Supply Chain Excellence Focuses on Improving Outcomes

I am excited that this monthly newsletter now reaches more than 100,000 readers. I hope the writing and the research help you and your team.

My current focus is gathering research for my next book. The working title is The MisGuided Gold Diggers. The focus is on the evolution of supply chain planning, the definition of global supply chain teams, and how the industry got so enamored with technology that companies failed to optimize outcomes. Many technologists and consultants improved personal wealth, but the question is, "Did we improve outcomes?"

I don't think so, but I am engaged in a year of research with the IYSE group at Georgia Tech and the Data Science Institute at the University of Wisconsin to understand more.

It is my version of Good to Great. The book highlights the failure of the analyst groups touting tactics like ERP II, which drove tight integration of ERP to APS without substantiation. It also showcases how the industry changed when Evergiven got stuck in the Suez Canal. Suddenly, everyone was a supply chain expert. There are lots of opinions. Sadly, I find that there is very little factual research. I want to change that.

The book will showcase the case studies of companies that used supply chain programs to improve outcomes for peer groups using the Supply Chains to Admire methodology.

The book will take a researched view of the last decade. While companies tout a VUCA world (I hate this acronym), 2013-2019 was a period of low variability. Working with the data science group at the University of Wisconsin, I will share insights from over 100 quantitative research studies completed using my followers on LinkedIn as a panel group. (If you are one of the 330,000 followers and have taken one of my studies, thanks. In the work, I will never betray your trust by revealing your name or your company's name.)

The research with the University of Wisconsin highlights the choices that drove value and the mistakes that eroded value. We are correlating the responses to balance sheet information. In short, I believe that we missed an opportunity to build effective global supply chains. If I am wrong, I will change the book title and premise.

The work with Georgia Tech will define value. This research uses public-reported data from 1982-2022 to analyze which metrics drive the highest market capitalization and the relationship between supply chain excellence and market capitalization. A supply chain leader using a balanced scorecard has a 70% impact on market capitalization. In the book, we will share a new hierarchy of metrics to substantiate why companies need to move from functional cost metrics and traditional optimization to maximize a balanced scorecard. This statistical modeling will take a year to complete. Ultimately, we will analyze the Supply Chains to Admire research and the Gartner Top 25. The problem in the industry is that there is nothing in the academic literature that defines value. Most companies optimize to reduce cost, which does not necessarily translate to margin or value. Inventories grow despite the expressed commitment to ESG filling warehouses with the wrong products.

The team has completed three industries, demonstrating that the greatest value occurs at the intersection of operating margin and inventory turns, which requires organizational alignment and design thinking. This link will take you to the presentation given at the recent Informs conference.

We will also showcase the work completed on thinking of the supply chain as a series of flows, starting with demand streams, at this year's ASCM conference in Austin on September 8th-11th. The goal is for companies to rethink demand as a series of flows using outside-in (channel data) and design supply strategies based on supply data to improve outcomes. Attendees will view other companies' work on rethinking demand and use the insights to draw their river.

Since all books make us feel better when there is a hero, the book ends with success stories of significant companies completing a transition from inside-out to outside-in planning processes and the redefinition of decision support.

What do you think? What hypothesis should I test?

Check out my recent research:

A plea to rethink supply chain software selection. Thoughts. Selecting Supply Chain Software.

Research completed with Nulogy on the value proposition of network solution investments. Network Investment. Defining the ROI.

Thoughts on the investment of Blue Yonder with One Network. If Only There Was There There

Insights on building outside-in planning processes. Outside-in Planning. How to Jump. And Just Jump

Research completed with UST on inventory optimization and the need to include supply variability. Rightsizing Inventory.