More Related Content Similar to What is Supply Chain Excellence? A Closer Look at Industry Performance (20) More from Lora Cecere (20) What is Supply Chain Excellence? A Closer Look at Industry Performance3. The Supply Chain
is a Complex System
with Complex Processes
with Increasing Complexity
Supply Chain Insights LLC Copyright © 2013, p. 3
4. The Supply Chain Effective Frontier
Supply Chain Insights LLC Copyright © 2013, p. 4
5. Methodology: Mining 20 Years of Financial
Data to Understand the Patterns
Financial Metrics
Growth
Profitability
Cycle
Complexity
Common Shares
Cash
Cash-to-Cash Cycle
Altman Z
Employee Growth
Cash Change in Period
Days of Finished Goods
Capital Turnover
Employees
Cash on Hand
Days of Inventory
Current Ratio
Market Capitalization
Cash Ratio TTM
Days of Payables Outstanding
Quick Ratio
R&D Margin
Cash Ratio Quarter
Days of Raw Materials
Return on Assets
R&D Ratio
Cash Ratio Year
Days of Sales Outstanding
Return on Equity
R&D to COGS Ratio
Cost of Goods Sold
Days of Work in Progress
Return on Invested Capital
Revenue
EBITDA
DPO/DSO
Return on Net Assets
Revenue Growth
Free Cash Flow Ratio
Finished Goods Inventory
Revenue per Employee
Revenue Growth TTM
Gross Margin
Inventory
Working Capital Ratio
Revenue TTM
Gross Profit
Inventory Turns
SG&A Margin
Net Profit Margin
Receivables Turns
SG&A Ratio
Operating Cash Flow Ratio
Raw Materials Inventory
SG&A to COGS Ratio
Operating Margin
Work in Progress Inventory
OPEX Ratio
Pretax Margin
Supply Chain Insights LLC Copyright © 2013, p. 5
8. What Does Good Look Like?
As companies mature progress is seen in:
• Strength: Year-over-year improvement in metrics.
• Balance: Balance in growth, profitability, cycles
and profitability.
• Resiliency: A tight, predictable pattern in results at
the intersection of operating margin and inventory
turns irrespective of what is happening in buy or
sell-side markets.
Supply Chain Insights LLC Copyright © 2013, p. 8
9. Most Interesting Patterns
• Cash-to-Cash Cycle vs. Inventory Turns
• Inventory Turns vs. Operating Margin
• Inventory Turns vs. Revenue per Employee
Supply Chain Insights LLC Copyright © 2013, p. 9
10. What Have We Learned?
• Each industry has a different pattern of
trade-offs of balancing growth, profitability,
cycles and complexity.
• Companies that are supply chain leaders
have very small movement with a balanced
portfolio of metrics.
• It is about MUCH more than Return on
Assets (ROA), growth and inventory.
Supply Chain Insights LLC Copyright © 2013, p. 10
12. Where Are We by Industry?
Supply Chain Insights LLC Copyright © 2013, p. 12
16. Impact of A Recession
Supply Chain Insights LLC Copyright © 2013, p. 16
17. Where Are We?
• Nine out of ten industries are stuck: unable to
power improvements in inventory turns and
profitability.
• Manufacturers have outperformed retailers on
productivity.
• The more steps back in the supply chain that a
company is, the more important the principles
of supply chain management are.
Supply Chain Insights LLC Copyright © 2013, p. 17
19. Visualizing the Patterns
Best Scenario
15
Here, we plot inventory turns (y-axis)
vs. revenue per employee (x-axis).
Inventory Turns
12
Ideally, companies are increasing
inventory turns and revenue per
employee, moving towards the upper
right corner of the graph over time.
DOW
999, 6.7
9
Trace the line from
2002 point to 2012
point to follow the
performance over
time.
6
3
2002
2012
The diamond shows the company’s average over the period.
Ex: The Dow Chemical Company (DOW) has an average of 999
K$ for revenue per employee and 6.7 for inventory turns.
0
0
250
500
750
1,000
1,250
Revenue per Employee (K$)
The Dow Chemical Company
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source
Supply Chain Insights LLC Copyright © 2013, p. 19
23. Cash-to-Cash Cycle vs. Inventory Turns
(2000-2012)
90
80
Cash-to-Cash Cycle
70
KMB
5.9, 67
2000
60
2000
50
2000
40
2012
2012
30
CL
5.7, 43
20
10
2012
PG
5.6, 39
Best Scenario
0
4
5
6
7
Inventory Turns
Colgate-Palmolive Company
The Procter & Gamble Company
Kimberly-Clark Corporation
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 23
24. Inventory Turns vs. Operating Margin
(2000-2012)
7
Best Scenario
2012
2000
Inventory Turns
2012
2000
6
2000
CL
0.21, 5.7
KMB
0.15, 5.7
2012
5
PG
0.18, 5.6
4
0.10
0.15
0.20
0.25
Operating Margin
Colgate-Palmolive Company
The Procter & Gamble Company
Kimberly-Clark Corporation
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 24
25. Inventory Turns vs. Revenue per
Employee (2002-2012)
Best Scenario
Inventory Turns
8
2002
KMB
309, 5.9
PG
536, 5.6
2012
6
2012
2002
2002
2012
4
CL
361, 5.5
2
200
300
400
500
600
700
Revenue per Employee (K$)
Colgate-Palmolive Company
The Procter & Gamble Company
Kimberly-Clark Corporation
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 25
26. Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Colgate-Palmolive Company
59
62
46
Kimberly-Clark Corporation
61
35
51
The Procter & Gamble Company
61
40
27
Days of Inventory
Days of Payables
Days of Receivables
Colgate-Palmolive Company
67
67
44
Kimberly-Clark Corporation
63
38
50
The Procter & Gamble Company
69
55
31
Days of Inventory
Days of Payables
Days of Receivables
Colgate-Palmolive Company
68
64
38
Kimberly-Clark Corporation
63
54
47
The Procter & Gamble Company
68
66
28
Days of Inventory
Days of Payables
Days of Receivables
Colgate-Palmolive Company
70
66
36
Kimberly-Clark Corporation
60
63
39
The Procter & Gamble Company
58
68
26
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
27. Summary
Consumer packaged goods companies have
strength and resilience in their metrics
performance, but have lost balance in the last
three years. New techniques in supply chain
management are needed to power the next
level of improvement.
Supply Chain Insights LLC Copyright © 2013, p. 27
30. Cash-to-Cash Cycle vs. Inventory
Turns (2000-2012)
75
CVS
6.07, 58
Cash-to-Cash Cycle
2000
50
2001
2012
2012
25
WAG
6.00, 39
Best Scenario
0
4
5
6
7
8
9
10
Inventory Turns
CVS Caremark Corporation
Walgreen Company
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 30
31. Inventory Turns vs. Operating Margin
(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 31
32. Inventory Turns vs. Revenue per
Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 32
33. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
CVS Caremark Corporation
83
33
16
Walgreen Company
N/A
N/A
N/A
Days of Inventory
Days of Payables
Days of Receivables
CVS Caremark Corporation
73
30
20
Walgreen Company
65
37
14
Days of Inventory
Days of Payables
Days of Receivables
CVS Caremark Corporation
48
19
21
Walgreen Company
57
35
14
Days of Inventory
Days of Payables
Days of Receivables
CVS Caremark Corporation
39
18
19
Walgreen Company
50
31
11
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
35. Cash-to-Cash Cycle vs. Inventory
Turns (2000-2012)
60
Cash-to-Cash Cycle
TGT
6.2, 39.6
2012
40
2000
WMT
7.8, 13.5
2000
20
2012
Best Scenario
0
5
6
7
8
9
10
Inventory Turns
Target Corporation
Wal-Mart Stores, Inc.
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 35
38. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Target Corporation
62
57
32
Wal-Mart Stores, Inc.
52
36
3
Days of Inventory
Days of Payables
Days of Receivables
Target Corporation
58
63
39
Wal-Mart Stores, Inc.
49
38
2
Days of Inventory
Days of Payables
Days of Receivables
Target Corporation
57
51
41
Wal-Mart Stores, Inc.
42
37
4
Days of Inventory
Days of Payables
Days of Receivables
Target Corporation
60
47
31
Wal-Mart Stores, Inc.
44
40
5
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 38
39. Corporate Summary
Stock
Exchange:
The Kroger Co.
(billions
Symbol
Safeway Inc.
Revenue
Ticker
Company
2012
USD)
NYSE: SWY
NYSE: KR
2012 Global
Country
Employees
Where
(thousands)
Based
41.1
178.0
USA
(Idaho)
82.2
338.0
USA
(Ohio)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2012
Supply Chain Insights LLC Copyright © 2013, p. 39
40. Cash-to-Cash Cycle vs. Inventory Turns
(2000-2012)
25
20
Cash-to-Cash Cycle
2000
KR
10.6, 11.9
15
2000
10
2012
SWY
10.5, 10.3
5
2012
Best Scenario
0
7
8
9
10
11
12
13
14
15
Inventory Turns
Safeway Inc.
The Kroger Co.
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 40
41. Inventory Turns vs. Operating Margin
(2000-2012)
15
Best Scenario
2012
14
Inventory Turns
13
2012
12
11
SWY
0.04, 10.5
KR
0.03, 10.6
10
9
2000
8
2000
7
-0.02
0
0.02
0.04
0.06
0.08
0.1
Operating Margin
Safeway Inc.
The Kroger Co.
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 41
42. Inventory Turns vs. Revenue per
Employee (2002-2012)
15
Best Scenario
2012
14
Inventory Turns
13
2012
12
SWY
211, 10.7
KR
218, 11.1
11
10
9
2003
2002
8
7
150
200
250
300
Revenue per Employee (K$)
Safeway Inc.
The Kroger Co.
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 42
43. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Safeway Inc.
N/A
N/A
N/A
The Kroger Co.
42
31
5
Days of Inventory
Days of Payables
Days of Receivables
Safeway Inc.
37
28
4
The Kroger Co.
36
30
4
Days of Inventory
Days of Payables
Days of Receivables
Safeway Inc.
N/A
N/A
N/A
The Kroger Co.
31
25
4
Days of Inventory
Days of Payables
Days of Receivables
Safeway Inc.
29
35
7
The Kroger Co.
26
22
4
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 43
44. Retail Comments
• Retailers have not been able to power the
levels of productivity (revenue/employee) of
consumer packaged goods, and mass
merchants are doing better on performance
improvements than grocery retailers.
• Wal-Mart is the leader in driving The
Effective Frontier.
Supply Chain Insights LLC Copyright © 2013, p. 44
48. Inventory Turns vs. Operating Margin
(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 48
49. Inventory Turns vs. Revenue per
Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 49
50. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
BASF SE
82
50
72
E. I. du Pont de Nemours and Co.
95
51
44
Days of Inventory
Days of Payables
Days of Receivables
BASF SE
66
38
61
E. I. du Pont de Nemours and Co.
86
49
53
Days of Inventory
Days of Payables
Days of Receivables
BASF SE
64
30
54
E. I. du Pont de Nemours and Co.
100
66
49
Days of Inventory
Days of Payables
Days of Receivables
BASF SE
64
30
50
E. I. du Pont de Nemours and Co.
106
69
42
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 50
51. Chemical Comments
• BASF has outperformed DuPont.
• Chemical companies have less resilience
than CPG.
Supply Chain Insights LLC Copyright © 2013, p. 51
54. Cash-To-Cash Cycle vs. Inventory Turns
(2000-2012)
Cash-To-Cash Cycle
70
2012
PEP
8.3, 30
50
2000
KO
5.4, 48
30
2012
10
4
5
6
7
8
9
-10
2000
-30
Best Scenario
Inventory Turns
PepsiCo Inc.
The Coca-Cola Company
Average (Inventory Turns, Cash-To-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 54
55. Inventory Turns vs. Operating Margin
(2000-2012)
9
2012
Best Scenario
2000
Inventory Turns
8
7
PEP
0.17, 8.3
6
2000
KO
0.27, 5.4
2012
5
4
0.10
0.20
0.30
0.40
Operating Margin
PepsiCo Inc.
The Coca-Cola Company
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 55
56. Inventory Turns vs. Revenue per
Employee (2000-2012)
10
Best Scenario
9
2012
Inventory Turns
2002
8
PEP
207, 8.2
7
KO
351, 5.4
2012
6
2002
5
4
0
100
200
300
400
500
Revenue per Employee (K$)
PepsiCo Inc.
The Coca-Cola Company
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 56
57. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
PepsiCo Inc.
43
46
36
The Coca-Cola Company
63
N/A
38
Days of Inventory
Days of Payables
Days of Receivables
PepsiCo Inc.
45
49
37
The Coca-Cola Company
70
N/A
39
Days of Inventory
Days of Payables
Days of Receivables
PepsiCo Inc.
46
51
33
The Coca-Cola Company
71
46
41
Days of Inventory
Days of Payables
Days of Receivables
PepsiCo Inc.
42
52
34
The Coca-Cola Company
63
35
36
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 57
59. Cash-to-Cash Cycle vs Inventory Turns
(2000-2012)
Cash-to-Cash Cycle
50
2000
GIS
6.2, 37.5
40
2012
2012
K
7.4, 26.5
30
20
2000
10
Best Scenario
0
4
5
6
7
8
9
Inventory Turns
General Mills, Inc.
Kellogg Company
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 59
60. Inventory Turns vs. Operating Margin
(2000-2012)
9
Best Scenario
Inventory Turns
8
2000
K
0.16, 7.4
2012
7
6
2012
GIS
0.18, 6.2
2000
5
4
0.10
0.15
0.20
0.25
Operating Margin
General Mills, Inc.
Kellogg Company
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 60
61. Inventory Turns vs. Revenue per
Employee (2002-2012)
9
Best Scenario
Inventory Turns
8
2012
2002
K
398, 7.4
7
2012
6
GIS
424, 6.6
2003
5
4
300
350
400
450
500
Revenue per Employee (K$)
General Mills, Inc.
Kellogg Company
Average (Revenue per Employee, Operating Margin)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 61
62. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
General Mills, Inc.
71
85
40
Kellogg Company
49
48
32
Days of Inventory
Days of Payables
Days of Receivables
General Mills, Inc.
54
47
31
Kellogg Company
49
56
28
Days of Inventory
Days of Payables
Days of Receivables
General Mills, Inc.
57
36
27
Kellogg Company
50
56
31
Days of Inventory
Days of Payables
Days of Receivables
General Mills, Inc.
51
39
29
Kellogg Company
57
58
37
Company (2004-2007)
General
Company (2008-2011) Mills, Inc.
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
63. Food and Beverage
• General Mills has outperformed Kellogg.
PepsiCo has outperformed Coke.
• With rising commodity volatility, the focus
on balanced portfolio metrics is critical.
Supply Chain Insights LLC Copyright © 2013, p. 63
66. Cash-to-Cash Cycle vs. Inventory Turns
(2000-2012)
350
300
2001
Cash-to-Cash Cycle
250
MRK
2.4, 175
200
150
2012
100
2000
50
BMY
3.2, 57
0
0
-50
1
2
2012
3
4
5
Best Scenario
Inventory Turns
Bristol-Myers Squibb Co.
Merck & Co., Inc.
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 66
67. Inventory Turns vs. Operating Margin
(2000-2012)
8
Best Scenario
2000
7
Inventory Turns
6
5
BMY
0.22, 3.2
MRK
0.31, 2.8
4
2012
3
2012
2
2000
1
0
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Operating Margin
Bristol-Myers Squibb Co.
Merck & Co., Inc.
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 67
68. Inventory Turns vs. Revenue per
Employee (2002-2012)
5
Best Scenario
Inventory Turns
4
BMY
526, 3.3
2002
3
2012
2012
2
MRK
412, 2.5
2002
1
0
200
300
400
500
600
700
800
Revenue per Employee (K$)
Bristol-Myers Squibb Co.
Merck & Co., Inc.
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 68
69. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Bristol-Myers Squibb Co.
109
110
72
Merck & Co., Inc.
222
N/A
74
Days of Inventory
Days of Payables
Days of Receivables
Bristol-Myers Squibb Co.
136
105
69
Merck & Co., Inc.
119
33
53
Days of Inventory
Days of Payables
Days of Receivables
Bristol-Myers Squibb Co.
99
133
45
Merck & Co., Inc.
179
55
68
Days of Inventory
Days of Payables
Days of Receivables
Bristol-Myers Squibb Co.
131
174
35
Merck & Co., Inc.
145
39
62
Company (2004-2007)
General
Company (2008-2011) Mills, Inc.
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
74. Cash-to-Cash Cycle vs. Inventory Turns
(2000-2012)
100
2000
Cash-to-Cash Cycle
DHR
5.4, 73.1
75
2012
50
JCI
20.1, 19.5
25
2012
2000
Best Scenario
0
0
5
10
15
20
25
30
Inventory Turns
Danaher Corporation
Johnson Controls, Inc.
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 74
75. Inventory Turns vs. Operating Margin
(2000-2012)
30
Best Scenario
2000
25
Inventory Turns
JCI
0.04, 20.1
20
2012
15
DHR
0.15, 5.4
10
5
2000
-0.05
0
0.00
0.05
0.10
0.15
2012
0.20
Operating Margin
Danaher Corporation
Johnson Controls, Inc.
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 75
76. Inventory Turns vs. Revenue per
Employee (2002-2012)
30
Best Scenario
2002
Inventory Turns
25
20
JCI
234, 18.9
2012
15
DHR
224, 5.4
10
5
2002
2012
0
150
200
250
300
Revenue per Employee (K$)
Danaher Corporation
Johnson Controls, Inc.
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 76
77. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Danaher Corporation
65
45
61
Johnson Controls, Inc.
15
60
55
Days of Inventory
Days of Payables
Days of Receivables
Danaher Corporation
68
63
65
Johnson Controls, Inc.
19
60
64
Days of Inventory
Days of Payables
Days of Receivables
Danaher Corporation
70
66
63
Johnson Controls, Inc.
23
64
65
Days of Inventory
Days of Payables
Days of Receivables
Danaher Corporation
75
64
65
Johnson Controls, Inc.
23
62
64
Company (2004-2007)
Company (2008-2011)
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
78. Automotive Industry
• The automotive supplier has more
resiliency than pharmaceutical or chemical
companies, but is going backwards, not
forwards in driving improvement in results.
Supply Chain Insights LLC Copyright © 2013, p. 78
82. Inventory Turns vs. Operating Margin
(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 82
83. Inventory Turns vs. Revenue per
Employee (2002-2012)
Supply Chain Insights LLC Copyright © 2013, p. 83
84. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
LG Electronics
62
61
49
Samsung Electronics Co., Ltd.
48
47
38
Days of Inventory
Days of Payables
Days of Receivables
LG Electronics
62
41
37
Samsung Electronics Co., Ltd.
46
30
38
Days of Inventory
Days of Payables
Days of Receivables
LG Electronics
47
44
45
Samsung Electronics Co., Ltd.
48
30
44
Days of Inventory
Days of Payables
Days of Receivables
LG Electronics
47
52
50
Samsung Electronics Co., Ltd.
59
29
46
Company (2004-2007)
General
Company (2008-2011) Mills, Inc.
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 84
85. Consumer Electronics
• Samsung has outperformed LG.
• Demand and price volatility has impacted
strength, balance and resiliency of
performance.
Supply Chain Insights LLC Copyright © 2013, p. 85
88. Cash-to-Cash Cycle vs. Inventory Turns
(2000-2012)
100
Cash-to-Cash Cycle
80
2000
OI
5.2, 67.9
SON
9.2, 42.6
60
2000
2012
2012
40
20
Best Scenario
0
3
5
7
9
11
Inventory Turns
Owens-Illinois Inc.
Sonoco Products Company
Average (Inventory Turns, Cash-to-Cash Cycle)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
Supply Chain Insights LLC Copyright © 2013, p. 88
89. Inventory Turns vs. Operating Margin
(2000-2012)
Supply Chain Insights LLC Copyright © 2013, p. 89
90. Inventory Turns vs. Revenue per
Employee (2002-2012)
11
Best Scenario
2012
Inventory Turns
9
2002
SON
210, 9.5
7
5
2012
OI
258, 5.3
2002
3
100
150
200
250
300
350
Revenue per Employee (K$)
Owens-Illinois Inc.
Sonoco Products Company
Average (Revenue per Employee, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012
Supply Chain Insights LLC Copyright © 2013, p. 90
91. Cash-to-Cash Cycle Components
Company (2000-2003)
Days of Inventory
Days of Payables
Days of Receivables
Owens-Illinois Inc.
79
45
49
Sonoco Products Company
44
40
43
Days of Inventory
Days of Payables
Days of Receivables
Owens-Illinois Inc.
70
60
55
Sonoco Products Company
40
41
44
Days of Inventory
Days of Payables
Days of Receivables
Owens-Illinois Inc.
63
58
55
Sonoco Products Company
37
44
43
Days of Inventory
Days of Payables
Days of Receivables
Owens-Illinois Inc.
74
67
50
Sonoco Products Company
35
40
47
Company (2004-2007)
General
Company (2008-2011) Mills, Inc.
Company (2012)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2012
92. Packaging
• Sonoco Products has outperformed Owens
Illinois in strength, resiliency and balance.
• The more steps back that a company is in
the supply chain, the greater the
importance of supply chain principles.
Supply Chain Insights LLC Copyright © 2013, p. 92
93. Summary
• Nine out of ten industries are stuck in their ability to
power The Effective Frontier. The potential and
pattern of each industry is different.
• It is a trade-off of strength, balance and resiliency.
• The larger the company, and the more steps back
in the supply chain, the more important the
principles of supply chain management.
• For leaders, progress is made in small increments
based on strategy.
Supply Chain Insights LLC Copyright © 2013, p. 93