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Supply Chain Agenda 2011


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The Capgemini Supply Chain Agenda 2011

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Supply Chain Agenda 2011

  1. 1. The 2011 Global Supply Chain AgendaMarket and demand volatility drivesthe need for supply chain visibility Cover-Reference Number
  2. 2. The Supply Chain agenda in 20112 The 2011 Global Supply Chain Agenda
  3. 3. Contents The supply chain agenda in 2011: Volatile environment drives the need for visibility 4 300 respondents shared their supply chain agenda with Capgemini Consulting 4 Dealing with market volatility is the key business driver for 2011 5 Need for visibility tops the supply 61 chain agenda 8 Reflections on 2010 and the 2011 outlook: Developing the supply chain function The 2011 Global Supply Chain Agenda 3
  4. 4. The supply chain agenda in 2011: Volatile environment drives the need for visibility These are the results of Capgemini important supply chain projects Consulting’s annual international supply for 2011. chain survey. The study assesses the views of supply chain executives around 300 respondents shared their the world on their key priorities. supply chain agenda with Capgemini Consulting Growth in China and Although the general economic outlook In this year’s edition of Capgemini Latin America is at the start of 2011 seems positive, a Consulting’s annual international significant number of the respondents to supply chain study, 300 leading promising but demand in this year’s supply chain survey, indicate companies participated from Europe Europe and the US is not they are uncertain about market demand (59%), the US and Canada (25%), that certain yet. At the in 2011. This year’s survey reveals that Asia-Pacific (10%) and Latin America operating a reliable supply chain in a (6%). In addition to the survey, we same time availability, volatile environment, while conducted face-to-face interviews with security and costs of raw simultaneously dealing with rising supply chain senior executives, which material costs, will be the primary provided additional insights. materials is being challenge for supply chain managers in jeopardized. Suppliers 2011. This challenge entails improving In this report we will first look at the have gone due to the control of both the internal and external business drivers for companies in supply chain. Consequently, improving 2011 and consequently the resulting crisis and the challenge supply chain visibility ranks as the top supply chain project calendar. is now how to secure this type of supply chain project planned for Secondly we will give insight in why 2011. 45% of the respondents recognize the project calendar of last year was again against supply chain visibility as the main focus not executed as planned and the competitive prices area for the coming year. Business implications of this for the position process redesign (44%), business and development of the supply chain innovation (41%) and improving long function. Finally we will look at what term (demand) forecasting and planning we can learn from leading companies (41%) follow close in the list of most on the topics mentioned in this report.4 The 2011 Global Supply Chain Agenda
  5. 5. Business Drivers 2011 vs 2010 Market/Demand volatility* 40% Increased material/service costs* 35% Meeting (changing) customer requirements 58% 34% Sustainability 50% 33% 30% Develop emerging markets 30% 38% Introduction of new product-market market combinations 25% 36% Economic recovery 24% Globalisation 23% 23% 20% Regulatory compliance 21% 20% Supply Chain security 17% Increased business risk* 17% New (type of) competition 19% 10% 2010 Other (please specify) 14% 9% 2011 Economic downturn 25% 8% *New entry in 2011 survey 0% 10% 20% 30% 40% 50% 60%Dealing with market volatility is in comparison to last year’s survey.the key business driver for 2011First we asked the participants the Meeting (changing) customerquestion: “What business challenges requirements, the number 1 businessdrive your supply chain agenda for driver in the 2010 survey, now ranks2011”. 40% of the respondents the number 3 position. Sustainabilityanswered that dealing with market/ remains high on this list, anddemand volatility is now the most respondents reported more greenimportant challenge. Dealing with initiatives for the coming year. We aredemand uncertainty after the excited to see what these initiativesrecession is now playing a key role will the supply chain manager’sbusiness decisions. Second in the With the global economy improvinglist of business drivers is increased at the beginning of 2011, thematerial/service costs with a score of economic downturn has now moved35%. Both topics are new in the list all the way down to the bottom of the The 2011 Global Supply Chain Agenda 5
  6. 6. Top 10 Supply Chain Projects 2011 Supply Chain visibility improvement 45% Business process (re)design programs (e.g. process harmonisation, reorganisation) 44% Business innovation 41% (e.g. new channel, new technology, etc)* Improve long term (demand) forecasting 41% /planning Operational excellence (e.g. LEAN) 39% Network redesign/Distribution strategy 36% Sustainability program 35% Supply Chain talent program (e.g.acceleration 34% training, project management, etc)* Inventory optimisation program 34% Contract renewal with Logistics Service Provider 33% * New entry in 2011 survey 0% 10% 20% 30% 40% 50% agenda, although it is still mentioned visibility improvement tops this year’s by 8% of the respondents. When agenda. In the interviews, both internal looking back at last year’s survey, we and external visibility are mentioned as reported that one year on from the key elements for realizing a reliable start of the global financial crisis, the supply chain. Visibility was reported customer was back on top of the as knowing where products and supply chain agenda for 2010. But the inventories are, being able to monitor results of this year’s survey show that order progress and being able to We want to get more grip last year’s intentions were not anticipate to unplanned events, like necessarily that well executed in the delayed transport or non-conformance on our external eyes of customers: many companies quantities in the production process manufacturing partners. experienced a drop in service levels of subcontractors. during 2010 while some companies Visibility on their order reported to be proud that they were The interview participants indicated status and the quality of just able to keep service levels stable. to have different understandings of production batches is supply chain visibility. Transport Need for visibility tops the oriented people define visibility as key to this supply chain agenda insight in the material and order flow Next we asked the participants about in the distribution network while their planned supply chain projects for manufacturing oriented people define 2011. The outcome is that supply chain visibility as insight in stocks, production6 The 2011 Global Supply Chain Agenda
  7. 7. Rank % % 2011(2010) Project 2011 2010 1 (4) L+3 Supply Chain visibility improvement 45% 48% 2 (1) M-1 Business process (re)design programs 44% 55% (e.g. process harmonisation, reorganisation) 3 NEW Business innovation 41% - (e.g. new channel, new technology, etc) * 4 (3) M-1 Improve long term (demand) forecasting /planning 41% 49% 5 (2) M-3 Operational excellence (e.g. LEAN) 39% 54% 6 (5) M-1 Network redesign/Distribution strategy 36% 40% 7 (9) L+2 Sustainability program 35% 34% 8 NEW Supply Chain talent program 34% - (e.g.acceleration training, project management, etc)* 9 (8) M-1 Inventory optimisation program 34% 35% 10 (6) M-4 Contract renewal with Logistics Service Provider 33% 40%quality and monitoring of production highest new-comer with a score oforder progress in the supply network. 41%. Business innovation is not only about exploring new channels, newTo realize visibility supply chain markets or new business models butmanagers need to establish trust also about utilizing new technologiesamong supply chain partners, support like Software-as-a-Service (SAAS),cross-department coordination, utilize collaborative transport platformstechnologies to share information, (supply chain control tower) and othersimplify and synchronize supply chain technologies to transform the supplyactivities. To achieve this goal, chain. Improving long termcompanies need to optimize their ways forecasting/planning, and operationalof working, remove unnecessary excellence initiatives have slightlyprocess steps and improve the dropped, but remain in the top fivecollaboration between up and down projects list. Planning processes likestream business partners. Sales & Operations Planning continue to be seen as essential to balancingCompared to 2010, the number one demand, investment and supply.project from last year – business Most of the managers expressedprocess (re)design programs – has the urgency and importance ofmoved to second position with a score improving their planning processesof 44%. Business innovation is the and forecast accuracy. The 2011 Global Supply Chain Agenda 7
  8. 8. Reflections on 2010 and the 2011 outlook: Developing the supply chain function We also asked the participants to look supply chain, such as agreements made back to 2010. The biggest gaps in with customers, the supply foot-print implementing a supply chain strategy and manufacturing policies determine occur in improving long term (demand) the service level to a large extent. forecasting and planning and centralizing/decentralizing supply chain In the interviews, most supply chain functions. Finding or implementing managers see the role of the supply transport management solutions is also chain function as becoming increasingly Unfortunately, it is still a a weak spot for companies. important. As a result of this, it was often stated that supply chain managers common belief in our Looking at the cause, over 40% are increasingly being added to the company that Supply respondents identify non-supply chain management team or seeing their Chain Management is a business priorities as the major management scope increased. bottleneck for not fulfilling supply cost driver, not a chain plans: supply chain executives are Do we really develop our supply chain business opportunity often faced with business priorities that people? do not support their objectives. In addition, IT capability and lack of The changing position of supply chain people talent also raise alerts. management also puts new requirements on people working in that I would like to get all our The business prioritization bottleneck is function. After a period dominated by key leaders and line more cause for concern than the often running the show and keeping costs recurring IT capability bottleneck. For under control, expectations are now managers aligned behind the supply chain manager this means changing. This reflects to the third our vision so they lead he/she must get a bigger say in the bottleneck mentioned which is about overall company’s business agenda. having sufficient talent in the themselves Supply chain managers must also gain a organization. 34% of companies broader influence. The reason for this is therefore plan to launch a supply chain that at the current level of “operational people development program in 2011. excellence”, factors outside of the One of the participants said “I would8 The 2011 Global Supply Chain Agenda
  9. 9. Top 3 bottlenecks for implementing a Logistics/ Supply Chain Strategy Business prioritization 40% IT capability 34% People talent/performance 26% 0% 10% 20% 30% 40% 50%like to have more staff with the right execution of the planned supply chaincapabilities.” In the interviews the projects in 2011, there are someability to understand supply chain interesting insights from leadingdynamics, to coordinate between value companies to overcome thechain partners and to innovate end-to- implementation gaps for 2010.end supply chain processes arementioned as the main required key First, implementing supply chainsupply chain management visibility will drive the benefits incompetencies. cutting the waste hiding in the processes, lowering pipeline inventories, and improving overall cost efficiency.Learning from leading Visibility will give you all thecompanies information you need to improveAll in all 2011 is going to be an planning, to make business decisions atinteresting year with a dual agenda. the right time, and to better anticipateOn the one hand, traditional to unplanned events in the internal and/management of costs and efficiency or external supply chain. Recentwill still be required although the era implementations of for example logisticsof major restructuring is hopefully control towers show this.behind. At the same time the supplychain function must increase its role Second, any business transformationas an innovating entity, capable of is founded on process, technology andsupporting the organization as it people. Usually, the improvemententers new markets and new efforts are concentrated on process(e)-channels and adopts an and IT, and forget the people aspect.increasingly sustainable way of Leading companies are investing inworking. To be successful in the their people. Supply chain The 2011 Global Supply Chain Agenda 9
  10. 10. communities and training programs are initiated in order to assimilate knowledge and improve understanding of the supply chain dynamics. An exchange of people from other functions into the supply SCM has proven to be a chain function (and vice versa) should differentiator in the past therefore be encouraged.and will continue to be so Third, in most companies supply in 2011. It will play a chain topics still don’t reach the board room. This leads to the question major role in achieving where the supply chain function my company’s goals for should be positioned in a company. the year to come Since the supply chain function cannot stand alone in an organization, supply chain managers struggle to improve operational excellence without senior management support.Companies don’t compete. When organization structures are not that easy to change a clear road-map Supply chains compete for supply chain development, which translates the business agenda into supply chain initiatives, can support these efforts.
  11. 11. About Capgemini® Capgemini, one of the Capgemini Consulting is the Global world’s foremost providers of Strategy and Transformation Consulting consulting, technology and outsourcing brand of the Capgemini Group, services, enables its clients to transform specializing in advising and supporting and perform through technologies. organizations in transforming their Capgemini provides its clients with business, from the development of insights and capabilities that boost their innovative strategy through to execution, freedom to achieve superior results with a consistent focus on sustainable through a unique way of working, the results. Capgemini Consulting proposes Collaborative Business ExperienceTM. to leading companies and governments The Group relies on its global delivery a fresh approach which uses innovative model called Rightshore®, which aims methods, technology and the talents of to get the right balance of the best talent over 3,600 consultants worldwide. from multiple locations, working as one team to create and deliver the optimum For more information: solution for clients. Present in 40 countries, Capgemini reported 2010 global revenues of EUR 8.7 billion and employs around 110,000 people worldwide. Rightshore® is a trademark belonging to Capgemini More information is available at The 2011 Global Supply Chain Agenda 11
  12. 12. Ramon Veldhuijzen Richard van SchipGlobal Logistics & Fulfilment Lead Managing Consultant Supply Chain ManagementTel.: +31 30 689 900 97 Tel.:+31 30 689 55 74Email: Email: ©Capgemini Consulting - March 2011Papendorpseweg 100Postbus 2575 – 3500 GN UtrechtThe NetherlandsTel.:+31 30 689 26 Consulting is the strategy and transformation consulting brand of Capgemini GroupThe information contained in this document is proprietary. Copyright © 2011 Capgemini. All rights reserved.