Secrets of Supply Chain Success
View our Supply Chain Infographic.
Download theNinth Annual Global Survey of Supply Chain Progress (PDF, 1.08 MB).
Read the full Spring 2012 issue.
Survey reveals what separates leaders from laggards in supply chain management
Visibility and analytics contribute the most to making a company’s supply chain management a success — and that success translates directly to the company’s growth. Those that have both strong visibility and analytics capabilities are almost twice as likely to be in the top 20% of business growth as firms that don’t, according to CSC’s ninth annual Global Survey of Supply Chain Progress (PDF, 1.08 MB), conducted along with Texas Christian University’s Neeley School of Business and Supply Chain Management Review.
“Supply chain has shifted its role from defense and survival last year to contributing to profitable growth,” says Ron Johnson, partner, national supply chain practice at CSC. “Over nine years there has been a steady elevation of supply chain as a strategic entity within the enterprise, versus a back-office transaction component.”
Across the board, respondents reported that supply chain management initiatives are making an ever-increasing difference to their businesses, but leaders in supply chain see the most benefit. The three-year average of supply chain’s contribution to revenue jumped from 4% last year to 8.5% this year, but leaders are seeing contributions upwards of 10%. Supply chain management is also chipping away at costs, contributing an average of 6.9% to cost reduction — but that number is 8% among supply chain leaders.
CSC and its partners surveyed manufacturers and service organizations across 20 industries, with company size ranging from $250 million to well over $1 billion, to find what separates a supply chain leader from a laggard.
For one, leaders are more likely to put supply chain directly into the hands of top management — they are 1.5 times more likely to make the supply chain chief one of the C-level executives, and twice as likely to have the supply chain manager report directly to a corporate officer, such as an executive vice president or COO.
Secondly, visibility into the supply chain is a key advantage for leaders, who rated their visibility higher than the rest, across 10 different criteria. That is, they had the best visibility into their customers’ sales information, promotional plans and demand forecasts, and their suppliers’ inventory, order lead times and delivery dates.
Still, on average, businesses aren’t too excited about the quality of the data into which they have visibility. When asked about the timeliness, accuracy, completeness and usability of the data, completeness received the lowest scores, but even the other categories only had 50% to 60% of respondents agreeing that their data met those criteria.
Leaders are twice as likely as laggards to be experienced users of data analytics software, and they are able to extract more useful information from their visibility data.
They are also flexible enough to quickly change their supply chain operations to respond to new threats or opportunities. The survey measured many different aspects of flexibility. One was how quickly a business is able to change the volume of products it makes. Businesses that were flexible in this area also scored better on the survey in cost reduction. If the business also had high visibility into its supply chain, its cost reduction was even greater.
Interestingly, leaders had the greatest advantage in two areas of flexibility: product customization and organization flexibility, which the report concludes are the “leading edge areas of improvement potential.”
Overall, the survey showed that companies with both high visibility into their supply chain and a high degree of flexibility had higher business growth and higher profits than companies that had only one or the other, or neither. The ideal scenario, of course, is to have visibility and analytics skills — plus the flexibility to take advantage of both.
JEFF CARUSO is senior managing editor for CSC’s digital marketing team.