Executive Briefings

Leveraging Supply Chain Planning to Improve Overall Performance

Capgemini recently announced the findings of its Global Supply Chain Planning Study 2009. Based on responses from 120 supply chain executives from around the world, the study finds that even when faced with difficult market conditions, Supply Chain Planning (SCP) is not being given the focus essential to navigate these challenges successfully.

Key findings include:

1. SCP is not yet universally seen as a strategic, decision-critical activity, with the majority of respondents viewing it as simply a support function, and very few respondents considering their organizations to be innovators or best-in-class in planning

2. Most organizations are not factoring in the increased risks associated with the tougher economic environment

3. Though most companies recognize that close collaboration with partners and customers is key to success, many have not defined mechanisms to accomplish this and struggle to achieve end-to-end supply chain integration both internally and externally

4. A significant majority of respondents do not utilize sophisticated and fully integrated tools for their planning processes

In a market faced with increased volatility and variability in demand, supplies and lead times, improving SCP can significantly lower inventory levels and maximize product turnover. Indeed, 67 percent of participants indicated that changes in planning processes were key to improving the overall performance of the supply chain. SCP is viewed positively as a source of competitive advantage and a critical decision-making function by some, but more than half the respondents perceived SCP as nothing more than an important support function or a back-office execution process, suggesting that planning is not being prioritized as it should be by most organizations.

Collaboration is one of the most important factors in effective supply chain management. However, less than 30 percent of respondents involve customers, and less than 20 percent involve suppliers, in their demand and supply planning processes. Very few organizations are sharing critical information like actual stock levels and gross demand or production plans with their suppliers, relying instead on forecasts and purchase orders to do the job. As a result, for many, accomplishing end-to-end supply chain integration, both internally and externally, still seems to be a dream.

"Effective planning is crucial to achieving a truly world-class supply chain, which in turn determines the success and often the survival of organizations in the current global market," said Steve Lambert, Global Leader, Supply Chain Planning, Capgemini Consulting. "The traditional supply chain challenges of balancing operational costs, working capital, agility and increasing service requirements are more important than ever and this is where the opportunity lies for SCP to really innovate and orchestrate the entire supply chain, to effectively achieve the goals of the business and gain a competitive advantage. By giving SCP the attention and resources it deserves, companies should be able to dramatically improve services, quality and costs, which at this time are vital areas of focus."

Supply chain challenges in the economic downturn: The global economic downturn presents more challenges for the supply chain function than ever before. The top trends in the market reflected by the survey include: increased requirements in terms of customer service, collaboration, and transparency, with a strong focus on logistics improvement and globalization. Indeed, the biggest challenges in supply chain management can be directly traced back to the globalization of supplies and markets. With 81 percent of respondents confirming they source at least 10 percent of their supplies from outside their borders, the scale of the challenge faced becomes clear.

In addition, the current global operating environment presents a unique set of potential supply chain risks that are intensified in the economic downturn. Perhaps most notably, while the risks associated with commodity price fluctuation and availability are well recognized and incorporated into the planning process, exchange-rate fluctuations are not. Also, a significant majority of organizations do not consider energy use, reverse flows/returns, carbon footprint and logistical delays due to natural and geo-political factors critical to their planning.

Sales and Operations Planning (S&OP): Significant challenges persist: Three-quarters of survey respondents indicated that their organization has regular S&OP processes in place. However, the report also finds that considerable challenges still remain in implementing these. For example, data availability and accuracy continues to be an issue. Necessary data often cannot be readily located, is inconsistent or only exists in fragments, which make it difficult to interpret. A major contributor to these data issues is a lack of adequate IT functionality to support the S&OP process. More than a third of respondents were missing S&OP functionality in their current planning systems, while the vast majority relies on ERP reporting capabilities or spreadsheet analysis for S&OP data reporting.

In addition, with the move to a more globalized model, the trend towards offshoring means more supply resources are being shared across enterprises than ever before and so the ability to run an inter-divisional, global S&OP process is becoming increasingly important. However, the survey's results indicate that single global S&OP processes are not being widely adopted. Less than one third of respondents had a single, global process in place for S&OP, which spanned all regions and divisions. However, integrated planning tools, providing an insight into real-time data, can play an important role in improving supply chain efficiencies.

This study, conducted by Capgemini's Supply Chain Planning Center of Excellence, is based on input from a series of face-to-face interviews and a web-based survey that collected responses from 120 supply chain executives. Participants from companies based in over 21 countries responded to the survey, with a respondent distribution of 37 percent from companies in Western Europe, 24 percent from Central and Eastern Europe, 19 percent from the Americas, 13 percent from the Nordics, and 7 percent from the Asia Pacific region. Participants were carefully chosen to ensure that they were all responsible for or actively involved with Supply Chain Planning activities within their organization.
Capgemini

Capgemini recently announced the findings of its Global Supply Chain Planning Study 2009. Based on responses from 120 supply chain executives from around the world, the study finds that even when faced with difficult market conditions, Supply Chain Planning (SCP) is not being given the focus essential to navigate these challenges successfully.

Key findings include:

1. SCP is not yet universally seen as a strategic, decision-critical activity, with the majority of respondents viewing it as simply a support function, and very few respondents considering their organizations to be innovators or best-in-class in planning

2. Most organizations are not factoring in the increased risks associated with the tougher economic environment

3. Though most companies recognize that close collaboration with partners and customers is key to success, many have not defined mechanisms to accomplish this and struggle to achieve end-to-end supply chain integration both internally and externally

4. A significant majority of respondents do not utilize sophisticated and fully integrated tools for their planning processes

In a market faced with increased volatility and variability in demand, supplies and lead times, improving SCP can significantly lower inventory levels and maximize product turnover. Indeed, 67 percent of participants indicated that changes in planning processes were key to improving the overall performance of the supply chain. SCP is viewed positively as a source of competitive advantage and a critical decision-making function by some, but more than half the respondents perceived SCP as nothing more than an important support function or a back-office execution process, suggesting that planning is not being prioritized as it should be by most organizations.

Collaboration is one of the most important factors in effective supply chain management. However, less than 30 percent of respondents involve customers, and less than 20 percent involve suppliers, in their demand and supply planning processes. Very few organizations are sharing critical information like actual stock levels and gross demand or production plans with their suppliers, relying instead on forecasts and purchase orders to do the job. As a result, for many, accomplishing end-to-end supply chain integration, both internally and externally, still seems to be a dream.

"Effective planning is crucial to achieving a truly world-class supply chain, which in turn determines the success and often the survival of organizations in the current global market," said Steve Lambert, Global Leader, Supply Chain Planning, Capgemini Consulting. "The traditional supply chain challenges of balancing operational costs, working capital, agility and increasing service requirements are more important than ever and this is where the opportunity lies for SCP to really innovate and orchestrate the entire supply chain, to effectively achieve the goals of the business and gain a competitive advantage. By giving SCP the attention and resources it deserves, companies should be able to dramatically improve services, quality and costs, which at this time are vital areas of focus."

Supply chain challenges in the economic downturn: The global economic downturn presents more challenges for the supply chain function than ever before. The top trends in the market reflected by the survey include: increased requirements in terms of customer service, collaboration, and transparency, with a strong focus on logistics improvement and globalization. Indeed, the biggest challenges in supply chain management can be directly traced back to the globalization of supplies and markets. With 81 percent of respondents confirming they source at least 10 percent of their supplies from outside their borders, the scale of the challenge faced becomes clear.

In addition, the current global operating environment presents a unique set of potential supply chain risks that are intensified in the economic downturn. Perhaps most notably, while the risks associated with commodity price fluctuation and availability are well recognized and incorporated into the planning process, exchange-rate fluctuations are not. Also, a significant majority of organizations do not consider energy use, reverse flows/returns, carbon footprint and logistical delays due to natural and geo-political factors critical to their planning.

Sales and Operations Planning (S&OP): Significant challenges persist: Three-quarters of survey respondents indicated that their organization has regular S&OP processes in place. However, the report also finds that considerable challenges still remain in implementing these. For example, data availability and accuracy continues to be an issue. Necessary data often cannot be readily located, is inconsistent or only exists in fragments, which make it difficult to interpret. A major contributor to these data issues is a lack of adequate IT functionality to support the S&OP process. More than a third of respondents were missing S&OP functionality in their current planning systems, while the vast majority relies on ERP reporting capabilities or spreadsheet analysis for S&OP data reporting.

In addition, with the move to a more globalized model, the trend towards offshoring means more supply resources are being shared across enterprises than ever before and so the ability to run an inter-divisional, global S&OP process is becoming increasingly important. However, the survey's results indicate that single global S&OP processes are not being widely adopted. Less than one third of respondents had a single, global process in place for S&OP, which spanned all regions and divisions. However, integrated planning tools, providing an insight into real-time data, can play an important role in improving supply chain efficiencies.

This study, conducted by Capgemini's Supply Chain Planning Center of Excellence, is based on input from a series of face-to-face interviews and a web-based survey that collected responses from 120 supply chain executives. Participants from companies based in over 21 countries responded to the survey, with a respondent distribution of 37 percent from companies in Western Europe, 24 percent from Central and Eastern Europe, 19 percent from the Americas, 13 percent from the Nordics, and 7 percent from the Asia Pacific region. Participants were carefully chosen to ensure that they were all responsible for or actively involved with Supply Chain Planning activities within their organization.
Capgemini