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Europe Leads In Supply Chain Advances
By Mike Sachoff
Staff Writer
Article Date: 2008-10-03
Europe jumped ahead of North America and Asia Pacific in reaching significant cost reductions, revenue gains and sustainability improvements through supply chain advancements, according to the 2008 Global Survey of Supply Chain Progress from CSC, Supply Chain Management Review, the Council of Supply Chain Management Professionals (CSCMP) and Michigan State University.
The survey, completed by supply chain professionals representing 22 industries and more than 32 countries, showed that Europe is ahead of North America in almost every element of supply chain optimization. More than half (63%) of European respondents believe that their flows of materials, people, information and cash are optimal compared to less than half of their North American counterparts.
Asia Pacific has dropped into a lower position as compared to the other geographical sectors in most areas of supply chain advancement, such as strategic alignment, customer integration and supplier integration. Despite the decline, the region ranked slightly ahead of Europe and North America in innovation management.
By industry, aerospace and defense (A&D), chemicals and consumer goods lead in over all supply chain performance. The survey shows that progress toward this goal is happening as specific industries develop advance practice in areas relevant to their increased success and continuity. As their supply chain efforts improve, leaders are shifting focus from traditional core competencies such as excellence in warehousing and transportation to broader process improvements that help them standout within market segments. For example, leading consumer goods firms are now better at segmenting customers and then matching specific, essential offerings.
As leaders focus more on the specific needs of their key customer segments, attention is drawn more toward how to bring distinctions to their supply chain network, which has shifted with the help of trusted business partners toward enterprise optimization.
"Industry characteristics reflect movement beyond the internal 'four walls' of expertise to attaining best practice across the enterprise in areas of importance for each market, such as strong internal integration for the chemical and consumer goods segments, and leadership positions in customer integration by third-party logistics providers and wholesale distributors," said Chuck Poirier, author of nine books on supply chain management and a partner in CSC's Global Business Solutions group.
"Companies in these industries are forging ahead by ensuring that best practices in areas such as order management are practiced across the network, and root-cause problems are eliminated throughout the end-to-end supply chain. One positive impact is a dramatic reduction in reconciliations."
"Firms that begin with forecast accuracies as low as 40 percent are able to reach levels of 75 percent or higher," Poirier noted. "The secret is including external parties -- suppliers and customers -- in the review sessions to dramatically improve the accuracy of delivered data."
Because of supply chain improvements, 71 percent of all respondents indicate they have realized cost savings over the last three years, in a range from one to five percent to as high as 15 percent or more, with eight percent saying they have reached 16 to 20 percent more.
"Firms are moving from a 'cost-only' perspective to a focus on primary objectives such as faster and more personalized order fulfillment, lead-time reductions from placing orders to products delivered, cycle time improvements across what are now becoming global networks, creating and delivering perfect orders, improving customer satisfaction ratings, shortening the cash-to-cash cycle so all parties get paid in a timely manner and asset turn improvement," said Poirier.
About the Author:
Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news.
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