Supply Chain Survey Report 2010

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  • 1. SUPPLY CHAIN SURVEY: 2010 Contact us at (866) 347-1130 or visit www.profitpt.com Supply Chain Survey 2010 by Profit Point, Inc. (www.profitpt.com) is licensed under a Creative Commons Attribution 3.0 United States License.
  • 2. SUPPLY CHAIN SURVEY WHAT TO EXPECT IN 2010 Supply chain professionals from a variety of companies and industries were polled. Here’s what we learned:• The global economy remains the leading cause for concern• Managing capital and inventory is of paramount concern• Half of all companies do not review their plan as often as needed• One-third of companies do not have future proof plans
  • 3. SURVEY DEMOGRAPHICS Who is represented? The survey included 67 supply chain professionals comprised of: •Director and Manager level decision makers •North American and multinational organizations 0% 10% 20% •With More than $1 billion in annual revenue Aerospace and Defense Automotive Other 20% C-Level 13% •Across a wide spectrum of industries Chemicals Consumer Goods VP / SVP Discrete Manufacturing 11% Food ServicesManager Director Healthcare 35% 20% High-Tech 6% 17% Mining and Metals 19% 7% Oil and Gas Other 33% Process Manufacturing North America More than $1B Multinational Professional Services 28% 50% 41% Retail C-Level Wholesale / Distribution VP / SVP Director Manager Other Less than $500M Multinational $500M to $1B North America More than $1B Asia Europe Other
  • 4. SUPPLY CHAIN STRATEGY HOW OFTEN IS IT REVIEWED? Best PracticesOnly one-half of all respondents are reviewing 50% their strategy annually. Leading supply chainpros are reassessing strategies at least annually and often more frequently as economic and business conditions dictate. 25% Key Components The right process and technology should enable you to review the following key components in a simple, integratedenvironment: revenue plan, product mix, supply 0% chain network and infrastructure design. Every year Every other year Every three years As business and economic conditions dictate Other
  • 5. SUPPLY CHAIN STRATEGIES WHERE IS IT WORKING? 15% 30% 45% 60% 0% Supply Chain Maturity While a majority of companies haveintegrated their supply chain strategy with their overall business strategy, most companies have fallen short of full supply chain maturity. Opportunities Benchmark, identify gaps and establish a plan to reach full supply chain maturity. Supply Chain is integrated into our business strategy SC Strategy is developed/executed at the division/business unit level SC Strategy is shared/common with supply chain partners SC Strategy is comprehensive across the entire corporation In the process of developing a supply chain strategy Strategy is developed and executed at the department level No supply chain strategy
  • 6. AREAS THAT NEED IMPROVEMENT Planning for Collaboration Most respondents listed collaboration as a leading problem. However, many also included planning and execution difficulties, which tend to lead to ineffective collaboration. 0% 10% 20% 30% 40% 50% 60%Collaboration with Suppliers and Customers Internal Collaboration Planning Plan Execution Communications Project Management Understanding new technologiesDeveloping a case for supply chain investment Customer ServiceRelationship between business and technology Organization Teamwork Other
  • 7. SUPPLY CHAIN COST % OF REVENUE Risks 11-20% of Revenue 30% of respondents were unable to 5-10% of Revenue 21-30% of Revenue estimate their supply chain costs. Less than 5% Opportunities 30% or more A mature supply chain should have clear visibility in to costs on a consistent andregular basis. They should also have a plan Don’t know for continuous improvement and reduction of costs. Less than 5% 5-10% of Revenue 11-20% of Revenue 21-30% of Revenue 30% or more Don’t know
  • 8. COST IMPACT OF SUPPLY CHAIN INITIATIVES 7% 3% 28% 25% ObservationAlmost 40% of companies were able to reduce their supply chain costs by less than 5%. Costs reduced 1 – 5% Risk 38% If you haven’t reduced your costs by atleast 5%, you may be trailing your peers. Costs reduced 1 – 5% Costs reduced 6 – 10% Costs reduced 11 – 20% Costs reduced more than 20% Failed to meet planned objectives Don’t know/ Not sure
  • 9. REVENUE IMPACT OF SUPPLY CHAIN INITIATIVES 13% 10% 8% Risks 5%More than 40% of companies have not 20% assessed the revenue impact of their supply chain strategy. Opportunities Don’t know/ Not sure Understand how customer service, 44%product mix and asset utilization impact your revenue. Revenue up 1 – 5% Revenue up 6 – 10% Revenue up 11 – 20% Revenue up more than 20% Failed to meet planned objectives or Revenue decreased Don’t know/ Not sure
  • 10. SUPPLY CHAIN INITIATIVE SUCCESS FACTORS Keys to Success We improve what we measure and track... with committed leadership and strong project management. 0% 20% 40% 60% Performance measures aligned to desired outcomes Active senior executive commitmentProject management clearly established and executed Realistic business case established to track results Awareness of need to reduce inventories Collaboration with supply chain partner(s) Technology enablers established and operating Awareness of need to increase customer satisfaction Trust between workers and senior management High goals set at onset If other, please specify
  • 11. GREEN IMPACT ON THE SUPPLY CHAIN It’s Time to Be Green 60% Green awareness is a growing part of company supply chain strategy. Opportunities 40%Understand the sustainability levers within your supply chain.80% of your supply chain’s footprint is set 20% with your infrastructure plan - much of the remainder is associated with your transportation. Definitely Not Will Not 0% Not Sure Maybe Definitely Next Year 2-4 Years 5+ Years
  • 12. SUPPLY CHAIN RISKS IN 2010 60% Risks 0% 20% 40% More than half of all companies are concerned with inventory and transportation costs. Opportunities Agility to dynamically balance supplyand demand will allow you to manage your inventory or capital risks. High variability in transportation andfuel costs remain a key opportunity to cut costs and gain advantage. Inventory and working capital Cost of transportation/fuel Critical trading partner / outsourcing partner vulnerabilities Global instability Environmental regulations Freight movement Manufacturing costs
  • 13. SUPPLY CHAIN VULNERABILITY Top 3 Risks A weak economy, unpredictable demand and supplier risk are the top three stated vulnerabilities60%40% 20% 0% Global Economy Predicting Demand Supplier Viability Lack of Resources Consolidation Regulatory Change Strongly Agree Agree Neutral Disagree Strongly Disagree
  • 14. FUTURE PROOF SUPPLY CHAIN PLAN COVERS CONTINGENCIES Risks 57%One-third of companies do not have asupply chain plan to cover the range ofpossibilities that may occur in the next 10% couple of years. 3% 3% Opportunities Uncertain 27%Make sure your supply chain plan willperform well in many different futurescenarios. In today’s market, it’s moreimportant to find a good solution formany different futures, than it is to findthe best solution for a given scenario. Strongly Agree Agree Uncertain Disagree Strongly Disagree
  • 15. CONCLUSIONS NOW WHAT? Predictability is key to superior supply chain performance. With an uncertain future, supply chain leaders should consider the following:• Adopt an improvement process that includes frequent measuring, assessing and planning• Develop a robust plan that performs well for all likely future scenarios• Address risky cost centers such as transportation in advance to mitigate variability
  • 16. READY TO OPTIMIZE YOUR SUPPLY CHAIN? Call us at (866) 347-1130 or visit ProfitPt.com