Companies Turn to Supply Chains for Revenue Gains and Cost Savings

Economic Pressures Turning Companies to Supply Chains for Revenue Gains and Cost Savings


Supply Chain Management Advancing as Counter-Cyclical Tool

FALLS CHURCH, Va., Sept. 17 /PRNewswire/ — 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 (NYSE: 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, who has helped analyze survey results for the last seven years. “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.

For the first time, this year’s survey included questions about supply chain sustainability and green initiatives. Eighty-seven percent of respondents report they are either evaluating or implementing options related to supply chain sustainability; just under half of those have already implemented such initiatives. Sixty-two percent report paying more attention to green/sustainability issues today than they were 18 months ago.

“This is encouraging because it suggests that sustainability and green issues will be dominant elements in future supply chain efforts,” said Poirier. “At the same time, there’s little in the survey results to show that revenues for such initiatives have actually been increased; in fact, we saw evidence that economic conditions have pushed green to a lower priority. Hopefully, that will be a short-term move.”

The 2009 survey was completed by 176 respondents from both large and mid-sized companies. Fifty-three percent of the firms indicated their size as $1 billion or more in annual sales, while revenues of the remaining companies ranged from $250 million to $1 billion.

The survey report, which includes the complete set of questions and responses, and an executive summary, can be found at www.csc.com/2009SCSurvey.

Kraft foods poised to axe 50% of its suppliers...

Kraft mulls axing its supplier base
Kraft Foods is evaluating plans to cut its supplier base in half in a dramatic move that would impact over 30,000 companies, according to media reports.

Reuters noted that the US food giant is seeking to save around $300m annually and has identified consolidation of its purchasing of everything from ingredients to packaging materials as a way of helping to achieve this objective.

The review of purchasing comes as the company tries to simplify a procurement framework that evolved as Kraft acquired numerous companies over the years, the news agency reported.

“This is probably the first truly holistic view we’ve taken,” Julia Brown, senior vice president of procurement at Kraft, said in an interview with Reuters.

“We’re essentially taking a white sheet of paper and saying ‘what is the right number of suppliers to support this particular category, who are they, what is the capability we need for now and in the future, and does the current supplier base have that.”

Agility and responsiveness are a must for the customer-driven supply chain

Aberdeen research report discusses ways to manage multi-enterprise, demand-supply networks in order to increase responsiveness and agility…

MARLTON, N.J.–(Business Wire)–

Acsis, Inc., a leader in track and trace solutions for supply chain safety, security and efficiency, today announced its sponsorship of the research report, “Multi-Enterprise Manufacturing: The Role of Visibility and Collaboration in Driving Responsiveness.” The research study, conducted by Aberdeen Group, a Harte-Hanks Company (NYSE: HHS), reveals that due to an increase in the outsourcing of supply chain processes and solutions, organizations are losing visibility at a time when agility and responsiveness are a must for the customer-driven supply chain.

“Manufacturing and demand-supply networks are continuing to grow in complexity. Because of this complexity, it has become difficult for companies to stay informed and in control of every stage of the supply chain lifecycle,” said Viktoriya Sadlovska, analyst and co-author of the report. “At the same time, these organizations are working to move towards a more customer-driven supply chain. Therefore it is critical for companies to better align their outsourcing and customer-service efforts to attain agility and enable better responsiveness to minimize supply chain risk.”

Key findings from survey respondents indicate that:

· The top strategic focus for 2009 was on customer-related processes

· When combating the multi-enterprise visibility challenge, respondents are more likely to focus on collaborative approaches

· Effective information management is absolutely key for success in today`s complex demand-supply networks

· Having granular visibility that extends both upstream and downstream the supply chain allows companies to achieve operational excellence

According to report authors, visibility plays a big role in day-to-day routine supply chain management tasks, historic supply chain performance analysis and long-term planning. Additionally, a centralized supply chain organization, with globally defined strategy has both global and regional centers of excellence, and is an important organizational element for managing today`s networks with a high degree of process outsourcing. Best-in-class companies have repeatedly shown to have adopted this capability.

“The Aberdeen report is an affirmation of the importance of visibility and agility within the supply chain,” said Andre Pino, chief marketing officer, Acsis, Inc. “As companies outsource more and more of their supply demand-networks, they lose the visibility and control that they once had when the operations were within their four walls. “However, new automated data collection and collaboration technologies can provide visibility and restore the management control over their demand-supply networks and minimize disruptions and operational errors, he said.”

To obtain a complimentary copy of this report, visit:

http://www.aberdeen.com/link/sponsor.asp?cid=5788

Perceptant (http://www.perceptant.com/) - Next Gen Supply Chain Management, B2B Integration & EDI

Packaging dimensions help streamline global Supply Chains…

Harkness Wilder and Gladson Announce Strategic Alliance to Deliver Improved Logistics Strategies

EVANSTON, Ill. & LISLE, Ill.–(BUSINESS WIRE)–Harkness Wilder, a consulting firm focusing on designing and implementing business process improvements in supply chain management, and Gladson, the leading provider of product images, product information and category management services, have announced a strategic alliance to deliver improved logistics strategies to the consumer packaged goods industry.

Harkness Wilder’s services specifically target improvement opportunities across the supply chain, such as reduced costs, improved service, increased productivity, and more efficient processes and controls. The company’s practice areas include sourcing, demand planning, inventory management, distribution network design, warehouse operations and transportation management.

Gladson’s Certified Master Data Program provides data on outer dimensions, weights, marking, labeling and bar code information for cases, inner-packs and retail units. This product information helps manufacturers streamline internal operations and support data exchange with trading partners to simultaneously build trust and eliminate the need for costly manual verification. This data can ensure that Harkness Wilder’s clients are working with the most accurate and complete information in the development of their logistics strategies.

“Our clients see logistics as a competitive weapon,” said Mark Shapiro, president and CEO of Gladson. “Harkness Wilder’s expertise in transportation planning and warehouse development in conjunction with Gladson’s highly-accurate product master data will create solutions that deliver real value across the supply chain.”

“Harkness Wilder’s consulting services depend on the accuracy of case-level data to ensure the quickest and most efficient evaluations of logistics activities for their clients, and the most accurate results,” Julie Forgash, CEO of Harkness Wilder said. “Gladson is already the leader in data management for space planning and on-line shopping. Their services at the case-level will be a tremendous advantage to our clients as we help them with logistics planning.”

http://www.perceptant.com/ - Next Generation Supply Chain Management, B2B Integration and EDI

Deutsche Bank enhances financial supply chain management platform

Deutsche Bank today announced that it has made the necessary investment to launch a new financial supply chain management (FSCM) platform that brings together the power of its trade and cash management capabilities.

The platform will offer flexible financing solutions and be fully-integrated with payments, reporting and SWIFT’s trade services utility (TSU). This standardized platform will be global and will offer both multi-currency and multi-lingual capabilities.

In response to increased client demand for FSCM, Deutsche Bank is enhancing its platform through the introduction of document and message exchange including matching via TSU. Additionally, the Bank is in the process of augmenting its risk management methodologies to provide more flexible, event-driven finance. Concurrently, the Bank is strengthening its dedicated sales and implementation teams.

The enhanced FSCM platform will provide great flexibility and facilitates integration with third parties. The Bank continues to develop partnerships and alliances with third parties, including financial institutions and others such as logistic providers, in order to expand supply chain reach, augment credit capacity and enhance the flow of supply chain information.

Marilyn Spearing, Global Head of Trade Finance and Cash Management Corporates, Global Transaction Banking, Deutsche Bank, said, “Demand for FSCM has increased as a result of globalization, further movement from letters of credit to open account, and the recent financial crisis. Managing working capital remains a strategic priority for our clients and we are developing a more robust FSCM platform to accommodate the needs of today’s market.”

Jon Richman, Global Product Head, Trade and Financial Supply Chain, Global Transaction Banking, Deutsche Bank, said, “Deutsche Bank continues to make the investment in our FSCM platform and product range necessary to help our clients succeed in this core area. Financial institutions and corporate clients look to partner with Deutsche Bank because of our extensive and expanding FSCM capabilities along with our stability and geographic coverage.

Do Pharmaceutical companies really focus on their Supply Chains?

I read the following and wondered just how much focus Supply Chain Optimization receives in Pharmaceuticals:

"Successful supply chain management, including managing demand, planning API and formulation production, packaging and distributing, is a goal shared by all pharmaceutical manufacturers. According to PharmaTech.com, effective supply-chain management is particularly important as the pharmaceutical industry seeks ways to reduce costs, maintain regulatory compliance, and adhere to quality and safety standards..."

Comments/thoughts?

The Business Case for EDI...

The first return (of many) for companies wanting to receive business documents from their supply chain partners electronically, is because if they are properly integrated then it saves the recipient having to provide the resource to enter the document on the their own ERP system...
http://knol.google.com/k/ian-ford/electronic-data-interchange-edi/yhsjocxy2hhk/2#

CISCO and Black & Decker Improve Forecast Accuracy

Whether it is a truck, a tsunami or an economic downturn, the same general rule applies: You are better off if you can see it coming from a safe distance.

http://computerworld.co.nz/news.nsf/mgmt/07FF5D9E832B4AD3CC25762000191781