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Supply Chain Insights LLC Copyright © 2012, p. 2

This is the new bible for all supply chain executives. It provides an insider’s perspective that will prove incredibly valuable to even the most grizzled supply chain veteran. This is the next must-have business book.

--Bruce Richardson, Chief Enterprise Strategist, Salesforce.com

The journey to build the outside-in end-to-end value network happens in stages and can only be led from the top based on value-based outcomes. This is a guidebook for leaders driving the transformation.

--Roddy Martin, Senior Vice President, CCI Best Practice Research and Consulting

This book is like no other that has been written about supply chain management. It is a must read for the supply chain leadership team.

--Marty Kisliuk, Global Operations Director, Agricultural Products Group, FMC Corporation

Lora Cecere has been a key driver of supply chain strategies that force companies to think differently about how they work with their customers, partners, and cross-functionally within their own organizations. Here she teaches us to take a bold step to change our thinking and turn the supply chain around to focus on the consumer.

--Ann Dozier, Vice-President, Fresh Dairy Direct IT, Dean Foods Company

Today, the worlds of social business and supply chain management have many degrees of separation. I enjoyed working with Lora to understand what the future transformation of digital marketing to digital business could look like.

--Jeremiah Owyang, Research Director, Altimeter• •

Back Cover


Bricks Matter Book Club on Linkedin

BRICKSRight Use of Assets

Expansion into BRIC Countries (Brazil, Russia, India and China)

Supply Chain Process Knowledge


Evolving Practices


The Supply Chain Pioneers


Industry Averages


Chemical


Consumer Electronics


Consumer Packaged Goods


Food


Pharmaceutical


Supply Chain Management: Top 3 Elements of Pain for Respondent


Evolution

Align:Market Driven

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

ResilientReliable

Adapt: Demand Driven

EfficientSense

Demandand Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Cost

Procure to pay/order to

cash


An adaptive network focused on a value-based outcome that senses and translates

market changes (buy and sell-side markets) bi-directionally with near-real time data latency to align sell, deliver, make and

sourcing operations.

What is a Market-driven Value Network?


Cash-to-Cash Cycle vs. Gross Margin (2000-2011)SUMMARY SLIDE


Supply Network: When the supply chain is extended to a network of trading partners, it is termed a supply network.

Value Chain: When the emphasis of this extended supply chain shifts from cost to value, it is called a value chain.

Value Network: When it becomes more strategic to the company, focused outside-in to drive value-based outcomes, it is termed a value network.

Definitions


Evolution

Align:Market Driven

Building Horizontal Process Connectors

ContinuousTesting

LearningImprovingIn Market

OrchestrateDemand and Supply

ResilientReliable

Adapt: Demand Driven

EfficientSense

Demandand Supply

Shape Demand andSupply based

on Market

Absorb DemandVolatility

Absorb Supply Volatility

Right Product

Right Place

Right Time

Right Cost

Cost

Procure to pay/order to

cash


A Supply Chain

is a Complex System

with Complex Processes

with Increasing Complexity


The Effective Frontier


Growth Profitability Cycle Complexity

R&D Margin Cash on Hand C2C Cycle Altman Z

R&D to COGS Ratio Free Cash Flow Ratio Days of Finished Goods Capital Turnover

SGA Margin Gross Margin Days of Inventory Current Ratio

SGA/COGS Net Profit Days of Payables Outstanding Quick Ratio

COGS as Percent of Net Sales Operating Margin Days of Raw

Materials Return on Assets

Pretax Margin (EBIT) Days of Sales Outstanding Return on Equity

YoY Sales Growth Days of Work in Progress

Return on Invested Capital

Operating Margin DPO/DSO Return on Net Assets

Inventory Turns Revenue/Employee

Receivables Turns Cost of Sales

Useful Ratios


• Performance better than peer group• Year-over-year improvements• Consistency in results• Leadership in managing trade-offs

What is Best in Class?


Five Year Comparison


Value Network Strategy

Supply chain strategy

Business StrategyWhat are the right things to do to increase company value?

Value-network Supply Chain StrategyWhat are the right ways to support the business strategy?

What are the right trade-offs between value drivers for each value network?

Right productplatforms

Design the supply

response

Build organizational systems and

manage talent

Align supply relationships

Align demandrelationships

Effective Supply Networks

Execution of buy-side strategies

Continuous Improvement

Capabilities RequiredSupply Chain

Network Design

Design Networks

Innovation Methodologies

Demand Networks

Joint Value Creation Strategies

Business ProcessHow do I do the right things right?

Source: Supply Chain Insights, LLC

The Path Forward


The Supply Chain of the Future

World Population

Source: “The World at Six Billion” United Nations, 2004; The World UN Population Assessment 2006; “Unsustainable World,” 04/15/08, BBC

North America

2007 2020339M 342M

Europe

2007 2020731M 722M

Asia

2007 20204.0B 4.6B

L America

2007 2020572M 660M

Africa

2007 2020965M 1.3B

Oceania

2007 202034M 40M

MARCO TRENDS


Outside-In

Value-Based OutcomesDelivered by Value Networks

Supply Chain Excellence =

Supply Chain 2020 Tipping Points

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Talent Shortage

Compliance on Safe & Secure

Orchestration

Big Data Supply Chains

Internet of Things

Learning Supply Chains

Digital Manufacturing


Scenario Planning


Rethinking Analytics


Definition

33

Challenges:• Transactional• Time phased data

Structured Data

• Social• Channel• Customer Service• Warranty

• Temperature• RFID• QR codes• GPS

• Mapping and GPS• Video• Voice• Digital Images

Unstructured Data

SensorData

NewDataTypes

Volume

Velocity

Variability


Connecting the Extended Supply Chain

34


Connecting the Extended Supply Chain


Two-day public training classes focusing on accelerating the understanding of supply chain excellence. $1500 for two days of training.

– Chicago, IL – April 1-2– Dallas, TX – May 6-7– Princeton, NJ – June 24-25

For more information and to register visit: www.supplychaininsights.com/services/training/

Training – Based on Bricks Matter

http://www.supplychaininsights.com/services/training/


Where is Your Opportunity?


Who is Lora?

• Founder of Supply Chain Insights

• 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.


Where Do You Find Lora?

Contact Information: [email protected]

Blog: www.supplychainshaman.com (4000 pageviews/month)

Twitter: lcecere 3700 followers. Rated as the top rated supply chain social network user.

LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (2300 in the network)