Healthcare Value Networks: How Do You

Measure UP?The Supply Chain Index

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Supply Chain Insights is focused on delivering independent, actionable and objective advice for

supply chain leaders.

A company dedicated to research, turn to us when you want the latest insights

on supply chain trends, technologies to know and metrics that matter.

About Us

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Presenters

Abby MayerResearch Associate

Lora CecereFounder and CEO

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Dr. George RungerProfessor, CIDSE, ASU

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Agenda

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Why It Matters To You

What's Next?

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A Supply Chain is a Complex System

with Complex Processes

with Increasing Complexity

Our Belief

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Resilient and predictable

Balanced across the set of metrics to maximize value

Showing year-over-year strength against peer group

Desired Corporate Performance

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The Supply Chain Effective Frontier:First Representation

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While we like this framework, there is no good source of consistent and accurate data for:

– Forecast Accuracy– Case Fill Rate– Corporate Social Responsibility

Problem with this Framework

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The Supply Chain Effective Frontier: Second Representation

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In most supply chains, complexity has risen throwing the supply chain out of balance. We find that nine out of ten companies are stuck at the intersection of inventory turns and operating margin.

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Industry Overview

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Progress over the Last Twelve Years

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Intersection of Operating Margin and Inventory Turns

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Companies Get More Serious With A Recession

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Today’s Supply Chain

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A Business Continuity Risk

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Agenda

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Supply Chain Index

What's Next?

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Mining 20 Years of Financial Data

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Correlations to Market Capitalization

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“No significant supply chain improvement happens in less than

three years….”

Marty Kisluik, FMC

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How to Read an Orbit Chart

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Supply Chain Metrics That Matter Reports

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Agenda

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Supply Chain Index

What's Next?

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Supply Chain Metrics That Matter Reports

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What is Resiliency?

Tightness of the Pattern on the Orbit Chart for Operating Margin and Inventory Turns

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Abbott Laboratories & Shire PLC

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Boston Scientific Corporation & Stryker Corporation

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GlaxoSmithKline PLC & Merck & Co., Inc.

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Resiliency 2000-2012

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Agenda

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Supply Chain Index

What's Next?

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Overall Ranking per Company• Balance: Return on Invested Capital & Revenue Growth Vector Trajectory (30%)• Strength: Inventory Turns & Operating Margin Vector Trajectory (30%)• Resiliency: Inventory Turns & Operating Margin Mean Distance (30%)• Peer: Peer Rankings by Industry (10%)

The Supply Chain IndexA new way to measure relative supply chain performance by industry, based on 4 components: balance, strength, resiliency and peer rankings.

Supply Chain Index: A Measure of Supply Chain Improvement

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The Index Framework

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Supply Chain Index

30% 30% 30% 10%

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What is the right weighting? What is the right time period?

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Looking at the Value Network

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Industry Overview: 2006-2012

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Supply Chain Index: Hospital for 2006-2012

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Supply Chain Index: Hospital for 2009-2012

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Pharmaceutical Industry

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Supply Chain Index: Pharmaceutical for 2006-2012

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Supply Chain Index: Pharmaceuticals for 2009-2012

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Medical Device

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Supply Chain Index: Medical Device 2006-2012

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Supply Chain Index: Medical Device for 2009-2012

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• Industries and companies in the healthcare value network have struggled to improve supply chain processes. With high margin, there is low priority on supply chain excellence.

• Nine out of ten companies are stuck on the Effective Frontier. The project approach versus a clear operating strategy was detrimental.

• Supply chain resiliency is improving. However, the lack of resiliency of contract manufacturing and 3PLs should be a risk concern for all manufacturers.

• Large companies, that were early adopters, made great progress at the beginning of the decade, but progress has slowed. The Supply Chain Index shows that their progress has been eclipsed by late followers.

What Have We Learned?

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Agenda

Vision

History of Our Work

Resiliency Patterns and Mathematical Calculation

Supply Chain Index

What's Next?

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Next Steps

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• Supply Chain Index Webinars• August 12- Industrial Value Network

• Monthly Research Reports• July 22- Healthcare Value Network• August 19- Industrial Value Network

• Final analysis of companies to be revealed at the 2014 Supply Chain Insights Global Summit

Questions?

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Metrics That Matter

• Lora Cecere’s 2nd book: Metrics That Matter

• To publish in Fall 2014

http://tinyurl.com/metricsthatmatter

Pre-orders available on Amazon:

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What’s Happening at Supply Chain Insights?

www.supplychaininsights.com

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About Lora Cecere

• Founder of Supply Chain Insights

• Invited to be a “LinkedIn Influencer”

• Invited to write a guest blog for Forbes

• Author of 2 books: Bricks Matter (2012) and Metrics That Matter (to publish Fall of 2014)

• 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.

Contact Information: • Email: lora.cecere@supplychaininsights.com• Blog: www.supplychainshaman.com (6000 pageviews/month)• Forbes: http://www.forbes.com/search/?q=lora+cecere• Twitter: lcecere (4800 followers)• LinkedIn: linkedin.com/pub/lora-cecere/0/196/573 (7000 in the network)

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