Companies want to be agile. As demand and supply volatility increases, the goal is to build a flexible supply chain system.
The definition is one that can deliver the same cost, quality and level of customer service with the increase in demand and supply volatility.
The gap is large. Today, based on recent research, less than 30% of supply chain leaders have a supply chain that they consider to be agile. It varies by geography.
As shown in Figure 1, companies in North America rate agility as 13% more important as an attribute for their supply chain than companies in Europe.
Progress is slowing. While 80% of companies believe that supply chains are more agile today than five years ago, only 36% of companies believe that the supply chain is more agile than a year ago. Improvements in transportation management had the greatest impact on improving agility.
Today, companies attempting to drive additional improvements through demand sensing and better visibility in Sales & Operations Planning (S&OP). It is not easy. Why?
These two projects require more than technology; but, companies cannot be successful without technology. Each has a significant change management component. It is a careful balance between change management and technology evolution.
Figure 1. Agility Importance: North America and Europe
Today, two in five companies believe their S&OP process is effective. Only one in five companies has a balanced process, and most companies struggle to get to data. Only one third report that they are able to execute the S&OP plan.
Most companies lack the ability to manage data and develop a feasible plan. For most, as shown in Figure 2, the technologies are not able to deliver role-based views or determine the most profitable plan.
Figure 2. Current Performance
Where Are We Going from Here?
At Supply Chain Insights, we are currently working on some research to understand the current state of technology for S&OP and inventory optimization. Through our research, we can see the gaps and want to help companies to understand the changing landscape. This is our third report in this series.
Agility doesn’t just happen. It does not grow on trees. Instead, it needs to be designed and built. New solutions offer promise.
Based on our current research, we believe that the gaps shown in Figures 2 and 3 will close. The first step is recognizing the need and asking for better answers.
Figure 3. Supply Chain Agility: Techniques and Effectiveness
The second is experimenting with new technologies. With most people max’d out on driving agility through traditional mechanisms, we expect more pressure on technology providers for newer solutions.
After all, agility does not grow on trees. Instead, it must be built.
About the Author
Lora Cecere is the Founder and CEO of Supply Chain Insights, the research firm that’s paving new directions in building thought-leading supply chain research. She is also the author of the enterprise software blog Supply Chain Shaman. The blog focuses on the use of enterprise applications to drive supply chain excellence. Her book, Bricks Matter, was published in December of 2012.
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Supply Chain Management (SCM) - the combined processes of procurement (source), manufacturing (make) and logistics (deliver) - is now thirty years old. Empirically companies know that supply chain performance matters to corporate performance; however, groups argue on which metrics matter the most and why. This book answers these questions. Order Online