Game-Changing Trends in Supply Chain

ut_game_changing_trends_slide1Spring 2013, the Global Supply Chain Institute of the University of Tennessee in cooperation with EY published a report about “Game-Changing Trends in Supply Chain“.

This document will give you a brief synopsis of today’s leading thinking about 10 game-changing trends in supply chain:

  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 percent) of its inventory while still improving on-shelf availability from 96 percent to nearly 100 percent.
  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 percent, achieve product availability to more than 99 percent, significantly decrease inventory by 34 percent, and save more than $11 million in logistics costs.
  3. Transformational strategy 
    Only 16 percent of firms have a documented, multi-year 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 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 performance.   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 percent of cost of goods sold and provides the foundation to generate revenue by delivering outstanding availability.
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