The_2012_Global_Supply_Chain_Agenda by SCcouncil


									The 2012 Global Supply Chain Agenda

Economic headwinds put operational excellence on top
of the agenda

  2012 Global

Supply Chain                                          Agenda

 Prepared and edited by:
 Xue Li            Capgemini Consulting Netherlands

 Erik Koperdraat   Capgemini Consulting Netherlands
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%
(52%) is the most important one,               Increased material/service costs                                      34%
closely followed by economic downturn                                                                                35%
(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%
their development pace. Whether that                        Regulatory compliance                         20%
will weaken US economic growth                                                                             21%
                                                                 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%
                                                             Other (please specify)               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
                                                   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%
                                                                         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%
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%
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.

from a support
department to
a function that
controls and
manages goods
and information

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
    45%                                                                                                       41.6%                   approach.*
    40%                                                                   36.5%
    35%                                             31.4%                                                                             Reducing cost and increasing
    30%                                                                                                                               operational efficiency is not the only
    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
                                                                                                                                      and, second, correct interpretation
                                                                                                                                      of the information. This has elevated



                                                                                                                                      supply chain visibility improvement
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                                                                                                                                      as another popular initiative in the
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                                                                                                                                      2012 agenda. Visibility requirements


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                                                                                                                                      put the IT capability under even more



                                                                                                                                      pressure since it is often already seen

                                                                                                                                      as a limiting factor for supply chain

                                                                                                                                      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:

Rightshore® is a trademark belonging to Capgemini


Ramon Veldhuijzen
Global Logistics & Fulfilment Lead
+31 30 689 900 97

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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