Consultants' Voice on Supply Chain Excellence - 20 August 2012

Consultants’ Voice

Views from Over Thirty Consulting Companies

on Supply Chain Excellence

8/21/2012

By Lora Cecere Founder and CEO

Supply Chain Insights LLC

Copyright © 2012 Supply Chain Insights LLC Page 1

Contents Research 2

Disclosure 2

Research Methodology and Overview 2

Executive Overview 3

State of Supply Chains 4

The Results 4

Conclusion 9

Methodology 10

About Supply Chain Insights LLC 12

About Lora Cecere 12


Research This independent research was 100% funded by Supply Chain Insights and is published using

the principle of Open Content research.

It is intended for you to read, share, and use. When you use it, all we ask for in return is

attribution. We publish under the Attribution-Noncommercial-Share Alike 3.0 United States

Creative Commons License and Supply Chain Insights’ citation policy.

Disclosure Your trust is important to us. As such, we are open and transparent about our financial

relationships and our research processes.

Research Methodology and Overview This report is the second report in a two-part series. The first report published in May 2012 and

represents the Supply Chain Executives’ voice and perspectives on supply chain excellence.

This report is a companion report reflecting the views of consulting partners working on supply

chain across multiple industries. In this report, we contrast the two views while sharing insights

from the Consultants’ Aggregate Voice on supply chain excellence.

The methodologies for the two quantitative studies are shown at the end of this report.

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Executive Overview For consultants trying to drive supply chain excellence, there is no substitute for Line of

Business leadership. As shown in Figure 1, the overarching concern by consultants

implementing supply chain management projects is the lack of understanding of supply chain

fundamentals by executive leadership teams.

This gap has many symptoms and takes many flavors. One characteristic is for the leadership

team to have the desire to have systems without the willingness to invest in the systems and

people to fix the problem. Another is the gap in understanding of the future impact and potential

of new technology trends. In Figure 1, we share the open-ended responses from the supply

chain consultants.

Figure 1 Supply Chain Consultants’ Challenges and Goals


State of Supply Chains For the purposes of this report, a supply chain consultant is a person that spends time working

with third-party supply chain teams, often in the industries of retail, manufacturing and

distribution, to improve supply chain processes. This often includes the implementation of

technology. In this report, we share insights from a recent quantitative study completed in July

2012 with input from over 30 different consulting companies. We contrast this data obtained

from the consultants to input gathered in a separate, but related, study fielded in March-April

2012 with responses from over 60 supply chain leaders.

The Results Overall, supply chain consultants and line of business leaders have general alignment on supply

chain maturity, business trends and future outlooks. As to be expected, the consultants are

further ahead in their thinking. In the study there are slight differences in four areas:

• Consultants Focus on Enablers While Supply Chain Line of Business Leaders Focus on Outcomes. Consultants implementing supply chain technologies are

more excited about the technology enablers of Software as a Service (SaaS), Big

Data Supply Chains and Business Analytics, while the Supply Chain Leaders are

more excited about the potential outcomes to drive improvements in Demand

Sensing and S&OP. The understanding of how these technology shifts can impact

supply chain processes is much clearer in the minds of Consultants than Supply

Chain Leaders in Line of Business leadership roles.

• Consultants Believe Their Clients Have a Greater Satisfaction with Supply Chain Execution Systems and a Lower Satisfaction Rate with Supply Chain Planning. Consistent with the prior Supply Chain Insights study on technology

satisfaction, the supply chain execution systems of warehouse management and

transportation planning have a higher satisfaction rate among Line of Business Users

than the systems of demand planning and Sales and Operations Planning (S&OP).

Consultants’ clients have a lower satisfaction level with planning applications than

supply chain execution systems. Demand planning and demand shaping

technologies are both rated the lowest in current satisfaction and the most important

for future year deployments.


Figure 2 Consultants’ Clients’ Satisfaction Rates with Current IT Systems

• The Gaps in Supply Chain Centers of Excellence Are Smaller for the

Consultants, but the Focus Is on Technology. In the survey, 86% of Consultants

surveyed are working with a client that has a supply chain center of excellence. The

gaps in current and desired states are shown in Figure 3A. When these gaps are

contrasted with Line of Business Leaders in Figure 3B we see that the views of the

Consultants tend to be more technology-driven concerns while the views by the Line

of Business Leaders are more focused on business outcomes. Note the difference in

perspective on key elements like leading an effective S&OP process.

The process evolution for S&OP is over thirty-years old. As the role of the supply

chain shifts in driving business strategy, the goal of the S&OP process changes and

the implementation of the processes become more strategic with a focus on the End-

to-End supply chain. This is both an opportunity and an issue. Supply chains are

more strategic and S&OP processes are more important, but the confusion on the

execution of the practices is high requiring a retooling of both Consultants and Line-

of-Business Leaders.


Figure 3(a) Consultants’ View of Performance vs. Importance of Supply Chain Center of Excellence

Figure 3(b) Line of Business Leaders Perspective on Supply Chain Centers of Excellence Gaps:

Importance and Performance

• Consultants Have a More Mature View of Supply Chain Excellence. There is

general agreement on the definition of the supply chain organization. Both


groups are in violent agreement that supply chain planning, inventory

management and distribution should have direct-line reporting relationships. In

general, Supply Chain Consultants believe that the definitions of the supply chain

organization should be wider than they are today.

Figure 4 Contrast of Views of Reporting Relationships

Embedded in the design of both surveys was a supply chain maturity model shown in Figure 5.

The basis of this model is that while companies start and must continue their focus on vertical

process reliability within source, make and deliver processes, and after delivering reliable

process excellence in these vertical silos, the company can then begin to connect the end-to-

end supply chain (E2E) through the building of horizontal connectors. The efficient and reliable

supply chain goals shown in Figure 5 are characteristic of the implementation of the SCOR

reference model. The Resilient phase is consistent with the implementation of Supply Chain

Risk Management principles along with Integrated Business Planning (IBP), while the Adapt

Phase is characteristic of the Demand-driven Value Network. The last, and most mature phase,

is defined as the Market-driven Value Network. (These concepts are defined in the Supply

Chain Insights report Building Market-driven Value Networks. These concepts are additive: each

phase building on the concepts of the prior.)

http://supplychaininsights.com/building-market-driven-value-networks/


Figure 5 Supply Chain Maturity Model

While many of the Line of Business Leaders focus on more traditional definitions of the efficient

and reliable supply chains, the Consultants’ definitions are more mature. As shown in Figure 6,

Supply Chain Consultants have a better understanding that the organization must first achieve

this level of reliability and then shift their focus to building strong horizontal processes to

improve supply chain resiliency and responsiveness.

Figure 6 Contrast of the Definitions of Supply Chain Excellence


Conclusion The building of the supply chain of the future is dependent on an ecosystem of consulting and

technology partners. While companies have implemented over 150 systems, there is only a high

satisfaction rate with supply chain execution systems. The implementation of planning and the

definitions of supply chain excellence are still a barrier for improved supply chain performance.

While the Consultants see the advance of new technologies as the next frontier, the Line of

Business Leaders are more focused on process improvement. They need to go hand-in-hand

with a clear definition of a multi-year roadmap.


Methodology

Consultants answering this survey had an average 17 years of experience in supply chain management.


The areas of focus vary, with an emphasis on traditional supply chain projects. There is more

focus on the front of the supply chain—demand management and Sales and Operations

planning—than the more supply-centric processes.


About Supply Chain Insights LLC Supply Chain Insights LLC (SCI) is a research and advisory firm focused on reinventing the

analyst model. The services of the company are designed to help supply chain teams improve

value-based outcomes through research-based Advisory Services, a Dedicated Supply Chain

Community and Web-based Training. Formed in February 2012, the company is focused on

helping technology providers and users of technologies improve value in their supply chain

practices.

About Lora Cecere Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights

LLC and the author of popular enterprise software blog Supply Chain

Shaman currently read by 4500 supply chain professionals. Her book,

Bricks Matter, publishes in December 2012.

With over eight years as a research analyst with AMR Research, Altimeter Group, Gartner Group and now as a Founder of Supply Chain

Insights, Lora understands supply chain. She has worked with over 600

companies on their supply chain strategy and speaks at over 50

conferences a year on the evolution of supply chain processes and technologies. Her research

is designed for the early adopter seeking first mover advantage.

http://www.twitter.com/lcecere



http://www.supplychainshaman.com/

http://www.supplychainshaman.com/

Consultants' Voice on Supply Chain Excellence - 20 August 2012

Business

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end supply chain

business leaders

demand planning

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