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SUPPLY CHAINS TO ADMIRE | 2025
Driving Progress by Conquering the Effective Frontier Globalization, channel complexity, war, and scarce resources all challenge business resilience: a company's ability to deliver consistent and reliable results despite demand and supply variability. Globalization increased both complexity and non-linearity. In 2012, Supply Chain Insights worked with Arizona State University to determine the most appropriate metrics to correlate to Market Capitalization. Based on the correlation of data from over 150 metrics for the period of 2006-2012 for more than five hundred companies, we selected the parameters of growth, operating margin, inventory, and Return on Invested Capital (ROIC) for the balanced scorecard analysis. In this report, we replace ROIC with ROCE based on two years of work with the Georgia Tech Statistics Department. Both of these efforts support two facts: the supply chain can be modeled, and that the metrics on the effective frontier are essential to maximize market capitalization. While we wish to include customer service in the Supply Chains to Admire analysis, no industry standard exists for comparison. Likewise, while we strongly believe in corporate sustainability, we do not feel that any of the current sustainability indexes, due to dependency on self-reported data, accurately reflect company performance.
Figure 3. The Approach: Balanced Scorecard Analysis
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PERFORMANCE FACTORS
Year-over-Year Growth
Operating Margin
Inventory Turns
Return on Capital Employed (ROCE)
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