Posted by Mark Brousseau
Economic pressures are forcing companies to employ their supply chains, primarily the sourcing and procurement functions, to contain costs and boost revenue, according to the 2009 Global Survey of Supply Chain Progress from CSC, Supply Chain Management Review, the Council of Supply Chain Management Professionals (CSCMP) and Michigan State University (MSU).
The survey, completed by supply chain executives representing more than 20 industries and every major geographical segment of the world, shows the extent to which the economy has impacted the supply management function. Survey respondents cited an immediate need to cut costs as the top economic pressure on their supply chains. An overwhelming 88 percent of respondents have set objectives for purchasing to generate cost savings in the next 12 months.
This enhanced focus on supply chain management (SCM) demonstrates its use as a counter-cyclical tool for improved business performance.
"The global economic downturn has impacted every aspect of business operations, and supply chain is no exception," said Chuck Poirier, author of several books on SCM and a partner in CSC's Global Business Solutions and Services group. "In the face of a renewed focus on cost reduction, supply chain management continues to show a positive impact on business performance. During the past year companies have turned to their supply chains to cut costs and grow revenues. To a large degree, the supply chain has delivered, helping companies get through some tough times."
The survey shows 33 percent of respondents indicate they leveraged supply chain initiatives to reduce costs between one to five percent in the last three years. Twenty-seven percent report realizing even higher cost reductions, ranging from six to 10 percent. "These results were comparable to last year's," said Poirier. "However, the most significant improvement over 2008 was in the number of respondents who reported no impact - or did not know the impact - of supply chain initiatives on costs. That number dropped significantly, from 22 percent in 2008 to 13 percent in this year's survey."
In spite of the difficult economy, 32 percent of respondents saw their revenues increase between one to five percent in the past three years as a result of supply chain initiatives, while another 24 percent identified revenue increases in the six to 10 percent range.
"That's a total of 56 percent, a significant number given the current downturn," noted Poirier. "We see this trend as evidence of the fact that supply chain is finally becoming entrenched as a company-wide improvement effort. Leaders are implementing strategic supply chain efforts to transform business processes to achieve near-optimum operating conditions. At the same time, most firms identified as followers and laggards have not reached the limit of what can be done to enhance financial performance with their supply chains."
While a majority of respondents indicate they are already using their supply chain to trim logistics costs, source more strategically and generate additional savings by leveraging the purchasing function, companies that are considered supply chain leaders are going a step further: accelerating revenue generation by integrating the supply chain organization with key internal groups such as finance, IT and product development. "The leaders, in short, understand the central role supply chain management can play in the company's business success and are playing that role to the fullest," said Poirier.
What do you think? Post your comment below.
Showing posts with label supply chain. Show all posts
Showing posts with label supply chain. Show all posts
Wednesday, September 23, 2009
Tuesday, February 3, 2009
Thinking Outside the Box
By Mark Brousseau
The state of the economy has companies looking to optimize whatever solutions they have in place, according to Susan L. Terry (slterry@cds-global.com), director of business development, new markets and indirect channels, CDS Global, a leading provider of outsourced business solutions.
“Whether the optimization is in the form of supplier change, outsourcing, co-sourcing, service expansion or tighter integration with other phases of the supply chain, every opportunity for process efficiency is being reviewed,” Terry told me. “All options are on the table.”
Terry believes the pace of opportunity for outsourced services providers like CDS Global may slow down over the next 12 months, but the scope of opportunities will continue to grow. “As human beings, and as companies made up of human beings, our creativity is at its best when the status quo is removed,” Terry explained. “We are now managing our businesses in a state without status quo, which will enable creative approaches to solving business problems.”
What do you think? Post your comment below.
The state of the economy has companies looking to optimize whatever solutions they have in place, according to Susan L. Terry (slterry@cds-global.com), director of business development, new markets and indirect channels, CDS Global, a leading provider of outsourced business solutions.
“Whether the optimization is in the form of supplier change, outsourcing, co-sourcing, service expansion or tighter integration with other phases of the supply chain, every opportunity for process efficiency is being reviewed,” Terry told me. “All options are on the table.”
Terry believes the pace of opportunity for outsourced services providers like CDS Global may slow down over the next 12 months, but the scope of opportunities will continue to grow. “As human beings, and as companies made up of human beings, our creativity is at its best when the status quo is removed,” Terry explained. “We are now managing our businesses in a state without status quo, which will enable creative approaches to solving business problems.”
What do you think? Post your comment below.
Wednesday, August 6, 2008
Gaining Supply Chain Visibility
Posted by Mark Brousseau
An interesting article from Compass Bank on supply chain visibility:
Supply Chain Visibility for the Mid-Market
In the summer issue of Compass on Business magazine, we offered, “Fast Forward: The Demand-Driven Supply Chain.” The article contained a sidebar called “Global Supply Chain Success Factors.”
Among the best practices we’re now hearing more about is supply chain visibility, which has been in place for large companies with complex operations for some time, but is now becoming more prevalent for companies of all sizes.
“Supply chain visibility is about balancing supply and demand, and using the links in the chain to understand how each impacts your entire business,” says Kai Trepte, co-founder of supply chain consultant John Galt Solutions. “How you go at it depends on your focus. Let’s say you’re a customer-focused company. If we break the supply chain view down into three parts, you start with having visibility around what the customer needs. Part two is what the people who support those customers need (i.e., retailers, distributors, manufacturing partners, etc.) The third component is looking at what you need for the people who support you—what you require of your manufacturing organization or of the outsourced partners who support you.”
In essence, total supply chain visibility offers the opportunity to look backward at all the isolated elements that went into creating and delivering the final product, and using that visibility to make every part of the process more efficient.
Supply Chain Challenges
It seems logical enough, yet, according to a recent survey of supply chain professionals by global supply chain research group Aberdeen Group, 75% of respondents rate supply chain visibility as among of the most challenging issues they currently face. Why has it been such a challenge?
It’s only recently that many companies have put enterprise resource planning (ERP) technology, warehouse management or return management systems—the technology that tracks the supply chain—in place.
“There have always been a number of tools available, but they’ve been expensive and time-consuming to implement,” Trepte says. “Solutions that are less complex and expensive are fairly new to mid-market companies. With lead times getting shorter and global outsourcing making product delivery times longer, greater inventory and supply chain planning have become the tools executives and managers use to make the most of the process. Five years ago, you never saw anything written about supply chain efficiency, now it’s the ‘next big thing’ in terms of gaining or maintaining marketshare.”
Benefits and strategies
The key benefit of supply chain visibility is that it allows for highly efficient planning, giving companies the opportunity to collect and analyze distributed data, generate specific recommendations and match insights to strategy.
“When you look at the metrics stored in any ERP or related system—inventory turns, forecast accuracy, periods of coverage, etc.—they’re typically backward-looking,” Trepte says. “Having data that allows you to plan and forecast going forward really changes your focus. That forward plan lets you know, for example, when inventory turns are decreasing and that you may need to get additional capital funding to cover a brief down period. Supply chain visibility allows you to do more than just react to immediate issues; it shows you the trends and makes the entire company more forward-thinking.”
In the current supply chain environment, visibility is taking on an increasingly key role. With new technologies, like radio frequency identification (RFID), becoming the norm in retail and government contracting applications, a planning system is rapidly becoming a “must have.”
“RFID is a tool that offers even greater granular and faster, real-time visibility, but it can’t exist in a vacuum,” Trepte notes. “It works best as part of a solution, improving the ability to see products at any time, anywhere in the chain and plan accordingly.”
As far as implementing a system is concerned, Trepte says that it need not be a complex endeavor. “In the mid-market, it makes sense to start small and use a solution that can scale up with you,” he notes. “We look at it as a ‘walk, fly, drive’ continuum, in which you take a series of small steps until you get to a more robust supply chain solution that meets your needs.”
Here’s how Trepte classifies each step:
• Walk—The first step can be as simple as using an Excel spreadsheet to do statistical forecasting and order planning, so you move from simply placing orders to order planning based on the history you’ve developed. You want to get people to buy into and utilize the plan.
• Drive—“Next comes automation and systemization,” says Trepte. “This is where you’ll create your key performance indicators, or KPIs, and benchmarks. The process supports demand and inventory management, sales and operations planning, rough cut capacity planning, promotion management, etc., and provides output to people who execute on those parts of the operation.”
• Fly—At this stage, you’re sharing information, in real time, throughout the supply chain.
“At the end of the process, you’ve achieved true supply chain visibility, and it’s transparent throughout your organization,” concludes Trepte. “Once you’re synchronized to that degree, planning and communication become easier and support is better—you begin to benefit from the optimum efficiencies you’re developed.”
What is your organization doing to gain supply chain visibility?
Post your comment below.
An interesting article from Compass Bank on supply chain visibility:
Supply Chain Visibility for the Mid-Market
In the summer issue of Compass on Business magazine, we offered, “Fast Forward: The Demand-Driven Supply Chain.” The article contained a sidebar called “Global Supply Chain Success Factors.”
Among the best practices we’re now hearing more about is supply chain visibility, which has been in place for large companies with complex operations for some time, but is now becoming more prevalent for companies of all sizes.
“Supply chain visibility is about balancing supply and demand, and using the links in the chain to understand how each impacts your entire business,” says Kai Trepte, co-founder of supply chain consultant John Galt Solutions. “How you go at it depends on your focus. Let’s say you’re a customer-focused company. If we break the supply chain view down into three parts, you start with having visibility around what the customer needs. Part two is what the people who support those customers need (i.e., retailers, distributors, manufacturing partners, etc.) The third component is looking at what you need for the people who support you—what you require of your manufacturing organization or of the outsourced partners who support you.”
In essence, total supply chain visibility offers the opportunity to look backward at all the isolated elements that went into creating and delivering the final product, and using that visibility to make every part of the process more efficient.
Supply Chain Challenges
It seems logical enough, yet, according to a recent survey of supply chain professionals by global supply chain research group Aberdeen Group, 75% of respondents rate supply chain visibility as among of the most challenging issues they currently face. Why has it been such a challenge?
It’s only recently that many companies have put enterprise resource planning (ERP) technology, warehouse management or return management systems—the technology that tracks the supply chain—in place.
“There have always been a number of tools available, but they’ve been expensive and time-consuming to implement,” Trepte says. “Solutions that are less complex and expensive are fairly new to mid-market companies. With lead times getting shorter and global outsourcing making product delivery times longer, greater inventory and supply chain planning have become the tools executives and managers use to make the most of the process. Five years ago, you never saw anything written about supply chain efficiency, now it’s the ‘next big thing’ in terms of gaining or maintaining marketshare.”
Benefits and strategies
The key benefit of supply chain visibility is that it allows for highly efficient planning, giving companies the opportunity to collect and analyze distributed data, generate specific recommendations and match insights to strategy.
“When you look at the metrics stored in any ERP or related system—inventory turns, forecast accuracy, periods of coverage, etc.—they’re typically backward-looking,” Trepte says. “Having data that allows you to plan and forecast going forward really changes your focus. That forward plan lets you know, for example, when inventory turns are decreasing and that you may need to get additional capital funding to cover a brief down period. Supply chain visibility allows you to do more than just react to immediate issues; it shows you the trends and makes the entire company more forward-thinking.”
In the current supply chain environment, visibility is taking on an increasingly key role. With new technologies, like radio frequency identification (RFID), becoming the norm in retail and government contracting applications, a planning system is rapidly becoming a “must have.”
“RFID is a tool that offers even greater granular and faster, real-time visibility, but it can’t exist in a vacuum,” Trepte notes. “It works best as part of a solution, improving the ability to see products at any time, anywhere in the chain and plan accordingly.”
As far as implementing a system is concerned, Trepte says that it need not be a complex endeavor. “In the mid-market, it makes sense to start small and use a solution that can scale up with you,” he notes. “We look at it as a ‘walk, fly, drive’ continuum, in which you take a series of small steps until you get to a more robust supply chain solution that meets your needs.”
Here’s how Trepte classifies each step:
• Walk—The first step can be as simple as using an Excel spreadsheet to do statistical forecasting and order planning, so you move from simply placing orders to order planning based on the history you’ve developed. You want to get people to buy into and utilize the plan.
• Drive—“Next comes automation and systemization,” says Trepte. “This is where you’ll create your key performance indicators, or KPIs, and benchmarks. The process supports demand and inventory management, sales and operations planning, rough cut capacity planning, promotion management, etc., and provides output to people who execute on those parts of the operation.”
• Fly—At this stage, you’re sharing information, in real time, throughout the supply chain.
“At the end of the process, you’ve achieved true supply chain visibility, and it’s transparent throughout your organization,” concludes Trepte. “Once you’re synchronized to that degree, planning and communication become easier and support is better—you begin to benefit from the optimum efficiencies you’re developed.”
What is your organization doing to gain supply chain visibility?
Post your comment below.
Sunday, May 11, 2008
Businesses Want Supply Chain Services
Posted by Mark Brousseau
There is a market for integrated financial supply chain management services, according to Financial Insights’ 2007 North American Commercial Payments Study.
Areas of potential cooperation clearly emerge in accounts receivable (A/R) and accounts payable, Financial Insights reports. The full benefits of financial supply chain reengineering have yet to be recognized, the consulting firm notes, indicating prospects for businesses, bankers and vendors to work together more closely to realize joint benefits. Banks have not grappled with their own business processes, and they do not have an execution framework, Financial Insights found. Meantime, businesses do not see them as supply chain providers or, if they do, they see them in the same position as supply chain vendors.
“Businesses are receptive to supply chain services, and banks have everything to gain and lose. Transforming payments to business processes is the key,” says Maggie Scarborough, research manager, Financial Insights Corporate Banking Advisory Services.
Is your bank offering integrated financial supply chain management services? Tell us about it by posting your comments below.
There is a market for integrated financial supply chain management services, according to Financial Insights’ 2007 North American Commercial Payments Study.
Areas of potential cooperation clearly emerge in accounts receivable (A/R) and accounts payable, Financial Insights reports. The full benefits of financial supply chain reengineering have yet to be recognized, the consulting firm notes, indicating prospects for businesses, bankers and vendors to work together more closely to realize joint benefits. Banks have not grappled with their own business processes, and they do not have an execution framework, Financial Insights found. Meantime, businesses do not see them as supply chain providers or, if they do, they see them in the same position as supply chain vendors.
“Businesses are receptive to supply chain services, and banks have everything to gain and lose. Transforming payments to business processes is the key,” says Maggie Scarborough, research manager, Financial Insights Corporate Banking Advisory Services.
Is your bank offering integrated financial supply chain management services? Tell us about it by posting your comments below.
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