Daily Archives: February 4, 2013

Have We Reached The Supply Chain Plateau Part III?

In Part I, we noted that Lora Cecere discovered, while analyzing the balance sheets of process companies over the past decade, that the average process manufacturing company has reached a plateau in supply chain performance as noted in a recent piece over on Supply Chain Shaman which stated she believes we have reached the supply chain plateau.

In Part II, we noted that growth has stalled, and asked why it has stalled. Lora conjectures that while complexity has increased, many well-intentioned executives lack the understanding of the supply chain’s potential or how to manage the supply chain as a system. This means that even though individual projects are getting great results, departments as a whole are not performing as well, and being managed even worse. Why? One conjecture, as implied in Lora’s post, is the current state of supply chain technology and ERP (and forecasting) systems in particular. And while there is a discontinuity and we need to declare the APS and ERP systems of the 1990s obsolete and start again, SI does not agree this is the core problem. The core problem is manpower capability. Not only do most executives not understand the supply chain from a holistic perspective, but neither do the function managers … who often do not even understand the best practices associated with their job because of the lack of education (and training).

But is this the whole picture? Robert Rudzki, of Greybeard Advisors, recently ran a 4-part series on the SCMR blogs where he summarized the results of a survey last quarter which asked has our profession advanced, or regressed?, which was administered as a result of anecdotal evidence that Procurement and Supply Management has regressed at some companies during the past 3 to 5 years. The survey, which was primarily filled out by Supply Management function leaders or direct reports and which drew interest from better-performing companies, produced some interesting results:

  • Only 38% of the respondents agreed with the statement that their “top management really understands and appreciates the enormous potential of modern supply management”, which is lower than the 47% who agreed with the statement in Greybeard Advisors’ 2008 survey
  • About a third of respondents indicated that they developed and presented a business case, also lower than the original survey
  • Not surprisingly, less than 30% of respondents indicated that “top management strongly supports the supply management organization with sufficient resources and budget”, also lower than the original survey.

And led Bob to conclude that overall, based on the companies that participated in the survey, we cannot show that our profession has advanced during the past four years; in fact, at some companies, there has been a return to more tactical approaches and objectives. Ouch! Why is this?