Friday, March 10, 2006

Supply Chain Organization Success

Supply chains have been in the business spotlight for years now, as companies like Dell, Wal-Mart, and others have built much of their competitive advantage on efficient supply chains. That said, a new survey of 300 North American companies conducted by AMR reveals that most companies are actually in the early stages of defining their supply chain organizations. About forty-two percent of surveyed companies either lack a supply chain organization altogether or have less than a year of experience in managing a supply chain organization. These figures show that there's a lot of organizational learning yet to be tackled on the supply chain front. In this regard AMR has offered three tips for success to young supply chain organizations:

Supply chain planning reporting to the supply chain organization improves new product launch successes.

Use customer scorecards to measure performance.

Cross-functional involvement with sales and marketing teams improves success.Companies with mature supply chain organizations are deeply involved in cross-functional planning ("When asked if a company had more than a 70% success rate in new product introductions, survey respondents indicated that supply chain teams with planning groups directly reporting to the supply chain organization met this hurdle 50% more frequently than if planning teams reported elsewhere in the organization"), customer scorecarding (" the higher the company performs in sensing demand and new product introductions "), and involving the sales and marketing teams ("While 59% of companies surveyed take more than two weeks to sense true channel demand, companies with sales and marketing having direct reporting relationships to the supply chain organization are more likely to be a leader in demand sensing. Companies that are better in demand sensing also have higher success rates in S&OP as well as new product development and introduction [NPDI] efforts").One of the most valuable aspects of a business survey is how it can offer insight into what top-performing companies are doing. AMR hopes that these insights distilled from mature supply chain organizations will be adopted by younger organizations.