Study identifies 10 ways to improve supply chain efficiency

Tennessee study looks at ways to improve data management, get more collaboration

06/27/2013


A recent report from the University of Tennessee pinpoints 10 game-changing supply chain trends that can help companies improve their operations.

The UT Global Supply Chain Institute researched the topic and identified and tracked the trends. UT supply chain management faculty surveyed 163 supply chain professionals from 132 global companies to develop the list. As defined by the survey, a game-changing trend is one that greatly impacts a firm's shareholder value and can be extremely difficult to implement successfully.

“This research confirmed that 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. “Companies also must be open to considering new challenges, such as the application of business analytics to big data and cloud-based applications.”

Companies surveyed ranged in size of revenue from $75 million to $500 million. The respondents cuit across all disciplines: 59% were manufacturers, 27% were retailers and 14% were service providers.

"The study highlights some of the latest trends that companies must consider as they look to the future," said Brad Newman, principal at Ernst & Young LLP, one of the study’s sponsors. "While there have been strides made to address such issues as cross-functional integration and collaboration, companies need to be even more diligent about how they leverage new sources of data to address the unique needs and economics of different customer and product segments."

The 10 trends addressed in the survey are:

1. Customer relationship management

Leading companies are successfully segmenting their products and customers and developing tailored supply chain solutions for each segment. This approach allowed one firm to eliminate nearly half (48%) of its inventory while still improving on-shelf availability from 96% to nearly 100%.

2. Collaborative relationships

A win-win collaboration between supplier and customer may be rare, but it can produce amazing results. These collaborations should be built on a foundation of common metrics, shared benefits and trust. OfficeMax collaborated with its supplier Avery Dennison to dramatically increase revenue by more than 22%, achieve product availability to more than 99%, significantly decrease inventory by 34% and save more than $11 million in logistics costs.

3. Transformational strategy 

Only 16% of firms have a documented multiyear supply chain strategy, yet developing these strategies can produce spectacular results. Whirlpool used a transformational strategy to deliver record-high service levels while decreasing inventory levels by over $100 million and logistics costs by $20 million.

4. Process integration 

Of great concern to supply chain organizations is the functional silos that still exist and disrupt supply chain performance.

"When processes are integrated and silo walls are eliminated, the results can be staggering," Dittmann said. 

One opportunity that can have tremendous impact is integrating purchasing and logistics. Although both functions are traditional supply chain functions, the research confirmed significant payback when these two areas align their objectives and operating plans.

5. Driver-based metrics

Simply changing the performance measurement and goal-setting system inside a firm can greatly enhance the overall performance of the supply chain. Procter & Gamble applied this concept and dramatically increased customer service levels, market share and sales.

6. Information sharing and visibility

Firms are changing the game by sharing and linking together masses of information from multiple sources (also referred to as big data) and interpreting the data using business analytics expertise. 

7. Demand management

No one buys a company's stock because of the company's ability to forecast. Yet 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. Leading companies are leveraging big data and new approaches to better forecast demand.

8. Talent management

Talent management is the number one requirement for transforming a supply chain. Critical competencies in hiring top supply chain talent include global orientation, leadership and business skills, and technical savvy.

9. Virtual integration 

One of the fundamentals of a great supply chain is for a company to stick to what it does well—its core competencies—and leave the rest to world-class service providers. When outsourcing, firms should create a win-win vested outsourcing framework with its service providers.

10. Value-based management 

Supply chain excellence is the key to creating shareholder value. On average, the supply chain controls 100 percent of the inventory, manages 60% to 70% of cost of goods sold and provides the foundation to generate revenue by delivering outstanding availability. 

The first annual "Game-Changing Trends in Supply Chain" survey was sponsored by Ernst & Young LLP and Terra Technology. To download a copy of the full survey, go to http://utk.edu/go/g7



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.