Planning benchmarking webinar

Supply Chain Planning Benchmarking

June 2014

Supply Chain Insights LLC Copyright © 2014, p. 2

An independent supply chain analyst and research company, focused on delivering actionable and objective advice for supply

chain leaders.

Our Mission


Supply Chain Insights

Our Methodology

What is Supply Chain Excellence?

Planning Benchmarking

Next Steps

Wrap-up


Our Research Difference

Our Research DifferenceCompany Audience Inputs Research Methodology Outputs Paid Services

Our Model

(Supply Chain Insights)

Supply chain leader

InquiryResearch

hypothesis

Combination of quantitative and qualitative research, coupled with

financial benchmarking to unearth new insights. Survey

respondents are always known and kept confidential.

Open research(available to all):

• Blog posts• Podcasts• Reports• Webinars

• Advisory• Speeches• Event• Training• Custom

research

Conventional Analyst Model

CIO audience Inquiry

When a question is asked multiple times, the analyst digs in to do some “research” to determine the answer.

Research is based on a series of phone calls for a qualitative research project. On occasion, a quantitative research

project is completed.

Paid research (access to the

research is only allowed based on

membership):• Alerts• Reports

• Networking & peer group membership with access to written research

• Advisory• Research

subscription services

• Speaking

Networking Model

A peer group of members

Direction of the peer advisory

board

Belief that there are known best practices to mine from the participants.

Paid research (access to the

research is based on membership)

• Alerts• Reports

• Networking & peer group membership with access to written research

• Advisory• Research

subscription services

• Speaking

Business Development

Model

Based on the paid research project by

a vendor

A research question by a vendor for a paid survey

Respondents are tied to business development efforts for a technology vendor. Lists are shared and used in business development campaigns.

Research written for the vendor

• Marketing development campaigns


What Does Research Mean to Us?

3 Core Research Types 5 Research Services & Products

1. Quantitative Surveys

2. Financial Analyses

3. Qualitative Interviews

1. Research Projects

2. Supply Chain Index

3. Financial Benchmarking

4. Supply Chain Planning Benchmarking

5. Technology Market Share Project

Results Shared Openly & Free of Charge

Reports Webinars Infographics Podcasts Blogs



Our Methodology



Next Steps

Wrap-up


A Supply Chain is a Complex System

with Complex Processes

with Increasing Complexity

Our Belief

#sciwebinar


Resilient and predictable

Balanced across the set of metrics to maximize value

Showing year-over-year strength against peer group

Desired Corporate Performance

#sciwebinar


The Supply Chain Effective Frontier:First Representation

#sciwebinar


While we like this framework, there is no good source of consistent and accurate data for:

– Forecast Accuracy– Case Fill Rate– Corporate Social Responsibility

Problem with this Framework

#sciwebinar


We believe that supply chain practices are “evolving practices” and that we do not know what are “best practices.”

Nine out of ten companies are stuck at the intersection of margin and cycles. We want to help companies tackle the

Effective Frontier with new ways of thinking.

Our Philosophy


Correlations to Market Capitalization

#sciwebinar


How to Read an Orbit Chart

#sciwebinar


Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)• Strength: Inventory Turns & Operating Margin Vector Trajectory (30%)• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)• Peer: Peer Rankings by Industry (10%)

The Supply Chain IndexA new way to measure relative supply chain performance by industry, based on 4 components: balance, strength, resiliency and peer rankings.

Supply Chain Index: A Measure of Supply Chain Improvement

#sciwebinar


The Index Framework

#sciwebinar


Supply Chain Index

30% 30% 30% 10%

#sciwebinar

What is the right weighting? What is the right time period?


An exclusive, invitation-only group of senior supply chain leaders (330 at present):• Two private networking events/year• One-on-one networking as needed• Invitations to rank companies for the

Supply Chain Index (one per company)• Monthly calls on specific topics

Shaman’s Circle

Food and Beverage


Supply Chain Index: Food and Beverage2006-2012

#sciwebinar


Campbell Soup and Hershey(2000-2013)


General Mills and Kellogg’s2000-2012


Supply Chain Index: Food and Beverage2009-2012

#sciwebinar

Chemical


Supply Chain Index: Chemical2006-2012

#sciwebinar


Inventory Turns vs. Operating Margin(2000-2012)

Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012

0.00 0.10 0.20 0.303

4

5

6

7

8

2000

2012

2000

2012

BASF SE E. I. du Pont de Nemours and Company

Operating Margin

Inv

en

tory

Tu

rns

Best Scenario

BAS0.10, 5.3

DD0.10, 4.0

Average (Operating Margin, Inventory Turns)


Supply Chain Index: Chemical2009-2012

#sciwebinar



Our Methodology



Next Steps

Wrap-up


• Objective: To conduct a comprehensive study of supply chain planning effectiveness.

• Methodology: We combine financial ratio data, quantitative survey data and qualitative research to provide unique insights to companies, with a focus on demand, supply, and S&OP.

• Timing: June - December 2014

• Why Participate: To better assess business performance from multiple angles.




Quantitative Surveys

Qualitative Interviews

Financial Analyses

Views of Planners: Analytics, Ease of Use,

Satisfaction with Reporting and Optimization, Use of Excel,

Agility and Alignment, What-if Analysis, Satisfaction by Region

Organizational Design: Organizational Charts,

Training Programs, Turnover, Open

Positions, Salaries, Tenure

Output: Report and NetworkingPlanner Productivity, Organizational Alignment and Balance, The Relationship of Planning, Gap between User and Leadership Perspectives, IT Effectiveness, Effectiveness and Financial Metrics, Planning Effectiveness in Demand and Supply

Views of Leaders: Accuracy of Plan, Organizational Fit,

Overall Satisfaction, Satisfaction with Vendor

Corporate Performance: DOI, MAPE, BIAS, Case Fill, RONA, ROIC, ROA, Growth for 2000-2013,

2006-2013, and 2009-2013

Technology: Version of APS,

Number of Instances, Frequency of Planning, Custom Optimization


The Life of a Survey

Design

Develop Field Analy

ze Share

• Objectives• Hypothesis• Respondent requirements

• Questionnaire development

• Online programming and testing

• Conducted online

• SCI database, social networks

• Partner outreach

• Independent of partners

• Reported in aggregate

• Reports, charts & infographics

• Open content research

3 months on average from start to finish


Divisional Analysis



Input Data

• Planning Process Evaluation• Review of three months of demand planning

output• Analysis of Sales and Operations Planning

documentation for three months

• Planning Process Review• Silent participant on S&OP review for one month• Review of Forecast Value Add data (if available)• Analysis of Tactical Supply Planning plans

• Quantitative Survey Input• Analysis of supply chain planner data

(satisfaction with technologies, use of technologies, and current state of processes). Collection of at least 30 respondents per company per node analyzed.

• Financial Data• When benchmarking divisional and regional

processes the need for DOI, RONA, Growth, Operating Margin, Cost of Goods Sold for the period of 2006-2013 (all data to be kept confidential)

• Case Fill data by quarter by division and region for 2006-2013

• Qualitative Analysis• Interviews of five supply chain leaders per

company. Goal is to understand the importance and performance of planning based on their views. Identify leadership belief statements.

• Organizational Details• Time for implementation• Number of planners per region per application• Turn-over of planners• Training program details• Organizational reporting

• Technology Implementation• Type of software and implementation details• Set-up: Number of instances and frequency• ERP Landscape• % of Business Planned

• Supply Chain Index Analysis• Progress on operating margin and inventory

turns• Resiliency• Progress on growth and ROIC• Customer service fulfillment



Output Data

• Gap Analysis. Contrast of leadership’s perspectives versus planners’ beliefs. • Effectiveness of Demand Planning. Analysis of forecast-ability and actual results for bias,

MPE, MAPE and the connection to the changes in business outcome of margin, inventory, customer service (case fill), growth, and ROIC/RONA. Time to plan.

• Effectiveness of Supply Planning. Balance between S&OP, slush and freeze periods and the number of changes in the freeze duration, use of constraints and what-if analysis, analysis of inventory (cycle, safety, seasonal, promotional, build and Slow and obsolete, and write-offs). Analysis of inventory turns, manufacturing changes, and planning cycle.

• Effectiveness of Supply Planning. The impact of supply planning processes on agility, resiliency, and balance. Analysis of the use of constraints, bottlenecks, what-if analysis, and optimization techniques as compared to peer group.

• Organizational Insights. Understanding of employee productivity, satisfaction, alignment, experience, and turnover as compared to peer group.

• Technology Satisfaction. Analysis of the technology footprint versus user satisfaction. Cost of implementation and ongoing budgets. IT support efforts. Use of planning tools.


• Manufacturers greater than $1B • Deployed APS for Demand and Supply• Planning Group for at Least Five Years• Support by the Executive Team

Who Can Participate?


Founding Members Participating Members

Input into the Study Design Participates in the Study

Ability to Get Custom Cuts of the Data for Regions and Divisions

No Custom Data Cuts

Custom Report Standard Report

Types of Participation



Our Methodology



Next Steps

Wrap-up


• June Kick-off Project: Define Scope and Assign Project Manager

• Late June Refine Questionnaire and Begin the Process of Sending the Survey to Participants

• July Conduct Leadership Interviews and Begin to Gather Technology Data

• Late July Schedule S&OP Silent Participant Sessions• August Gather Planning Output Data from Demand, Supply

and S&OP• September Begin Analysis• October Refine Analysis• December Final Report• January Networking Session with Participants

(Optional)

Timetable


1. Define scope. Set-up a one hour call to discuss objectives, concerns and scope.

2. Assign a Project Manager, and socialize within the organization.

3. Set up interviews for the qualitative interviews with executives, and arrange for the silent participation in S&OP

4. Gather planning documents (demand, inventory, and S&OP documents) for the period of May-August of 2014.

5. Share details on the technology implementation. Footprint, data model, Software release, planning cycle.

6. Gather documents on organizational design: number of planners, reporting structures, training programs

7. Share data on customer service by business based on scope (monthly data for the last three years)

Next Steps

Questions?


What’s Happening at Supply Chain Insights

www.supplychaininsights.com


About Lora Cecere

• Founder of Supply Chain Insights

• Invited to be a “LinkedIn Influencer”

• Invited to write a guest blog for Forbes

• Author of 2 books: Bricks Matter (2012) and Metrics That Matter (to publish Fall of 2014)

• Partner at Altimeter Group (leader in open research)

• 7 years of management experience leading analyst teams at Gartner and AMR Research

• 8 years experience in marketing and selling supply chain software at Descartes Systems Group and Manugistics (now JDA)

• 15 years leading teams in manufacturing and distribution operations for Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and Procter & Gamble.

Contact Information: • Email: [email protected]• Blog: www.supplychainshaman.com (6000 pageviews/month)• Forbes: http://www.forbes.com/search/?q=lora+cecere• Twitter: lcecere (4800 followers)• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (7000 in the network)

Planning benchmarking webinar

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