Last week, Lora Cecere stated over on Supply Chain Shaman that she believes we have reached the supply chain plateau.
I believe that, while we have been in a bit of an innovation dry spell the last few years relative to the early noughts, there is still innovation to come and mountains to climb, but Lora’s evidence is pretty damning: while analyzing the balance sheets of process companies over the past decatde, she discovered that the average process manufacturing company has reached a plateau in supply chain performance. Specifically Lora found that:
Growth has stalled. To compensate and stimulate revenue, the companies increased SG&A margin by 1%. However, the conditions were more complex; the average company, over the last ten years, experienced a decline of 1% in operating margin, and an increase in the days of inventory of 5%. While cycle times have improved, the majority of the progress has come from lengthening of days of payables and squeezing suppliers.
And delaying payments and squeezing suppliers is not progress!
This is scary! Really scary! And before I discuss this any further, you need the facts and you need to read Lora’s post.
SI’s post is going to end my here today so you can go read it and dwell on it. We’ll discuss this more in SI’s next post.