10
10
THE OUTSIDE-IN PLANNING HANDBOOK | 2023
turns of 4.92. Plotting metrics against each other allows business leaders to see their pattern against their peer group. Ecolab outperformed the industry in both metrics until 2020 but slipped and underperformed in margin during 2020-2022 Performance is complex to sustain through management changes. In the case of
______________________________ “The complexity of the supply chain arises from the number of echelons in the chain and the number of facilities in each echelon. Given the inherent complexity of the typical supply chain, selecting appropriate performance measures for supply chain analysis is particularly critical since the system of interest is generally large and complex.”
Companies following traditional supply chain practices focused on transactional data do not outperform. The use of functional metrics and close coupling of the supply chain to the financial budget is a barrier to driving balance sheet improvement. A worst-case scenario is defining the supply chain as another function
within a rigid set of silos. The best supply chains are focused on using market data and improving customer outcomes. Getting clear on the mission and the definition of supply chain excellence is the first step in building outside-in processes. The next step is re- evaluating the modeling.
Benita Beamon, Measuring Supply Chain Performance, International Journal of Operations and
Ecolab, a new executive team in 2013 drove improvement but could not support it with management turnover and the variability of the pandemic. There are many barriers to beating the peer group in
Production Management, VOL 19, 1999. ______________________________
improvement, performance, and value. Smaller, innovative, newer companies focusing on customer value tend to win the Supply Chains to Admire award.
Figure 2. Orbit Chart: Ecolab Progress Against Peer Group Operating Margin vs. Inventory Turns (2013 - 2022)
Best Scenario
Best Scenario
7.00
Fundamental Average Scores Ecolab = 9 Industry = 8
2019
6.50
ECL 0.14, 5.35
6.00
2016
2014
2017
2013 2016
2020
2013
5.50
Chemical 0.11 4.92
2014
2021
5.00
2015
2015
2017
2020
2022
2019
2018
2022
4.50
2018
2021
4.00
0.07
0.08
0.09
0.10
0.11
0.12
0.13
0.14
0.15
0.16
0.17
Operating Margin
Fundamental Average Scores Ecolab = 9 Industry = 8 Ecolab
Ecolab
Chemical Industry
Chemical Industry
Average (operating margin, inventory turns)
◆ Average (Operating Margin, Inventory Turns) Source: Supply Chain Insights LLC, Corporate Annual Reports 2013-2022 from YCharts
Supply Chain Insights LLC Copyright © 2023, p. 2
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