This document summarizes a presentation by Supply Chain Insights LLC on supply chain metrics and performance. It defines key terms used in supply chain analysis like orbit charts and the Supply Chain Index. It also provides examples of orbit charts for companies like Walmart, Apple and Dow Chemical comparing metrics like inventory turns and operating margin over time. Finally, it outlines Supply Chain Insights' methodology for identifying "Supply Chains to Admire" based on above average performance and improvement on important metrics.

1. Supply Chain Insights LLC Copyright © 2015, p. 1
Supply Chain Metrics That
Matter in the Market-Driven
World
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2. Supply Chain Insights LLC Copyright © 2015, p. 2
Our Goal is to Help the Average Joe
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3. Supply Chain Insights LLC Copyright © 2015, p. 3
Four Years of Work
Wiley
December 2012
Wiley
December 2014
Self-published
September 2014
Self-publishing
September 2015
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4. Supply Chain Insights LLC Copyright © 2015, p. 4
• Metrics That Matter: Metrics that can be improved by the supply
chain leader and have 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.
Let’s Start with Definitions
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5. Supply Chain Insights LLC Copyright © 2015, p. 5
Methodology Comparison
Gartner Top 25 Supply Chains to Admire
Focus
Fortune 1000
Companies
Companies by Industry
Irrespective of Size
Calculation
-25% ROA (3 Year
Weighted Average)
-15% Inventory
Turns (2014)10%
Growth (2013
versus 2014)
-50 % Opinion
Performance Better than Peer
Group for the Period of 2009-
2014 on the Metrics That
Matter
Improvement Greater than
the Average of the Peer
Group for 2009-2014
Experience 10th Year 2nd Year
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6. Supply Chain Insights LLC Copyright © 2015, p. 6
Progress: All Industries
Industry Snapshots (2006-2013)
Industry
Year –over-
Year Revenue
Growth
Operating
Margin
Inventory
Turns
Cash-to-
Cash Cycle
Revenue per
Employee
(K$)
SG&A
Ratio
Retail Apparel Industry
18%
39%
0.39
27%
05
05%
68
26%
325
18%
27%
05%
Apparel Manufacturing Industry
14%
82%
0.12
32%
05
68%
150
08%
400
355%
27%
63%
Mass Retail Industry
09%
50%
0.06
20%
06
06%
03
148%
350
48%
23%
6%
Beverage Industry
09%
61%
0.19
16%
02
04%
53
46%
512
NC
24%
16%
Pharmaceutical Industry
08%
47%
0.23
29%
03
16%
155
47%
572
32%
27%
08%
Chemical Industry
08%
45%
0.10
10%
06
04%
87
23%
557
23%
14%
27%
Medical Device Industry
06%
38%
0.14
32%
02
13%
206
16%
351
12%
34%
04%
Grocery Retail Industry
06%
31%
0.03
37%
17
01%
10
50%
405
54%
14%
06%
Consumer Packaged Goods
05%
25%
0.14
73%
08
482%
72
17%
333
14%
26%
09%
Food Industry
05%
55%
0.10
19%
07
17%
40
04%
534
55%
20%
18%
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2013
Industry Average comprised of public companies (combined food & beverage industry: NAICS 3112% where % is any number from 0-9, 311320, 311520, 311821,
311941 & 312111), (chemical: NAICS 325188 & 325998), (consumer packaged goods: NAICS 3256% where % is any number from 0-9), (medical device
industry: NAICS 339112), (pharmaceutical industry: NAICS 325412) reporting in One Source with 20123annual sales greater than $1billion
NC=no change
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7. Supply Chain Insights LLC Copyright © 2015, p. 7
9 out of 10 Supply Chains are
Stuck
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8. Supply Chain Insights LLC Copyright © 2015, p. 8
Descriptors Used by Leaders
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9. Supply Chain Insights LLC Copyright © 2015, p. 9
Functional Organizational
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10. Supply Chain Insights LLC Copyright © 2015, p. 10
Fallacy: Functional Excellence
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11. Supply Chain Insights LLC Copyright © 2015, p. 11
Growing Demand Volatility
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12. Supply Chain Insights LLC Copyright © 2015, p. 12
Why? The Long Tail of the Supply Chain:
Growing Complexity
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13. Supply Chain Insights LLC Copyright © 2015, p. 13
Ability to Get to Total Supply Chain Costs
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14. Supply Chain Insights LLC Copyright © 2015, p. 14
A Project-based Focus
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15. Supply Chain Insights LLC Copyright © 2015, p. 15
Which Metrics Matter?
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16. Supply Chain Insights LLC Copyright © 2015, p. 16
What We Expected
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17. Supply Chain Insights LLC Copyright © 2015, p. 17
A Supply Chain
is a Complex System
with Complex
Processes
with Increasing
Complexity
What We Learned….
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18. Supply Chain Insights LLC Copyright © 2015, p. 18
The Supply Chain Effective Frontier
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19. Supply Chain Insights LLC Copyright © 2015, p. 19
Correlations to Market Capitalization
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20. Supply Chain Insights LLC Copyright © 2015, p. 20
Orbit Chart: Wal-Mart
(Inventory Turns and Operating Margin)
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21. Supply Chain Insights LLC Copyright © 2015, p. 21
Orbit Chart: Apple
(Inventory Turns and Operating Margin)
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22. Supply Chain Insights LLC Copyright © 2015, p. 22
Orbit Charts: Dow Chemical Company
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23. Supply Chain Insights LLC Copyright © 2015, p. 23
Measuring Supply Chain Improvement
Overall Ranking per Company
• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)
• Strength: Inventory Turns & Operating Margin Vector Trajectory (30% of score)
• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)
𝑺𝒖𝒑𝒑𝒍𝒚 𝑪𝒉𝒂𝒊𝒏 𝑰𝒏𝒅𝒆𝒙 =
𝟏
𝟑
𝑩𝒂𝒍𝒂𝒏𝒄𝒆 𝑭𝒂𝒄𝒕𝒐𝒓 +
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𝑹𝒆𝒔𝒊𝒍𝒊𝒆𝒏𝒄𝒚 𝑭𝒂𝒄𝒕𝒐𝒓
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24. Supply Chain Insights LLC Copyright © 2015, p. 24
Supply Chains to Admire Methodology
Performance
Beats the industry
average for operating
margin, inventory turns
and ROIC for 2006-
2014 and 2009-2014
Improvement
Ranks above peer
group average on
The Supply Chain
Index for 2006-
2014 or 2009-2014
+
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25. Supply Chain Insights LLC Copyright © 2015, p. 25
Annual Study: Supply Chains To Admire
Supply Chains to Admire 2015 to be Announced at the Supply
Chain Insights Global Summit on September 9th and 10th
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26. Supply Chain Insights LLC Copyright © 2015, p. 26
Consumer Products
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27. Supply Chain Insights LLC Copyright © 2015, p. 27
Consumer Packaged Goods
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Company
2006-
2014
2009-
2014
2011-
2014
2006-
2014
2009-
2014
2011-
2014
2006-
2014
2009-
2014
2011-
2014
2006-
2014
2009-
2014
Church & Dwight Co. Inc. 0.17 0.18 0.19 12.4 13.0 13.3 11% 13% 13% 4 2
Colgate-Palmolive 0.21 0.22 0.22 12.8 12.7 12.7 32% 33% 31% 7 8
The Clorox Company 0.17 0.17 0.16 14.9 14.5 14.4 21% 21% 22% 5 6
Kimberly Clark 0.13 0.13 0.13 8.7 8.9 9.0 16% 16% 16% 9 4
Newell Rubbermaid 0.09 0.10 0.09 7.7 8.0 8.2 7% 8% 9% 3 9
Procter & Gamble Co. 0.19 0.19 0.18 11.6 11.6 12.0 12% 12% 12% 6 5
Reckitt Benckiser Group 0.23 0.24 0.24 14.2 13.5 12.8 28% 26% 24% 8 7
Tupperware Brands Corp. 0.12 0.14 0.14 8.2 8.4 8.6 17% 20% 20% 1 1
Unilever plc 0.14 0.14 0.15 10.7 11.0 11.1 17% 17% 19% 2 3
Average 0.15 0.16 0.16 10.6 10.7 10.7 16% 17% 17%
Performance and Improvement
Operating Margin Inventory Turns Return on Invested Capital
Supply Chain Index
Rankings

28. Supply Chain Insights LLC Copyright © 2015, p. 28
9%
14%
19%
-0.07 -0.02 0.03 0.08 0.13 0.18
RevenueGrowth
Return on Invested Capital (ROIC)
Procter & Gamble
2000
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
20122013
P&G: Growth and ROIC
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from YCharts
Best Scenario
PG
0.06, 14%
Trace the line from 2000
point to 2014 point to
follow the performance
over time.
The diamond shows
the company’s average
over the period. Ex:
The Procter & Gamble
Co. (PG) has an
average of .06 for ROIC
and 14% for revenue
growth.
Ideally, companies are increasing
growth and Return on Invested
Capital (ROIC) moving towards the
upper right corner of the graph
over time.
Here, we Growth (y-axis) vs. ROIC (x-
axis).
Average (Return on Invested Capital, Revenue Growth)
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29. Supply Chain Insights LLC Copyright © 2015, p. 29
10.00
11.00
12.00
13.00
0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21
InventoryTurns
Operating Margin
Procter & Gamble
2000
2014
2001 2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
P&G: Inventory Turns and Operating Margins
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from YCharts
Best Scenario
PG
0.18, 11.75
Trace the line from 2000
point to 2014 point to
follow the performance
over time.
The diamond shows
the company’s average
over the period. Ex:
The Procter & Gamble
Co. (PG) has an
average of .18 for
operating margin and
11.75 for inventory
turns.
Ideally, companies are increasing
inventory turns and operating
margins moving towards the upper
right corner of the graph over time.
Here, we plot inventory turns (y-axis)
vs. operating margins(x-axis).
Average (Operating Margin, Inventory Turns)
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30. Supply Chain Insights LLC Copyright © 2015, p. 30
10.00
11.00
12.00
13.00
14.00
15.00
0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25
InventoryTurns
Operating Margin
Colgate-Palmolive
2000 2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Colgate: Operating Margins and Inventory Turns
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from YCharts
Best Scenario
CL
0.21, 13.03
Trace the line from 2000
point to 2014 point to
follow performance over
time.
The diamond shows the company’s
average over the period. Ex: The
Colgate-Palmolive Co. (CL) has an
average of .21 for operating margin
and 13.03 for inventory turns.
Ideally,
companies are
increasing
inventory turns
and operating
margin, moving
towards the
upper right
corner of the
graph over time.
Here, we plot inventory turns (y-axis)
vs. operating margin (x-axis).
Average (Operating Margin, Inventory Turns)
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31. Supply Chain Insights LLC Copyright © 2015, p. 31
7.50
8.00
8.50
9.00
9.50
10.00
10.50
11.00
0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19
InventoryTurns
Operating Margin
Kimberly Clark
2000
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Biggest Loser: Kimberly-Clark
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from YCharts
Best Scenario
KMB
0.15, 9.01
Trace the line from 2000
point to 2014 point to
follow the performance
over time.
The diamond shows the company’s
average over the period. Ex: The
Kimberly Clark Co. (KMB) has an
average of .15 for operating margin
and 9.01 for inventory turns.
Ideally,
companies are
increasing
inventory turns
and operating
margin moving
towards the
upper right
corner of the
graph over time.
Average (Operating Margin, Inventory Turns)
Here, we plot inventory turns (y-axis)
vs. operating margin (x-axis).
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32. Supply Chain Insights LLC Copyright © 2015, p. 32
4.00
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18
InventoryTurns
Operating Margin
Unilever
2000
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Unilever: Impressive Gains
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source & YCharts
Best Scenario
UN
0.13, 8.66
Trace the line from 2000
point to 2014 point to
follow the performance
over time.
The diamond shows the company’s
average over the period. Ex: The
Unilever Co. (UN) has an average of
.13 for operating margin and 8.66 for
inventory turns.
Ideally, companies are increasing
inventory turns and operating
margin moving towards the upper
right corner of the graph over time.
Here, we plot inventory turns (y-axis)
vs. operating margin(x-axis).
Average (Operating Margin, Inventory Turns)
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33. Supply Chain Insights LLC Copyright © 2015, p. 33
9.00
10.00
11.00
12.00
13.00
0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21
InventoryTurns
Operating Margin
Procter & Gamble Unilever
2014
2006
2014
2006
Procter & Gamble and Unilever
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source & YCharts
Best Scenario
UN
0.14, 10.74
Average (Operating Margin, Inventory Turns)
PG
0.19, 11.59
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34. Supply Chain Insights LLC Copyright © 2015, p. 34
9.50
10.50
11.50
12.50
13.50
0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23
InventoryTurns
Operating Margin
Colgate Palmolive Unilever
2014
2006
2014
2006
Colgate and Unilever
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2002-2012 from One Source & YCharts
Best Scenario
UN
0.14, 10.74
Average (Operating Margin, Inventory Turns)
CL
0.21, 12.77
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35. Supply Chain Insights LLC Copyright © 2015, p. 35
Procter & Gamble and Colgate
Inventory Turns vs. Operating Margin
(2006 – 2014)
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36. Supply Chain Insights LLC Copyright © 2015, p. 36
Clorox and Church& Dwight Rising Stars
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37. Supply Chain Insights LLC Copyright © 2015, p. 37
Beauty
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Company
2006-
2014
2009-
2014
2011-
2014
2006-
2014
2009-
2014
2011-
2014
2006-
2014
2009-
2014
2011-
2014
2006-
2014 2009-2014
Avon Products 0.08 0.07 0.05 9.92 9.73 9.65 10% 5% -1% 4 6
Estee Lauder 0.12 0.12 0.14 9.09 9.36 9.58 18% 19% 22% 1 3
Inter Parfums 0.15 0.17 0.20 4.45 4.38 4.41 10% 11% 13% 3 2
KAO Brands 0.09 0.09 0.09 10.35 10.18 9.98 8% 8% 9% 6 5
L'Oreal 0.16 0.15 0.16 11.10 10.92 10.77 14% 15% 16% 2 1
Elizabeth Arden 0.04 0.03 0.04 3.75 3.98 4.30 2% 1% 0% 5 4
Revlon 0.11 0.14 0.13 10.01 11.23 11.66 9% 25% 6% 6 7
Performance and Improvement
Operating Margin Inventory Turns Return on Invested Capital
Supply Chain Index
Rankings

38. Supply Chain Insights LLC Copyright © 2015, p. 38
Estee Lauder and L’Oreal
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39. Supply Chain Insights LLC Copyright © 2015, p. 39
Colgate Estee Lauder
Clorox L’Oreal
2015 Supply Chains to Admire Additions
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40. Supply Chain Insights LLC Copyright © 2015, p. 40
Food & Beverage
Webinar
August 4, 2015
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41. Supply Chain Insights LLC Copyright © 2015, p. 41
Beverage
Company 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014
Anheuser-Busch 0.31 0.34 0.36 14.57 15.52 15.94 8% 8% 10% 6 1
Coca-Cola 0.24 0.23 0.22 14.80 14.63 15.02 18% 16% 13% 1 2
Diageo 0.28 0.27 0.28 2.92 2.85 2.80 14% 13% 14% 2 3
Molson Coors 0.17 0.21 0.21 19.56 18.30 17.20 6% 6% 5% 6 4
SABMiller 0.19 0.20 0.22 16.61 14.94 15.20 8% 8% 8% 5 5
Heineken 0.14 0.14 0.15 13.06 12.99 12.79 8% 7% 8% 6 6
PepsiCo 0.16 0.15 0.14 18.64 18.61 18.88 20% 16% 13% 4 7
MonsterBeverage 0.26 0.28 0.27 10.76 10.95 11.39 22% 14% 0% 3 8
Average 0.22 0.23 0.23 13.87 13.6 13.65 13% 11% 9%
Performance and Improvement
Operating Margin Inventory Turns
Supply Chain
Index RankingsReturn on Invested Capital
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42. Supply Chain Insights LLC Copyright © 2015, p. 42
10.00
12.00
14.00
16.00
18.00
20.00
22.00
0.08 0.11 0.14 0.17 0.20 0.23 0.26 0.29 0.32 0.35 0.38 0.41 0.44 0.47
InventoryTurns
Operating Margin
Anheuser-Busch Inbev SABMiller
2014
2006
2014
2006
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Best Scenario
SBMRF
0.18, 17.14
Average (Operating Margin, Inventory Turns)
BUD
0.31, 14.57
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43. Supply Chain Insights LLC Copyright © 2015, p. 43
Coca-Cola and PepsiCo
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44. Supply Chain Insights LLC Copyright © 2015, p. 44
Food Products
Operating Margin Inventory Turns Return on Invested Capital
Company 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-20142009-2014
The J.M. Smucker Company 0.14 0.15 0.16 6.93 6.59 6.14 7% 7% 7% 4 1
Hershey Co. 0.16 0.17 0.18 9.60 10.36 10.47 19% 22% 24% 1 2
Mead Johnson Nutrition Co. 0.24 0.23 0.22 7.67 8.49 8.26 2% 4% 4% 3 3
Mondelez 0.10 0.10 0.10 8.85 8.35 8.21 6% 6% 6% 9 4
Conagra Foods Inc. 0.08 0.09 0.08 6.68 7.20 7.38 8% 7% 6% 8 5
Nestle SA 0.14 0.14 0.14 11.13 10.65 10.13 17% 18% 13% 7 6
General Mills, Inc. 0.17 0.17 0.17 11.00 10.98 11.04 11% 12% 12% 2 7
Maple Leaf Foods 0.14 0.13 0.12 12.68 12.07 11.47 14% 13% 11% 6 8
Campbell Soup Co. 0.16 0.16 0.15 9.58 9.45 9.40 19% 18% 16% 5 9
Danone SA 0.13 0.13 0.12 18.81 18.56 18.42 6% 2% 1% 10 10
Kellogg Company 0.10 0.20 0.22 16.61 14.94 15.20 8% 8% 8% 11 11
Average 0.14 0.15 0.15 10.87 10.69 10.56 11% 11% 10%
Performance and Improvement
Supply Chain
Index Rankings
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45. Supply Chain Insights LLC Copyright © 2015, p. 45
9.00
10.00
11.00
12.00
0.10 0.11 0.12 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25
InventoryTurns
Operating Margin
General Mills
2000
2014
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
General Mills:
Visualizing the Patterns
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2014 from YCharts
Best Scenario
GIS
0.17, 10.77
Average (Revenue per Employee, Inventory Turns)
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46. Supply Chain Insights LLC Copyright © 2015, p. 46
General Mills versus Kellogg:
Inventory Turns vs. Operating Margin
(2006 – 2014)
5.0
7.0
9.0
11.0
13.0
15.0
0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20
Operating Margin
General Mills Kellogg
K
0.14, 12.68
2014
2006
2014
2006
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
GIS
0.17, 11.00
Average (Operating Margin, Inventory Turns)
InventoryTurns
Best Scenario
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47. Supply Chain Insights LLC Copyright © 2015, p. 47
Hershey and Danone
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48. Supply Chain Insights LLC Copyright © 2015, p. 48
General Mills InBev
2015 Supply Chains to Admire Additions
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49. Supply Chain Insights LLC Copyright © 2015, p. 49
Chemical
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50. Supply Chain Insights LLC Copyright © 2015, p. 50
Results of Chemical Leaders
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51. Supply Chain Insights LLC Copyright © 2015, p. 51
6.00
7.00
8.00
9.00
10.00
-0.02 -0.01 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12
InventoryTurns
Operating Margin
Dow Chemical
2000
2014
2001
2002
2003
2004 2005
2006
2007
2008
2009
2010
2011
2012
2013
Dow Chemical
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2014 from YCharts
Best Scenario
DOW
0.06, 7.66
Trace the line from 2000 point
to 2014 point to follow the
performance over time.
The diamond shows the company’s average over
the period. Ex: The Dow Chemical Co. (DOW) has
an average of .06 for operating margin and 7.66 for
inventory turns.
Ideally,
companies are
increasing
inventory turns
and revenue per
employee,
moving towards
the upper right
corner of the
graph over time.
Here, we plot inventory turns (y-axis)
vs. revenue per employee (x-axis).
Average (Operating Margin, Inventory Turns)
#SCIWEBINAR

52. Supply Chain Insights LLC Copyright © 2015, p. 52
6.00
7.00
8.00
9.00
10.00
0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10 0.11 0.12 0.13
InventoryTurns
Operating Margin
BASF Dow Chemical
2014
2006
2014
2006
Dow Versus BASF
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Best Scenario
DOW
0.06, 7.73
Average (Operating Margin, Inventory Turns)
BASFY
0.11, 8.01
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53. Supply Chain Insights LLC Copyright © 2015, p. 53
6.00
7.00
8.00
9.00
10.00
11.00
12.00
0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20
InventoryTurns
Operating Margin
Dow Chemical Eastman Chemical
2014
2006
2014
2006
Dow versus Eastman Chemical
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Best Scenario
DOW
0.06, 7.73
Average (Operating Margin, Inventory Turns)
EMN
0.11, 9.20
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54. Supply Chain Insights LLC Copyright © 2015, p. 54
Ecolab Making Progress
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55. Supply Chain Insights LLC Copyright © 2015, p. 55
Eastman Chemical
2015 Supply Chains to Admire Additions
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56. Supply Chain Insights LLC Copyright © 2015, p. 56
Pharmaceuticals
Webinar
August 4, 2015
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57. Supply Chain Insights LLC Copyright © 2015, p. 57
Pharmaceuticals
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Company 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014 2011-2014 2006-2014 2009-2014
Abbott Laboratories 0.11 0.11 0.12 8.98 8.79 8.11 12% 11% 10% 3 6
AstraZeneca plc 0.27 0.27 0.22 14.96 15.79 14.28 22% 19% 15% 9 8
Bristol-Myers Squibb Co. 0.08 0.08 0.08 7.77 7.76 7.48 7% 6% 7% 4 4
Eli Lilly and Company 0.20 0.23 0.21 8.24 8.42 8.40 16% 21% 18% 7 7
Merck and Company 0.15 0.13 0.16 9.12 7.35 7.22 15% 13% 11% 8 2
Novo Nordisk A/S 0.36 0.35 0.37 6.47 7.31 8.16 42% 51% 60% 5 4
Novartis AG 0.21 0.21 0.20 8.09 8.32 8.44 13% 11% 11% 1 1
Pfizer, Inc. 0.50 0.23 0.26 8.13 7.83 8.10 12% 0.10 12% 7 5
Teva Pharmaceutical
Industries Limited 0.16 0.16 0.14 4.23 4.13 4.00 7% 8% 7% 2 3
Average 0.19 0.20 0.20 8.44 8.41 8.95 16% 18% 17%
Operating Margin Inventory Turns Return on Invested Capital Supply Chain Index
Performance and Improvement

58. Supply Chain Insights LLC Copyright © 2015, p. 58
9.00
10.00
11.00
12.00
13.00
14.00
0.21 0.22 0.23 0.24 0.25 0.26 0.27 0.28 0.29
InventoryTurns
Operating Margin
Johnson & Johnson
2000
2014
2001
2002
2003
2004
2005
2006
2007
2008 2009
2010
2011
2012
2013
Visualizing the Patterns
Source: Supply Chain Insights LLC, Corporate Annual Reports 2000-2014 from YCharts
Best Scenario
JNJ
0.25,11.36
Trace the line from 2000 point
to 2014 point to follow the
performance over time.
The diamond shows the company’s average over
the period. Ex: The Johnson & Johnson Co. (JNJ)
has an average of .25 for operating margin and
11.36 for inventory turns.
Ideally, companies
are increasing
inventory turns and
operating margin,
moving towards the
upper right corner
of the graph over
time.
Here, we plot inventory turns (y-axis)
vs. operating margin (x-axis).
Average (Operating Margin, Inventory Turns)
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59. Supply Chain Insights LLC Copyright © 2015, p. 59
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
2006
4.0
5.0
6.0
7.0
8.0
9.0
10.0
-0.10 0.00 0.10 0.20 0.30 0.40 0.50 0.60
Operating Margin
Eli Lilly and Company Novo Nordisk
2014 NVO
0.31, 6.48
2014
2006
Best Scenario
LLY
0.24, 8.30
Average (Operating Margin, Inventory Turns)
InventoryTurns
Novo Nordisk Making Progress
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60. Supply Chain Insights LLC Copyright © 2015, p. 60
7.00
8.00
9.00
10.00
11.00
12.00
13.00
0.17 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25 0.26 0.27 0.28 0.29
InventoryTurns
Operating Margin
Johnson & Johnson Novartis
2014
2006
2014
2006
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Best Scenario
JNJ
0.25, 11.11
Average (Operating Margin, Inventory Turns)
NVS
0.21, 8.30
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61. Supply Chain Insights LLC Copyright © 2015, p. 61
5.00
6.00
7.00
8.00
9.00
10.00
11.00
12.00
13.00
0.14 0.16 0.18 0.20 0.22 0.24 0.26 0.28 0.30
InventoryTurns
Operating Margin
Johnson & Johnson Pfizer
2014
2006
2014 2006
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014 from YCharts
Best Scenario
JNJ
0.25, 11.11
Average (Operating Margin, Inventory Turns)
PFE
0.21, 8.13

62. Supply Chain Insights LLC Copyright © 2015, p. 62
Inventory Turns vs. Operating Margin
(2006 – 2014)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2014
TEVA
0.16, 4.28
Average (Operating Margin, Inventory Turns)
2006
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
0.00 0.10 0.20 0.30
Operating Margin
TEVA Pharmaceutical Industries Mylan N.V.
2014
MYL
0.16, 4.83
2014 2006
Best Scenario
InventoryTurns
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63. Supply Chain Insights LLC Copyright © 2015, p. 63
The Journey
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64. Supply Chain Insights LLC Copyright © 2015, p. 64
Metrics Maturity
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65. Supply Chain Insights LLC Copyright © 2015, p. 65
• Which metrics matter?
– Growth, operating margin, inventory turns, ROIC, customer
service (in the eyes of the customer)
• How do we get unstuck?
– Focus cross-functionally on a balanced portfolio. Bonus
employees against the portfolio.
– Augment with functional metrics focused on improving
RELIABILITY.
• What are the functional reliability metrics?
– Examples include: Forecasting, first pass yield, OEE, on-time
delivery, orders shipped complete, hands-free orders, schedule
attainment, safety metrics, employee turnover
Insights
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66. Supply Chain Insights LLC Copyright © 2015, p. 66
• Continuity of leadership
• Supply chain talent development
• Focus on a multi-year supply chain strategy
• Clear governance to guide cross-functional decision-making
• Strength in horizontal processes
• Excellence in supply chain planning, network design and inventory
management
What Drives Top Performance?
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67. Supply Chain Insights LLC Copyright © 2015, p. 67
Clorox Colgate
Eastman Chemical Estee Lauder
General Mills Inbev
L’Oreal
Congratulations!
2015 Supply Chains to Admire Winners
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68. #SCIWEBINAR

69. #SCIWEBINAR

70. #SCIWEBINAR

71. Supply Chain Insights LLC Copyright © 2015, p. 71
Founder: Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 3 books: Bricks Matter (2012), Shaman’s Journal (2014)
and Supply Chain Metrics That Matter (December 2014)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at
Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for
Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (8,000 pageviews/month)
• Forbes: http://www.forbes.com/search/?q=lora+cecere
• Twitter: lcecere (6200 followers)
• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (46,000 followers)
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72. Supply Chain Insights LLC Copyright © 2015, p. 72
Definition:
Metric Equations
Source: Supply Chain Insights LLC, Corporate Annual Reports (2000-2014)
Metric Equations
Cash-to-Cash Cycles = (Avg. Inventory/COGS + Avg. Accounts Receivable/Sales - Avg. Accounts
Payable/Purchases)*91.5
Days of Inventory = (Average Inventory/COGS)*91.5
Days of Payables = (Average Accounts Payables/Purchases)*91.5
Days of Receivables = (Average Accounts Receivable/Sales)*91.5
Inventory Turns = (Cost of Sales/Average Inventory)
Operating Margin = (Operating Income/Revenue)
Return on Invested Capital = (Net Income/Invested Capital)
Return on Net Assets = (Trailing 12 Month Net Income/Total Assets from the most recent quarter)
Revenue Growth = (Quarterly Revenuei/Quarterly Revenuei-4 -1)
Revenue per Employees = (Revenue/Average Annual Employee)
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