The Supply Chain Index – Improving Strength, Balance and Resiliency

Supply chain leadership is a continuous balancing act. Companies are always faced with the task of balancing competing priorities. The best do it consciously and with purpose. The worst do it unconsciously, and are held hostage by market fluctuations.

Companies struggle to understand the supply chain as a complex system with interrelated metrics. In the process of driving operating strategy, companies balance the priorities of growth, profitability, cycle, and complexity. To design the Supply Chain Index, we studied industry performance of several financial metrics for each category of the Effective Frontier: Growth, Profitability, Cycle, and Complexity.

We find that at the beginning of the last decade, companies were able to make substantial progress. This was the dawn of business-to-business computing and the automation of supply chain processes. Recently, the story is different. Today, supply chain progress is stalled. Nine of out ten companies are stuck: unable to make progress at the intersection of inventory turns and operating margin.

Research Overview:

• Report Details: This report is based on analysis of financial balance sheet and income statement data for the period of 2006-2012 as available and cooperative research conducted with Arizona State University..
• Objective: To reveal the methodology of the Supply Chain Index and the calculation of three of the four component metrics: strength, balance and resiliency.
• Hypothesis: Supply chain progress is stalled. The Supply Chain Index is a new benchmarking tool to measure supply chain performance through objective financial performance on the metrics of strength, balance and resiliency.