2016: Building a Balanced Scorecard for Discrete Industries

December 15, 2015
6:39 pm

2016 is around the corner. For the supply chain leader it is time to reflect and build budget targets. To help, in this blog post I share industry trends. For the discrete industries we contrast the industry averages for growth, operating margins, inventory turns, cash-to-cash cycle, revenue per employee, and SG&A ratio for the periods of 2006-2014 and 2011-2014. For each metric we show the averages and the percent change from the beginning and end of the period. What can we learn?

Growth Is Slowing. All industries are in decline. With the headwinds of a recession gathering, companies are battening down the hatches.
Operating Margin. Operating margin improvement was easier at the start of the last decade. It is more difficult now.
Inventory Turns. Progress on inventory turns is declining due to business complexity. Inventory tactics to right-size buffers and manage the form and function of inventory matter more than ever.
Cash-To-Cash. While progress on inventory turns is declining, reductions in payables are driving cash-to-cash improvements. This, over time, erodes costs. To drive value companies with a lower cost of capital should fund investment for their suppliers that have a higher cost of capital.
Revenue-Per-Employee. Outsourcing and labor reduction projects were easier at the start of the last decade. They are more complex now.

Table 1. Metric Performance for Discrete Industries

So, what can we learn?
1) Each industry has a different potential. Set your targets based on industry performance.
2) Driving progress is more difficult. This is a case where complexity management and a focus on year-over-year improvement is paramount. Set realistic expectations.
3) There is no magic bullet. Supply chain leadership requires focus and leadership.
4) Faster success happens when there is organizational alignment. Build a bridge to your commercial teams and work to close the gap between commercial teams and operations. Define customer-centric supply chains that provide value to your customers in a meaningful way. Work with your commercial teams to accomplish this task.
5) Educate the executive team. This is the purpose of this post.
Good luck on your journey! Tonight I am writing the Supply Chain Metrics That Matter report on the High-Tech Industry, and the Research in Review for 2015. We are heads-down on reports for our last newsletter for 2015. This will be our 87th report. Over the course of the last four years at Supply Chain Insights we have built over 3,000 pages of content which we have now archived in our new community, Beet Fusion. Over the holidays we will be posting more financial analysis on industries into Beet Fusion. Let us know if you have any questions. We want to help companies set the right targets. Metrics cannot be managed in isolation and realistic targets drive career success. We hope that this helps.
About Lora:
Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter, and is currently working on her third book, Leadership Matters. She also actively blogs on her Supply Chain Insights website, at the Supply Chain Shaman blog, and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, knitting and quilting for her new granddaughter, and doing tendu (s) and Dégagé (s) to dome her feet for pointe work at the ballet barre. Lora thinks that we are never too old to learn or to push for excellence.

Navigating Supply Chain Economic Downturns

August 30, 2026 5:28 pm

In 2007, the average company took six months to sense market shifts and adapt its supply chain. My estimate, based on work with clients, is that if a downturn happened today, the average company would take 20-30% more time to adjust than in 2007. Here I give insights on preparedness.

Warning: Sidestep the Narrative of the Misguided Goldiggers

August 10, 2026 4:58 pm

Ten years ago, I started writing a book titled Stories of the Misguided Gold Diggers. The book was a collection of stories from two decades of stories of technology leaders perpetuating the myth of integrated end-to-end supply chain planning.

I dusted off the manuscript on Saturday. I think that we have a new chapter. Companies focused on putting Artificial Intelligence (AI) on top of existing architectures are putting AI Stupid on steroids.

The Myth of End-to-End Planning

July 31, 2026 9:14 pm

Supply chain planning, supply management, supply chain execution, network design, and transportation/logistics management operate in silos. Not much has changed over four decades. The connections flow back through transactional systems: order-to-cash and procure-to-pay. There is a myth that companies can buy an end-to-end supply chain management solution. This is largely a myth. Here we explain.

Lead Time: A Broken Gossamer

July 16, 2026 6:38 pm

If you are struggling with supply chain planning, dancing in the light of shiny objects, and scratching your head, please read on. My goal is to help you.

Please do not AI Stupid. What do I mean? AI Stupid is putting agents and agentics on top of existing architectures believing that making them faster and hands free add value. To me, this is fools play.

I love AI. I am excited about new technologies. To this end, I want to shine a light on how new technologies can help address the black holes and inconsistencies in today’s supply chain, which largely stem from the limitations of the first generation of supply chain planning and execution technologies. In this blog, I give you three places to start.

Do You Need a Supply Chain Coach?

July 9, 2026 5:27 pm

Supply chain is where the rubber hits the road. For a public company, over 40% of market capitalization is tied to the trade-offs between growth, operating margin, inventory management, and Return on Capital Employed.

The road for supply chain improvement is fraught with issues. Here we share some and offer some advice.

Is your Supply Chain AI Ready?

June 11, 2026 2:39 pm

A simple quiz to assess an organization’s AI readiness.

The pace of change is fast and furious. Every day, technology advances faster than we can digest. A great challenge to have.

Determining whether a supply chain is “AI-ready” is less about technology and more about the gray matter between the ears of supply chain leaders. Leadership, alignment, and clarity of goals matter.

Too few companies are clear on the definition of supply chain excellence. Measuring and rewarding functional metrics reduces the firm’s value. Putting agentics on top of today’s processes can make bad practices run faster, reducing value.

The toughest job for the supply chain leader is challenging existing supply chain paradigms that were defined by the limitations of decades of supply chain technologies. As the curtain lifts on the potential of new forms of technology, process redefinition is our opportunity, but only if we are clear on what drives value. (Here, I link to the Supply Chains to Admire reports to help you define value. The next report will be published on June 23rd, along with my Dynamic Benchmarking Product, to help you define value in the face of your AI readiness. More information about the launch is at the bottom of this blog.)