A Survey of Supply Chain Progress

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A Survey of Supply Chain Progress

• Presented by
• Charles C. Poirier, Partner, CSC Consulting
• Frank Quinn, Editor, Supply Chain Management
  Review

Supply-Chain World, 2007 March 19-21,
Philadelphia, PA
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Key Facts Figures

• 20064th Annual Global Survey of Supply Chain
  Progress
• Purpose To Gauge Evolution of Supply Chain
  People, Processes and Technology
• 8-page Survey Questionnaire
• 134 Respondents
• Two Thirds of Respondents from NA One Third from
  Outside NA.
• 22 Industries represented

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Five Hypotheses

• Companies and individuals will vary widely in
  terms of their evolution against the supply chain
  framework
• S.C. initiatives will have a significant and
  well-documented impact, particularly with regard
  to cost-savings and revenue enhancements.
• Companies will adopt technology solutions before
  improving their related processes.
• Interenterpise collaboration will be the mark of
  advanced firms.
• Customers will be the driving force behind many
  supply chain initiatives.

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2006 Survey Breakdown by Industry
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Breakdown by Type of Organization
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Breakdown by Geography
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A Maturity Model was Used for the Measuring
Framework
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Summary Results from the 2006 Survey

• There are no national distinctions, only industry
  variability Aerospace Defense, Healthcare
  Supplies, Discrete Manufacturing, and Wholesale
  Distribution are in the lead
• Results are distributed across a tight
  bell-shaped curve, shifted to the high side of
  the supply chain maturity model
• Results vary by function, with most progress
  reported in sourcing and logistics, followed by
  supplier management and development, and sales
  and operations planning
• Europe leads in cost reduction Asia leads in
  revenue increase North American firms indicate a
  softening of results

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Summary Results (Continued)

• Reported cost savings range from 1 to 20 or
  more of supply chain costs, with most firms in
  the 1 to 10 area
• Reported revenue increases vary from 1 to 20 or
  more, with most firms in the 1 to 10 area
• The link to technology remains indelible, but
  expectations have outpaced actual improvements
• Supply Chain has been accepted as a major
  business improvement technique, but work remains
  to be accomplished.

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What Functions Are Included InA Supply Chain
Organization?

• Four major areas of concentration
• Purchasing/procurement/sourcing
• Logistics, Transportation and Warehousing
• Inventory and materials management
• Forecasting, planning, scheduling
• Four secondary areas of concentration
• Supply chain software and technology
• Supplier/customer collaboration (SRM/CRM)
• Manufacturing
• Marketing, sales and customer service
• Other

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Apparent Results

• 50 of the responding firms placed their
  companies or business units in Level 3 or higher
• Lack of advanced-level ratings for the other 50
  indicates an opportunity still exists
• Efforts deliver the greatest results when SCM is
  part of an overall business strategy
• SCM is most likely to under deliver when there is
  poor connection between functions across a total
  business
• While technology is an absolute necessity for
  advanced progress, poor impact of technology as
  an enabler is still a major complication.
• Getting the process right must come first,
  followed by successful enablement.
• In spite of the rhetoric, few firms are
  collaborating closely with key customers.

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Costs Included in Supply Chain Spending
Other
Product Management, Design Engineering
Manufacturing
Supplier/Customer Collaboration (SRM/CRM)
Inventory, Materials Management
Logistics, Transportation, and Warehousing
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Impact on Costs

• These results are consistent with previous
  findings, but show a leveling in savings,
  validating one to five points of new profits can
  be added through cost savings from a supply chain
  effort
• Results also show many firms still struggling to
  show similar progress

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Geographical Impact on Costs
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Impact on Revenues

• While the emphasis remains on the bottom line
  cost reduction, the more contemporary view of
  working as well on top line new revenues has
  made significant progress
• Supply chain has become a major tool for
  improving the top and bottom lines of a financial
  statement

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Geographical Impact on Revenues
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Why Does Supply Chain Management Under Achieve?

• Supply chain effort is not part of the overall
  business strategy
• Poor connections between functions and units
  across the total organization
• Flexibility is sacrificed in drive to cut unit
  costs
• Poor impact of technology as an enabler

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Alignment of Strategies
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Frequency of Strategy Review
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Connection to Financials
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Leadership/IT Collaboration
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Global Collaboration
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Sharing of Forecasts
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Three Necessities

• Efforts must be conducted to bring all parts of
  the enterprise to best practices
• Enterprise process improvement is now a
  collaborative exercise among the industry
  leaders, which rely on business partners to reach
  optimized conditions
• Technology must not be presented as the solution,
  but as the means of providing the knowledge
  transfer that separates the preferred networks
  from the wannabes

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Technology Tools
Electronic Messaging, EDI, XML
JIT, Kanban
Transportation Management Services
Supplier Relationship Management
Inventory, Planning, Analysis, Optimization
Systems
Sales and Operations Planning
Collaborative Planning, Forecasting, and
Replenishment
E-Procurement, Auto Sourcing (Tendering,
Auctions, Central Mgmt.
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Rationale for Investments
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Areas for Projected Future Supply Chain
Investment Over the Next Three Years
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Overall Rating on Maturity Model
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A Framework for the Future
Costs
Revenues

• Lean Manufacturing plus
• Selective Outsourcing plus
• Quality
• Six Sigma
• ISO Capability, plus
• Advanced Supply Chain Management
• Yields Total Enterprise Optimization
• With Business Process Management (BPM) as the
  technology catalyst

• Advanced Supply Chain Management plus
• Customer Relationship Management plus
• Technology Collaboration yields
• Customer Intelligence, which becomes the heart of
• The Intelligent Value Network
• With Business Process Management as the business
  catalyst

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Steps Forward

• Calibrate your organization on the maturity model
• Determine the gap in important functions or areas
  of operation
• Establish an economic target for improvement
• Create plan/roadmap for creating the value
  managed enterprise
• Get started with a willing business unit/function
  led by a visionary manager

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Enhancements to 2007 Survey

• Addition of Michigan State University as Partner
  in the Study
• Increased Number of Respondents
• Greater Global Representation
• More Detailed Geographic and Industry Analysis

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QASpeaker Contact Info
Frank Quinn Editorial Director Supply Chain
Management Review fquinn_at_reedbusiness.com
Charles Poirier A Business Author and Partner at
CSC Consulting cpoirier_at_csc.com
And for a copy of the report, visit
www.csc.com/2006SupplyChainSurvey