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In today’s architectures and functional metrics, value optimization does not exist. And, when procurement and tactical planning operate in isolation, there is no decision support framework to guide the trade-offs especially when the functions are tethered to different and conflicting metrics. You are right.
Reason #6 Not effectively managing inventory. Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics. Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric. There can be multiple reasons.
This year supply chain leaders will celebrate thirty years of progress in supply chain management; but we have not made progress on one of the funamentals: inventory management. I think that it is time for us to take the litmus test and ask the hard questions, “Have our practices impacted days of inventory? I want to believe.
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. To change course, learn from history, to unlearn to rethink outcomes. Reward teams for cross-functional metrics. What did we find?
The research tries to establish “ who did supply chain best ” by looking at a weighted formula of Year-over-Year Growth, Return on Assets (ROA), and Inventory Turns for the Fortune 500 companies. Inventory Turns values are based on an average of quarterly reporting for the past year. Inventory Turns is only part of the story.
Over the course of the last week, I had a Linkedin comment from Dubai, questions from a team from the Philippines, and an inquiry from Switzerland. While Joe is trying to balance the feedback from Filipe and Frank, he is often asked to change his metric targets by his CFO named Lou. Achieving Balance in Metrics. 3) Outside in.
An average margin of 21% with inventory turns of 1.58 As shown in Figure B, the company improved cash-to-cash through the extension of payables, but never improved inventory levels after the spin-off from Kraft. The group’s response is, “Are these supply chain metrics?” Avoid fads and stay the course.
The future inventory fire sale. One of my stark realizations this year is that smaller companies are beating larger and often more established companies on growth metrics, inventory turns, operating margin, and Return on Invested Capital (ROIC). (In The metrics selection resulted from work with Arizona State University in 2013.)
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. Understanding inventory planning will take on a new dynamic. by CJ Wehlage.
I just don’t think the comparison of very different industries in a spreadsheet based on growth, inventory values, and Return on Assets (ROA) is meaningful. 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.
For instance, a student struggling with inventory management concepts can receive supplementary materials, interactive simulations, and one-on-one tutoring sessions tailored to their needs. Conversely, a student who quickly grasps procurement strategies can be challenged with advanced case studies and leadership projects.
In my decades of working in replenishment and inventory optimization, I’ve noticed that many companies seek solutions to symptoms rather than the underlying problem. Of course, you’ll never want to deal with that company again. They want to have an aging report for inventory or a report on vendor performance.
Fortunately, there are numerous courses available to help you develop your expertise in supply chain management, regardless of your level of experience. In this article, we’ll take a closer look at the top 10 supply chain management courses that can take your career to the next level. Ratings of each course will also be included.
Interview for Metrics That Matter. My kitchen table is piled high with interviews for the upcoming book, Metrics That Matter. I recently interviewed him for my upcoming book, Metrics that Matter, that publishes in August 2014. Which metrics do you think matter to supply chain excellence? ” Supply Chain Leader.
Integration of corporate social responsibility metrics in planning. There is a lack of clarity on what drives value and metrics are functional. Monthly design of the supply chain including form and function of inventory and inventory placement. Focus on the level of inventory. Functional metric orientation.
Assess root causes, adjust plans, and debate course corrections. But before you start measuring everything in sight – and a few things not in sight – start with a set of thoughtful intentions and questions that will guide you to the right set of metrics and the right set of expectations. That’s not a bad answer.
This of course generates carbon from transportation activities. They achieved significant carbon reductions in their cloud supply chain by creating a model that looked at the forward positioning of inventory, freight consolidation opportunities, and where to build the distribution centers.
It is a quest and the subject of my next book, Metrics That Matter , that will publish in September, 2014. Over the course of the last eighteen months we have attempted to build a linear regression model to build a formula using supply chain ratios that can predict market capitalization. .” As I shuffle along, I am not sure.
Focus the organization on understanding the “probability and patterns of demand” and how to design push/pull decoupling points, supplier networks and inventory buffers to improve agility (focusing on form and function of inventory in the supply chain). Next week, I will be writing on my new book Metrics That Matter.
Days Sales of Inventory (DSI) is a key measure to help you understand how efficient your inventory management is. Here explain what DSI is, how to use it, and why it’s crucial to track this metric in your business – whether you’re a retailer, manufacturer, wholesaler or distributor. How do you calculate Average Inventory?
Over the course of the last decade, his story is the same. Optimization engines to improve functional metric performance resulted in an exploding number of planners. Rolling up a perpetual inventory signal takes eleven hours. days to get a perpetual inventory signal and 2.2 Back to John. On average, it takes 2.8
Of course not… But, the industry is in a group think. It is tough for me to see that nine out of ten companies are stuck, and not making progress, at the intersection of operating margin and inventory turns. In addition, I am now done with the page proofs for my new book, Metrics that Matter. This is how we see our role.
Enroll in SCMDOJO’s flagship Sales & Operations Planning Blueprint course! Review Supplier Performance Performance Measurement: S&OP provides a framework for tracking supplier performance against agreed-upon metrics, such as delivery time, quality, and cost. Keep Reading to unlock a 50% discount code!
This week, at Supply Chain Insights LLC, we published our 11th report in the series titled Supply Chain Metrics That Matter. Over the course of a year, we analyzed a decade of financial data to gain an understanding of how companies and industry sectors are balancing growth, profitability, cycles and complexity. We enjoy writing them!
A study by E2open – the 2021 Forecasting and Inventory Benchmark Study: Supply Chain Performance During the Covid-19 Pandemic – provides the answers. The company provides demand and inventory planning solutions based on a public cloud architecture. I look forward to this study every year. Forecasting Accuracy Was Terrible .
Over the next five weeks, seventy business/technology and consulting leaders will complete the course. Based on the work with Georgia Tech, we are getting clear on which metrics matter by industry. As companies adopt a balanced scorecard, the functional metrics shift to a focus on reliability. Analyze inventory health.
Of course, the big challenge in this type of external benchmarking is obtaining the necessary data, since many companies are wary of sharing performance data with potential competitors. Of course, its also possible to add further tiers for even more granularity, but again, the more levels you have, the more complex your KPI solution.
As an industry analyst, over the course of the last ten years, I have worked with all of these companies. Over and over again, over the course of many years, I have heralded the progress of Procter & Gamble (P&G) on revenue/employee as a characteristic of supply chain excellence. Who Did It Best? I know, I know.
Is inventory bloating your costs? Running procurement and supply chain without metrics is like driving blindfolded. A scorecard acts as your dashboard, providing crucial visibility that helps you: Make Data-Driven Decisions: Replace guesswork with facts when evaluating suppliers, processes, and inventory levels.
Over the course of the last quarter, with the help from Cloudera, we built a data lake of with data from 1449 public companies. 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. So, you might be saying, “ WOAH!”
No company in either the household non-durable (consumer goods) or the food manufacturing group beat their peer group on the balanced scorecard of growth, inventory turns, operating margin, and Return on Invested Capital (ROIC) for 2013-2022. The supply chain has two important buffers–inventory and capacity. Any takers here?
The focus is on functional metrics, but are unable to get to overall supply chain metrics. For example, only 29% of manufacturing companies can access total cost data and 31% struggle to see the impact of business decisions on inventory. As shown in Figure 3, companies struggle to get data to make decisions.
.” As shown in Table 1, operating margin has declined 16% over the course of the decade. As hospitals adopted consignment planning programs, inventory progress slowed. With the shift of inventory back in the supply chain, there is a lot of discussion on Vendor Managed Inventory (VMI). Change is under foot.
Here is the list: Supply chain technology implementations have reduced inventory. Here they are: The Lie of Inventory Reduction. Over the course of the last decade, I have carefully recorded and reported presentation after presentation from conference after conference and interview after interview with supply chain leaders.
Food manufacturers, over the course of the last decade, have pushed costs and waste backwards in the supply chain. As I write my new book, Metrics That Matter, I am studying the patterns of corporate performance based on choices in supply chain program execution. It cannot be about singular metrics. So, what can we learn?
We analyzed the impact of 150 factors on 493 financial metrics for the period of 2004-2016. Across the industry, we find that companies think that they are managing costs and inventory better through technology investments like supply chain planning, but they have a false sense of accomplishment. This research was tough work.
Over the course of the last six years, I have helped many companies with their demand-driven initiatives. They set a target to improve top line revenue over the course of five years. Note the trends in operating margins and inventory turns. Each faces four years of deterioration on this important supply chain metric.
The answer, of course, is yes. 3PLs can quickly assess client-level profitability via accurate cost-to-serve metrics and analytics on demand while creating a verifiable audit trail of events and charges that reduce potential credit settlements and contribute to customer satisfaction. But can technology do more?
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. By doing this, they could potentially save the company millions of dollars in excess inventory.
This is often managed with the help of supplier management software or inventory management software. Of course, the emphasis on each priority will differ depending on the industry. That’s where Procurement Metrics and Key Performance Indicators (KPIs) come into play. Undamaged shipment rate. On-time delivery: all suppliers.
The result is, of course, an unhappy customer and the likelihood that for the next incident, they will be looking for another service provider or third party. There are simple metrics, which indicate the linkage between parts availability and additional sales. Have you looked into inventory solutions?
This past month I attended our Supply Chain Insights Bootcamp training led by Lora Cecere in Philadelphia and facilitated the first course of a Cross-Company Academy training, End-to-End Supply Chain Orchestration. Cross-Company Academy is a 7 month online training course, Bootcamp is a 2 day in-person training course.)
Products, of course, can be picked up at the branches. In the annual report where they report on their key performance indicators (KPIs), they don’t just report on core financial metrics and the NPS, they also have people metrics. The company has shown sustained improvement on this metric. Across the US, Ferguson has 6.5
Year after year, well intentioned people toiled against improving metrics that reduced, not improved, the effectiveness of the supply chain. ERP is valuable to improve transactional accuracy, but I can find no evidence that investments in ERP have reduced inventory or improved cash-to-cash cycles. Metrics comparison of Kellogg Co.
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