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The performance gap between supply chain leaders and those in "follower" and "laggard" categories is growing wider, according to Chuck Poirier, president of the Advanced Supply Chain Institute and a partner in CSC's Global Business Solutions and Services group. Poirier's conclusion is based on seven years of research conducted in cooperation with CSCMP, Michigan State University and Supply Chain Management Review.
During the early years of surveying supply chain professionals, "we started to see that companies were progressing along the supply chain maturity model," says Poirier. "They were getting more mature in their practices and were saving money." During the last two years, after MSU joined the research effort, the survey expanded to look more specifically at how companies were getting better in areas like sourcing, cost reduction, and transportation and warehouse management. "To my personal surprise this latest research was able to document distinct differences in performance. We now have statistical evidence which shows that in almost every industry there are one or two leaders with a number of followers and a lot of laggards that are substantially behind," says Poirier.
The superior performance of leaders is evident in both cost and revenue figures. Evidence from this research shows leaders' cost reduction efforts have boosted profits by up to 8 points for the most advanced companies, though Poirier cautions that these optimal results are the result of years of effort and investment. "These improvements do not happen overnight," he says.
Supply chain leaders are improving their top line as well. "Leading companies are generating new revenue by doing a better job of having the kind of products that customers want to buy on the shelf and by differentiating their supply chain from their competitors," says Poirier. Again, this result is measured in years, not months, Poirier says. "I would say it takes these companies one to five years to generate one to five percent in new revenue."
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