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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. What should we do?
The use of orbit charts allowed me to see the patterns of performance at the intersection of metrics over time. We purchase data from Y charts. (A As an aside, I do not think that Lenovo is an example of a supply chain excellence. Hopefully, I will be able to walk on Tuesday for my client strategy day.
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.)
When reviewing strategy decks for supply chain teams, I often see statements like “move from a functional-silo’d focus to a drive a more holistic response.” ” Followed by “How are you organized, and what defines functional excellence? And, how do you tie functional excellence to corporate value?”
Enhanced Promotions and Events Analysis Promotions, advertising campaigns, and trade events are vital components of marketing strategy, but accurately measuring their impact on demand remains challenging. Five Ways Advanced Machine Learning in Demand Planning Is Improving Forecasting 1.
How aligned do you believe your organization is to drive these metrics? Observations on What It Takes In the Mea Culpa post, I wrote that I used to believe that excellence in S&OP was a ratio of 60/30/10. (60% Clearly Define an Operating Strategy. Strategy definition precedes process definition.
Introduction Gardner, (1954) and Huntzinger, (2007) define Purchase price variance (PPV) as a metric used to measure the effectiveness of cost-saving efforts by calculating the difference between the planned cost (standard pricing) allocated for purchasing activities and the actual cost incurred.
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. The group’s response is, “Are these supply chain metrics?”
We explore the concept of holistic inventory strategies focused on the form and function of inventory. The shift from Inside-out to Outside-in is impossible using a crawl, walk, and run strategy. The shifts over the last decade are profound: Is the answer a Supply Chain Center of Excellence? Lack of aligned metrics.
Initially, the output was published to procurement to design strategic buyingstrategies. Watermelon Metrics Don’t Drive The Right Results. I love the metaphor of watermelon metrics. The issue is that traditional functional metrics drive underperformance—the greater the variability, the larger the gap.
Clear operating strategy and definition of supply chain excellence across plan, source, make and deliver. Most companies buy decision support technology, but do not redefine work to improve decisions. A shift from functional metrics to a balanced scorecard. I write this post as a guide. What Does Good Look Like?
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?
The client leaned across the table and asked, “Is a customer-centric supply chain strategy the same as a demand-driven supply chain strategy?” Drawing from the Whiteboard: Building Customer-Centric Supply Chain Strategies. It had been a long night. However, I had little time to be tired. ” I smiled.
In 2014, ecommerce strategies grew in importance. At that time, manufacturers talked about customer-centric supply chains, but were afraid to aggressively adopt ecommerce strategies. Manufacturers, today, are aggressively pursuing e-commerce strategies. Make test and learn an active part of your supply chain strategy.
We’ll examine the key components of efficient supply chains, explore essential performance metrics, and uncover the fundamental drivers that influence efficiency. Additionally, we’ll discuss best practices for optimization and strategies for balancing efficiency with resilience.
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. This article delves into how these two elements, working together, can transform procurement strategies into long-term competitive advantages.
Running procurement and supply chain without metrics is like driving blindfolded. Identify Bottlenecks & Opportunities: Quickly spot areas that are underperforming and need attention or areas where you’re excelling. Control Costs: Track value beyond just the purchase price and manage inventory effectively.
The promise was the delivery of a decision support system that would allow the organization to optimize the relationships between cash, cost and customer service against the strategy. By purchasing planning and transactional systems for a common vendor, they had one throat to choke and they were familiar with the architectural elements.
For the past month, I have been working alongside companies implementing digital strategies. Or agreement on the definition of supply chain excellence. As a result, functional excellence anchors action. An orbit chart is a plotting of data at the intersection of two metrics. ” Incrementalism. Movement by degrees.
Ultimately, what KPIs, as metrics and indicators derived from the set of plans are taken into account and prepared for each scenario. Working with Excel spreadsheets does not contribute the efficiency, speed and agility necessary for planning teams to bring the best plans to the company. Technology for Effective Planning.
Theme 2: Online buying will fuel home delivery growth, challenges and new strategies. In 2023, consumers will be less forgiving and poised to buy from retailers whose delivery performance is commensurate with the rest of the shopping experience. Figure 1: U.S. Container Import Volume Year-over-Year Comparison.
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. As a result, the financial and strategy teams became more interested. Ensuring Profitability. The gap is tough.
When I hear companies discussing the implementation of a customer segmentation strategy, I ask a series of questions: Who is your customer? How do they buy from you? What are you trying to accomplish through the execution of a customer segmentation strategy? How do they buy from you?” Why does it matter to you?
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). The company’s current strategy is to bring a Connected Enterprise to life.
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.
A process audit report is designed to, ultimately, streamline processes, enhance decision-making and drive overall procurement excellence. Typically, a procurement audit report will review areas such as the agreement of contracts, pricing data and purchase information, financial statements, stakeholder data and supplier performance records.
What are the essential purchasing books you should read? In this article, we will uncover the best purchasing books to help you get the edge over competition. Background Historically, purchasing people are considered a kind of clerical workers who are expected to perform basic tasks such as document issuance and price negotiation.
It is hard work to maintain the status quo in metrics performance. A balanced portfolio of metrics delivers the greatest value. In the setting of strategy goals, executive teams often set unrealistic goals because they are not aligned with supply chain potential. The front office and back office strategies are not aligned.
As an analyst in the supply chain market for 15 years, I have written many articles on best-of-breed technology companies purchased by a larger company. The Terra Technology investment is one of what we believe will be a series of purchases to build inter-enterprise cloud-based software platforms to redefine supply chain planning.
As organizations continue to invest in these tools, their potential to reshape procurement strategies is immense, giving early adopters a serious competitive advantage. How JAGGAER Helps JAGGAERs ESG solutions help procurement teams integrate sustainability into their sourcing strategies.
I would like for us to move past the conventional view of sourcing strategies and globalization to drive improvements to the supply chain in a variable world. The sad thing is that most companies will never know because they are blindly measuring the wrong metric and driving a supply-centric agenda. Let me explain.
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.
I work with many organizations on their supply chain strategies. This team is not buying the message. 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.
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.
I have learned that supply chain systems are more complex than I originally thought, and that the relationships between supply chain metrics are nonlinear. I would build an expertise system in the Supply Chain Center of Excellence. After three years of research, I have just refined the methodology to start to pull the trends.
Therefore, evaluating performance and creating a comprehensive digitalization strategy are essential for a distributor’s success. To maximize efficiency, distributors should adhere to the following set of guidelines for evaluating and planning their supply chain with the strategies mentioned below.
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.
The company buying his company, EXE Technologies, is now infamous among those who have followed the WMS market. It was really intended to allow us to buy a few robots and rent some space, just get us started” and prove the business model. We asked for $2 million to buy more robots and then shortly thereafter another $4m.
Available to Promise (ATP) Available to Promise (ATP) is a real-time inventory management metric that tells you how much of a product you can promise to customers without overcommitting. It supports smarter buying by showing which categories or products deliver the best ROI. Why is GMROI important?
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. Managing a supply chain requires big feet—grounding in real-world experience—coupled with big wings—conceptualization of strategy.
The company won the ISM 2012 Award for Excellence in Supply Management (category:process). However, the logic Cisco uses to manage the disruption is very robust and details are summarized into the infographic below, Note: metrics data is for illustrative purpose. Robust risk mitigation strategies really work. Discussion.
”[5] In other words, in today’s business environment, a company cannot separate sustainability efforts from its overall business strategy. “Reach out to other departments about ways to collaborate on sustainability initiatives, and talk to your executive team to gain buy in.” ” Improving Sustainability.
I want to be part of the evolution that helps leaders to redefine strategies based on the changing physics, electronics and capabilities in value networks. I think about this discussion with Keith often as I work on the Supply Chain Index and edit the chapters of Metrics That Matter. E2open last week announced the purchase of Serus.
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