Seventy Years Around the Sun: A Reflection

2025. Seventy years around the sun. Forty-five years working in supply chain management. To look forward, here I reflect.

Background

Who is Lora Cecere? My first job as a chemical engineer was in manufacturing. I spent sixteen years in progressive roles in food and household products manufacturing. In the 1980s, I expanded my experience to run distribution warehouses. I spent four years in distribution, eight years in plant engineering/maintenance assignments, and eight years managing production line teams in union and non-union environments. Although I did not think so then, I was lucky to have cross-functional work experience and observe leadership styles in six companies. As a female, these years were tough. The culture was a traditional male work environment.

My second career focused on building and deploying supply chain planning software. I spent two years implementing supply chain planning, six years in product and corporate marketing, and two years in sales operations. These experiences exposed me to the industry: how software is built, marketed, deployed, and evolved. I consider myself a first-generation supply chain pioneer.

My third career is as a supply chain analyst, where I attempt to help business leaders drive better outcomes. My days are filled with research projects, writing, and speaking. In 2025, I will have been an analyst for twenty-three years. My goal is to help drive better outcomes. The analyst position allows me to gain a mega-perspective. I believe that my prior experience as a software business leader and in hands-on functional roles make my research more valuable. I am humbled that 120,000 global business leaders read my newsletter. Thanks!

Supply chain excellence builds economies and can improve the planet, but only if organizations can align to drive value. Supply-centric functional thinking increases waste, as demonstrated by my latest post.

Observations

In my years around the sun and working with thousands of companies, I have observed:

• High Political Environment. Bigger Egos. Somehow, in the evolution of global supply chain management, we created pressurized environments high on politics and dominated by big egos. The primary focus is the myopic deployment of enterprise systems, which makes organizations more efficient but less effective. Metrics and process definitions are misaligned. For example, I asked how many metrics manufacturing companies measured for S&OP at a recent event. The range was 50-100—such an unacceptable answer. Supply chains will never be effective if we are not clear on outcomes.
• Network Ownership. We speak of trading partner collaboration, but progress is dismal. I reminisce and long for the leadership demonstrated by Danny Wegman (Wegman's) and Sandy Douglas (Coca-Cola) in driving the need for the barcode. I contrast this to Wal-Mart's failure with the RFID code. Despite the evolution of technology, there has been no substantial innovation or improvement in network productivity in the last three decades.
• Turnover. Lower level of Supply Chain knowledge. As M&A raged, employee turnover rose. The aggregate supply chain understanding today in an organization is much lower than in three decades. I seldom find the leadership of teams like I experienced with Keith Harrison at P&G and Annette Clayton at Schneider Electric, who focused on building teams and core capabilities. Both are retired. There are too few like Kevin Carpenter, the supply chain leader at Toro and the winner of four years of consecutive Supply Chains to Admire distinction. The difference is servant leadership. Often, executive teams hijack most organizations and boot-strap them with a narrow definition of supply chain performance focused on cost reduction, and the politics begins. These leaders get swept into the never-ending wave of politics. The Kevin's of the world focus on team building and influence management.
• Consultants and Technologists Became Order Takers. Two decades ago, aggregate knowledge was higher, and project designs started with a clear definition of outcomes. This was easier in a regional organization. Today's consultants and technologists are primarily "order takers" focusing on technology implementations. Many tackle symptoms. The assumption is that the business leader is clear about the definition of the process. (This assumption is usually false.) As a result, we are automating functional processes that fall short of delivering value. These create waste and decrease corporate value.
• Too Many Conferences. A Focus on Lead Generation for Consultants and Technologists. Lower Level of Content. Where does a business leader learn about new technologies and the building of better outcomes? It is hard. Three decades ago, conferences focused on content. Today, the conferences have become hijacked to drive lead generation—the rise of social evangelists and podcasters flame but fall short of filling the vacuum. The lack of independent content in the industry is an issue.

Need For A Reset?

I believe a reset is needed. My efforts are focused on defining value for supply chain leaders. What metrics should be measured to improve value? What processes improve this balanced scorecard approach? How do we rewire the organization from the leadership team to drive organizational alignment and decrease corporate politics?

As we built global supply chains, organizational alignment issues grew threefold. Sales became less aligned with operations, and procurement and manufacturing gaps grew. Silos became self-serving, and companies were not clear on how to make decisions using advanced technologies.

What is a good decision? Were the best decisions made at a regional level? Divisional? Business unit? Globally? The right answer was cultural fit with organizational alignment to remove bias and sandbagging. Getting there required clarity and measurement of what makes a good plan and the alignment of organizational incentives. For most companies, this is still a struggle.

While many companies see Sales and Operations Planning (S&OP) as the panacea, I do not. How do we drive improvement if we are not clear on outcomes and strategy? As a result, most S&OP processes in today's organizations add latency to decision-making without improving outcomes. Over 90% of organizations I work with cannot easily communicate the definition of a "good plan." Most have implemented technology for technology's sake, and the industry is awash with "industry experts."

The answer is not the Gartner Top 25. Compared to peer group performance for 2013-2023, 59% of the Gartner Top 25 score below their peer group on average revenue growth, 41% below inventory turns, and 41% below on invested capital. The celebrated group is doing the best on the operating margin, where only 24% rank below their peer group. Based on research with Georgia Tech, we find that the greatest value is when companies manage a balanced scorecard of operating margin, inventory turns, Return on Capital Employed, and revenue/employee.

I also laugh when newer software players speak to me about autonomous supply chains or no-touch planning. Or the use of AI to improve supply chain planning. The reason? I observe that organizations are unclear on outcomes and the definition of supply chain excellence. What should we do? I think the rewiring starts with the education of the executive team, and that process should follow strategy. Never start with the process definition. Instead, implement a balanced scorecard, build a clear strategy, and align bonus incentives. What should be on the scorecard? This brings me to the unveiling of the outcomes of the two-year project with Georgia Tech.

How Do We Drive Value?

Let me start by sharing the history of this research effort with Georgia Tech ISYE. Using Y-Chart data, Supply Chain Insights built a database of 117 metrics for twenty-six industry sectors (using the Supply Chains to Admire industry classifications) for 610 companies from 1980 to 2023.

The Y chart service harmonizes the data across different public markets, currencies, M&A, and restatements. This work was expensive. I thank Kinaxis for funding the graduate students working on this project. The data outcome is open source and can be used to improve project outcomes. Because the academic literature lacks a definition of value in the supply chain, Georgia Tech is developing a series of journal articles. The goal is to give back and help business leaders drive value.

This is not a new project. My journey to understand supply chain value stretches over fourteen years.

What have I learned? Eleven of the thirteen industries studied are forecastable and stable over time. Three metrics can effectively model market capitalization/employee with the supply chain delivering more than 50% of value. These metrics are strongly affected by supply chain practices but are usually degraded by functional optimization.

When the Cost of Goods metric is substituted for Operating Margin, the correlation coefficient falls by 40-60%. (A focus on cost throws the supply chain out of balance. Cost reductions also do not always translate into operating margin improvements.)

Currently, no planning technology helps business leaders translate a balanced scorecard into actionable exceptions. This is an opportunity. Instead, traditional planning approaches optimize functional metrics like Safety Stock (versus the form and function of inventory), Operational Equipment Efficiency (OEE), Purchase Price Variance (POV), and Functional Costs. Functional improvements throw the supply chain out of balance, decreasing value.

Your next step? Align the organization in 2025 to a balanced scorecard of growth, operating margin, inventory turns, ROCE, and order fulfillment. Align bonus incentives to this balanced scorecard. Align functional metrics to reliability to deliver value. As a business leader, drive organizational alignment from the customer back.

The process of aligning functional metrics to improve the reliability of outcomes for the scorecard will not be easy. For example, measure Forecast Value Added (FVA) and bias instead of measuring forecast error. Instead of measuring OEE in manufacturing, measure first-pass yield and schedule adherence. Instead of measuring safety stock in isolation, continually evaluate the form and function of inventory and inventory health. Evaluate transportation by the success of first-pass tender and on-time delivery while considering the impact on operating margin.

Note that the models for apparel, automotive aftermarket, beverage, chemical, diversified industries, food, and semiconductor industries have a high correlation, a great model fit, and a test error of less than 15%. Why would you not adopt a balanced scorecard as a next step?

Join a Guiding Coalition for Change?

The industry struggles with the dilemma-- there is much discussion on the need to eliminate functional silo thinking, but we perpetuate sameness. Current organizational design perpetuates functional excellence, focusing on cost reduction and transactional efficiency. The question is, "How do we break the cycle?"

The supply chain is a complex, nonlinear system. We need bidirectional flows with minimal latency from the market (channel) to the market (supplier) to drive value. This cannot be managed by typical change management. The transformation must start by "unlearning" conventional paradigms and focusing on value. The organization needs to define and implement a new set of metrics. Then, and only then, the question becomes, "How do I align the organization to improve value?"

If you are interested in rethinking your supply chain strategies and approaches to planning and decision-making based on the greater availability of data, the evolution of technology, and the opportunity to make better and quicker decisions, consider signing up for the six-week virtual outside-in planning course offered by Supply Chain Insights at the end of January.

The learning is designed to be fun. Each student will be accompanied by guided GPT learning. There is one class for EMEA and one for the Americas. There is lots of hands-on homework and case studies to cement the learning. The class is limited to manufacturers, retailers, and distributors. Networking across industries and companies raises the bar as an opportunity to learn. If interested, email me at lora.cecere@supplychaininsights.com or direct message me here on LinkedIn.

Definitions:

Jargue-Bera Test: A test of fitness of the regression model

Correlation Coefficient: A value of 0-1 representing the correlation of the model to the outcome. In this case the prediction of market capitalization/employee.