Supply Chain Metrics that Matter

How to Conquer the Effective Frontier and Drive Improved Value in Global Operations

Growth has slowed. Volatility has increased and the world is more global. Brands are defined by innovation and services. Supply chain excellence matters more than ever. It makes a difference in corporate performance.

One cannot snap their fingers and deliver supply chain success. It happens over the course of many years. It is measured in inches not miles. In this book, the author evaluates the progress of over a hundred companies over the period of 2006-2013.

Success drives value. The effective supply chain makes a difference in winning a war, saving a patient, and driving commerce; but it also makes a difference in a community having clean air, potable water, and a standard of living. Mistakes are hard to overcome. Supply Chain Metrics that Matter tells this story. The book links corporate financials to supply chain maturity. In the book, the author analyzes which metrics matter.

The author Lora M. Cecere is a supply chain researcher as well as an authority in supply chain technology. She helps companies gain first mover advantage. In the book, Cecere provides concrete, actionable steps to align and balance the supply chain to drive value. The book explores the crossover between supply chain efficiency and financial growth with topics such as:

• Outlining the metrics that matter, the metrics that don't
• Progress in industry sub-segment in improving inventory, cash, productivity and margin
• The management techniques that improve performance
• Sharing insights on how metrics change as the supply chain matures
• The roadmap to improve performance.

Today, supply chains are global and dynamic. They are rapidly evolving. Companies that constantly seek out new solutions and opportunities for improvement drive differentiation. In a market where growth is stalled and many companies are stuck in driving supply chain performance, this book provides a clear, concise framework for a more modern, effective supply chain.

Foreword xi

Preface xv

Acknowledgments xvii

Chapter 1: Starting the Journey 1

Meet Joe 4

Setting Metrics Targets 5

The Journey 6

Agility 37

Evolution 40

Conclusion 42

Notes 43

Chapter 2: Managing Metrics on the Effective Frontier 45

The Connection of Metrics to the Business Strategy 46

Managing Metrics as a Complex System 49

Using the Metrics Maturity Model to Drive Change 52

Aligning on Asset Strategies 81

Managing Change 85

Conclusion 87

Notes 88

Chapter 3: Using Value Network Strategies to Move to the Next Level on the Frontier 89

Managing What You Can’t Control 90

Building the Guiding Coalition 132

Educating the Organization to Take the First Step 133

Conclusion 139

Notes 139

Chapter 4: A Strategy Session on Managing Value Networks 141

Addressing Organizational Tensions 142

The Strategy Day 154

The Journey: Becoming Market-Driven 169

Risk Management: A Catalyst for Driving Balance and Resiliency? 171

Can Corporate Social Responsibility Be an Impetus to Drive Alignment and Build Market-Driven Value Networks? 176

Sales and Operations Planning to Drive Balance and Resiliency 180

Moving to the Next Level of the Effective Frontier 186

Conclusion 188

Notes 188

Chapter 5: What Drives Value in the Value Network?: Industry Progress in Consumer Value Chains 189

The Questions 190

Leveling the Playing Field 193

The Supply Chain Index 195

The Consumer Value Chain Journey 196

Wrapping Up the Strategy Workshop 235

Conclusion 237

Notes 237

Chapter 6: What Drives Value in the Value Network?: Industry Progress in the Health-Care Value Chain 239

What Is Value? 242

Who Is the Customer? 248

Where Are We Headed? 250

The Health-Care Value Chain 253

Hospitals 259

Pharmaceutical Industry 267

Medical Device Manufacturers 278

Conclusion 283

Notes 284

Chapter 7: What Drives Value in the Value Network?: Industry Progress in the Industrial Value Chain 285

Understanding the Industrial Value Network 296

High-Tech and Electronics 300

Semiconductor Industry 310

Conclusion 320

Notes 321

Chapter 8: What Drives Value in the Value Network?: Industry Progress in the Automotive Value Chain 323

Automotive Progress on the Index 325

Review of the Automotive Industry 329

Moving Forward with Project Orbit 346

Notes 350

Chapter 9: The Smoke Clears 351

Reflections 353

Joe’s Story 354

Reflections 363

Appendix: The Methodology 365

About the Author 371

Index 373

LORA M. CECERE is the founder of the research firm Supply Chain Insights. She is the author of the enterprise software blog Supply Chain Shaman, which attracts 5,000 readers weekly. She also writes a blog for Forbes and is a LinkedIn Influencer. Currently, Lora's research focuses on supply chain sensing and revenue management. Her supply chain experience includes specialist roles at AMR Research, Clorox, Gartner Group, Kraft, and Procter & Gamble.

Corporate performance is not a "set it and forget it" proposition. Supply Chain Metrics That Matter makes this truth clear enough with its thorough analysis of recent multi-industry performance trends. The research shows that continually building value at all points along the value chain is the key to sustained success. And continually building value means continually changing. Supply Chain Metrics That Matter was written to guide businesses through the change process with a measurement-based outlook that will help any organization stand the test of time.

By using a fictionalized case that aggregates the author's three years of intensive research, Supply Chain Metrics That Matter provides an engaging and useful way to think about value and performance. By following "Joe," the leader of a major multinational corporation, readers will see their own concerns given voice. There is also value to considering the nitty-gritty details of how Joe designs, implements, and measures his goal, all the while striving to create company-wide alignment.

Change can be risky. The process of implementing metrics that will help identify value creation opportunities certainly counts as a change, and leaders need to know that their efforts will be rewarded before they begin large-scale projects. Peppered with real-world examples from across industries, Supply Chain Metrics That Matter reinforces ideas with evidence. Author Lora M. Cecere has also included the methods and measures that form the foundation of her value-chain analyses. Readers will proceed with certainty knowing which variables are worth tracking.

With chapters on value-chain indices specific to the consumer, health-care, industrial, and automotive sectors, Supply Chain Metrics That Matter will appeal to a broad audience. Leaders in every industry put their companies at risk by resting on corporate laurels. Instead, we should all be working to identify opportunities for growth and improvement at every step along the business process. Supply Chain Metrics That Matter is a story about how to do just that.

Corporate performance is not a "set it and forget it" proposition. Supply Chain Metrics That Matter makes this truth clear enough with its thorough analysis of recent multi-industry performance trends. The research shows that continually building value at all points along the value chain is the key to sustained success. And continually building value means continually changing. Supply Chain Metrics That Matter was written to guide businesses through the change process with a measurement-based outlook that will help any organization stand the test of time.

By using a fictionalized case that aggregates the author's three years of intensive research, Supply Chain Metrics That Matter provides an engaging and useful way to think about value and performance. By following "Joe," the leader of a major multinational corporation, readers will see their own concerns given voice. There is also value to considering the nitty-gritty details of how Joe designs, implements, and measures his goal, all the while striving to create company-wide alignment.

Change can be risky. The process of implementing metrics that will help identify value creation opportunities certainly counts as a change, and leaders need to know that their efforts will be rewarded before they begin large-scale projects. Peppered with real-world examples from across industries, Supply Chain Metrics That Matter reinforces ideas with evidence. Author Lora M. Cecere has also included the methods and measures that form the foundation of her value-chain analyses. Readers will proceed with certainty knowing which variables are worth tracking.

With chapters on value-chain indices specific to the consumer, health-care, industrial, and automotive sectors, Supply Chain Metrics That Matter will appeal to a broad audience. Leaders in every industry put their companies at risk by resting on corporate laurels. Instead, we should all be working to identify opportunities for growth and improvement at every step along the business process. Supply Chain Metrics That Matter is a story about how to do just that.