19 THE OUTSIDE-IN PLANNING HANDBOOK | 2023
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______________________________ “83% of manufacturers report that deployed supply chain technologies have not met expectations.” Source PWC Report, 2023 _____________________________
What can we learn from the research? Companies with teams from planning, sourcing, manufacturing, and transportation reporting to a central leader tend to be the most balanced, with the smallest gaps. The organizations with the closest alignment, as shown in Figure 6, have improved employee retention and driven growth faster while outperforming peers on operating margins. An example of a company that drove improvement in
planning redefines demand concepts. The flows are sensed, typed, and profiled using the demand analyzer for demand collaboration and supply optimization. The flows cross over the commercial sales and marketing teams and finance to enable collaboration on the demand cycle. Demand collaboration enables the team to determine the following: • Impact of market drivers. Visibility of market and demand latency. • Baseline demand for products, categories, and brands. • Effectiveness of demand shaping. Percentage of demand shifting. • The bullwhip impact of the portfolio shifts. • New product launch acceptance. This monthly analysis starts the planning cycle and precedes S&OP.
organizational alignment is Clorox 8 . The Company worked with Georgia Tech to train commercial and operations teams to understand supply chain constraints and flows. The leadership team cited this program as a critical factor in outperforming their peer group in job retention, margin, and growth for 2013- 2021 (pre-pandemic). For the period, as shown in Figure 7, Clorox outperformed the household products peer group with margins of 18% compared to the industry average of 16%. Clorox also had inventory turns of 7.33 versus the industry average of 4.78. After defining the roles and focus, the journey for outside-in
Operating Margin vs. Inventory Turns (2013 - 2021) Figure 7. Clorox Supply Chain Performance
Best Scenario
2015
8.50
2014
2020
2013
7.50
CLX 0.18, 7.33
2017
2016
2019
2018
6.50
2015
2014
2013 Household Non-Durable 0.16, 4.78
5.50
2021
2020
2019
2016
2018
4.50
2021
2017
3.50
0.15
0.16
0.17
0.18
0.19
0.20
Operating Margin
Fundamental Average Score Clorox = 8 Industry = 6 Clorox
Clorox Household Non-Durable Industry
Average (Annual Revenue, Return on Invested Capital (ROIC)
Household Non-Durable Industry
◆ Average (Annual Revenue, Return on Invested Capital (ROIC)) Source: Supply Chain Insights LLC, Corporate Annual Reports 2013-2022 from YCharts
8 Clorox Successfully Implements a Program for Value Chain Segmentation – Supply Chain Shaman Supply Chain Insights LLC Copyright © 2023, p. 2
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