2/7/22 September 2014, p.1 Supply Chain Insights Global Summit #ImagineSC The Math Behind the Supply Chain Index Lora Cecere, Supply Chain Insights Dr. George Runger, Arizona State University Abby Mayer, Supply Chain Insights
The Math Behind the Supply Chain Index
Oct 30, 2014
The presentation given during the panel discussion of the Math Behind the Supply Chain Index at the Supply Chain Insights Global Summit in Scottsdale, AZ on September 11, 2014
The panel included:
Lora Cecere, Founder and CEO of Supply Chain Insights
Dr. George Runger, Professor, School of Computing, Informatics and Decision Systems Engineering – Ira A. Fulton School of Engineering at Arizona State University
Abby Mayer, Research Associate at Supply Chain Insights
The Math Behind the Supply Chain Index
Join this session to understand the math behind the newly launched Supply Chain Index. This data-driven analysis gives supply chain leaders a new way to measure supply chain improvement.
The panel included:
Lora Cecere, Founder and CEO of Supply Chain Insights
Dr. George Runger, Professor, School of Computing, Informatics and Decision Systems Engineering – Ira A. Fulton School of Engineering at Arizona State University
Abby Mayer, Research Associate at Supply Chain Insights
The Math Behind the Supply Chain Index
Join this session to understand the math behind the newly launched Supply Chain Index. This data-driven analysis gives supply chain leaders a new way to measure supply chain improvement.
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9/11/2014 September 2014, p.1Supply Chain Insights Global Summit #ImagineSC
The Math Behind the Supply Chain Index
Lora Cecere, Supply Chain InsightsDr. George Runger, Arizona State University
Abby Mayer, Supply Chain Insights
9/11/2014 September 2014, p.2Supply Chain Insights Global Summit #ImagineSC
Speakers
Lora CecereSupply Chain Insights
Founder and CEO
Dr. George RungerArizona State University
Professor, School of Computing, Informatics and
Decision Systems Engineering – Ira A. Fulton School of
Engineering
Abby MayerSupply Chain Insights
Research Associate
9/11/2014 September 2014, p.3Supply Chain Insights Global Summit #ImagineSC
The Supply Chain Effective Frontier
9/11/2014 September 2014, p.4Supply Chain Insights Global Summit #ImagineSC
Mining 20 Years of Financial Data
9/11/2014 September 2014, p.5Supply Chain Insights Global Summit #ImagineSC
Companies Get More Serious with a Recession
9/11/2014 September 2014, p.6Supply Chain Insights Global Summit #ImagineSC
Correlations to Market Capitalization
9/11/2014 September 2014, p.7Supply Chain Insights Global Summit #ImagineSC
The Promise
9/11/2014 September 2014, p.8Supply Chain Insights Global Summit #ImagineSC
Orbit Chart: Dow Chemical (Inventory Turns Vs. Operating Margin)
9/11/2014 September 2014, p.9Supply Chain Insights Global Summit #ImagineSC
Supply Chain Metrics That Matter Reports
9/11/2014 September 2014, p.10Supply Chain Insights Global Summit #ImagineSC
Operating Margin: Is Bigger Better? Operating Margin for Years 2000-2012
Industry Segment Companies between $1-5B in Annual Revenue
Companies Greater than $5B in Annual Revenue
Automotive .03 .04
Chemical .08 .10
Consumer Electronics .03 .03
Consumer Packaged Goods .11 .13
Contract Manufacturers .02 .04
Food and Beverage .08 .05
Hospitals .09 .14
Mass Retail .04 .03
Medical Device .15 .16
Pharmaceuticals .11 .19
Semiconductors .03 .04Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
9/11/2014 September 2014, p.11Supply Chain Insights Global Summit #ImagineSC
Inventory Turns: Is Bigger Better? Inventory Turns for Years 2000-2012
Industry Segment Companies between $1-5B in Annual Revenue
Companies Greater than $5B in Annual Revenue
Automotive 7.4 7.5
Chemical 5.3 4.6
Consumer Electronics 6.5 6.8
Consumer Packaged Goods 4.1 4.8
Contract Manufacturers 7.6 7.2
Food and Beverage 6.2 11.1
Hospitals 13.3 11.1
Mass Retailers 10.5 7.6
Medical Device 4.7 3.2
Pharmaceuticals 3.6 2.7
Semiconductor 7.6 6.5Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
9/11/2014 September 2014, p.12Supply Chain Insights Global Summit #ImagineSC
Our Answer? For Supply Chain Excellence?
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Supply Chain Index: A Measure of Supply Chain Improvement
Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory• Strength: Inventory Turns & Operating Margin Vector Trajectory• Resiliency: Inventory Turns & Operating Margin Mean Distance
A new way to measure relative supply chain performance by industry, based on the components of balance, strength and resiliency.
9/11/2014 September 2014, p.14Supply Chain Insights Global Summit #ImagineSC
Supply Chain Index: A Measure of Supply Chain Improvement
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Do you think that the factors in the Supply Chain Index (balance, strength and resiliency)
should be weighted equally?
a) Yes, weight them equally
b) No, weight them differently
c) Not sure – still thinking about it
To respond, go to www.scisummitpolling.cnf.io, select current session name and choose your response. Aggregated responses will be shared at the end!
Polling sponsored by
9/11/2014 September 2014, p.16Supply Chain Insights Global Summit #ImagineSC
What Is Resiliency?
Resiliency =Tightness of the pattern on the orbit chart for operating margin and inventory turns
9/11/2014 September 2014, p.17Supply Chain Insights Global Summit #ImagineSC
Resiliency 2000-2013
9/11/2014 September 2014, p.18Supply Chain Insights Global Summit #ImagineSC
Consumer Goods
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Chemical 2006-2013
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Chemical 2009-2013
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Summary
• Patterns are significantly different by industry.
• Many have exaggerated both supply chain performance and improvement.
• Work on the Supply Chain Index is challenging and evolving.
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