Nearly two and half years of work on financial ratios in connection with supply chain excellence have led us to this point. This week we are publishing the results of the 2014 Supply Chain Index. Our report (The Supply Chain Index: Improving Strength, Balance and Resiliency) examines the methodology of the Index as well as three industry peer groups (chemical, consumer packaged goods and pharmaceutical). Here is what I have learned through the process -
*This is hard work. Connecting financial metrics with supply chain performance is not as simple as it sounds. Maybe to wiser people it doesn't sound easy, but to me it initially sounded straight forward. It has not been. This has been a long project full of mistakes and iterations and improvements.
*Cross industry analysis and comparisons are fun but not always meaningful. Comparing well known supply chain leaders like Wal-Mart, McDonald's and Apple is a fun exercise, but the realities of the different business environments means practices are not always transferable across industries. Comparing against a similar peer group of public companies or even down to divisional analysis provides much more actionable insight.
*Big companies may be disadvantaged in the race for supply chain excellence. Companies with a larger supply chain footprint and more complexity stretching across the globe deal with more inertia than smaller more agile companies. It is for this reason we are aiming to include public companies of all different sizes in our ranking, not only the largest by revenue.
*Change takes time. It takes several years to measure consistent and sustained change within a supply chain. Most leaders are surprised to see that, in general, inventory levels over the past decade have not come down significantly. A short-term project mentality has led us to exaggerate inventory improvements. In an effort to provide the necessary time horizon, the Supply Chain Index is based on seven years of results (2006-2012).
I hope you will catch the whole report available here and consider joining our webinar on May 19 at 11 EST. The webinar is the second on the list here.