Accenture Identifies Winning Supply Chain Capabilities for Challenging Economic Times

In its most comprehensive supply chain study to date, Accenture (NYSE: ACN) has identified supply chain capabilities that are directly linked to cost effectiveness and superior customer service, providing new insight at a time when executives are under intense pressure to reduce costs while maintaining business performance.

The Accenture High Performance Supply Chain study, which comprises online surveys of more than 1,500 executives from 10 industries and 21 countries across North America, Europe and Asia, documents what supply chain “masters” do differently across six supply chain functions: fulfillment, manufacturing, supply chain planning, sourcing & procurement, service management and product development.

Masters were defined as those organizations that were in the top 10 percent within the specific function, based on performance across a range of key operating metrics in that function, with “low performers” defined as those organizations in the bottom 10 percent within the specific function. The study identified the performance advantages of mastering each of the six supply chain functions. Compared with low performers:

• Fulfillment masters deliver customer orders on time and in full at a rate 13 percent higher, have significantly lower transport costs, and maintain 50 percent less finished goods inventory.
• Manufacturing masters achieve 13 percent higher throughputs (volume of products manufactured), 15 percent better equipment effectiveness, 30 percent more equipment uptime, and as much as a 75 percent reduction in manufacturing lead time.
• Supply chain planning masters achieve 10 percent greater forecast accuracy and lower inventory costs while maintaining a 99 percent order fulfillment rate.
• Sourcing & procurement masters deliver 2.5 times more value for every dollar they spend in their procurement organizations.
• Service management masters achieve 33 percent better turns on spares inventories, 33 percent higher service spend efficiency, and 10 percent fewer past-due service orders.
• Product development masters achieve 30 percent reduction in time-to-market with an equal reduction in resources and have significantly lower product-development costs.

“Supply chains are an obvious target in today's economy, as corporations face heightened pressure to cut costs and drive efficiency," said Narendra Mulani, managing director of Accenture's Supply Chain Management practice. “This research initiative is designed to help executives make more-informed decisions about what supply chain capabilities best serve their operational objectives.”

Among the leading supply chain capabilities identified by the surveys:

• Fulfillment masters are more than twice as likely as low performers to design their distribution channels to accommodate varying customer needs and product characteristics (70 percent vs. 30 percent).
• Manufacturing masters are nearly twice as likely as low performers to adopt and internalize bottom line driven and proven manufacturing excellence principles (90 percent vs. 50 percent).
• Supply chain planning masters are nearly twice as likely as low performers to use planning models that are differentiated by customer and product characteristics to enable greater responsiveness (82 percent vs. 43 percent).
• Sourcing & procurement masters are more than five times as likely as low performers to have a centrally led category management structure and optimally leverage global sourcing (81 percent vs. 5 percent).
• Service management masters are more than three times as likely as low performers to tailor their service delivery by customer segment (81 percent vs. 26 percent).
• Product development masters are four times as likely as low performers to reduce complexity by use of product platforms for new product development and leverage up to 70 percent of an existing design, leading to rapid product launch (76 percent vs. 19 percent).

“What emerges from our research and from our work with leading companies is that to survive and thrive in today’s volatile business environment, companies must develop dynamic supply chains that can nimbly and flexibly respond to changing business conditions,” Mulani said.

About the Surveys

Accenture conducted online surveys of more than 1,500 executives across six supply chain capability areas, representing input from 10 industries and 21 countries across North America, Europe and Asia, to identify what supply chain leaders do differently across six supply chain capability areas: fulfillment, manufacturing, supply chain planning, sourcing & procurement, service management and product lifecycle management. The research is available at www.accenture.com/supplychainmastery.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. With more than 181,000 people serving clients in over 120 countries, the company generated net revenues of US$23.39 billion for the fiscal year ended Aug. 31, 2008. Its home page is www.accenture.com.