Last night as I worked to compile the data needed for a table in our upcoming consumer value network report, it hit me. What we are doing is hard. There is a lot that happens behind the scenes to get that pretty data in to the report. Below is the table I was working on to consider 5 industries in the consumer value chain over the period 2006-2012. Not only are we showing averages, but also the change over the time period on the second portion of each row. It seems obvious, but the average and the percentage change illuminate different facts. Together, they provide a much more comprehensive understanding than on their own.
But what makes it into our research and how do we display it? The choices are many and for better or for worse, there is no one single right answer. What industries are considered part of the consumer value network? What is the right NAICS code designation to capture the retail segment without getting too narrow or too broad? What are the metrics we (or the reader) should care about?
Some supply chain metrics are obvious: inventory turns, cash-to-cash cycle and operating margin. Other are less so, revenue per employee encompasses the whole enterprise but helps as a proxy of complexity in operations from a supply chain perspective. Return on invested capital (ROIC) is another metric we have come to gradually, through trial and error. In our work last year, we were surprised to find that ROIC had a much higher correlation factor with market capitalization than the more traditional return on assets. It is for this reason we have included ROIC as one part of the balance metric in the Supply Chain Index.
Once the metrics are chosen, more decisions appear. What is the right time period to consider? Is a table appropriate or perhaps an orbit chart? What about a simple line graph? These decisions depend not only on what data we want to present, but also on the audience. For someone new to the methodology, jumping straight into a pile of orbit charts is hard. Tables or simpler charts might provide a better entry point.
Next time you're faced with a chart or table, remember the layers of decisions that lie beyond that research offering. A pie chart may look simple, but research is anything but easy as pie.