, total cost and more, as a critical way to evaluate resiliency.

Top Supply Chain Articles of 2015

Cerasis

The Benefits of Evolved Vendor Managed Inventory Model Led by Web-Based VMI. When I was Materials Manager at Maricopa County, Arizona, the second largest county in the country, I introduced Vendor Managed Inventory. I called Fastenal, who specializes in Vendor Managed Inventory (VMI) for fasteners, in to see what we can do together. There was a signed contract with agreed upon inventory levels. There was no inventory carrying costs or concern for inventory turns.

Supply Chain Best Practices: Preparing for the Worst

Elementum

Potential Sources of Disruption. Identifying sources of risk and developing a plan are only part of the story. Establish appropriate metrics that correspond with the steps outlined in your contingency plan. What alternative plants/factories/sources of supply do they have at their disposal? With contingency plans in place, the company announced that it had a healthy inventory supply of finished products and did not foresee a risk to patient supply at that time.