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But just what provides better visibility? Is it technology and systems integration? Or is it just as much a culture and mindset that may in some cases use more manual support systems but nonetheless improve decision-making? What Do You Say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

At the recent CSCMP 2008 conference in Denver, Dr. Karl Manrodt of Georgia Southern and Dr. Mary Holcomb of the University of Tennessee presented results from the 17th annual Trends and Issues in Logistics and Transportation report, which summarizes a survey of over 1000 supply chain professionals.

As we noted last week, one key finding of the data analysis was that larger firms seem to be gaining a competitive edge in supply chain performance, which the authors say may be largely related to greater investments in technology and integration. (See What Makes a Company a “Master of Logistics?”) This week, we summarize additional findings from the study.

For the past several years, the report's authors have presented a framework for supply chain excellence that includes six dimensions of performance: Collaboration, Optimization, Connectivity, Execution, Speed and Visibility (see graphic nearby).

The authors say that they continue to find “that many firms are still struggling to implement these six drivers, and are therefore unable to achieve the transformation that is needed to move their organization forward.”

The research also showed the competitive pressures that companies are facing. Picking up on the book “The Discipline of Market Leaders,” by Michael Treacy, the survey for several years has asked respondents to identify their primary competitive strategy: cost leadership, product innovation, customer service, or trying to be great at all three.          

This year, the number of companies saying that their strategy was to be great at all three, or being “all things to all people,” rose 22% for a total of 45% of all respondents. That’s up from just 20% in 2004.

While Treacy’s book argued companies need to pick one primary strategy and just be good enough in the other two areas, it appears the tremendous level of global competition is causing more companies to believe that they can’t afford not to strive to be leaders in cost, service and innovation.

At the same time, while the cost leadership strategy had been losing numbers every year since 2004, it jumped markedly in this year's study, being cited by 17% of respondents versus just 8.4% in 2007. Will this strategy hold? The report says that “It is anticipated that this shift in strategic direction will be the new reality as long as the current economic conditions persist.”

(Supply Chain Trends and Issues Article - Continued Below)

The report again found a wide mix of Transportation Management System (TMS) technology support. As shown in the figure below, in North America there is a roughly even split between companies using best-of-breed, traditional TMS and those using the TMS module of their ERP provider, but both tally just 13.3% of the market. The largest percent (23.8%) rely on the TMS used by a third-party logistics provider, and another 18% use a system developed in-house. It may be noteworthy that the number of companies using a “hosted” TMS is starting to get on the radar screen, at 5.7% in this year’s survey.

Source: 2008 Trends in Transportation and Issues in Logistics and Transportation Report

Green Initiatives

Not surprisingly, the survey this year covered Green supply chain and logistics issues, which included a couple of interesting findings. The number 1 driver of Green initiatives was the “Priority of the CEO,” as executives perceive a number of financial and other benefits to getting more Green and are trying to drive their organizations forward. This was true both in North America and the rest of the world, but there was an interesting difference between regions on Green drivers after that. In North America, “cutting costs” was the second most important driver of Green strategies, but that ranked only 5th on the priority list in the rest of the world, which placed “pressure from customers/consumers” as the number 2 Green driver. (See illustration below.)

Source: 2008 Trends in Transportation and Issues in Logistics and Transportation Report

The Role of Visibility

In analyzing the data, the authors find a clear link between supply chain performance and the level of visibility the company believes it has.

But just what provides better visibility? Is it technology and systems integration? Or is it just as much a culture and mindset that may in some cases use more manual support systems but nonetheless improve decision-making?

That's something the authors say will require additional study, but investment in supply chain visibility should be high on the company priority list.

“Firms should recognize that in addition to being an operational capability, visibility is a concept with strategic and tactical implications,” the report says. “Becoming a responsive supply chain is only possible with the ability to “see” critical flows and proactively manage them. From a strategic perspective, it is about the possibility of evaluating and reshaping the logistics network to better meet the changing needs of customers and business conditions.”

The full report is available for download from Manrodt’s web site: Trends and Issues in Transportation and Logistics 2008.

Do any of the numbers or perspectives in our summary of the Trends report surprise you? Do you see a clear link between the level of visibility and the level of supply chain performance? Let us know your thoughts at the Feedback button below.