Survey: Supply Chains Reach Plateau
Companies continue to break through to higher levels of supply chain management, but progress has slowed, CSC and Supply Chain Management Review magazine report in their Fourth Annual Global Survey of Supply Chain Progress.
Last year’s survey showed companies reaching advanced stages of supply chain management. But this year’s edition, written by CSC Consulting Group partner Chuck Poirier, shows that firms were moderately successful with specific supply-chain initiatives, with the best results coming from continued efforts in strategic sourcing of direct materials, supplier management and development, sales and operations planning, and strategic inventory planning.
However, on a scale of one to five, with five signifying a fully evolved supply chain that employs Web-based tools and involves key external parties, 50 percent of the firms still reported their progress at levels one and two of the model, while the other half reported they have progressed into level three or beyond, which marked no gain over last year.
"Overall, there continues to be a concerted movement forward in nearly all categories of supply chain initiatives, another indication firms are breaking through the obstacles historically keeping them stuck in the middle of the supply chain progression in the past," the survey states.
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Collaborating to continue advancement
The survey confirms that significant results in cost reduction are possible with concerted supply chain improvement efforts, but the strong momentum measured in 2005 is not being sustained.
The report indicates that slower firms must collaborate with network partners and move their organizations into level three. "Those in the lead must now enter areas where collaboration and technology are required to reap higher levels of achievement," Poirier says.
However, "results indicate another plateau has been hit, as firms finish work bringing slower parts of the organization into level three."
Aligning supply chain to business plan
Specific reasons for lack of progress included a lower level of alignment between respondents’ supply chain and business strategy, lack of executive visibility and accountability, and the inability to collaborate and share best practices across the extended enterprise.
Forty-three percent of survey respondents said supply chain strategy is aligned with corporate strategy, down from 49 percent in 2005. And 43 percent reported their strategies were reviewed formally every year, down from 56 percent in 2005.
"We have a dichotomy of results with some firms and areas showing strong strategy connections and the kind of progress ending in positive achievements, while other firms simply do not appear to understand the importance of the key success factors," the report states. "These firms operate with virtually no plan at all."
The survey also found most firms continue to rely on technology to get them into and through the advanced levels of the maturity model. The usual technologies were cited, with ERP systems, warehouse management systems, electronic messaging, inventory planning, analysis and optimization techniques, and advanced planning, forecasting, and scheduling systems being the top five choices.
Surveying the supply chain
The 2006 Global Survey of Supply Chain Progress was sent to supply chain professionals in North America, Europe, Asia, Australia and other selected countries. The names were drawn from CSC’s client base as well as from readers of Supply Chain Management Review.
A total of 134 respondents from 21 industries completed the eight-page questionnaire. The majority of the responses came from North America, mainly the United States, with about one third coming from Europe, Asia and the Pacific Rim. Industries represented ranged from aerospace and defense, retail and consumer packaged goods to high technology and telecommunications.
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