Logistics and Supply Chain: New Accenture research looks at "master" capabilities for supply chain efficiency
Jeff Berman, Group News Editor -- Supply Chain Management Review, 5/7/2009
Research released this week by Accenture takes a close look at specific supply chain capabilities that are directly related to cost savings and strong customer service, which are paramount in today’s business climate.
Dubbed “The Accenture High Performance Supply Chain Study,” the research is based on online surveys taken by more than 1,500 executives from ten industries and 21 countries throughout North America, Europe, and Asia. This data, said Accenture, examines what supply chain “masters” are doing differently in six functional areas: fulfillment, manufacturing, supply chain planning, sourcing and procurement, service management, and product development.
These “masters” were classified by Accenture as those organizations in the top 10 percent within a specific function, while low performers were those in the bottom ten percent.
“This is an exciting bit of research,” said Jonathan Wright, director of Accenture’s supply chain fulfillment practice. “One of the key takeaways of it in our opinion was the ability to link supply chain capability with supply chain performance. In the past there has been supply chain research done separately around capabilities and metrics—for things like what types of fill rates companies are achieving—and by bringing them together with this research, we are showing how they work together, and helping companies understand the benefits of implementing a new type of capability within their supply chains.”
The study’s data for how the “Masters” match up to the rest of the field is as follows:
Fulfillment masters deliver customer orders on time and in full at a rate 13 percent higher, have significantly lower transport costs, and maintain 50 percent less finished goods inventory.Manufacturing masters achieve 13 percent higher throughputs (volume of products manufactured), 15 percent better equipment effectiveness, 30 percent more equipment uptime, and as much as a 75 percent reduction in manufacturing lead time.Supply chain planning masters achieve 10 percent greater forecast accuracy and lower inventory costs while maintaining a 99 percent order fulfillment rate.Sourcing and procurement masters deliver 2.5 times more value for every dollar they spend in their procurement organizations.Service management masters achieve 33 percent better turns on spares inventories, 33 percent higher service spend efficiency, and 10 percent fewer past-due service orders.Product development masters achieve 30 percent reduction in time-to-market with an equal reduction in resources and have significantly lower product-development costs.
Accenture also provided data for the leading supply chain capabilities that were identified by its surveys. Some of the findings the consultancy released included how fulfillment masters are more than twice as likely as low performers to design their distribution channels to accommodate varying customer needs and product characteristics (70 percent vs. 30 percent) and how supply chain planning masters are nearly twice as likely as low performers to use planning models that are differentiated by customer and product characteristics to enable greater responsiveness (82 percent vs. 43 percent), among others.
While masters are more adept at dynamic supply chain operations, Accenture’s Wright said this is in tune with dynamic supply chain strategy. This is key, he said, because it shows how shippers can change supply chain strategies—and the capabilities behind that—in line with volatile market conditions.
“Masters across all different domains have the ability to sense and respond to market conditions like changes in their customer base or supplier base, oil price changes, and geopolitical unrest,” said Wright. “They have the tools and techniques in place to respond to changes as needed. By getting things done right, masters have the ability to achieve much more than the competition, it seems. And it is critical in an economic downturn like now, when masters are achieving operational excellence levels above their peers.”
For more information on Accenture’s High Performance Supply Chain Study, click here.
View All On-Demand Webcasts
