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The 2012 Global Supply Chain Agenda Economic headwinds put operational excellence on top of the agenda The 2012 Global Supply Chain Agenda Prepared and edited by: Xue Li Capgemini Consulting Netherlands Erik Koperdraat Capgemini Consulting Netherlands Contents 350 Supply chain professionals shared their supply chain 4 agenda with Capgemini Consulting Volatility is the key business driver for 2012 5 Top 10 supply chain projects 6 Summary 7 For the 4th year in a row Capgemini So what are the strategic plans Consulting is pleased to present the for 2012? 65% of the respondents result of our annual international indicate that they have planned supply chain survey. The study operational excellence projects. Supply Chain assesses the views of supply chain executives around the world on their Supply chain visibility improvement (57%), and business innovation (56%) will focus on key priorities are also ranked high in the list. executional and In recent months, the world 350 Supply chain economy has dropped due to the planning excellence continuing euro-zone crisis. The professionals shared their supply chain agenda with to facilitate the resulting uncertainty around the future economic situation is reflected Capgemini Consulting higher service and in our 2012 supply chain survey. In this year’s edition of Capgemini Specifically, market volatility (52%) responsiveness was voted the number one business Consulting’s annual international supply chain study, 350 leading driver that respondents currently required for both face. This is followed by the economic companies participated from Europe (64%), the Americas (21%), Asia- business growth downturn (39% of the respondents). On the other hand, only 17% have Pacific (11%) and Others (4%). and maintaining an optimistic outlook and believe In this report we first look at the that economy will recover in 2012. competiveness in However, when compared to the business drivers for companies in 2012. Secondly we share how previous economic slowdown of current volatile ‘08-‘09, it appears that companies companies are prepared for market uncertainty and what kind of markets. are better prepared to handle the volatility. In our current survey 52% measures they have taken to improve their supply chain flexibility. Next, of the respondents indicate that we provide the list of top 10 supply they are now better prepared for a chain projects as voted by our more volatile environment, while the respondents and the difficulties in the remaining indicate there are equally project execution. We summarize the (43%) or even worse prepared (6%). report at the end. 4 The 2012 Global Supply Chain Agenda Volatility is the key business Business Drivers 2012 vs 2011 driver for 2012 Market/Demand volatility 52% What are the business challenges 40% Economic downturn 39% that are driving the strategic plans 8% Meeting (changing) customer 38% and project focus of our responding 34% companies? Market/demand volatility Develop emerging markets 35% 30% (52%) is the most important one, Increased material/service costs 34% closely followed by economic downturn 35% 29% Sustainability (39%). As predicted by the IMF, 33% Introduction of new product 25% Euro-zone countries will struggle to 25% Globalisation 23% reduce the damage of the crisis and 23% the emerging markets will slow down Increased business risk 21% 17% their development pace. Whether that Regulatory compliance 20% will weaken US economic growth 21% 17% Economic recovery 24% is still unclear, but it is a common 14% understanding that 2012 will be a Supply Chain security 17% 2012 New (type of) competition 10% volatile year again. 10% 2011 Other (please specify) 9% 9% Market volatility 0% 10% 20% 30% 40% 50% 60% Market volatility has sat high on this list for two years, and probably will continue to be highly ranked in the coming year. To plan resources and Preparation for a next economic downturn compared to previous years production capacity accordingly on a strategic level is not going to be easy. Better 52% Increased commodity and raw material prices will put an enormous pressure on procurement spend and overall Equal 43% profitability. Hence, operations should be supported by a smart procurement strategy and pricing mechanisms. Worse 6% Among all the business challenges, more demanding customers, who require 0% 10% 20% 30% 40% 50% better quality and more adaptive service and products, cannot be neglected. After all, the question is how well are Measures taken to improve the flexibility of supply chains in 2012 we prepared for a gloomy economic outlook? Improved visibility and control 67% Recession preparation Increased ﬂexibility in operations 59% The worsened economic outlook Reduced capital exposure 43% for many of the world’s economies Cash ﬂow improvement 33% is becoming an important topic for 2012. We have asked the respondents Reduced vendor risk 24% how well they are prepared for an Outsourcing of logistics functions 17% economic downturn in 2012 compared to previous years (08/09). Over half of No explicit measures taken 7% the participants indicate they are better Other 7% prepared for an economic downturn 0% 10% 20% 30% 40% 50% 60% 70% compared to previous years. Furthermore we asked the respondents what kind of measures they have taken measure and adapt their supply and cash flow improvements (33%) to improve the flexibility of their supply chains. are also frequently mentioned by chains. First in the list, and mentioned the participants. A reduction in by 67% of the respondents, are measures Mentioned by 59% of the participants capital exposure can be achieved by to improve visibility and control. are measures to increase flexibility seller and buyer collaboration or, for in operations. Examples of these example, by a reduction of working Companies that have taken these measures are usage of flexible labor capital such as inventory reduction. measures are expected to have a head or space. Financial measures such Examples of cash flow improvements start in 2012, since they are able to as reduced capital exposure (43%) include improved account receivables. The 2012 Global Supply Chain Agenda 5 Operational Excellence and Top 10 Supply Chain Projects 2012 vs 2011 visibility projects top the supply chain agenda Operational excellence (e.g. LEAN) 65% 39% Logistics contract renewal 60% In our list of the top 10 supply chain 33% projects that companies plan on Supply chain visibility 57% improvement (control tower) 45% undertaking in 2012, operational Business innovation 56% excellence (65%), logistics contract (e.g. e-commerce,new technology, etc) 41% renewal (60%) and visibility Improve long term forecasting /planning 56% 41% projects (57%) are ranked the Centralising or decentralising supply chain 54% highest. Compared to 2011 list, the organisational functions (e.g. shared service centres) 25% votes are significant higher for all Sales and operation planning 52% 26% the top 10 project types. Facing a 51% Network redesign/Distribution strategy volatile market, companies have 36% Supply chain talent program 50% adopted different approaches. Some 34% 2012 are implementing the traditional Supply chain collaboration 46% (cross company/industry) 27% 2011 programs such as operational 0% 10% 20% 30% 40% 50% 60% 70% excellence, or sales and operations planning; while others are choosing innovative programs such as business innovation, or supply chain control towers. One of the big changes in Operational excellence Visibility the 2012 list is that sustainability Why are operational excellence Projects for improving supply chain projects have not made into our list in projects are ranked number 1 in our visibility continue to be high on the 2012. Sustainability initiatives require list? Responding companies believe agenda of supply chain executives. a solid business case to demonstrate that before moving to the next stage Companies keep recognizing the their added value. Many companies of excellence, establishing a value importance of improving supply chain have de-prioritized it from the driven and cost effective operation visibility because it enables them to cooperate agenda. Another change must be their primary goal. Another measure and improve the effectiveness is the emphasis on talent programs. important goal of such operational of the overall supply chain. With In the past, we often saw that there excellence initiatives is to establish a the current market volatility, there is was not enough focus on developing continuous improvement company a need for a single, consistent view people capabilities in the supply culture. This is more challenging of the end-to-end supply chain. chain area. To establish the required because it changes the behavior at This view encompasses the cross- competencies, such as analytic all levels and requires top-down organizational flows of materials, capabilities, a creative mindset, a commitment from the whole capital, and information. The collaborative attitude, and effective organization. The leading companies objective of enhancing SC visibility is leadership, companies have taken move from pure opportunistic cost to capture and interconnect data, to serious efforts in putting a long term reduction programs to initiatives that extract information and then to apply people development plan in place. can help them achieve long-lasting the information to have different, and and sustainable business results. better, decision outcomes. Transition from a support department to a function that controls and manages goods and information flows. 6 The 2012 Global Supply Chain Agenda Difficulties in implementing Looking ahead there are many Summary projects uncertainties and companies have many priorities, which makes the task Due to the market dynamics, the The pessimistic economic outlook even more challenging. This forces 2012 supply chain agenda’s focus is is forcing companies to re-evaluate companies to be more selective in on operational excellence projects, priorities and focus on programs that their choice of supply chain projects which are powerful tools to establish will improve efficiency and save costs. and investment decisions. Another a value driven operation and 44% of the respondents indicate common problem is that once a continuously improving company business prioritization will remain company is in firefighting mode, it culture. Key success factors for the main bottleneck for implementing is very difficult for management to the deployment include senior their supply chain strategy. Financial move into another strategic direction. leadership commitment, well- resource challenges are mentioned Supply chain executives and top managed organizational change, by 39% of the respondents as an management must have a shared consistent objectives, and review, important bottleneck. IT capability is understating of the benefits that reward and recognition mechanisms. traditionally also within the top 3 of supply chain projects can have for According to Capgemini Consulting mentioned bottlenecks and this year the whole organization. Once there research findings, it would appear is no exception. is a common understanding of the that traditional lean programs with true benefits, supply chain initiatives their strong emphasis on lean tools should get a seat in the C-level and techniques and much less meeting agenda. focus on implementing sustainable behavioral change need to be rethought. The solution requires a What are the main bottlenecks for implementing your Logistics / Supply chain new approach to lean, such as our strategy? BeLean® methodology, which includes a heavy emphasis on behavioral 50% change as part of the lean deployment 44.3% 45% 41.6% approach.* 39.2% 40% 36.5% 35% 31.4% Reducing cost and increasing 30% operational efficiency is not the only 25.1% 25% supply chain objective, making the 20% 16.9% right business decisions is a far more 15% important element in the volatile 10% market, and requires, first, availability 5% and, second, correct interpretation 0% of the information. This has elevated ure ints y supply chain visibility improvement ion mit nt orm t/ limi udget bilit nt e perf e talen ons c om geme anc es s s tra me iz at apa as another popular initiative in the tati l/ b l pr iorit c on na IT c nc ia pl ona 2012 agenda. Visibility requirements ma Peo s pr ion Fina rati Top at ines put the IT capability under even more Ope aniz Bus pressure since it is often already seen Org as a limiting factor for supply chain projects. Companies need to go through a fundamental change to establish a responsive operation and transparent There is always time to fix things but never supply chain control. The findings time to do things right. Focus, stay on of this report provide the widely accepted outlook, the prioritized target and persist, also when it gets though. supply chain challenges, and the industry insights for companies to benchmark against the baseline and prepare better for 2012. * from the Capgemini report “LEAN for the long haul” The 2012 Global Supply Chain Agenda 7 About Capgemini With more than 115,000 people Capgemini Consulting is the Global in 40 countries, Capgemini is one of the Strategy and Transformation Consulting world’s foremost providers of consulting, brand of the Capgemini Group, specializing technology and outsourcing services. The in advising and supporting organizations Group reported 2010 global revenues of in transforming their business, from EUR 8.7 billion. the development of innovative strategy through to execution, with a consistent Together with its clients, Capgemini creates focus on sustainable results. Capgemini and delivers business and technology Consulting proposes to leading companies solutions that fit their needs and drive the and governments a fresh approach which results they want. A deeply multicultural uses innovative methods, technology organization, Capgemini has developed and the talents of over 3,600 consultants its own way of working, the Collaborative worldwide. Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. For more information: http://www.capgemini-consulting.com/ Rightshore® is a trademark belonging to Capgemini Contacts Ramon Veldhuijzen Global Logistics & Fulfilment Lead +31 30 689 900 97 firstname.lastname@example.org Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group The information contained in this document is proprietary. © 2012 Capgemini. All rights reserved.
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