A couple weeks ago, I wrote a post entitled "What the Heck is Supply Chain Resiliency?" We had just completed preliminary work on a new metric in cooperation with Arizona State University called resiliency. Resiliency is a measure of a company's performance at the intersection of inventory turns and operating margin. It is one piece of the Supply Chain Index that we are developing. The other pieces are still in development, but I'd like to give you a sneak peek into our work. We're planning to develop two additional metrics - strength and balance.

 

Strength will be our attempt to quantify year-over-year consistency in results. This might be revenue growth on an annual basis or even Return on Invested Capital. This metric is designed to reward companies demonstrating consistency in results. Of course improvement in metrics is important, but so too is consistency.

 

Balance is the third metric we are creating and for long time readers will likely evoke memories of last year's work on the Index. This is our attempt to connect supply chain financial metrics with market capitalization. Of course, there is a TON of noise in market capitalization data that cannot be controlled by supply chain, but we believe there is a relationship there. As the work continues, we are finding that some industries demonstrate a correlation and others do not. Is there a pattern between industries that do or do not correlate? The discovery is ongoing.

 

This is work that has never been done before and it keeps me on my toes. If you'd like to follow along with our latest developments, be sure to tune into our complimentary webinar this Thursday, April 24 at 2 p.m. ET. Lora Cecere, myself and Dr. George Runger of ASU will be presenting our latest research.

 

In order to keep our webinar series going, we depend on survey respondents from readers like you. We have several open surveys available here and are especially excited to finish a long running study on retail scorecards. If you can help us out, here is the link. See you Thursday!