Majority of Companies Report Supply Chain Gains According to CSC Survey
Announcement posted by Computer Sciences Corporation (CSC) 23 Nov 2005
Evidence suggests concerted efforts can bring up to 8 percentage points of new profit
For the first time in recent years, companies report that they are overcoming obstacles to supply chain advancement and making significant strides toward their supply chain goals, according to the third annual Global Survey of Supply Chain Progress from Computer Sciences Corporation (NYSE: CSC) and Supply Chain Management Review. Key reasons for progress include emphasis on strategy development and process improvement.
The survey indicates that 38 percent of respondents now develop and execute supply chain strategy at the division or business unit level, versus only 18 percent in 2004. Forty-nine percent say supply chain strategy is aligned with corporate strategy and 57 percent say it is being reviewed formally every year.
"There is growing evidence that supply chain is gaining the attention of executive management as a critical business driver," said Donna Watt, Senior Consultant, Supply Chain practice, CSC Australia. "There is also proof that companies are using the results from their improved operations to generate revenue increases."
According to this year's survey, 61 percent of respondents have achieved reductions in supply chain costs from one to 10 percent, and an additional 13 percent have saved 11 to 20 percent. Furthermore, 52 percent indicated they increased revenue by one to 10 percent, and another 11 percent said they have enjoyed increases from 11 to 20
percent or more. "These combined figures provide solid evidence that serious attention to supply chain management can bring as much as eight points of new profit to a firm's financial statements," said Watt.
These gains mirror progress along what Donna Watt describes as the "Five Levels of Supply Chain Evolution." Ranging from the lowest (level 1 - "Enterprise Integration") to the highest (level 5 - "Full Network Connectivity"), the levels enable quick snapshots of current operating mode and help benchmark progress. Levels 1 and 2 reflect states in which supply chain efforts are limited to within the company. Level 3 denotes the beginning of external collaboration and, thus, key process improvements with business partners. This year, 50 percent of respondents indicated their progress is beyond level 2 -- a 10 percent increase over last year.
"In previous reports on this survey, I have noted that while significant business benefits had been achieved, the full potential remained largely untapped for most," said Watt. "It appears I can no longer make that assertion. Too many companies in multiple industries are now gathering the fruits of their supply chain efforts."
The survey shows that although the most significant progress has come through strategy development, many firms continue to rely on technology -- primarily enterprise resource planning, e-procurement, inventory planning, Web-based applications, warehouse management systems and advanced planning systems -- to achieve supply chain advancement.
Additionally, radio frequency identification (RFID) technology, which went nearly unnoticed in last year's survey, was included among technologies driving results by 16 percent of the respondents. Thirty-one percent of companies surveyed indicated interest in investing in this emerging technology, moving from almost no plans in the previous year.
Although half of the companies responding say they have entered level 3 or higher, collaborating more effectively -- both internally and externally -- is still one of the major problems confronting the supply chain professional, said Watt. "For example, when we inquired if the company had a standardised, enterprise-wide bill of material that was
shared with tier 1 supply chain and design partners, 75 percent said 'no,'" she said. "This finding alludes to the fact that they are still struggling with the ways and means to achieve their goals."
Conducted this summer, the 2005 Global Survey of Supply Chain Progress was sent to supply chain professionals in North America, Europe and selected countries around the world. The names were drawn from readers of Supply Chain Management Review and other publications of Reed Business Information, as well as clients of CSC.
A total of 123 respondents completed the comprehensive, eight-page questionnaire. The majority of responses came from North America, mainly the United States. Eighteen industries were represented, ranging from aerospace and defense to retail and consumer-packaged goods to high technology and telecommunications. Organisationally, 62 percent of the respondents represented corporate entities; 19 percent were from wholly-owned subsidiaries or strategic business units; and 19 percent
were from groups or multiple divisions.
The survey report, which includes the complete set of questions and responses, and an executive summary, can be found at http://www.csc.com/solutions/supplychainmanagement/cs05survey_results.pdf.
About CSC
Founded in 1959, Computer Sciences Corporation is a leading global information technology (IT) services company. CSC's mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.
With approximately 78,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC's own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $14.3 billion for the 12 months ended July 1, 2005. For more information, visit the company's Web site at www.csc.com.
The survey indicates that 38 percent of respondents now develop and execute supply chain strategy at the division or business unit level, versus only 18 percent in 2004. Forty-nine percent say supply chain strategy is aligned with corporate strategy and 57 percent say it is being reviewed formally every year.
"There is growing evidence that supply chain is gaining the attention of executive management as a critical business driver," said Donna Watt, Senior Consultant, Supply Chain practice, CSC Australia. "There is also proof that companies are using the results from their improved operations to generate revenue increases."
According to this year's survey, 61 percent of respondents have achieved reductions in supply chain costs from one to 10 percent, and an additional 13 percent have saved 11 to 20 percent. Furthermore, 52 percent indicated they increased revenue by one to 10 percent, and another 11 percent said they have enjoyed increases from 11 to 20
percent or more. "These combined figures provide solid evidence that serious attention to supply chain management can bring as much as eight points of new profit to a firm's financial statements," said Watt.
These gains mirror progress along what Donna Watt describes as the "Five Levels of Supply Chain Evolution." Ranging from the lowest (level 1 - "Enterprise Integration") to the highest (level 5 - "Full Network Connectivity"), the levels enable quick snapshots of current operating mode and help benchmark progress. Levels 1 and 2 reflect states in which supply chain efforts are limited to within the company. Level 3 denotes the beginning of external collaboration and, thus, key process improvements with business partners. This year, 50 percent of respondents indicated their progress is beyond level 2 -- a 10 percent increase over last year.
"In previous reports on this survey, I have noted that while significant business benefits had been achieved, the full potential remained largely untapped for most," said Watt. "It appears I can no longer make that assertion. Too many companies in multiple industries are now gathering the fruits of their supply chain efforts."
The survey shows that although the most significant progress has come through strategy development, many firms continue to rely on technology -- primarily enterprise resource planning, e-procurement, inventory planning, Web-based applications, warehouse management systems and advanced planning systems -- to achieve supply chain advancement.
Additionally, radio frequency identification (RFID) technology, which went nearly unnoticed in last year's survey, was included among technologies driving results by 16 percent of the respondents. Thirty-one percent of companies surveyed indicated interest in investing in this emerging technology, moving from almost no plans in the previous year.
Although half of the companies responding say they have entered level 3 or higher, collaborating more effectively -- both internally and externally -- is still one of the major problems confronting the supply chain professional, said Watt. "For example, when we inquired if the company had a standardised, enterprise-wide bill of material that was
shared with tier 1 supply chain and design partners, 75 percent said 'no,'" she said. "This finding alludes to the fact that they are still struggling with the ways and means to achieve their goals."
Conducted this summer, the 2005 Global Survey of Supply Chain Progress was sent to supply chain professionals in North America, Europe and selected countries around the world. The names were drawn from readers of Supply Chain Management Review and other publications of Reed Business Information, as well as clients of CSC.
A total of 123 respondents completed the comprehensive, eight-page questionnaire. The majority of responses came from North America, mainly the United States. Eighteen industries were represented, ranging from aerospace and defense to retail and consumer-packaged goods to high technology and telecommunications. Organisationally, 62 percent of the respondents represented corporate entities; 19 percent were from wholly-owned subsidiaries or strategic business units; and 19 percent
were from groups or multiple divisions.
The survey report, which includes the complete set of questions and responses, and an executive summary, can be found at http://www.csc.com/solutions/supplychainmanagement/cs05survey_results.pdf.
About CSC
Founded in 1959, Computer Sciences Corporation is a leading global information technology (IT) services company. CSC's mission is to provide customers in industry and government with solutions crafted to meet their specific challenges and enable them to profit from the advanced use of technology.
With approximately 78,000 employees, CSC provides innovative solutions for customers around the world by applying leading technologies and CSC's own advanced capabilities. These include systems design and integration; IT and business process outsourcing; applications software development; Web and application hosting; and management consulting. Headquartered in El Segundo, Calif., CSC reported revenue of $14.3 billion for the 12 months ended July 1, 2005. For more information, visit the company's Web site at www.csc.com.