Supply Chains to Admire Report

Supply chain excellence matters. It can make or break corporate performance.

To drive improvements, companies need a clear definition of supply chain competency. It is easier to state than to define, and the market is full of beliefs that are not grounded by hard, cold facts.

Now 30-years old, the practice of supply chain management is still evolving. While companies speak of ‘best practices’, and boast about improvements in operating margin, inventory levels and asset management in conference after conference, we do not see it in our analysis of balance sheet information for any industry.

The reason? The supply chain is not well-understood by executive teams, and many companies have pursued a project-based approach (implementing multiple projects with ROI above a threshold) or a focus on vertical excellence (where functional charters create very strong functional excellence); however, this is misguided. We do not find that these two approaches make a difference. Instead, we find that it is supply chain leadership driving resilient, predictable, and forward-looking processes that drives sustained balance sheet improvement. We find that for top performers that it happens in a slow and steady pattern versus the big-bang approach.

Supply chain leaders want to drive excellence. By their nature, these leaders are competitive. They want to drive 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, 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 now is a way to gauge improvement.

Research Overview:

• Report Details: This report is based on analysis of financial balance sheet and income statement data for the period of 2006-2013. To determine the companies to include in the Supply Chains To Admire list, progress of companies within thirteen industries were analyzed for performance and improvement. Companies performing above their peer group and demonstrating improvement are listed as Supply Chains To Admire.
• Objective: To analyze supply chain performance and improvement to understand which companies are operating at top performance levels and still driving improvement.
• Hypothesis: Nine out of ten companies are stuck at the intersection of operating margin and inventory turns. With declining growth and increasing complexity, supply chain excellence helps companies to drive superior performance on the balance sheet.