Supply Chains to Admire™

2015 A Study of Supply Chain Excellence: Performance and Improvement for the Period of 2006-2014

09/08/2015

Lora Cecere

Founder and CEO Supply Chain Insights LLC

Regina Denman

Client Services Director Supply Chain Insights LLC

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Contents

Research Overview

Disclosure

Research Methodology

Determination of the Metrics That Matter

Evaluating Supply Chain Performance

Driving Balance

Driving Profitability

Improving Cycles

Managing Complexity

Defining Improvement

Balance

Strength

Resiliency

Evaluating Supply Chain Excellence: Putting It All Together

Executive Summary

Why It Matters

Retail

Mass Merchants and General Merchandise

Grocery Retail

Apparel

Process Industries

Chemical

Consumer Packaged Goods

Beauty

Food Manufacturing

Beverage Production

Packaging

Over-the-Counter Drugs

Pharmaceutical

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Contents

Discrete Manufacturing

Aerospace and Defense

Automotive

Heavy Equipment

Tires

Automotive Suppliers

Consumer Electronics

B2B Electronics

Contract Manufacturing

Semiconductor Manufacturing

Medical Device

What Makes a Difference?

Conclusion

Appendix: Supply Chain Index Calculations

Balance

Strength

Resiliency

Alternative Measures Considered for Resiliency

Formula Calculations

Definitions

Supply Chain Metrics That Matter Reports

About Supply Chain Insights, LLC

About Lora Cecere

Endnotes

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Research Overview Supply chain excellence is easier to say than to measure. For a supply chain leader, having a clear

definition is the starting point to drive improvement. Without clarity it is very difficult to define an

effective operating strategy. To help supply chain leaders fill this gap, over the course of the past two

years we have studied industry progress on supply chain excellence by analyzing corporate balance

sheet and income statement information for the period of 2006-2014. In this work we have analyzed

patterns of performance and improvement for individual companies, for industries, and for value

networks.

The supply chain is a complex system. Performance is defined by nonlinear relationships between

metrics. When we plot the year-over-year progress of companies, as will be seen, very few

companies have made linear improvements. For most the journey is a gnarly and tangled pattern.

The rhythms and cycles of each industry define the possible band of performance in the critical

supply chain metrics of growth, operating margin, inventory turns, and Return on Invested Capital

(ROIC). A supply chain leader’s goal is to improve the potential of the supply chain within the possible

range for a specific industry.

To determine what is possible, over the course of the past two years we completed deep studies and

published 21 reports to analyze the progress of companies within industry peer groups over time.

These reports, by Supply Chain Insights LLC, were published in a series called Supply Chain Metrics

That Matter™ during the period of August 2012 through August 2015. The observations from these

deep industry-specific studies of supply chain performance helped us to build a methodology to judge

supply chain performance and define supply chain improvement.

While it is easy to measure performance, gauging improvement is more difficult. To accomplish this

goal we needed to define a new methodology. The objective was to develop a methodology that

could be used by all companies, large and small, within an industry peer group for a given time frame.

This led to the building of the Supply Chain Index in 2013. To define the method, we worked with the

team at the Arizona State University School of Computing, Informatics and Decision Systems

Engineering to determine patterns in orbit charts. The Supply Chain Index is a composite metric,

measuring a company’s improvement on balance, strength and resiliency factors within a peer group

for a given time period across a portfolio of metrics.

In this report we analyze the progress of 22 industries. To guide the reader, we group these industries

into three categories: retail, process manufacturing and discrete assembly. The goal of this report is

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to identify and celebrate the success of the companies that have excelled in driving both performance

and improvement for the period of 2006-2014.

Disclosure Your trust is important to us. As such, we are open and transparent about our financial relationships

and our research processes. This independent research is 100% funded by Supply Chain Insights.

These reports are intended for you to read, share, and use to improve your supply chain decisions.

Please share this data freely within your company and across your industry. All we ask for in return is

attribution when you use the materials in this report. We publish under the Creative Commons

License Attribution-Noncommercial-Share Alike 3.0 United States and you will find our citation policy

here.

Research Methodology This report is based on data collected from financial balance sheets and income statements over the

period of 2006-2014. Our source of data is YCharts and corporate reporting.

Within the world of Supply Chain Management (SCM), each industry is unique. As a result, it is

dangerous to list all industries in a spreadsheet and declare a supply chain leader. We believe a

better methodology is to evaluate change over time with a focus on overall performance and

improvement within an industry peer group. This is the goal of this report.

Our first step in the process was to develop industry groupings, or peer groups, for analysis. To

accomplish this goal we used NAICS codes. Companies with extreme redefinition, i.e.

merger/acquisition/split, were eliminated. In addition, conglomerates were not evaluated. By definition

the analysis does not contain information on private companies.

Determination of the Metrics That Matter The second goal in the development of the research methodology was to determine which metrics

should be tracked in the portfolio analysis. Within a supply chain there are many metrics. It is our

experience that most companies measure too many metrics. The second step in the analysis was to

determine which financial ratios to use for the research. In the measurement of supply chain

excellence, no two companies measured the same metrics portfolio. So, the determination of which

metrics to measure required a year of research.

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In the development of the methodology, financial ratios (as opposed to absolute values) were used.

Why? This enables cross-currency analysis and comparisons across companies of different sizes.

Our goal was to build a universal methodology which could be used across the supply chain

independent of company size.

In Table 1, we share the supply chain ratios we analyzed to understand the trends in the Supply

Chain Metrics That Matter™ report series. Through the analysis of the industries in these reports, and

interviews with supply chain leaders on the results, we refined the methodology.

Table 1. Financial Ratios Considered in the Development of the Supply Chain Index

While there are other metrics which we believe are important in the determination of supply chain

excellence—forecast accuracy, case fill rate, on-time delivery, carbon footprint, and inventory write-

offs—we could not use these as inputs into the analysis due to the lack of a reliable and consistent

source of data for these metrics covering the industries and years studied. While we believe these

metrics should be used within the corporation in the building of strategy, we had to accept the

limitations. There is no reliable data source to enable these metrics to be used in this type of cross-

industry analysis.

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To understand the relationship between supply chain performance and market capitalization, we

calculated the correlation of seven years of financial ratios (based on quarterly reporting) to market

capitalization (the number of outstanding shares multiplied by the share price on a quarterly basis).

The results of this study are presented in Table 2. Our goal was to select a portfolio of metrics that

would be meaningful to all industries.

Table 2. Correlation of Supply Chain Financial Ratios to Market Capitalization

We believe it is the supply chain leader’s role to build and manage supply chain performance to drive

year-over-year improvements which are balanced, strong, and resilient. In our research we find that

most companies focus on singular metrics throwing the supply chain system out of balance. In this

report, 26 of the companies in the study group performed better than their peer group, while driving

improvement on the portfolio of metrics of operating margin, inventory turns and Return on Invested

Capital. We list these companies as the Supply Chains to Admire. This is our second year of analysis.

Evaluating Supply Chain Performance For leaders, we find that progress is slow and deliberate. In our research we find it takes at least

three years to drive significant supply chain progress, and the best supply chain transformation

projects take at least five to six years.

We also find it is difficult for supply chain leaders to sustain progress. A bad project, a quality issue,

or a merger can result in deep balance sheet gyrations. For example, Campbell’s Soup was a leader

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in Food and Beverage until 2013, but faltered and has not gained ground from a failed technology

implementation. Many companies go through these ups and downs with distinct patterns.

The basis of this work is a study of metric performance patterns in orbit charts. We believe the

patterns matter. The goal is to drive consistency across economic cycles. It is for this reason that in

this report we analyze companies’ progress in three time periods—pre-recession, during the

recession, and post-recession—to analyze year-over-year trends. In our research, supply chain

excellence is defined as ‘performance better than a competitor on a portfolio of metrics’, and

‘improvement better than the peer group average’. While this sounds easy, what will be seen by the

reader of this report is that this is a tough standard which only 10% of companies can meet.

Driving Balance The management of the supply chain is a constant juggling act. The basis of the analysis is the

Effective Frontier model. As shown in Figure 1, the Effective Frontier is designed to illustrate the

principle that a supply chain is a complex system, with increasing complexity, which needs to be

managed using a balanced metrics portfolio.

Figure 1. The Effective Frontier

In our writing, this model is deliberately not named the ‘Efficient Frontier’—a term used in economic

theory. Why? Quite simply it is because the term ‘efficiency’ in supply chain processes is usually

linked to the lowest cost or the best revenue per employee. The concepts of the Effective Frontier are

based on the balance of growth agendas with cost, cycle metrics (a focus on inventory), and

complexity. We use Return on Invested Capital as a proxy for complexity.

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Driving Profitability There is often an inverse relationship between margin and supply chain excellence. Industries with

the thinnest margins are more serious about delivering on the promise of supply chain leadership.

Progress was faster in the last decade than in the last five years. In this study, 60% of the industries

made progress on improving operating margin during 2011-2014. For many companies, as costs rose

and volatility increased, maintaining operating margin was a major feat.

In our analysis for this report, we use operating margin as the measure of profitability. The

methodology is equally applicable to EBITDA. While we also tried to use gross margin and cost per

unit, we found more gyration in the patterns using these two metrics.

Improving Cycles When it comes to managing cash-to-cash cycles, a small number is better. Cash-to-cash is a

composite metric of receivables, inventory, and payables. As can be seen through the charts, the

greatest improvement in supply chains in the last decade has been made in payables—lengthening

payment terms to suppliers. Inventory levels and receivables have been more constant. The question

in the boardroom is “How small can supply chain working capital cycles be managed to pump cash

into the organization?” There is seldom the question of “How low can we go in working capital cycles

before we put the supply chain at risk?”

In our analysis we use inventory turns as our measure of supply chain cycles. The higher the

inventory turn value, the stronger the results. In this report, 50% of industries made progress on

improving inventory turns during the period of 2011-2014.

Managing Complexity Within supply chain there are many forms of complexity: increase in items, formulas, customer

policies, geographic reach, and markets. Over the last decade complexity increased. A focus on cost-

to-serve, supply chain segmentation, and cross-functional supply chain planning improves the

potential of the supply chain to balance complexity while managing asset utilization. Very few

companies are good at translating volume planning into value-based policy decisions. L’Oréal is an

example of a company doing this well 0F

i. L’Oréal also makes the list of the Supply Chains to Admire.

Return on Invested Capital is a less well-known metric compared to Return on Assets (ROA). The

organization that has a focus on Return on Assets will typically have higher inventory levels. Our

research for this report indicates that ROIC has a better correlation with stock market capitalization,

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and provides a broad perspective on cash flow generation and profitability based on shareholder

equity. The formula used for ROIC is:

ROIC is a measurement of the company’s use of capital. The goal is to drive higher returns than the

market rate of the cost of capital. As will be seen in this report, for many companies this is a struggle.

In the period of 2011-2014, 45% of industries made improvement on ROIC.

Defining Improvement In judging improvement, the patterns matter. We built the Supply Chain Index to gauge the progress

of supply chain leaders. The methodology starts with understanding the resulting pattern when two

supply chain metrics (generally financial ratios) are plotted over time on an orbit chart. As shown in

Figure 2, an orbit chart enables the visualization of performance patterns. In this case, it is the story

of Colgate balancing inventory turns and operating margin. Colgate, a top performer in cost and asset

utilization, has struggled with the balance of operating margin and inventory turns over the course of

the past three years.

Figure 2. Example Orbit Chart of Colgate-Palmolive’s Operating Margin vs. Inventory Turns During 2000-2014

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While Colgate outperforms the industry on the management of cost and delivering ROIC, the

progress at the intersection of operating margin and inventory turns improved dramatically in the

period of 2006-2009, but corporate performance on these two metrics is going backwards during

2011-2014. This is the case with most companies. The patterns of orbit charts tell stories. Frequently,

as seen Figure 2, they are tumultuous and turbulent. As a result, our first challenge in the creation of

a methodology was to define ‘Supply Chain Improvement’. This was our goal in building the Supply

Chain Index methodology. We wanted to develop a means to analyze improvement across a variety

of industries with applicability to companies with different levels of revenue and at different levels of

supply chain maturity.

As we shared our findings, and educated supply chain leaders about financial ratios, the interviews

with companies on their orbit charts helped us to better understand the data. “What caused this

downswing in inventory in 2007?” we would ask. The company would then share that it was a six-

month laser-focus brought on by a new manager. When we asked, “What caused these cash-to-cash

cycle gyrations in the period of 2002-2004?” they told us the story of a difficult merger. We found for

supply chain leaders that this was a new way of looking at data; and while it took adjustment and

training, it provided a new and fresh perspective at most organizations.

Our insight? Supply chain progress happens over time; not in months or quarters. Instead,

improvement occurs over the course of many years. How long? It usually takes at least three years to

see impactful change. The interrelationships between the metrics are real. The supply chain is a

complex system with nonlinear relationships between the metrics of growth, cost, inventory turns, and

ROIC. The effective management of the supply chain requires embracing and managing it as a total

system. As a result, the data cannot properly be assessed in a spreadsheet. Our approach was to

plot the shifts in patterns over time using orbit charts. In this report, we share the orbit charts of

consumer products manufacturing leaders.

The Supply Chain Index™ has three elements: balance, strength, and resiliency. The Supply Chain

Index is a measurement of supply chain improvement. Each of the factors—balance, strength and

resiliency—as defined below, comprises 1/3 of the total score.

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Balance Balance in the supply chain is a constant struggle. Growth requires an increase

in inventory. Forecasting and managing a new product launch is difficult.

Excessively long Days of Payables leads to weakened supplier health. The

examples are endless. The two metrics which comprise our balance measure

are Revenue Growth and Return on Invested Capital.

The balance measure in the Supply Chain Index is a mathematical calculation

of the vector trajectory of the pattern between growth and ROIC for the periods of 2006-2014 and

2009-2014.To understand this measurement, imagine a four quadrant grid with growth and ROIC on

the two axes. In our calculation, the overall trajectory of this vector from Year 0 (2006) to Year 8

(2014) is simplified into a single value which represents the company’s ability to balance growth while

improving ROIC.

Figure 3. P&G’s Growth vs. Return on Invested Capital (ROIC) for 2000-2014

Companies that were able to drive improvement in both metrics scored the best, while companies

that deteriorated in both metrics scored the worst. The companies are then stack ranked based on

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factor ratings. Often the addition of items or customized customer programs throws the supply chain

out of balance. This is best seen on the orbit chart of ROIC and growth.

With a 6% average growth rate, and a 14% average ROIC performance for the period of 2000-2014,

the marketing engine of P&G built more billion-dollar brands than any other consumer products

company. The company struggled with item proliferation. The company also acquired and divested

many companies within this period, the most notable being the acquisition of Gillette in 2005 for $57

billion (in stock).

Note the shift and loss of balance in these two metrics, shown in Figure 3, through these acquisitions.

Currently, this is recognized, and as a result P&G is streamlining the company to reduce complexity.

(On August 1, 2014, the company announced it was dropping around 100 brands to concentrate on

80 remaining brands which produce 95% of the company's profits. A.G. Alley, the company's

Chairman, President and CEO, said the future P&G would be "a much simpler, much less complex

company of leading brands that's easier to manage and operate.1F

ii")

The balance factor comprises 1/3 of the total Supply Chain Index calculation. Sustained improvement

on both year-over-year growth and ROIC indicates a balanced supply chain and is reflected in a high

balance score.

Strength A successful supply chain is strong and reliable. Supply chain leaders strive to

deliver year-over-year improvements in both cost and inventory management.

Our research on pattern recognition has uncovered a rich relationship between

operating margin and inventory turns. For most supply chain leaders these are

some of the most important measures of their performance. Not only are they

important, they are more directly influenced by day-to-day supply chain

decisions than other, and more broadly used, corporate metrics. It is for this reason they are the two

components of our strength factor in the Supply Chain Index.

The strength measure in the Supply Chain Index is a mathematical calculation of the vector trajectory

of the pattern between inventory turns and operating margin for the periods of 2006-2014 and 2009-

2014. Like the balance factor calculation, the work starts with understanding the orbit chart pattern.

To understand the calculation, imagine a plot—an orbit chart—of inventory turns and operating

margin. In this report, performance is graphed on an annual basis from an origination point

representing performance on the two metrics at Year 0 (2006). The overall trajectory of this vector

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from Year 0 (2006) to Year 8 (2014) is simplified into a single value which represents strength.

Improvement on both metrics simultaneously is graphically shown as movement to the upper-right

quadrant with increasing values for both inventory turns and operating margin over the period.

The companies are then stacked-ranked based on performance and assigned a strength factor. The

strength factor comprises 1/3 of the total Supply Chain Index calculation. Sustained improvement on

both inventory turns and operating margin indicates a strong supply chain and is reflected in a high

strength score.

In Figure 4, using an orbit chart, we show the pattern of Procter & Gamble versus Colgate. Note that

while Colgate is performing, over the period, at a higher level than P&G in both operating margin and

inventory turns, the patterns are very different. In the period of 2010-2014 Colgate is losing ground

and P&G is making progress. The comparative orbit chart contrasting two companies helps to tell the

story. These trends cannot be easily detected in a spreadsheet.

Figure 4. Orbit Chart: Operating Margin vs. Inventory Turn Comparison of Colgate and P&G for the Period of

2006-2010

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Resiliency Resiliency is an adjective easily tossed around as one of the important qualities

of a successful supply chain in today’s volatile world. However, the concept of

resiliency is difficult to define, and there is rarely clarity among stakeholders as

to what resiliency is or should be.

As we plotted orbit chart after orbit chart, we could see that some supply chains

had very tight patterns at the intersection of operating margin and inventory

turns, and that other companies had wild swings. We wanted to find a way to measure the variation.

So, we turned to the experts at ASU. After evaluating several methods to determine the pattern in the

orbit chart, we settled upon the Euclidean Mean Distance between the points.

These results were published in our March 2014 report, Supply Chain Metrics That Matter: Improving

Supply Chain Resiliency, where we define resiliency as the tightness of the pattern at the intersection

of inventory turns and operating margin. These metrics, both critical for any supply chain, are

components of both the strength and resiliency metrics in our Supply Chain Index model.

Table 3. Supply Chain Resiliency by Industry

The orbit chart plot (mathematically speaking, the Euclidean Mean Distance) indicates the ability of a

supply chain to maintain a tight, consistent pattern across these two metrics as the business

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environment shifts and changes over a nine year period (2006-2014). As shown in Table 3, supply

chain resiliency varies considerably by industry. In general, the discrete industries are less resilient;

but have equaled the challenge with stronger practices in supply chain planning and the building of

value networks. As a result, the discrete industries do better on the Supply Chains to Admire

rankings.

The resiliency metric is similar to the cash-to-cash cycle in that a smaller number is better. A lower

number for resiliency is an indicator of a tighter pattern and greater reliability in results over the time

period.

Evaluating Supply Chain Excellence: Putting It All Together In this annual study each company is judged by their own potential to make progress. In this analysis

we determined the relative performance and improvement

of 320 companies in 22 industries and declared 26

winners. As you look at the analysis, remember that while

the average values of a company’s performance may be

higher than the peer group, in the Supply Chains to Admire

analysis we judge companies on both performance and improvement on a portfolio of metrics.

Use caution in looking at the tables. The best performing supply chains will often have a Supply

Chain Index value in the middle of the peer group. Why? Companies that are underperforming their

peer group can drive supply chain improvement faster than higher-performing companies. As a result,

their scores on the Supply Chain Index can be higher than a company with better results.

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Executive Summary Supply chain excellence makes a difference to corporate value. Resilient, predictable, and forward-

looking supply chain processes drive sustained balance sheet improvement. This is especially true in

times of declining growth. (In this research, only four industries—aerospace & defense, apparel,

automotive, and packaging suppliers—experienced growth for 2009-2014.)

Leaders want to drive excellence. By their nature these leaders are competitive. They want to power

performance improvements, increase corporate value, and outpace competitors. It is not easy. The

rate of business change is intense and the personal stakes are high. Day after day, supply chain

leaders must answer questions like, “Which path should I to take? What are the best technologies to

use? What is an acceptable rate of performance? How am I doing against my peer group? And, what

can I learn from others that I can use to improve the performance of my own operation?” Until the

development of the Supply Chain Index there was no independent and objective data-driven

methodology that could answer these questions. With the development of this methodology there is

now a way to gauge improvement.

When we started this work we were fearful that the methodology would not be selective enough to

reward leaders. Our fear was that the list would be too large. However, we should not have worried.

For two consecutive years only 10% of the companies studied are performing above the average of

their peer group on the Supply Chain Metrics That Matter—operating margin, inventory turns and

Return on Invested Capital—while driving improvement to a greater degree than their peer group. It is

a select group. Figure 5 shows the 26 winners of the 2015 Supply Chains to Admire analysis.

The 26 companies are: Anheuser-Busch InBev; Audi AG; Biogen Inc; CCL Industries Inc.; Cisco

Systems, Inc.; The Clorox Company; Coloplast Corp.; CVS Pharmacy; Dollar General Corporation;

Dollar Tree, Inc.; Eastman Chemical Company; EMC Corporation; The Estée Lauder Companies Inc.;

General Mills, Inc.; Intel Corporation; Deere & Company; Lexmark International Inc.; L'Oréal Group;

Nike, Inc.; PPG Industries; Qualcomm Inc.; Samsung Electronics Co. Ltd.; United Tractors; Wal-Mart

Stores, Inc.; Western Digital Corporation; and Whole Foods Market Inc. (Note: Shorter corporate or

trade names are used in the tables within this report.)

Eight companies have made the list for two consecutive years: Anheuser-Busch InBev; Audi, Cisco

Systems, Inc.; Eastman Chemical Company; EMC Corporation; General Mills, Inc.; Intel Corporation;

and Nike, Inc.

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Figure 5. Winners of the 2015 Supply Chains to Admire Analysis

Why It Matters Today, nine out of ten supply chains are stuck. They may be able to progress in one of the metrics,

but not the entire portfolio. Or they are at a higher level, but cannot drive improvement. In our analysis

no companies make the list from the aerospace and defense, automotive supply, contract

manufacturing, over-the-counter drug, or tire manufacturing industries.

The Supply Chains to Admire analysis highlights both performance and improvements. Companies

like Apple, AstraZeneca, Altera, BASF, Carter’s, Colgate, Monster Beverages, Packaging Corporation

of America, Ralph Lauren, Reckitt Benckiser, Revlon, Seagate, TSMC, Under Armour, VF

Corporation and Xilinx drove higher levels of performance, but were unable to power improvement. In

contrast, companies like Bridgestone, Campbell’s, Church & Dwight, Coca-Cola, Cooper Tire,

Hershey, Medtronic, Novo Nordisk, Tupperware, and Unilever meet the improvement criteria, but they

are not performing at or above average on the Supply Chain Metrics That Matter for their peer group.

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In the development of supply chain strategy, defining excellence and managing a balanced portfolio is

job one. This report is designed to help. Listed below are summary tables of each industry with a

short analysis of industry trends. (For a more detailed discussion of each industry, with orbit charts,

reference the Supply Chain Metrics That Matter reports listed in the Appendix.) Use the methodology

to answer critical questions like:

Is your company making improvement? The Supply Chain Index is a measuring stick for gauging

improvement. Using the methodology calculations outlined in the Appendix, define the appropriate peer

group and time frame for comparison and see if your supply chain is keeping pace with your peer

group.

What is the potential of the supply chain? Many times, companies are unclear on the right goals.

They do not know how to understand what is possible, or what is an appropriate target. Using the range

and averages of this report by peer group and time horizon set reasonable goals to drive improvement.

How fast can change happen? What are reasonable goals? The best results happen when there is

small, incremental progress. Big bang projects can throw the supply chain out of balance. The orbit

charts are a guide to help supply chain leaders know how fast a supply chain can make a

transformation.

Supply chains have never been tougher to manage. It matters more now than ever. This report is a

story of when the going gets tough the tough get going. Many of the companies that have

outperformed in their industries overcame major obstacles. They faced the toughest challenges and

drove performance while companies with high margins and less pressing issues made less progress.

It is our hope that this report can help companies in all industries drive higher levels of performance.

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Retail Retail is not retail. In this report, to determine the winner, we studied three retail sectors: Mass

Merchants and General Merchandise, Grocery Retail, and Apparel Retail. In the analysis, retailers

with new business models fared better than their industry peers. Good examples are Dollar General,

Dollar Tree and Whole Foods Market. Each defined a new category of retailing.

For the retailer, inventory strategies are closely tied to merchandising and allocation decisions. It has

a short life and not selling it within the season results in write-offs, markdowns and lost sales. As a

result, the industry made more progress on inventory management than the other metrics within the

Supply Chain Metrics That Matter portfolio.

Traditionally, retailers were supply chain laggards, slow to adopt technology and embrace new

technologies. The evolution of e-commerce strategies and the race for omnichannel retailing has

accelerated retail progress.

While no retailer made the list last year, the 2015 list includes Dollar General, Dollar Tree, Walmart

and Whole Foods Market.

Mass Merchants and General Merchandise In the retail sector of mass merchants and general merchandise we studied 18 companies. The worst

performance was by Sears Holdings. The best performers were CVS, Dollar Tree, and Dollar

General. The traditional retail model of JC Penney, Bon-Ton, and Dillard’s underperformed. Target

met the performance target, but failed to meet the improvement threshold. Walmart, on the borderline

for supply chain improvement, barely makes the list. For Target’s executives keeping shelves full is a

growing challenge2F

iii.

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Table 4. Analysis of Performance and Improvement for Mass Merchants and General Merchandise Retailers

Grocery Retail Eating habits and shifts in demographics reshaped grocery retail over the last decade. Health and

wellness catapulted Whole Foods into a winning position to drive growth, but the Whole Foods supply

chain team drove the performance in operating margin, inventory turns and revenue per employee.

Tesco and Metro AG overachieve in operating margin and inventory turns, but lose ground to

competitors in driving improvement. SUPERVALU is the poorest overall performer.

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Table 5. Analysis of Performance and Improvement for Grocery Retailers

Apparel Is apparel a manufacturer or a retailer? The difference is a thin line. In the last decade apparel

companies aggressively tackled the omnichannel opportunity and opportunistically opened retail

outlets. This spurred growth. Nike outperforms while Carter’s, Ralph Lauren, and VF perform better

than their peer group, but they are not driving the required levels of improvement. Conversely, Under

Armour is driving improvement, but is not performing at the peer group average for the Supply Chain

Metrics That Matter.

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Table 6. Analysis of Performance and Improvement for Apparel Manufacturers and Apparel Retail

Process Industries Process industries by definition are asset intensive. These industries have less outsourcing than

discrete industries, and they tend to be more global. Over the last decade the building of global

supply chain capabilities was a major thrust for the process industry.

Chemical Sitting four to five levels back in the value network, the chemical industry struggles to drive

performance at the intersection of operating margin and inventory turns. With tight margins and high

demand volatility, the challenges are greater than in other industries. While the historical focus has

been on functional excellence, this does not deliver the level of performance needed to meet the test

to make the list for the Supply Chains to Admire. Instead, there is a need for strong horizontal

processes—revenue management, sales and operations planning, new product launch, supplier

development—and horizontal cross-functional alignment.

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For 2015, Eastman Chemical and PPG make the list. BASF made the list for 2014, but not for 2015.

The reason? The BASF supply chain has slowed in delivering improvement when compared to their

peer group. As you glance through the results, note that the chemical industry is a clear case of

making improvement in a singular metric, not the balanced portfolio. Dow Chemical is an example.

With extreme results on improving revenue per employee, the Dow organization fails to deliver on the

operating margin results of others in the peer group.

Table 7. Analysis of Performance and Improvement for Chemical Manufacturers

Consumer Packaged Goods Some of the best known supply chain case studies are in the Consumer Packaged Goods (CPG)

industry. With strong brand presence, and global supply chains, the last decade was focused on

powering global growth. The CPG manufacturers, in a very competitive industry, pioneered many of

the supply chain practices used today in the 1990-2000 period. In the last decade industry

performance stalled as most companies lost ground with the increase in complexity.

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In our study of orbit charts, companies in this industry sector struggled over the last decade to make

improvement while driving global growth. For most, performance is at a plateau. With acquisitions and

a larger scale of operations, companies grappled with technology scalability, the lack of talent in

emerging economies, increasing complexity, and a lack of clarity in global governance (how to make

decisions to maximize value).

How to get past the plateau? While point-of-sale data and VMI processes are now over 40-years old,

few companies on the list are innovating in the design and implementation of outside-in processes.

The sad reality is that retail and customer data comes into the organization, but rarely moves past the

sales or marketing organization into supply chain processes. In the face of growing complexity the

organization is stuck with a traditional definition of forecasting, rules-based demand consumption and

MRP/DRP logic. Using channel data, and adapting to the customer response, requires the redesign

of technologies and processes and the rethinking of IT standardization.

Growth has slowed, and supply chain excellence matters more than ever. In the journey,

organizational alignment is an ongoing issue. Large gaps exist between sales and operations; and as

a result, the journey to build the demand-driven value network is stalled. To get off the plateau, the

CPG leader needs to become market-driven, systemically listen and respond to consumer

preferences (the use of sentiment analysis) and build outside-in processes. It is clear that the

traditional marketing-driven approach of adding product complexity, and accelerating trade programs

without the redesign of processes, does not work in this digital world.

While most supply chain leaders will list P&G as a top performing supply chain, the company does

not meet the performance standard for this analysis for the period of 2006-2014. However, the

company would have made the list for the period of 1990-2000. The P&G journey of acquisitions and

divestiture, without the redesign of processes to be more outside-in, threw the supply chain out of

balance. In contrast, in the same time period Unilever drove improvement, but still does not meet the

industry performance standard.

In the last five years, Clorox, based on a focused journey of supply chain transformation over the past

decade, passes the Supply Chains to Admire test. This is based on a decade of redefining their end-

to-end supply chain processes. Colgate, the 2014 winner, falls off the list in 2015 due to failure to

meet the supply chain improvement test. As can be seen in Table 8, the strongest performers in the

peer group, Colgate and Reckitt Benckiser, are stalled in driving improvement. In parallel, P&G made

improvement in the last five years, but failed to meet the ROIC test of the Supply Chains to Admire

standard.

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Table 8. Analysis of Performance and Improvement for Consumer Packaged Goods

Beauty The beauty industry learned the lessons of supply chain excellence from the CPG industry and

applied them to drive improvement in the last five years. While the CPG industry is stalled, the beauty

industry is driving the results today that CPG experienced a decade ago. Growth is flat, but inventory

levels are slowly improving. The potential of the industry is very different than CPG with lower

operating margins and inventory turns, and an ROIC 1/3 the level of CPG.

The beauty industry is maturing in the face of global complexity. While no company from the beauty

industry made the list in 2015, two companies, Estée Lauder ad L’Oréal, make the list this year. In

Table 9, L’Oréal is higher performing, but both the L’Oréal and Estée Lauder case studies are great

examples of supply chain leadership with strong transformational leaders. In contrast, with the lack of

a strong supply chain leader and a more IT-focused program, Avon is the poorest performer.

The companies have stronger cross-functional alignment than CPG; and due to higher value products

with shorter-life cycle products, they have been more successful in the implementation of cost-to-

serve and complexity rationalization programs. While still not performing at the level of CPG, the

industry is playing catch-up while pioneering some success in complexity rationalization.

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Table 9. Analysis of Performance and Improvement for Beauty Product Manufacturers

Food Manufacturing A common mistake is to group Food and Beverage and CPG industries together. While they may

serve the same customer, the rhythms and cycles of the industries are very different. The food

industry has larger margins and ROIC than CPG. In the face of volatility in commodities, the growth of

short life cycle products, and special handling conditions in response to consumer demand for health

and wellness products, the food company’s supply chain is growing in importance. Companies like

General Mills and Nestlé are pioneering the use of channel data in supply chain processes

With a decline in volume growth due to changing customer preferences, the food manufacturing

supply chain needed to adapt quickly. This has resulted in a wave of mergers, acquisitions, and

divestures. The industry is in turmoil.

The CPG companies are more global while the food manufacturers tend to be more regional to match

processes with local taste preferences. In our analysis, General Mills makes the Supply Chains to

Admire list with improving performance in the period of 2006-2014 even though performance declined

in 2009-2014. Nestle is a top performer, but fails to drive improvement in either period of 2006-2014

or 2009-2014. Hershey and Smucker’s are driving improvement. Kellogg’s outperforms in inventory

turns, but underperforms on the total portfolio. Campbell’s Soup, a strong performer in 2013, has

declined in performance due to struggles with network design and IT implementation in a declining

market.

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Table 10. Analysis of Performance and Improvement for Food Manufacturers

Beverage Production Like the food industry, volumes in the beverage industry are also in decline. With higher margins than

CPG, beauty, or food, the beverage manufacturers are trying to redefine their supply chains quickly to

adapt to changing preferences to preserve margins. It is a struggle. A more regional supply chain with

short cycles, the industry operates with quicker cycles than CPG or food. The increase in item

complexity has eroded ROIC over the period of 2006-2014.

AB InBev makes the cut to be included in the Supply Chains to Admire for two consecutive years.

Coca-Cola comes close to making the list with a near miss in operating margin. As can be seen in

Table 11, the rest of the companies struggle to drive results in the balanced portfolio. The worst

performance is posted by Diageo and Monster Beverages.

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Table 11. Analysis of Performance and Improvement for Beverage Manufacturers

Packaging While their primary customers in consumer value chains are experiencing declining growth, the

overall industry for packaging and pulp manufacturing is growing. The secret is a diversified product

and customer list.

Like the chemical industry, the packaging industry sits four to five levels back in the value network

and struggles to manage margin in the face of volatile demand. The margins are 40-50% lower than

their major customers; and inventory turns are 25-30% lower. With the increase in artwork in

packaging and the need for late-stage postponement and digital redesign, there is an opportunity to

redefine the consumer value chain and build value networks to streamline the consumer response

while improving the margins for all parties.

While there were no packaging winners of the Supply Chains to Admire analysis for 2014, CCP

Industries makes the 2015 list. As you glance through the list you will see that like other industries,

companies in this industry often make the goal in one or two metrics but struggle to make the list on

the portfolio of metrics that define the Supply Chain Metrics That Matter.

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Table 12. Analysis of Performance and Improvement for Packaging Manufacturers

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Over-the-Counter Drugs Over-the-counter (OTC) drug companies have legacy process definitions from CPG and

pharmaceutical companies. They have a little bit of both in the history of their process evolution. With

lower volumes and longer data latency for demand, the potential industry performance is lower than

CPG or food. No company in the OTC drug industry makes the list. The industry is evolving.

Table 13. Analysis of Performance and Improvement for Over-The-Counter Drug Manufacturers

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Pharmaceutical Despite the growth in healthcare, pharmaceutical companies are also experiencing declining

volumes. The industry is also in the process of evolving from major redefinition from multiple mergers

and acquisitions (Bristol-Myers Squibb, Pfizer, and Merck). Facing a patent cliff, with slowing

introduction of blockbuster drugs, the industry is struggling to preserve high margins and improve

drug discovery.

The pharmaceutical industry is traditional and functional. With historically high margins, the industry

has not been aggressive in the redefinition of supply chain processes. The secret to improving

performance lies in a three-prong approach of improving cross-functional alignment, strengthening

horizontal processes, and improving manufacturing reliability.

In this industry, Biogen makes the list of the Supply Chains to Admire. AstraZeneca has the highest

level of performance, but does not make the list due to the lack of improvement. In contrast, Novo

Nordisk and Novartis show improvement but do not meet the performance standard.

Table 14. Analysis of Performance and Improvement for Pharmaceutical Manufacturers

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Discrete Manufacturing While process company supply chain processes evolved from manufacturing, discrete companies’

supply chain processes have their roots in procurement. Material sourcing and the management of

the bill of materials are essential to the discrete industries and managing costs. In general, with the

exception of automotive, the labor input for the discrete industries is lower than their process

counterparts.

With more manufacturing and transportation outsourcing, and a dependency on procurement,

discrete manufacturers are more mature in the building of supply networks and the management of

supplier relationships. The leaders understand the need for supplier development and supplier

sensing, and the reduction of latency in supplier integration.

The industries have different dependencies. While the process and retail industries are more

dependent on road and ocean transportation, the discrete industries focus more on regional assembly

and hubbed material deployment strategies with air transport.

The best supply chain planning is in the consumer electronics industry. The processes in the discrete

industries are maturing faster than those of their process counterparts. However, as these companies

prepare to make the digital pivot, they are working to embrace the disruptive technologies of robotics,

drones and digital printing. They are facing even more potential disruption than other industries.

In general, the companies in discrete industries are smaller, and more focused with greater

integration of supply chain processes into new product launch. With the shortening of product life

cycles, and the evolution of software in product design, the cycles of the supply chain are shorter and

the decisions more critical. As can be seen in this analysis, the discrete industries are making faster

progress in the evolution of supply chain processes.

Companies making the list in the discrete industry are Audi, Coloplast, EMC, Intel, Lexmark,

Qualcomm, Samsung, United Tractor, and Western Digital. Three companies—Audi, EMC, and

Intel— make the list for two years in a row.

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Aerospace and Defense The aerospace and defense industry is subject to economic cycles. With a strong dependency on

military spending there are strong boom and bust cycles with strong ups and downs. The supply

chain is dependent on program management of new models and is carefully controlled through

supplier networks. Innovation in the industry through Performance Based Logistics has changed the

focus from building new models to uptime and reliability. This is a major change.

Additionally, in A&D there is a strong focus on service and warranty. Part performance and the

recycling or repair of major components is a strong design element in the supply chain.

The industry is a concentrated industry with few players. They are currently experiencing strong

growth. Operating margins are up and inventory turns are down. No company makes the list for the

Supply Chains to Admire. All companies are struggling with balance. This is the opportunity.

Table 15. Analysis of Performance and Improvement for Aerospace and Defense Manufacturers

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Automotive The automotive industry is also subject to the ups and downs of economic cycles. The industry is

currently in an upturn in a growth market, but the balance is better in the automotive industry than that

of A&D. In the Supply Chains to Admire analysis, Audi makes the list. While many supply chain

leaders think of Toyota, with the introduction of Lean processes, as the supply chain leader in this

industry, they do not meet the standard for operating margin or ROIC of the Supply Chains to Admire.

Toyota also ranks the lowest on supply chain improvement. The issue is that Lean processes have

been implemented too narrowly in manufacturing processes, and the automotive industry is a long

way from building outside-in to better understand what the shopper wants and building the right cars

to meet consumer demand.

Table 16. Analysis of Performance and Improvement for Automotive Manufacturers

In general, the United States automotive manufacturers lag the industry. With legacy issues in the

management of labor, they have brutally negotiated price and reduced automotive supplier

profitability, to the point of reducing viability, decreasing industry resiliency. In the analysis, European

and Asian manufacturers are more progressive and post better results.

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Heavy Equipment Heavy equipment—trucks, earth movers and diggers—have similar processes, but very different

industry drivers. The margins are higher in heavy equipment than automotive and the inventory turns

are lower. Progress is being made in both metrics.

United Tractors and John Deere make the list of Supply Chains to Admire. The rest of the companies

are struggling with balance on the Supply Chain Metrics That Matter.

Table 17. Analysis of Performance and Improvement for Heavy Equipment Manufacturers

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Tires The tire industry is a specialized industry supporting the heavy equipment, A&D, and automotive

industries. Historically a laggard industry, recent investments in these supply chains have driven

improvement. Operating margin and ROIC increased despite the decline in volumes. No company in

the tire industry makes the list for the Supply Chains to Admire; and while Bridgestone drives the

greatest improvement, they are unable to drive the level of performance in the portfolio of metrics.

Table 18 Analysis of Performance and Improvement for Tire Manufacturers

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Automotive Suppliers No automotive supplier makes the list for the Supply Chains to Admire in 2015. The industry is a story

of performance in singular metrics not the metrics portfolio. Danaher drives above performance in

operating margin, Johnson Controls outperforms on inventory turns, and UTC in ROIC. No single

company outperforms on the portfolio. There is also no definitive pattern on supply chain

improvement.

The automotive supplier industry has persevered decades of cost-cutting by automotive companies

by diversifying the customer base. The industry is stronger now than it was post-recession.

Table 19. Analysis of Performance and Improvement for Automotive Suppliers

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Consumer Electronics The consumer electronics industry is a supply chain leader. Due to changes in the industry—shorter

life cycles, pressure on margins, and the speed of change of technology—the consumer electronics

industry had to change to keep up.

As growth slowed, and market pressures increased, margins in the industry declined while inventory

turns improved. Due to industry pressures, consumer electronics brand owners manage complex

global supply chains with a high level of outsourcing.

For this industry, Lexmark makes the Supply Chains to Admire list. Apple, an overperformer, posts

results in the metrics portfolio above the peer group; however, they are stuck, unable to drive

improvement. Apple is 16th out of 16 on the Supply Chain Index.

Table 20. Analysis of Performance and Improvement for Consumer Electronics

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B2B Electronics In contrast, B2B electronics companies weathered the impacts in a very different industry. The

industrial B2B electronics experienced more consistent demand and drove growth in margins and

consistency in inventory and ROIC results. The industry was more stable than the consumer

electronics industry. Cisco Systems, EMC, Qualcomm and Western Digital make the list of Supply

Chains to Admire. Seagate, a 2014 winner, falls off the list due to a decline in improvement.

This industry leads in the establishment of emerging practices for supply sensing, risk management

and supply chain planning. For emerging practices in the use of technology, look to the consumer

electronics and the B2B high-tech industries.

Table 21. Analysis of Performance and Improvement for B2B Technology Providers

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Contract Manufacturing Contract manufacturing emerged over the last decade to support the evolution of the high-tech

industries. With volatile revenue and slim margins, one can argue that this commodity-based service

model is not sustainable over the long term and poses a risk to the discrete industries that they

support. The question should be, “Is this industry viable?” However, the answer is moot since the

industry is now over a decade old.

Each of the contract manufacturers in Table 22, over time, has attempted to differentiate services and

become a preferred vendor in this commodity market, but to no avail. Competition in this market is

fierce with tough negotiation on margins and service. The contract manufacturer supporting the high-

tech industry operates in a tough market with little forgiveness by the high-tech brand owners.

Table 22. Analysis of Performance and Improvement for Contract Manufacturers

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Semiconductor Manufacturing The semiconductor industry is a different story. With high and increasing margins, and ever-changing

technology opportunities, the semiconductor industry is more stable than the industries of consumer

electronics or contract manufacturers. As demand for upstream products slows, growth in the

semiconductor industry is slowing. Semiconductor manufacturers are attempting to diversify to

overcome this challenge.

Intel makes the list for the 2015 Supply Chains to Admire. This is the second year Intel made the list.

TSMC, a 2014 winner, and an overperformer, is eliminated from the list. TSMC does not meet the

improvement standard. Altera also outperforms, but does not meet the improvement standard.

Table 23. Analysis of Performance and Improvement for Semiconductor Manufacturers

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Medical Device The medical device industry is a story of industry laggards. While other discrete industries have

driven significant improvement, medical device companies have maintained high margins of 19% but

have not driven improvements in inventory or ROIC.

Coloplast makes the list of the Supply Chains to Admire, and Edwards Lifesciences drives

improvement, but the rest of the companies have struggled to improve the total portfolio of the Supply

Chain Metrics That Matter.

Table 24. Analysis of Performance and Improvement for Medical Device Manufacturers

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What Makes a Difference? The analysis of “Who does supply chain the best?” is complicated and not for the faint of heart. The

journey for improvement is a long, and often a winding road. For companies that have outperformed

there are seven common characteristics:

1. Continuity of leadership. Companies with leadership consistency have a higher probability of

driving higher levels of performance. A supply chain is not a supply chain and form needs to

follow function in the design of the supply chain strategy. A strong supply chain leader is good at

making conscious choices and focusing on cross-functional orchestration.

2. Supply chain talent development. Supply chain leaders take ownership of talent

development. It is not an accident or an afterthought. Instead, it is an active and aggressive

program deep within the DNA of the organization.

3. Focus on a multiyear supply chain strategy. The journey is multiyear, with a strong

understanding of movement in small increments while managing the supply chain as a complex

system with a nonlinear relationship between the metrics.

4. Organizational reporting. A common characteristic of outperformers is the consolidation of the

functions of plan, make, source, and deliver under a common leader. While this may be a tough

goal for the large organization within the global multinational, progress is accelerated when

reporting relationships are consolidated (source, make and deliver reporting to the same

organization) and trade-offs between functions are orchestrated to improve progress on the

Supply Chain Metrics That Matter.

5. Clear global governance to guide cross-functional decision making. For the global

multinational, clarity on decisions streamlines results. While this sounds easy, it is not. The

greater the clarity in governance, the faster the progress on performance and improvement.

6. Strength in horizontal processes. Cross-functional alignment happens through the alignment

of horizontal processes. The critical horizontal processes are revenue management, new

product launch, sales and operations planning, supplier development and corporate social

responsibility. The focus is shifting to be outside in.

7. Excellence in supply chain planning, network design and inventory management.

Excellence in supply chain planning is fundamental to driving improvement and outperforming

on the Supply Chain Metrics That Mater. The use of supply chain planning technologies allows

companies to manage the supply chain as a complex network.

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Conclusion On the journey towards supply chain excellence, companies need to hold themselves accountable to

balance sheet performance. The patterns are gnarly, but to judge supply chain excellence,

performance and improvement need to be assessed together by peer group, and the analysis needs

to be viewed over time. The patterns matter. For all, it is a journey, not a sprint.

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Appendix: Supply Chain Index Calculations Supply chain leaders want to know if they are making improvement against their peer group. The

financial patterns are gnarly and it is often difficult to assess progress from a simple two-dimensional

plot. To make this easier, we developed the Supply Chain Index.

In building the Index, we used financial ratios versus absolute numbers. The use of ratios allowed us

to compare companies regardless of size, and to also compare companies across currencies.

The math behind the Index is defined below. This methodology was built in cooperation with a

research team from the School of Computing, Informatics and Decision Systems Engineering at

Arizona State University (ASU) in the spring of 2014.

Balance To develop the balance factor used in the Index, we evaluated a scatter plot of revenue growth and

Return on Invested Capital (ROIC) for a specific company. The balance factor (B) is the proportional

difference of points on an orbit chart for the period of 2006-2014 at the intersection of revenue growth

and Return on Invested Capital. To calculate the balance factor, let iREV denote the revenue growth

of the ith time period, iROIC denote the return on invested capital of the ith time period and n

denote the total number of periods under consideration. Thus the balance factor is defined as:

1

1

1

1

1

1

ROIC

ROICROIC

REV

REVREV

nB nn

.

Strength The strength factor is a similar calculation to the balance factor, but with a focus on the intersection of

operating margin and inventory turns. For this analysis we used a scatter plot of operating margin and

inventory turns on an orbit chart for a specific company. Let iOMdenote the operating margin of the

ith time period (e.g., ith year), iIT denote the inventory turns of the ith time period and n denote the

total number of periods under consideration.

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The strength measure (S) is defined as:

1

1

1

1

1

1

IT

ITIT

OM

OMOM

nS nn

The denominator reflects that there are n-1 differences between n time periods. Figure A depicts the

intersection of operating margin and inventory turns for an example company. The difference in

operating margin and inventory turns between the first and last time period is shown.

Figure A. Inventory Turns and Operating Margin Intersection for an Example Company

Resiliency The resiliency factor is a measurement of the tightness of the pattern at the intersection of operating

margin and inventory turns for a given company. For companies that did well, and had a tight pattern,

the value will be lower than companies that lacked reliability for the period. To develop the value, we

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considered a scatter plot of operating margin and inventory turns for a specific company.

Let dij denote the Euclidean Mean distance between a pair of points i and j and let m denote the total

number of pairs. The resiliency measure (R) is defined as the mean distance of all possible pairs of

points at the intersection. That is,

i ij

ijdm

R1

Figure B shows an example of the operating margin and inventory turns intersection for an example

company.

Figure B. Calculation of Resiliency at the Intersection of Inventory Turns and Operating Margin

Table A shows the distances between every possible pair of points at the intersection. Resiliency is

calculated from the mean of the distance values and is equal to 0.7335.

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Table A. Calculation of Euclidean Distances for an Example Company

Alternative Measures Considered for Resiliency To develop the resiliency factor, we considered a number of alternative approaches. One method

considered was Principal Components Analysis (PCA). It is a traditional method used to summarize

multidimensional data. We considered measures commonly applied with PCA based on eigenvalues

and eigenvectors. (e.g., the condition index, percentage of variance explained by the first principal

component). Although these measures were reasonable they did not distinguish between orbit plots

that were visually different as well as simpler approaches.

We also considered other measures based on the distances (e.g., sum, maximum, minimum and the

coefficient of variation of the distances). The mean distance was finally selected to measure the

compactness of a set of points. In fact, a similar measure called cohesion is frequently used in cluster

analysis to measure the compactness of a set of points. Rather than taking the sum of distances (as

in cohesion), we consider the mean to account for the potentially different number of points for each

company.

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Formula Calculations The definitions of financial metrics used in this report are outlined in Table B.

Table B. Metrics Definitions

Definitions The definitions used in this report are summarized below:

Definitions

• Metrics That Matter: Metrics that can be improved by the supply chain leader and have a high

correlation to market capitalization.

• Market-Driven: The ability to sense and respond from market-to-market (from the customer’s

customer to the supplier’s supplier).

• NAICS Codes: US census classification(s) of industry groupings.

• Orbit Chart: A comparison of year-over-year improvement between two supply chain metrics.

• Supply Chain Index: A methodology developed by Supply Chain Insights in 2014 to measure

supply chain improvement based on orbit chart measurements.

• Supply Chains to Admire: An objective, and independent analysis of supply chains that are

outperforming in the Supply Chain Metrics That Matter and are driving supply chain improvement

as measured by the Supply Chain Index.

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Supply Chain Metrics That Matter Reports Over the course of the last three years, our methodology has changed and matured. You can track

our progress, and find industry-specific information here:

Supply Chain Metrics That Matter: A Focus on Retail

Published by Supply Chain Insights in August 2012.

Supply Chain Metrics That Matter: A Focus on Consumer Products

Published by Supply Chain Insights in September 2012.

Supply Chain Metrics That Matter: The Cash-to-Cash Cycle

Published by Supply Chain Insights in November 2012.

Supply Chain Metrics That Matter: A Focus on the Food and Beverage Industry

Published by Supply Chain Insights in December 2012.

Supply Chain Metrics That Matter: Driving Reliability in Margins

Published by Supply Chain Insights in January 2013.

Supply Chain Metrics That Matter: A Focus on Hospitals

Published by Supply Chain Insights in January 2013.

Supply Chain Metrics That Matter: A Focus on Brick & Mortar Retail

Published by Supply Chain Insights in February 2013.

Supply Chain Metrics That Matter: A Focus on Medical Device Manufacturers

Published by Supply Chain Insights in February 2013.

Supply Chain Metrics That Matter: A Focus on Consumer Electronics

Published by Supply Chain Insights in April 2013.

Supply Chain Metrics That Matter: A Focus on Apparel

Published by Supply Chain Insights in May 2013

Supply Chain Metrics That Matter: A Focus on Contract Manufacturing

Published by Supply Chain Insights in August 2013

Supply Chain Metrics That Matter: A Focus on the Automotive Industry

Published by Supply Chain Insights in October 2013

Supply Chain Metrics That Matter: A Closer Look at the Cash-To-Cash Cycle (2000-2012)

Published by Supply Chain Insights in November 2013

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Supply Chain Metrics That Matter: Third Party Logistics Providers

Published by Supply Chain Insights in December 2013

Supply Chain Metrics That Matter: A Critical Look at Operating Margin

Published by Supply Chain Insights in December 2013

Supply Chain Metrics That Matter: A Closer Look at Pharmaceutical Companies

Published by Supply Chain Insights in April 2014

Supply Chain Metrics That Matter: A Closer Look at Chemical Companies

Published by Supply Chain Insights in May 2014

Supply Chain Metrics That Matter: A Closer Look at Food and Beverage Companies

Published by Supply Chain Insights in June 2014

Supply Chain Metrics That Matter – A Focus on Pharmaceutical Companies

Published by Supply Chain Insights in April 2015

Supply Chain Metrics That Matter – A Focus on Chemical Companies – 2015

Published by Supply Chain Insights in May 2015

Supply Chain Metrics That Matter: A Focus on Food and Beverage Companies-2015

Published by Supply Chain Insights in June 2015

Supply Chain Metrics That Matter: A Focus on Consumer Products

Published by Supply Chain Insights in August 2015

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About Supply Chain Insights, LLC Founded in February, 2012 by Lora Cecere, Supply Chain Insights LLC is focused on delivering

independent, actionable, and objective advice for supply chain leaders. If you need to know

which practices and technologies make the biggest difference to corporate performance, turn to us.

We are a company dedicated to this research. Our goal is to help you understand supply chain

trends, evolving technologies and which metrics matter.

About Lora Cecere Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights LLC and

the author of popular enterprise software blog Supply Chain Shaman currently read

by 5,000 supply chain professionals. She also writes as a Linkedin Influencer and

is a a contributor for Forbes. She has written four books. The first book, Bricks

Matter (co-authored with Charlie Chase). published in 2012. The second book,

Supply Chain Metrics That Matter, published in December 2014. In addition, there

are two self-published books, The Shaman’s Journal 2014, published in September

2014, and the fourth book, The Shaman’s Journal 2015, published in September 2015.

With over 12 years as a research analyst with AMR Research, Gartner Group, and Altimeter

Group, and now as a Founder of Supply Chain Insights, Lora understands supply chain. She has

worked with over 600 companies on their supply chain strategy and speaks at over 50 conferences a

year on the evolution of supply chain processes and technologies. Her research is designed for the

early adopter seeking first-mover advantage.

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Endnotes i L’Oréal a Beautiful Supply Chain, March 2015, Supply Chain Shaman, http://www.supplychainshaman.com/supply-chain-2/supply-chain-excellence/loreal-a-beautiful-supply-chain-2/ iiAround 100 Brands to be Dropped by Procter and Gamble to Boost Sales, August 14, 2014, Cincinnati News,

http://www.cincinnatinews.net/index.php/sid/224358103 iii Expect more? Empty shelves frustrate Target customers, execs, MPR News, September 3, 2015,

http://www.mprnews.org/story/2015/09/03/empty-target-shelves