FALLS CHURCH, Va., Oct. 1 VA-CSC-Europe-Supply
FALLS CHURCH, Va., Oct. 1 /PRNewswire/ -- Europe leaped ahead of North
America and Asia Pacific in achieving significant cost reductions, revenue
gains and sustainability improvements through supply chain advancements,
according to the 2008 Global Survey of Supply Chain Progress from CSC
(NYSE: CSC), Supply Chain Management Review, the Council of Supply Chain
Management Professionals (CSCMP) and Michigan State University (MSU).
The survey, completed by supply chain professionals representing 22
industries and more than 32 countries, showed that Europe is ahead of North
America in nearly every element of supply chain optimization. Sixty-three
percent of European respondents believe that their flows of materials, people,
information and cash are optimal compared to less than half of their North
American counterparts.
Asia Pacific has fallen into a lower position as compared to the other
geographical sectors in most areas of supply chain advancement, such as
strategic alignment, customer integration and supplier integration. However,
the region ranked slightly ahead of Europe and North America in innovation
management -- a proven factor in supply chain success.
In terms of industries, aerospace and defense (A&D), chemicals and
consumer goods lead in overall supply chain performance. The survey shows
that progress toward this goal is occurring as specific industries develop
advanced practices in areas pertinent to their increased success and
continuity. As their supply chain efforts mature, leaders are shifting focus
from traditional core competencies such as excellence in warehousing and
transportation to broader process improvements that help distinguish them
within market segments. For example, leading consumer goods firms now excel
at segmenting customers and then matching specific, essential offerings.
As leaders focus more on the specific needs of their key customer
segments, attention is drawn further toward how to bring distinctions to their
supply chain network, which has moved with the help of trusted business
partners toward enterprise optimization. Traditional commodity producers, for
example, have progressed with the help of key customers to creating connecting
portals through which information on supplies, inventories and shipments can
be shared instantly with very high accuracy.
"Industry characteristics reflect movement beyond the internal 'four
walls' of expertise to attaining best practice across the enterprise in areas
of importance for each market, such as strong internal integration for the
chemical and consumer goods segments, and leadership positions in customer
integration by third-party logistics providers and wholesale distributors,"
said Chuck Poirier, author of nine books on supply chain management and a
partner in CSC's Global Business Solutions group. "Companies in these
industries are forging ahead by ensuring that best practices in areas such as
order management are practiced across the network, and root-cause problems are
eliminated throughout the end-to-end supply chain. One positive impact is a
dramatic reduction in reconciliations."
"If there is one area of general incompetence exposed by the survey
results, it would be sales forecast accuracy," said Morgan Swink, professor of
Supply Chain at MSU. "However, supply chain leaders are overcoming this
deficiency by having greater interaction with their supply chain partners
through the sales and operations planning portion of their efforts."
"Firms that begin with forecast accuracies as low as 40 percent are able
to reach levels of 75 percent or higher," Poirier noted. "The secret is
including external parties -- suppliers and customers -- in the review
sessions to dramatically improve the accuracy of delivered data."
As a result of supply chain improvements, 71 percent of all respondents
indicate they have realized cost savings over the last three years in a range
from one to five percent to as high as 15 percent or more, with eight percent
saying they have reached 16 to 20 percent or more. Twice as many leaders
reported savings in this highest range than either followers or laggards.
Most organizations are still in the area of 10 percent savings.
"Firms are moving from a 'cost-only' perspective to a focus on primary
objectives such as faster and more personalized order fulfillment, lead-time
reductions from placing orders to products delivered, cycle time improvements
across what are now becoming global networks, creating and delivering perfect
orders, improving customer satisfaction ratings, shortening the cash-to-cash
cycle so all parties get paid in a timely manner and asset turn improvement,"
said Poirier. "These initiatives are creating significant revenue growth
opportunities; about 10 percent of respondents indicate revenue growth of 11
percent or more attributable to supply chain endeavors.
"This type of improvement continues to validate the efforts leaders are
making to enhance top-line revenues, as well as bottom-line costs," he added.
"What the leaders have discovered is that pursuing supply chain improvement
must also result in better customer satisfaction and, therefore, new sales."
According to the survey, leaders are more than twice as likely to see
growth in this range of revenue improvement. Leaders also have a greater
correlation between executive involvement and development of specific supply
chain plans that become an integral part of the corporate strategy and
planning system. Less mature firms reported an absence of such a connection.
Sustainability initiatives were also studied in this year's survey, and
the results reveal that Europe is ahead in this area as well. "Europe was an
early adopter due to its greater focus on customer relationships, but
sustainability is starting to be accepted as a supply chain initiative across
all regions now, and more progress can be expected," added Poirier.
Another issue receiving a central supply chain focus is including green
initiatives in the portfolio of efforts. More than 80 percent of leaders
indicate an emphasis on green issues, as opposed to about half of the
laggards. The effort is picking up momentum as these leaders increasingly
place responsibility for "being green" onto suppliers and promote positive
results in their marketing campaigns. 3M stands out as a company that has made
green a major priority across its supply chain, said Poirier.
The 2008 survey was completed by 294 individual respondents. Sixty
percent of the firms indicated a size of $500 million or greater, while 40
percent have revenues of less than $500 million. The companies responding
were largely corporations with a heavy emphasis on manufacturing and
distribution, with five percent indicating a focus on retail operations. To
facilitate global participation, CSCMP extended the survey to its global
membership, and Supply Chain Europe sent it to the magazine's subscribers.
The survey report, which includes the complete set of questions and
responses, and an executive summary, can be found at
www.csc.com/2008SupplyChainSurvey.
About CSC
CSC is a global leader in providing technology-enabled solutions and
services through three primary lines of business. These include Business
Solutions & Services, Global Outsourcing Services and the North American
Public Sector. CSC's advanced capabilities include systems design and
integration, information technology and business process outsourcing,
applications software development, Web and application hosting, mission
support and management consulting. Headquartered in Falls Church, Va., CSC
has approximately 90,000 employees and reported revenue of $17.1 billion for
the 12 months ended July 4, 2008. For more information, visit the company's
Web site at www.csc.com.
SOURCE CSC
