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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.
When I started this research project, I was busy. One of my lessons learned in completing survey-based research over the past twelve years, is that projects are full of surprises. In my post Mea Culpa, I reference my work with the Gartner Supply Chain Hierarchy of Metrics. Error is error, but is it the most important metric?
During my current supply chain planning market research, I have received briefings from several SCP companies. Solvoyo has a metric they call the user acceptance rate. You set a target inventory level. When forecasting accuracy improves, achieving on-time in full can be accomplished with less inventory. You route a truck.
Yawn and walk on if the answer is i mproving demand error or reducing inventory levels. On December 5th, Supply Chain Insights is hosting a small event at Georgia Tech to share the results of a two-year research effort to connect financial metrics by industry to supply chain performance to drive value.
Now the writing follows the research. I mix the quantitative research with my observations and interviews, and the posts seem to roll from my fingers. If you would like to participate in a current research study, we would love your help and participation in the contract manufacturing study. (If It was a struggle!) Figure 3.
Supply shortages resulting in empty shelves or parking lots of WIP inventory represent a spectre causing supply chain leaders to reconsider supply chain inventory practices. Opinion of just-in-time (JIT) as a practice has taken a battering and inventory is rising. Is supply chain inventory the problem?
Despite the evolution of technology, none of the 28 industry segments I follow can drive improvement at the intersection of operating margin and inventory turns. Functional Metrics and the Lack of Alignment to Strategy. In our research, small regional companies outperform large multinationals. Change is Hard. Guess what?
The research methodology for the Supply Chains to Admire compares the performance of a company against its industry peer group for the metrics of Year-over-Year Revenue Growth, Inventory Turns, Operating Margin, and Return on Capital Employed (ROCE). Today, companies measure too many metrics without a clear definition of value.
Investment in research and partnerships is crucial for scaling these solutions industry-wide. AI-powered warehouse management improves inventory flow and reduces waste. Research and development are needed to overcome these limitations and ensure affordability. Immutable records enable accountability throughout the supply chain.
For demand forecasting, this means looking beyond mere accuracy to focus on: Strategic decision-making improvements Cost reduction strategies Inventory optimization Customer service enhancement 2.Understand Define Clear Business Outcomes The most successful technology investments start with a clear understanding of desired business outcomes.
According to my research, top-performing supply chains possess three very different qualities. 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.
In this area of research, I find that companies are like dogs chasing cars. At each company, there is a relationship between the metrics of growth, margin, inventory, customer service, and asset strategy. I term this relationship between metrics and capabilities as the company’s Effective Frontier. The reason?
I share research, observations, and insights. How aligned do you believe your organization is to drive these metrics? I shared this after interviewing 150 companies on their S&OP processes while at AMR Research. This research, completed in 2006, was during the transformation of multi-national to global supply chains.
Tom, the colorful warehouse manager, constantly heckled Frank for the increasing inventory levels while Ed, the quiet material/logistics manager, constantly questioned if there was a better way. He felt that inventory was no problem, he would just cut it at the end of each quarter to make the balance sheet goals. The So What?
trillion distortion inventory problem. Trillion Inventory Distortion Problem In this podcast, Karl Swensen, CEO and Co-founder of Pull Logic, discusses how their AI-enabled technology helps retailers, brands, and manufacturers reduce lost sales by addressing supply chain and selling process failure points. Summary: Solving the $1.8
It is exciting to have two years of research, nine months of writing, and four months of editing to become crisp, fresh pages. 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. The smell of ink is intoxicating.
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. The intent was good. Over-dependency on ROA.
Using balance sheet data from 2011 to 2019, we chart companies’ progress by peer group on rate of improvement and performance in the metrics of growth, operating margin, inventory turns, and Return on Invested Capital (ROIC). A focus on functional metrics throws the supply chain out of balance.) We Give to You.
In research study after study, we see that the greatest challenge to achieving supply chain excellence is the understanding of the supply chain by the leadership team. Closing the gaps happens when there are aligned metrics, clarity of vision and aligned planning processes. Metrics Alignment. They lack cohesion.
If you ask companies if they would like better inventory and global supply chain visibility, you will get an overwhelming answer of, “Yes!” In our recent report on defining supply chain visibility in B2B networks, we provide a definition based on a research study of over seventy participants. ” The answer is simple.
The results in table 1 come from a nine months research project of 120 respondents representing 183 instances of demand and supply planning. What can we learn from this table, and the research? The second thing that I learned from the research is that we do not have good solutions for large organizations in the market today.
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. For five of the past ten years, I voted on the Top 25 when I was an analyst at AMR Research (before the acquisition of AMR Research by Gartner).
As an analyst in the market for the past ten years (first with Gartner, then with AMR Research, followed by my work at Altimeter Group and now with my own firm Supply Chain Insights), I have stood in front of clients doing strategy days advocating “best practices” and I wanted to set the record straight. It was an awakening.
Supply Chain Improvement is based on the work that we completed with an Arizona State University Operations Research team to determine the Supply Chain Index. Attending the conference was Alexia Howard, Senior Research Analyst – US Foods for Sanford C. Aligned Metrics. We find that this is true of too few companies.
We explore the concept of holistic inventory strategies focused on the form and function of inventory. In the process, we learn that only 15-20% of inventories are safety stock and that the current APS frameworks do not enable a holistic analysis of the form and function of inventory. Lack of aligned metrics.
The relationship between corporate financial performance and supply chain metrics was complex; and in my first attempts, I was unable to derive a correlation. I feel that there is too little primary research in the area of supply chain management. I wanted to better understand which metrics truly mattered. Definitions.
It is the end of a two-year research project, and identifies which publicly held companies outperformed their peer group on balance sheet results. Here we share the answers to the questions that we get the most often about this research: What is the source of data? There are a lot of misconceptions about inventory.
The future inventory fire sale. As I search for answers, three questions are top of mind in my current research. 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
It comes in many flavors–increase in inventory, changes in sales policies, new product lines– all add to the complexity. The only industry that has made progress in inventory management is consumer electronics. The only industry that has made progress in inventory management is consumer electronics. 5) Alignment.
As a team we conduct quantitative research of supply chain leaders to help gain clarity of the answers. The impact of complexity on inventory is not quick. To help, today I want to share some of the insights from our recent Inventory Optimization study. Inventory management is a hot issue. Why do we do this?
And the impact doesn’t stop there, since trade-off decisions will be required to answer questions like which customer is most important to satisfy with the limited bolts in inventory and if production capacity should be reallocated. And then decisions on these questions will in turn affect other customers in your rattled supply chain.
We have been taught, as supply chain leaders, that over the last decade supply chain processes have improved costs, shortened cycle times, improved customer service and decreased inventory. Based on our recent research, we find that only 1% of process-based companies are making progress on both operating margins and inventory.
So much so, that three years ago, I founded a research company to focus on understanding supply chain excellence. In our work, we tie research from quantitative and qualitative studies to financial results to drive new insights. I also believed that this company would have the best inventory and customer service. I was wrong.
While consultants know the answers (or believe they do), I believe my goal as a research analyst is to unearth new questions that should be asked (and answered together openly in the supply chain community) to improve value. Optimization engines to improve functional metric performance resulted in an exploding number of planners.
Get Good at Having a Real-time Perpetual Inventory Signal. Foundational for ecommerce is a real-time perpetual inventory (PI) signal. If you are going to be excellent at ecommerce fulfillment, you need to have great perpetual inventory capabilities. No matter where inventory is, put it to work. Don’t fool yourself.
Interview with Lora Cecere, Founder and CEO of Supply Chain Insights and Author of Supply Chain Metrics that Matter ( published December 2014 ). Lora Cecere is the founder and CEO of the research firm Supply Chain Insights. Currently, Lora’s research focuses on supply chain sensing and revenue management.
An efficient supply chain strategy is one that takes every aspect of your supply chain into account, from inventory management and warehouse design to freight tendering and transport optimisation. Inventory Management The key starting point is implementing proper ABC analysis, and you need to look at it from multiple angles.
Interview for Metrics That Matter. My kitchen table is piled high with interviews for the upcoming book, Metrics That Matter. The research is the fun part of the process. I recently interviewed him for my upcoming book, Metrics that Matter, that publishes in August 2014. How do you define the metrics that matter?
ABC Analysis for Inventory Planning : Clustering products that behave similarly highlights issues, challenges, and opportunities for serving customers better. Price index and price elasticity are useful metrics on their own, and a combination of these can help determine the right price point to maximize revenue and profit.
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. The research that I have conducted has enabled me to look at this holistically. They are slow to adapt. It is easier said than done.
It is now our fifth year of analyzing balance sheets to understand which companies are outperforming their peer groups on the metrics of growth, operating margin, inventory turns and Return on Invested Capital (ROIC) while driving improvement. It takes us three months and two full-time research assistants to finish the analysis.
They also brought me and my colleagues at AMR Research stuffed Llamas. It could no longer be just about inventory levels. This analysis needed to be completed monthly and fed to newer forms of inventory optimization technologies. I smiled as I began to present the story of the “Metrics that Matter.”
In the research, I’m trying to understand the impact of choices—technology, process innovation, and leadership– on balance sheet performance. The research is independent and data-driven. For the past six years, I have analyzed public reporting and triangulated the results to the quantitative research. What have I found?
Supply Chain Matters highlights indications providing added evidence that manufacturers and retailers are front loading inventory management actions in attempts to initially hedge against added U.S. We cited indications of the post Lunar New Year ramp-up of global production levels to replenish inventories, more so than in prior years.
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