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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?
I have learned that supply chain systems are more complex than I originally thought, and that the relationships between supply chain metrics are nonlinear. In my work on the Supply Chain Index , I see that companies I recognize as doing networkdesign well are rising faster on the list of the Supply Chain Index work.
The market for networkdesign tools was growing at a moderate rate, and most of the market had invested in technologies from either i2 Technologies (then termed i2 Strategist) or Logictools. Today, supply chain design has become a process all to its own. Instead, it needed to be steps of continuous designs. The reason?
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. You got it! vs. General Mills, Inc. A Case Study.
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. The design principle is that history is a good predictor of the future.
Driving an excellent supply chain depends on how people are recruited and managed, processes, and the technology used. 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. Getting the Most out of People.
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. Granular data by volume is a must to be able to manage replenishment, networkdesign, and inventory targets. Time horizon.
Q: You mention that Executive Buy-in is the biggest stumbling block. What techniques are being used to get executive buy-in? Q: What is the best metric to begin analyzing when starting to evaluate Supply Chain agility? Q: You touched on robust networkdesign tools which allow you to test your network to determine your agility.
Demand latency is two-eight weeks delayed from consumption purchase to translate to an order. Organizations can align to drive value despite the allegiance to functional metrics. I kept pressuring this client to use their channel data locked into the Excel files in their sales account teams. Mistake #3. My challenge? Measure it.
In 2012 I built on these concepts to define the market-driven value network. The definition: an adaptive network focused on a well-defined value-based outcomes. A value network governed and defined by customer segmentation and a clear understanding of what drives value for the customer. Buffer Design.
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.
” At the other end of the continuum is the argument that “ Forecast error is the most important metric to improve.” Most demand planning happens in Excel Ghettos not in the expensive technologies implemented in 90% of manufacturing companies. This is Planning by Design. How Do We Plan by Design?
While traditional supply chain processes evolved from functional excellence definitions for source, make and deliver from the inside-out; to make the digital pivot and become more market-driven, companies need to define new supply chain processes outside-in. The design needs to be from the customer’s customer to the supplier’s supplier.
Each are good at localized planning within a focused area of demand, supply, networkdesign, transportation planning, material sourcing or finite scheduling. Buying From the Same Vendor Improves Integration. Lora believes that we are never too old to learn or push for supply chain excellence.
“Currently, the biggest challenge for supply chain managers is…” Keeping up with consumers and their buying behaviors. Therefore, better networkdesign, planning and operations are all needed, and all of which might not be completely satisfactory.
In the last five years, while the physician is still important, the buying decisions transitioned from the supplier to the care provider. They lack the greater understanding of planning and value networkdesign. They are primarily focused on cost management on new purchase decisions. It is now shifting again.
The use of descriptive analytics along with agile planning techniques (what-if analysis, discrete event simulation, and networkdesign) helped. We find that companies with an analytics center of excellence drove progress faster than those with a supply chain center of excellence. Analytics investments are essential.
19 average) and 3 times better ROIC for the period (33% versus P&G’s 11%), note that none of these three household products companies made progress on supply chain excellence in the period of 2013-2015. P&G’s rate of improvement on the Metrics That Matter was lower than the peer group. 21 versus P&G’s.19
I want to understand why some companies outperform on the Supply Chain Metrics That Matter while others do not. In Agrosciences is the customer the distributor of seed/additives, the farmer or the downstream purchaser of food products? Use networkdesign and inventory technologies to unearth new opportunities.
If I do an excellent job at safety stock management, my company will have the right levels of inventory. Evaluate networkdesign options to simplify sourcing and reduce the number of platforms. Leadtimes, conversion rates, and cycle times are fixed parameters. Order and shipment patterns are a good proxy for future demand.
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