Consultancy Accenture says it has identified supply chain capabilities that are directly linked to cost effectiveness and superior customer service.
The Accenture “High Performance Supply Chain” study surveyed more than 1,500 executives from ten industries and 21 countries across North America, Europe and Asia, to find out what supply chain “masters” do differently across six supply chain functions: fulfilment, manufacturing, supply chain planning, sourcing & procurement, service management and product development.
Masters were defined as those organisation that were in the top ten per cent within the specific function, based on performance across a range of key operating metrics in that function, with “low performers” defined as those organisation in the bottom ten per cent within the specific function.
The study identified the performance advantages of mastering each of the six supply chain functions. Accenture found that compared with low performers:
* Fulfilment masters deliver customer orders on time and in full at a rate 13 per cent higher, have significantly lower transport costs, and maintain 50 per cent less finished goods inventory
* Manufacturing masters achieve 13 per cent higher throughputs (volume of products manufactured), 15 per cent better equipment effectiveness, 30 per cent more equipment uptime, and as much as a 75 per cent reduction in manufacturing lead time.
* Supply chain planning masters achieve ten per cent greater forecast accuracy and lower inventory costs while maintaining a 99 per cent order fulfilment rate.
* Sourcing & procurement masters deliver 2.5 times more value for every dollar they spend in their procurement organisation.
* Service management masters achieve 33 per cent better turns on spares inventories, 33 per cent higher service spend efficiency, and ten per cent fewer past-due service orders.
* Product development masters achieve 30 per cent reduction in time-to-market with an equal reduction in resources and have significantly lower product-development costs.
Narendra Mulani, managing director of Accenture’s Supply Chain Management practice, said: “What emerges from our research and from our work with leading companies is that to survive and thrive in today’s volatile business environment, companies must develop dynamic supply chains that can nimbly and flexibly respond to changing business conditions.”
Among the leading supply chain capabilities identified by the surveys:
* Fulfilment masters are more than twice as likely as low performers to design their distribution channels to accommodate varying customer needs and product characteristics (70 per cent vs. 30 per cent).
* Manufacturing masters are nearly twice as likely as low performers to adopt and internalise bottom line driven and proven manufacturing excellence principles (90 per cent vs. 50 per cent).
* Supply chain planning masters are nearly twice as likely as low performers to use planning models that are differentiated by customer and product characteristics to enable greater responsiveness (82 per cent vs. 43 per cent).
* Sourcing & procurement masters are more than five times as likely as low performers to have a centrally led category management structure and optimally leverage global sourcing (81 per cent vs. 5 per cent).
* Service management masters are more than three times as likely as low performers to tailor their service delivery by customer segment (81 per cent vs. 26 per cent).
* Product development masters are four times as likely as low performers to reduce complexity by use of product platforms for new product development and leverage up to 70 per cent of an existing design, leading to rapid product launch (76 per cent vs. 19 per cent).