Supply chains put market leaders ahead of the pack

16 July 2003
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17 July 2003 | Robin Parker

Supply chain leadership is more vital than ever to a company's financial performance, a major study has revealed.

Analysis of 636 global firms by consultancy Accenture and research universities Stanford and Insead claims that companies identified as supply chain leaders have growth rates 26 percentage points higher than their sector averages.

Supply chains are said to be very important or critical to their business by 89 per cent.

A similar figure have spent more on their supply chain operations over the past three years. They cite supply chain planning, linking with customers and connecting with suppliers as the main areas for improvement.

Computer firm Dell, telecommunications group Nokia and drinks giant Coca-Cola are among those said to be leaders for the way their supply chain transformations have influenced their company performance.

Beleaguered US retailer Kmart is singled out as a "laggard" despite numerous public announcements and major investments in logistics and supply chain technology.

"Savvy investors know that inefficient supply chain operating models can significantly reduce overall profit performance," the report notes.

Cutting costs remains the main driver of supply chain improvement initiatives, identified by two-thirds of respondents, but a quarter said enhancing revenue was a key factor.

Accenture said this was evidence of supply chain management's growing importance to front-end processes.

More than half have faced unexpected problems in transforming supply chains, including resistance to change, cost overruns and poor technology.

Companies polled also forecast that outsourcing logistics will account for a third of their supply chain budgets this year.

SMjul2003

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