|
|
 |
|
|
Supply
Chain Management
|
The Benefits of Supply Chain Management — Overview
|
A recent Pittiglio Rabin Todd &
McGrath study has shown that, on average, companies with best-in-class
supply chain management have a 7% cost advantage over median
performers. The study further shows that leading companies continue
to have a 40 to 65% advantage in cash-to-cash cycle time over
average companies. Also, top companies hold 50 to 80% less inventory
than their competitors. It is, therefore, very advantageous
to implement supply chain management solutions.
It is generally acknowledged that supply chain planning solutions
have much faster implementation cycles as compared to ERP solutions,
typically six to twelve months versus two to four years.They
also have significantly faster payback periods — less than
one year versus two to five years. Even though supply chain
planning solutions may work in concert with the “transaction
backbone,” such as ERP, it is not necessary to wait for
ERP implementation before proceeding with implementing supply
chain planning solutions.
Businesses implementing supply chain planning solutions can
expect to realize large,multidimensional performance improvements.
Below are typical findings, as described in case studies of
companies that have implemented supply chain planning solutions
recently.
These companies have:
Realized cost savings by:
• Reducing inventory levels 10 to 50%
• Reducing markdowns and scrap by 40 to 50%
• Utlilizing resources 10 to 20% more efficiently
Improved customer service by:
• Improving delivery reliability to 95 to 99.9%
• Bringing outages down to 0 to 5%
• Reducing cycle times by 10 to 20%
Achieved business growth by:
• Increasing market share
• Increasing ability to retain customers, with a resulting
3 to 7% increase in sales
• Gaining the flexibility to adapt to business changes
• Improving speed to market |
|
|
|
|
State of the Market
|
The growing use of extranets, dramatic
improvements in Internet computing, maturity of supply chain
software, and best practices will bring the supply chain dream
closer to reality. A recent Forrester Report suggested that
the “Supply Chain Voyage” will follow a three-phase
progression: 1) Integration (1997-1999) of disparate applications
to advance planning and scheduling, 2) Extension (1998-2002)
into real-time data sharing among trading partners, and 3) Exploitation
(2001+) of de facto standards, forcing suppliers to compete
based on price and service, rather than relying on historical
relationships.
The IT industry today is at the first phase of the Forrester
three-phase progression. In fact, most of IBM’s large customers
across all industries are focusing not only on improving their
own business operations, but also on the total supply chain.
Supply chain management solutions will become the core decision
support systems for these companies. |
Requirements for Success
|
| The essential ingredient for effective
supply chain management is the tight coupling of execution and
decision-making systems between trading partners. Since different
trading partners will probably have different information systems
and business processes, a successful supply chain solution must
be based on open-industry standards and easily integrated with
stand-alone, as well as ERP, systems. |
 |
|
|