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August 20, 2015 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Inventory Performance 2015 - Interesting Comparisons bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet Expert Insights bullet On Demand Videocasts

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Supply Chain Graphic of the Week
Q2 2015 US Carrier Operating Performance by Mode

Good News, Bad News Quarter at Walmart;
USPS Looking for Salvation from eCommerce - and Finding It
Empire State Production Plummets
Maersk Cuts Global Container Volume Forecasts


August 4, 2015 Contest

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Holste's Blog: Searching For Solutions To Complex Logistics Challenges


Weekly On-Target Newsletter:
August 19, 2015 Edition

Cartoon, Amazon Culture, LTL Q2 Results, Key Skill in Procurement and more

A Business-Driven Approach to Supply Chain Analytics
by Ashwin Patil
Director, Analytics and Information Management
Deloitte Consulting LLP
by Lane Warshaw
Senior Manager, Information Management
Deloitte Consulting LLP

Why Supply Chain Visibility Tools are a Good Investment

by Stephanie Miles
Senior Vice President, Commercial Services
Amber Road


New Report from SCDigest!

Conquering the Omnichannel Challenge


What are the only two universities that have produced two CSCMP Distinguished Service Award winners at the time of their recognition?

Answer Found at the
Bottom of the Page

Inventory Performance 2015 - Interesting Comparisons

Ok, here in the dog and back to school days of August, I decided to milk one more column out of our annual work with the working capital data supplied again to SCDigest from REL, a Hackett Group company.

Last week's column summarized inventory turns by over 60 industry sectors (created by SCDigest from REL's less granular grouping), as well as which companies had the highest and lowest turns in each of these sectors. (See Inventory Performance 2015 Part 2.)

This week, a couple of more things. First, this interesting chart in REL's own report, summarizing working capital performance over the past decade overall and in its individual components, as shown below:


See Full Size Image

If you view the full size image, you will see overall cash conversion cycles are down about 7% from 2004 (an improvement). Inventory performance as measured by Days Inventory Outstanding (DIO) has improved about 2.5% over the same period, though is basically flat with 2010. And despite all the articles about big companies stretching out payments to suppliers over the past few years, Days Payables Outstanding (DPO) levels have contracted since 2004 and 2010, meaning payments are actually being made slightly faster on average.

With that relatively brief introduction, below you will now find a list of select grouping of companies in the same sectors and the inventory turn numbers in 2014.

Think you will find it interesting.

Sports Apparel Nike: 3.9
Columbia Sportswear: 3.0
Under Armour: 2.9
Food Wholesalers US Foods: 18.3
Sysco: 14.7
Industrial Distributors Graybar: 10.5
Westco: 7.7
Grainger: 4.2
Fastenal: 2.1
Mass Merchants Walmart: 8.0
Target: 5.8
Sears: 3.9
Department Stores Nordstrom: 5.0
Kohl's: 3.2
JC Penney: 3.0
Dillard's: 3.1
Macy's: 3.0
Belk: 2.7
Grocers Whole Foods: 20.7
Kroger: 13.7
Safeway: 12.0
Apparel Retailers American Eagle Outfitters: 6.5
Express: 6.1
Urban Outfitters: 5.5
The Gap: 5.1
L Brands: 5.0
Chico's FAS : 4.9
Home Products Retailers Home Depot: 4.8
Lowes: 4.1
Metals Manufacturers Nucor: 7.0
Worthington Industries: 6.4
US Steel: 6.2
Alcoa: 6.2
Food Manufacturers Nestle: 7.5
Kraft: 7.5
General Mills: 7.4
Kellogg: 7.3
Mondalez: 6.2
Conagra: 6.1
Heinz: 5.7
Campbell Soup: 5.3
Hershey: 5.1
JM Smucker: 3.8
Consumer Packaged Goods Clorox: 8.4
Church & Dwight: 7.5
Kimberly-Clark: 6.9
Procter & Gamble: 6.2
Colgate-Palmolive: 5.2
Energizer Holdings: 3.7
Semiconductor Manufacturers Broadcom: 7.7
Advanced Micro Devices: 5.4
Intel: 4.7
Texas Instruments: 3.1
Pharmaceuticals Merck: 2.7
Roche Holdings: 2,5
Hospira: 2.5
Bristol-Myers Squibb : 2.4
Eli Lilly: 1.8
Pfizer: 1.6
Personal Care Products Revlon: 4.2
Avon Products: 4.1
Coty: 3.0
Elizabeth Arden: 1.9
Estée Lauder: 1.7
Computer Network Equipment Juniper Networks: 31.7
Cisco: 11.8
JDA Uniphase: 6.0
Construction Related Equipment Deere & Company: 5.9
Oshkosh Corp.: 5.9
Terex: 4.0
Caterpillar: 3.3
Joy Global: 2.4
Soft Drink Manufacturers Coca-Cola Bottling Co.: 14.7
Coca-Cola Enterprises: 13.6
Dr Pepper Snapple: 12.2
Pepsico: 9.8
Monster Beverage: .6.4
Coca-Cola: 5.8
Chemical Manufacturing Celanese: 6.6
HB Fuller: 6.3
W.R. Grace: 6.2
Dow Chemical: 5.8
Eastman Chemical: 4.7
Dow Corning: 4.3
DuPont: 2.8

It is fascinating to me to see the competitors with very similar turns - but more often than not there are rather significant differences in those values within each sector.

Why, for example, are turns at Pepsico so much higher the Coca-Cola's? I don't know for sure, but suspect it is because a significant share of Pepsico's business is from snack foods, which have to turn fast due to freshness issues.

But why does chemical maker HB Fuller have nearly three times the turns of DuPont? I have no idea, just that there are many variables in inventory levels, from service policies to supply chain models to trade-off management and much more, often including skills and processes.

And as we noted last week, toy maker Hasbro had slightly better turns than rival Mattel (6.0 versus 5.4), but if Mattel had equaled Hasbro's level, it would have generated an extra $58 million in cash flow in 2014.

Ok, I promise I am done now for 2015. But I'll be back for more next year, with a few expansions, based on some of the requests I have received in recent weeks.

Any reaction or other analysis to this inventory data? Why do you think turns vary so much within a sector? Let us know your thoughts at the Feedback button or web form below.

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We've received a number of letters on our couple of First Thoughts columns on supply chain strategy, and we will publish a few here this week and more next time.

That includes our Feedback of the Week from David Schneider of David K Schneider & Company, who has quite a bit of interesting things to say on the topic.

Feedback on the Week on Who Really Has a Supply Chain Strategy?


You asked for a response to your article about Supply Chain Strategy, of the apparent lack of it in the study group.

That is like throwing a steak at a hungry dog.

In 1988, as a young logistician, I stood in front of the senior executives of a Fortune 500 company and said that figuring out the supply chain was a strategic weapon against the competition. I then proceeded to demonstrate how we could change multiple tactics in our supply chain execution that would create over $100 million of incremental operating cash flow, fulfilling a strategic need of generating more cash to support paying off debit. Only a year ago I challenged that most people in supply chain management mistook tactics as strategy, that most people would not recognize strategy if it bit them on the leg like a hungry dog.


Cream rises to the top, and accounts for about 12% of the total volume of a gallon of raw milk. There are other natural distributions like that, but it is a good proxy for the point. The best companies in supply chain are perhaps only 12% of all of the companies in the business universe. The CEO and CFO of those organizations realize that getting their supply chain right, as in having an overall strategy for how they look and develop their supply chain, is a strategic exercise. These same leaders understand that supply chain strategy must be in alignment with the marketing strategy, the financial strategy, and the personnel strategy. It is one piece of the puzzle, and only about 12% of the companies out there make the effort to really figure it out.

Less than that get it right.

Even when the CEO get it, and wants to drive a supply chain strategy, there are always factions in the organization that don't get it, that will resist the notion. Call me crazy, but it is true. The Vice Presidents, the Directors, the Managers, they are all focused on their tactical areas, lower managers looking up their silos for leadership and the upper managers listening to the grumbles of how the operators in the other silos are making things bad.

There are dozens, hundreds, perhaps thousands of insightful CEOs who get it, but are unable to overcome the cultural inertia to change the business model. I used to think that little companies had a harder time gaining the necessary alignment, but they are just as bad as the largest of the corporations.


I toiled for over a year in the late 80's to develop ways to determine the total landed cost of the different products we sold so to develop a model we could use to support the strategy modeling for product sourcing. At the time we called it the Real Cost model. Almost 6 months into the effort my Vice President left a note on my desk. "When we see Real Cost we will not us them at store level. We don't know how to handle Real Cost."

I still have that note hanging on the wall at my desk, over 25 years later because the statement is just as true today as it was then.


Oh, our systems are so much better now, and we can get the total landed cost, the real cost, of getting the product onto the shelf or into the plant. However, so many managers barely know what real cost is, or how to apply it.


There really is a huge pot of gold for the managers who do get it, who are lucky enough to be part of a team of managers that use measurements and metrics to understand the dynamics of how their supply chains can work in concert with the financial, marketing and personnel components of the operations model. The potential is always there. It is just damn hard to get all of the people aligned to go after it.

David K. Schneider
David K Schneider & Company, LLC

  More on Who Has a Supply Chain Strategy  

As a Supply Chain student, I found this article very interesting as to where I should put some of my learning focus on and how a potential employer might be looking for.

Carrie Harrison


Just two observations about what a Supply Chain Manager should be doing. First and foremost is to concentrate on delivering excellence to the customer operationally. Secondly is to promote and facilitate supply chain thinking throughout the supply chain.

That way they will see what good looks like and actually understand what it means when it all comes together.

David MacLeod
Learn Logistics Limited


It is amazing how hard it can be for a retailer to get its perpetual inventory to be right at store level. RFID or not, it's just addition and subtraction. Even more critical today with needing an accurate picture of availability to promise for online, and store inventory needing to be exposed to the web shopper who wants to click and collect.

Peter J. Charness
SVP America, Global CMO,
TXT Group



Q: What are the only two universities that have produced two CSCMP Distinguished Service Award winners at the time of their recognition?

A: University of Tennessee (John Langley and Tom Mentzer) and University of South Florida (Doug Lambert and James Stock).

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