14
2022 // SUPPLY CHAINS TO ADMIRE
A Closer Look at Supply Chains to Admire Results by Industry At the start of this analysis, we start by mapping industry trends. Supply chain practices grew in importance as the margins of 85% of the industry sectors regressed over the last decade. Without the supply chain's redesign, companies cannot drive progress based on traditional process paradigms. Inventory is a sticky wicket—a political hot potato—in many organizations. Inventory levels at the end of 2021 were significantly higher across industries than pre-recession levels in 2007. Today, many companies have burgeoning inventories; but lack the right product to ship orders reliably. They are drowning in inventory, decreasing cash-to-cash performance, but have the wrong products to ship orders. This is due to the lack of evolution of processes to manage inventory holistically. Winners focus on the design of inventory strategies while most companies, often laggards, only focus on safety stock levels. The lack of performance in inventory optimization is a significant factor in determining the winners in the Supply Chains to Admire Award process. While over 82% of manufacturers greater than 5B$ in annual revenue own an advanced planning solution, a spreadsheet is the most often used technology. There is a significant gap in inventory performance between companies that use advanced optimization versus those dependent on spreadsheets. When we started this analysis, we believed the analysis would favor the iconic brands of Procter & Gamble, Unilever, or Walmart. While each company contributed significantly to supply chain process improvement, in this study, each struggled to outperform its peer group on the balanced scorecard selected for this analysis.
Table 6. Inventory Levels by Industry Sector Across Time Periods
Days of Inventory by Industry: Comparison across Years
Years
Diffeence (2020 - 2021 vs 2004 - 2006)
Industries
2004 - 2006
2007 - 2008
2009 - 2013
2014 - 2019
2020 - 2021
Beverage
95
98
114
160
153
57
Pharmaceuticals
146
135
158
184
182
36
Medical Device
100
107
120
129
145
44
Beauty
105
127
132
142
147
42
Automotive Parts
47
52
61
66
76
29
Household Products
50
51
57
74
78
29
Aerospace & Defense
94
89
97
103
122
28
Apparel Retail
62
65
66
69
83
21
Chemical
58
54
59
73
77
19
Semiconductor
61
69
80
92
76
15
Automotive
37
41
43
48
51
14
Food
50
51
57
59
61
11
Broadline Retail
65
62
63
66
59
-5
Made with FlippingBook - professional solution for displaying marketing and sales documents online