Daily Archives: August 21, 2006

The Global Supply Chain Benchmark Report

Yesterday we discussed the Innovators in Supply Chain Security: Better Security Drives Business Value report recently released by the Stanford Global Supply Chain Management Forum and IBM that detailed the qualifiable and quantifiable business benefits that result from supply chain security investments. Although the report detailed some of the initiatives being undertaken by the participants, including:

  • additional storage and transportation security,
  • anti-piracy features / methods for identifying genuine products,
  • product tracking tools / RFID,
  • implementing measures to comply with voluntary security initiatives,
  • advanced training programs,
  • incorporation of security requirements into supplier contracts, and the
  • development of a security knowledge base;

The report did not really detail generic priorities for visibility, collaboration, and trade compliance for companies that have identified the need for increased supply chain security or risk management. However, again Aberdeen comes to the rescue with the Global Supply Chain Benchmark Report (sponsored access) that identifies industry priorities for companies about to embark on risk management initiatives.

The report, which notes a critical lack of global supply chain automation, notes that the most critical areas that a company needs to address to keep up with global trade growth and increased competitive pressures are:

  • Supply Chain Visibility
    to increase the transparency and velocity of global activities
  • Business to Business Collaboration
    to improve supply/demand synchronization
  • Trade Compliance
    to ensure undisrupted movement across borders and take advantage of preferential trade agreements to lower total landed costs
  • Risk Management
    to ensure resiliency in the face of supply chain disruptions

The report found that:

  • On average, global supply chains are only 50% as automated as their domestic supply chains at large companies;
  • An astounding 90% of all enterprises report that their global supply chain technology is inadequate (to provide the corporate finance organization with the timely information it requires for budget and cash flow planning and management); and
  • Only 11% of the 82% of companies concerned about supply chain resiliency are actively managing risk.

As a result, Aberdeen recommends that you:

  • Extend supply chain visibility
    by moving to exception-based management of activities and increasing the number of monitored milestones
  • Scale business-to-business collaboration
    and implement collaborative forecasting, advanced inventory management, and replenishment applications
  • Go corporate-wide with trade compliance
    and move toward a single corporate wide trade compliance platform with comprehensive origin and trade agreement management
  • Institutionalize risk management
    and make risk assessment and contingency planning part of your standard operating procedure

In addition, based on the Innovators in Supply Chain Security report, I would recommend that you

  • insure your trade compliance platform incorporates advanced product features,
  • insure your visibility applications are fully RFID compatible, and
  • augment your risk assessment and contingency planning with extensive training on your visibility, collaboration, and compliance systems.

After all, according to the report, best-in-class companies:

  • have end-to-end and cross-functional automation,
  • use commercial visibility solutions to monitor order-line level status, inventory, and mobile assets,
  • collaborate across 3+ processes across multiple supplier and customer tiers,
  • run on an enterprise-wide trade compliance platform that includes preferential trade agreement optimization,
  • frequently perform 3+ logistics agility actions,
  • use managed services or BPO solutions to augment staff, supported by visibility and collaboration technology, and
  • manage supply chain resiliency to risk related events.

The report also contains some great recommended actions for laggards, industry average, and best-in-class companies, so check out the Global Supply Chain Benchmark Report!