SCDigest Editorial Staff

SCDigest Says:

The report notes accurately that “Most companies simply do not put the amount of effort into the planning area to truly match supply with demand. Rather, the focus is on supply chain efficiency in terms of cost, and planning is expected to follow in step with emphasis on throughput and efficiency.” What do you say? Send us your comments here

Last week saw the release of The Annual Global Survey of Supply Chain Progress from Computer Sciences Corporation (CSC) and Michigan State University. The fifth such report, the effort as the name implies tries to gauge how much progress the industry is making.

That’s actually quite a hard task, and it’s hard to get a clear view from the data from this year’s report, released last week. The full report is available from the CSC web site: The Annual Global Survey of Supply Chain Progress 2007. We summarize key findings below.

Dimensions of Competence

The study provides a framework for thinking about supply chain competence that may be of interest for companies evaluating their own supply chain strategies and capabilities. The eight dimensions considered are:

• SCM Alignment with Business Strategy
• Strategic Customer Integration
• Strategic Supplier Integration
• Cross-Functional Internal Integration
• Supply Chain Responsiveness
• Planning and Execution Process and Technology
• Supply Chain Rationalization/Segmentation
• Risk Management

This is a pretty good model for thinking about a company’s supply chain capabilities and maturity. We’d like to see a more defined list of attributes for leaders, followers and laggards for each dimension, but it’s as good as any place to start for analyzing your own supply chain.

Key 2007 Report Findings

From our view, the important or most interesting findings from the report include:

• 38% of respondents said their organizations had a chief supply chain officer or similar single executive in charge of the supply chain.
• Those with Chief Supply Chain Officers reported stronger supply chain results, but whether creating a CSCO role leads to the improved results, or companies with a strong supply chain orientation and performance are more likely to create such a role, is unclear.
• Not surprisingly, forecast accuracy continues to be a big supply chain concern. About 78% of respondents rate themselves in the bottom two-thirds of performance in terms of accuracy – a reversal of the usual over-rating of themselves most companies do, and probably just reflects how difficult forecasting is.
• 56% of companies review and update supply chain strategies only on a perceived “as needed” basis, rather than formally doing so on say an annual cycle.
• Internal collaboration across functions, not surprisingly, needs work in many companies. For example, only 39% of respondents agreed or strongly agreed that procurement decisions were based on consensus plans and forecasts. Only 36% of respondents rated their firm “high” in terms of using common product roadmaps and other procedures to guide product launches.
• Just 45% of respondents said their companies had a good feedback loop between supply chain plans and execution to identify the causes of variance to plan.
• 11% of respondents said that supply chain initiatives had reduced supply chain costs by 11-20% in the past three years. 6% claimed an amazing 21-25% cost reduction. 58% said costs had been reduced between 1 and 10%. The challenge, of course, in any such survey is getting the frame of reference. Is the cost reduction in absolute terms, or in reference to what would have been the results with the status quo? We suspect most answered from the latter perspective, which is more subjective.

The report notes accurately that “Most companies simply do not put the amount of effort into the planning area to truly match supply with demand. Rather, the focus is on supply chain efficiency in terms of cost, and planning is expected to follow in step with emphasis on throughput and efficiency.”

Leveraging Financial Data

The reports conclusions include a valuable point – that better integration of the supply chain with financial information and analysis can lead to much better decisions.

“There is a large opportunity for financial officers to be more involved in supply chain efforts, particularly drawing attention to the actual improvements that can be made to financial performance,” the report observes. “The leaders’ use of costing and financial information to impact strategy and tactics is evidence that a closer relationship can be beneficial.”