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Direct Materials Study 2016 - Summary Charts

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Growth in global markets is slowing. Stock markets reward growth, and most supply chain leaders want to be successful in driving a growth agenda. To accomplish this goal, within the supply chain there needs to be a healthy intersection of the worlds of gray and black.
In the launch of new products, companies manage a stage-gate process. This is the circle of life for new product launch. This is a world of gray. As supply chain teams work with new product launch, they must effectively dance with this world of gray.
The conversations encompass wider and wider groups of people as products progress. This includes suppliers. Today’s solutions are not effective in driving this type of meaningful conversation. There are gaps. Instead, enterprise solutions drive black and white discussions.
Most supply chain leaders come from the world of black and white. In operational teams there is little gray. Products are made at specification targets, and quality of design is carefully measured through Six Sigma processes. Process variation is rigorously controlled. Enterprise Resource Planning (ERP) systems strengthen the discipline of these processes. Within this world there are fixed and well-defined item codes, production locations, and material specifications. This gives rise to a question: "How will companies grow if they only automate the world of black and don't embrace the world of gray?" This leads to another question, "Are supply chain leaders hampering product development efforts by forcing black-and-white process definitions too early onto product launch processes?" As shown in Figure 2, this research suggests they are.
For sourcing, discrete companies perform well on cost, lead times and delivery reliability. This is the world of black and white and the management of known specifications, sourcing arrangements, and contract performance. However, in the world of gray, in new product launch we have not cracked the code to power innovation, either internally or externally, with suppliers. Few companies have the capabilities for the collaborative review of design drawings, and a collaborative workflow to facilitate conversations on opportunities and design. A missing gap is to tie these collaborative discussions on design to sourcing. The gap between traditional Product Life Cycle Management (PLM) systems, and Supplier Relationship Management (SRM) for sourcing decisions, is large. Traditional deployments of PLM, SRM and ERP have not closed this gap.

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