10 supply chain trends to boost shareholder value

2 July 2013

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2 July 2013 | Andrew Allen 

The University of Tennessee (UT) has identified 10 “game-changing” supply chain ideas that can make companies more competitive.

The UT supply chain management faculty surveyed 163 supply chain professionals from 132 companies to develop the list of points to greatly enhance a firm’s shareholder value.

“World-class companies need to revisit these trends on a regular basis to stay abreast in today’s dynamic and rapidly changing environment,” said Paul Dittmann, executive director of UT’s Global Supply Chain Institute. The trends are:

1.  Customer relationship management: Leading companies are segmenting products and customers and developing individual supply chain solutions for respective segments. One firm eliminated 48 per cent of its inventory while improving on-shelf availability from 96 per cent to nearly 100 per cent by doing so.

2.  Collaborative relationships. Collaborations between customer and supplier can produce dramatic effects. OfficeMax collaborated with supplier Avery Dennison to increase revenue by more than 22 per cent, and save more than $11 million (£7.2 million) in logistics costs.

3.Transformational strategy. The report claims that only 16 per cent of firms have a documented multi-year supply chain strategy. Whirlpool used a transformational strategy to deliver record-high service levels while decreasing logistics costs by $20 million (£13.1 million).

4.Process integration. Integrating processes and eliminating silo walls can have tremendous impact, the survey says.

5.Driver-based metrics: Changing performance measurement and the firm’s goal-setting system.

6.Information sharing and visibility: sharing, linking and interpreting big data using business analytics tools.

7.Demand management: Increasing forecasting accuracy along with integrating the demand and supply functions across the supply chain can drive higher revenue, lower working capital, and decrease costs.

8.Talent management: Critical competencies in hiring top supply chain talent include global orientation, leadership and business skills, and technical savvy.

9. Virtual integration: A fundamental characteristic of a great supply chain is for a company to stick to its core competencies and outsource the rest to world-class service providers, the report says.

10. Value-based management: By delivering outstanding availability of goods and services supply chain excellence is the key to creating shareholder value.

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