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In follow-up qualitative interviews, one of the largest issues with organizational alignment was metric definition and a clear definition of supply chain excellence. To manage continuous improvement, companies need a clear definition of excellence and organizational alignment to that goal. What Drives Value?
The use of orbit charts allowed me to see the patterns of performance at the intersection of metrics over time. By charting the performance against peer groups, I could see the story. The first step was to find a reliable data set and establish the peer groups. We purchase data from Y charts. (A
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.
Supply chain excellence is easier to say than to explain. 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.) The reason?
Reason #4 Making key decisions by modelling the supply chain in Excel. 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. Sound ridiculous?
” Followed by “How are you organized, and what defines functional excellence? And, how do you tie functional excellence to corporate value?” Companies became less clear on the definition of supply chain excellence and how to implement decision support technologies. Functional Metrics.
How Do You Define Excellence? In retrospect, I find that technology is an enabler, but only if we are clear on what defines supply chain excellence. Many believe that an ex-supply chain exec knows the definition of supply chain excellence. As shown in Figure B, the Company outperforms their peer group but lacks resilience.
The Company was attempting to gain economies of scale by grouping manufacturing technologies within a common infrastructure to reap the benefits of a co-generation facility, a centralized warehouse, and a talented administrative team. In my forty years of studying supply chain planning, the groups became larger, but with questionable results.
Initially, the output was published to procurement to design strategic buying strategies. Watermelon Metrics Don’t Drive The Right Results. I love the metaphor of watermelon metrics. This was a gift from a member of a group that I am facilitating.) What are functional metrics? Over time, this changed.
Groupthink is a psychological phenomenon that occurs within a group of people in which there is a desire for harmony within the group, but the result is an irrational or dysfunctional outcome. I feel that the industry is engaged in ‘Group Think’ No one in this meetings is going to ask tough questions.
Ed argued that instead of buying new packaging equipment that we should work with R&D to have a base flavor and add the color and flavoring at the head of the machine. Despite goals to improve agility and resiliency, functional metrics for manufacturing efficiency continually throw the supply chain out of balance. The So What?
Users are accustomed to building everything in Excel and manipulating the data as needed for their own particular use, typically using static reports or spreadsheets that are siloed in specific departmental needs. A key first step is to have buy-in at the highest level of the organization. Starting at the Top.
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). Note the balanced results of Rockwell Automation against their peer group.
It was a story where people believed that functional excellence leads to supply chain superiority. Year after year, well intentioned people toiled against improving metrics that reduced, not improved, the effectiveness of the supply chain. Metrics comparison of Kellogg Co. The peer groups are growing more and more complex.
While there is work within SAP to rethink SNC and use the assets purchased with Ariba to build multi-tier capabilities, the progress is not encouraging. the company is owned today by 20 organizations representing manufacturers, distributors, hospitals and grouppurchasing organizations (GPOs). Marketplace Rebirth.
The classical approach involves functional silos, sequential decisions, and Excel and people to render a plan executable. Big data is used to understand a customer’s propensity to buy, the tendency to return, conversion of clicks to orders, demand sensing signals, individualized promotions, etc.
Think of them as apples and gearseach essential and effective on its own, yet when combined; they create a formidable mechanism for achieving procurement excellence. A study by Hackett Group found that companies using automated procurement tools reduced their operational costs by 25%.
Gartner purchased the firm in 2010.) Driving Improvements in Supply Chain Excellence. He felt strongly that supply chain leaders knew how to drive supply chain excellence and needed a forum– or maybe two or three depending on the business model– to help them network and refine their approaches. I disagreed.
Or agreement on the definition of supply chain excellence. As a result, functional excellence anchors action. The focus is on digitization—automating today’s processes—versus rethinking process excellence based on the art of the possible. An orbit chart is a plotting of data at the intersection of two metrics.
With the purchase of i2 by JDA, and Logictools by IBM, manufacturing companies serious about network design started looking for a company, with a well-established community, that was more serious about network design. Most companies are still struggling with “what good looks like” and “what defines supply chain excellence.”
It was my first time working with this group. This team is not buying the message. The group laughed. So much so, that three years ago, I founded a research company to focus on understanding supply chain excellence. When all functions are jointly focused on improving these metrics, then we can have one team.
The company buying his company, EXE Technologies, is now infamous among those who have followed the WMS market. If the private equity group feels the existing CEO is not working out, an executive in residence can be inserted into the company as the new CEO. Quiet Logistics had been buying autonomous mobile robots from Kiva Systems.
Nick Lynch is the Global Excellence Manager at Shell Lubricants, a division of Shell Global. Completed in 2012, the ERP project forced the company to standardize organizational design, roles, and metrics. What can often look like compliance in APO could actually be numbers calculated in Excel and posted into the SAP system.
To drive global scale, companies need to design the supply chain to buy globally and execute locally. The company leverages globally sourcing strategies to buy products at a lower cost and then deploys some unique process logic to drive mass customization for retailers. Performance on the Supply Chain Metrics That Matter.
Over the last decade, neither the pharmaceutical nor medical device manufacturer has been able to drive the revenue/employee productivity gains of their comparative peer groups. They each lag in their understanding of supply chain excellence, and are now struggling to build effective supply chain teams. Healthcare.
Buying supplies, equipment, low preference items and the latest innovations to support high-value care delivery is expensive and while it’s not an area where you want to skimp, there are certainly ways to reduce these expenses without impacting quality of care. The Path to Supply Chain Excellence. Watch a BSW webinar here.
Ferguson provides plumbing and heating products to 9 specialist customer groups – over a million customers – in the US and Canada. Driving an excellent supply chain depends on how people are recruited and managed, processes, and the technology used. The company has shown sustained improvement on this metric.
Each of these companies performed better than their peer group on Return on Assets (ROA), but worse than their peer group on operating margin. To do this, I compare each company against their peer group to see if they have made progress on the ratios of growth, profitability, complexity and cycles. ” I smiled.
It is hard work to maintain the status quo in metrics performance. A balanced portfolio of metrics delivers the greatest value. Companies balance supply chain metrics better in good times than bad. Growth in car buying stimulated the value chain. Then identify, if the peer group is making progress. Many fail.
I think about this discussion with Keith often as I work on the Supply Chain Index and edit the chapters of Metrics That Matter. This is a group of leaders. Our current processes and dependencies on Excel spreadsheets cannot get us to our goal. E2open last week announced the purchase of Serus. What can we learn?
The focus is on the role of supply chain finance in driving supply chain excellence. The design of the conference includes tours of several modern warehouses and centers of excellence. The discussions are with groups of executives—often ex-management consultants. ————————-.
Nine times out of ten, the finance group is portrayed as a dam, a barrier or a ferris wheel in the drawings. Companies tightly coupling the budget to S&OP have significantly higher inventories and lower growth than their peer group. Demand latency is two-eight weeks delayed from consumption purchase to translate to an order.
In groups of 5, each team member is given a different role: Finance, Sales, Marketing, Production, and Procurement. The beer game requires purchasing, manufacturing, and distribution quantities to be set with no communication amongst the people assigned to the functions, aside from an order quantity. Screenshot of SCI IMPACT!
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). Note the balanced results of Rockwell Automation against their peer group.
Many companies talk about Supply Chain Excellence, but most leaders struggle to define it. One supply chain leader, in a discussion last week, likened supply chain excellence to fitness. He felt that supply chain excellence was analogous. Our journey for supply chain excellence has changed and evolved over time.
Most of the concepts were new to the team; and while the group had discussed many of the ideas at a high level, they had not been able to take the conceptual ideas into implementation. I asked the group to think of demand-driven concepts as the enabler of customer-centric strategies. As a result, there were arguments.
Older men buy less underwear than younger males and their packaging was not as attractive to the female shopper buying for the family. The company sold on Amazon, operated its own website, managed outlet stores, and could purchase end-aisle displays in major retail chains. Rules, engines, policies and metrics need to align.
This is unlike many studies that are fielded to B2B panel groups where the identity of the respondents cannot be ascertained.). Buying these solutions is far more complicated than is represented in a simple four-box quadrant. The SAP and Oracle analyst relations groups are big machines. It is complex. There are many parameters.
An accomplishment-based resume provides metrics and quantifiable info about a candidate’s accomplishments. 2) Rodney Apple from SCM Talent Group Developing a comprehensive job search action plan is the most actionable tip for landing dream supply chain job. Functional resumes tend to list prior experience in terms of “duties.”
These critics sensed a sinister “rebranding” ploy designed to get companies to purchase technology and services they already own but perhaps have not fully implemented. Challenge yourself to think beyond the traditional Available-to-Promise metric and ask if an action meets the criterion of Profitable-to-Promise.
Two years at Gartner Group , six years at AMR Research (now Gartner), two years at Altimeter Group and three years as the founder of Supply Chain Insights. E2open went public in July 2012 and in February 2015 participated in a private buy-out for $273M by Insight Venture Partners. I have been an analyst for over a decade.
Intertape Polymer Group is thinking outside the box and working with Stanfield’s Ltd to produce PPE garments for medical teams on the frontline battle against COVID-19. In a much broader context, the byproduct of this work will be lasting innovation that informs design, production and distribution excellence for years.
Executive, after executive, lament, “They have purchased many technologies and sponsored many projects to reduce inventories, but they are not seeing results.” We are systemically evaluating each industry in the Supply Chain Insights Metrics That Matter series of reports. At Supply Chain Insights , this is our passion.
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.
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