Chief Supply Chain Officer R

The Chief Supply Chain Officer Report 2011
A research study by: Dr. Hau Lee, Chairman, SCM World Kevin OMarah, Group Vice President, Supply Chain Research, Gartner Executive Summary by: Pier Luigi Sigismondi, Chief Supply Chain Officer, Unilever
www.scmworld.com | SCM World, a RaptureWorld Company
INTRODUCTION
SCM World, the global institute for supply chain learning, training and development, brings you the results of its 2011 Chief Supply Chain Officer (CSCO) study. This years CSCO Report is a collaboration between Dr. Hau Lee, Chairman, SCM World and Kevin OMarah, Group Vice President, Supply Chain Research, Gartner and includes an executive summary by Pier Luigi Sigismondi, Chief Supply Chain Officer at Unilever. Developed to ascertain the priorities and strategies senior-level supply chain professionals are undertaking in 2011 and beyond, this report looks to understand how companies are positioning their supply chain organisations to deliver growth. Over 750 global executives completed the survey, including SCM World members and non-members, with over 50% of respondents at VP-level and above within their organisations. This years report is sponsored by E2open, a leading provider of cloudbased supply chain management solutions. The report sponsor has no influence over the survey design or results. We are sure you will find this highly informative reading. Please do not hesitate to contact SCM World to discuss any of the findings in greater detail. Yours sincerely,
Dr. Hau Lee Chairman SCM World

Kevin OMarah Group Vice President, Supply Chain Research Gartner
SCM World 2011
Table of Contents
Executive Summary
by Pier Luigi Sigismondi, Chief Supply Chain Officer, Unilever
5 12 23 32 45 47
Supply Chain Management and Value Creation Globalisation and Emerging Economies Sustainability Talent Management and Skills Development Conclusion and Recommendations About SCM World
SCM World 2011
Executive Summary by Pier Luigi Sigismondi, Chief Supply Chain Officer, Unilever
In the weeks following the Japanese earthquake and tsunami in March, the eyes of the business world were firmly focused on the global supply chain. In the aftermath of those tragic events, many businesses have suffered shortages in supply and production incapacity, as well as a lack of inventory and inevitable closures across distribution networks. All this has served to position the supply chain even higher as a key business asset. That is, as a strategic driver of value for the business that delivers tangible competitive advantage. We as supply chain leaders are no longer exclusively technical, operational people with sole focus on driving cost reduction. In todays climate, we play a fundamental role in enabling the company growth agenda through cross-functional engagement and external partnership with our suppliers and customers. And nowhere is this more evident than in times of crisis where resilience, flexibility, speed and responsiveness across the end-toend value chain make all the difference. So against this backdrop, it is my pleasure to write the introduction for the Chief Supply Chain Officer Report 2011. This years report has been co-authored by Dr. Hau Lee, Chairman of SCM World and Thoma Professor of Operations, Information and Technology at the Stanford Graduate School of Business, alongside Kevin OMarah, Group Vice President, Supply Chain Research, Gartner. Both Hau and Kevin have designed this report to draw out the critical insights that executive supply chain professionals are prioritising across four key areas: value-driving supply chain management, globalisation, sustainability and talent management. As you will discover, the findings identify a series of key developments which suggest a change in supply chain strategy from three or four years ago. Highlights of this study include:
Emerging markets are now fully-fledged growth markets with an overwhelming 80% of respondents selling and delivering to emerging economies Sustainability increasingly forms part of the DNA for high performing supply chains, with 65% of respondents characterising pressure from senior management and the board as the source of sustainability efforts Talent acquisition and leadership development represent key challenges across supply chain management, with 90% off respondents agreeing that it is at least an important issue
In sum, this years research findings serve to underline supply chains growing role as a driver for value creation and source of competitive advantage in the global context and, in turn, the changing requirements for supply chain leaders to deliver excellence. Consequently, there is no doubt that talent management will become an increasing priority as industry looks to develop future leaders that can drive overall business performance. I feel very energised by these new perspectives and hope you will find them equally inspiring in continuing your own journey toward supply chain excellence. Yours sincerely,
Pier Luigi Sigismondi Chief Supply Chain Officer
SCM World 2011
SUPPLY CHaIN MaNaGEMENT aND VaLUE CREaTION
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Supply Chain Management and Value Creation
Supply chain management is viewed as a key driver to enhance the competitiveness of companies. Traditionally, supply chain excellence has enabled companies to operate lean and efficiently, thereby reducing waste and resources used. Operating cost reduction in the form of lower processing cost, higher asset utilisation and reduced inventory can result in higher margins for companies. But lately, innovative companies have used supply chain excellence as a means to support new business development, resulting in companies gaining more market share and revenues; increased profitability; improved customer service and loyalty; and enhanced shareholder value. Such value creation aspects of supply chain have become a new competitive ground for most companies to aspire to. Indeed, the super-agile and efficient supply chains of companies like Seven-Eleven Japan, Amazon.com, Dell, Zara and Li & Fung are viewed as the driving force for the business success. Is it true that more supply chain executives are using supply chain excellence as a means to create value, or is this limited to the innovators? Does supply chain excellence really enable value creation? In what ways do companies create value using supply chain management and what factors drive the success of the different ways for value creation? This report addresses these matters in order to aid companies, on an operational level, to steer their supply chains for business value creation. As shown in Figure 1, overall business value and company equity can be created through increasing revenues, value-added services and operating cost reduction. Such value creation and cost reduction can be supported by the use of supply chain levers as performance drivers for the business, whereby value can be created and key business drivers met through supply chain excellence. As such, understanding what the business drivers are and their relationship therein with supply chain levers becomes critical in helping companies design the journey to realise success. Around this specific focus area, the Chief Supply Chain Officer 2011 survey posed the following questions:
1 2 3 4
How important do supply chain executives view supply chain improvements as key for value creation versus operating cost reduction? How important are supply chain levers in supporting value creation? What are the ways in which value can be created through supply chain excellence? For each way of creating value, what drivers play significant roles for its success?
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Importance of Supply Chain Improvements Rather expectedly, supply chain executives view supply chain improvements as critical for operating cost reduction, with Figure 1 illustrating that 88% of respondents view supply chain improvements as important or very important for ensuring operating cost reduction. However, what is Ultimately, in perhaps surprising is that 80% of respondents also rank supply chain improvements as an important or very important means for value todays business creation through increasing revenue, while 61% correspondingly view environment such improvements as very important for value creation through long organisations whose term equity improvements (such as enhanced customer service and loyalty). Such results provide a strong signal that viewing supply chain supply chain efforts improvement as a foundation for value creation is no longer limited are only confined to the more progressive and innovative supply chain companies and to operating cost that there is now a widespread view (and we expect corresponding reduction are likely action) amongst supply chain executives to go after value creation. Ultimately, in todays business environment organisations whose to be left behind the supply chain efforts are only confined to operating cost reduction are competition likely to be left behind the competition. Figure 1
Gpera8ng cost reduc8on
9.0% 2.3% 0.7%
36.9%
51.1%
Figure 1: How important is it for you as a CSCO to focus on supply chain improvements for the following? (1=not important, 5=extremely important)
4a6ue crea8on through increasing revenue
4.1% 1.3%
14.4%
40.1% 40.1%
5 4 3 2
4a6ue crea8on through 6ong term equity improvement (such as enhancing brand equity)
8.1% 3.1%
26.2% 34.7% 27.9%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Figure 2
Importance of Supply Chain Levers and Value Creation The literature is rich with the many best practices and levers through which companies gain control of their supply chains, while past surveys have focused on identifying what these levers are. Of interest in this report is the importance of these supply chain levers in supporting value creation. The first observation is that almost all the levers stipulated have been identified as significant. In other words, supply chain executives have been using multiple levers to help support value creation. These levers include:
Lead time reduction Lead time reliability improvement Information visibility Supplier collaboration Inventory turn increase
Timely, accurate and comprehensive performance management Demand management (like forecasting and demand shaping through promotions) Capacity flexibility
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Figure 2 below shows that all the levers proposed in the survey were identified as extremely important by more than 25% of respondents; while 66-78% of respondents ranked each lever as important or very important. These levers were also identified as important drivers for operating cost reduction and a significant driver of value creation. Two levers, however, stood out from the rest. Seventy nine per cent of respondents identified information visibility and lead time reliability improvements as either important or very important. Information visibility is a means for companies to coordinate their supply chain operations to increase efficiency, reduce waste and improve response time reliability. Hence, information visibility becomes the foundation for all other levers. But it is imperative to note that lead time reliability improvements require other attributes too, such as having the right distribution and logistics partners; having the right level of safety capacity or inventory; and having reliable manufacturing processes.
Improvin# lead 8me reliability
3.8% 0.9%
14.8%
40.7% 39.8%
Remand mana#ement Bforecas8n#, demand shapin# throu#h promo8on etcF
3.4% 1.4%
18.2%
40.7% 36.3%
Figure 2: How important are each of the following levers to supporting value creation through supply chain improvement? (1=not important, 5=extremely important)
Informa8on visibility
1.9% 0.7%
16.2%
39.2% 42.0%
Customer Collabora8on
7.7% 2.0%
20.3%
31.2% 38.8%
30.6% Qupplier collabora8on 5.9% 1.1% 20.1% 29.1% Pead 8me reduc8on 6.8% 1.3% 20.1% 27.7% 3.1% 1.1% 19.5% 26.2%
42.4% 5 42.7% 4 3 2 48.6% 1
Timely, accurate and comprehensive performance measurement
Inventory turn increase
5.4% 2.0%
26.4% 24.6%
40.0%
Capacity exibility
5.6% 1.3% 8.3%
24.6%
44.0%
Partnership incen8ve ali#nment 3.9% 7.6% Postponement 5.5%
28.2% 21.1% 25.2% 20.3%
38.5%
41.3%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
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Ways to Create Value through High-Performing Supply Chains High performing supply chains can enable companies to create value in multiple ways:
New product introduction Premium pricing Expanded offerings of valueadded services Customer service leading to customer loyalty
Expansion to new market segments within existing geographies or expansion to new geographical markets Leveraging opportunities created from external disturbance or disasters (such as earthquakes, major supply disruptions, fire, etc.) Stronger supplier relationships
As Figure 3 reveals, the overwhelming majority of the supply chain executives surveyed felt that supply chain excellence helps to build value through customer service and, in turn, customer loyalty. There is a link between this observation and the importance of supply chain levers as discussed previously. Viewed by supply chain executives alongside lead time reliability improvements as one of the two most important levers to support value creation, information visibility takes two directions; gaining visibility from supply chain partners and providing visibility to supply chain partners. Given that the latter of these directions and lead time reliability are both customer service oriented, it is rather unsurprising that enhanced customer service is identified by supply chain executives as the most important way in which value is created. Strong customer loyalty is the bridge through which customers repeat business or expand their relationship to cover other products or services, and is also the way in which customers offer priority treatment. Indeed, 83% assign high or very high value to supply chain excellence creating value through customer service (leading to enhanced Figure 3 loyalty). customer
Customer service leading to customer loyalty 33.3% 50.1%
3.0% 1.1%
12.5%
Zew product introduc8on
6.0% 2.5%
21.8%
32.5% 37.2%
Figure 3: At your company, what is your assessment of the value created by having a high performance supply chain (1=no value, 5=very high value)
Expansion to new market segments within exis8ng geographies or new geographies
28.0% 8.9% 3.0% 20.0%
40.0%
5 25.6% 24.1% 44.0% 4 3 2 23.0% 25.8% 39.6% 1
Qtronger supplier rela8onships
5.4% 1.0%
Expanded oerings of value-added services
9.0% 2.5%
17.6% Premium pricing 2.7% Peverage opportuni8es created from external disturbance or disasters (such as earthquakes, major supply chain disrup8ons, Ure etc 10.9%
39.1% 29.7%
7.2%
20.0%
14.6%
33.0% 25.3%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
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Respondents also suggest other ways in which value creation can occur through supply chain excellence. The most frequent such response, which applies to some industries more than others, is the retailer relationship. Indeed, strengthening the retailer relationship, being able to serve retailers better and collaborating with retailers are all proven ways to improve Strong customer sales. loyalty is the bridge
through which customers repeat business or expand their relationship to cover other products or services
The second most frequent response was new product introduction, with 70% of respondents stating that supply chain excellence is of high or very high value in this regard. Indeed, supply chain excellence can help speed up new product introduction or increase the probability of a successful new product introduction. Finally, new market expansion is also regarded as a high value result of supply chain excellence, smoothening the penetration of new markets through efficient and reliable deliveries and, in turn, allowing the effective customisation of products tailored to new market needs. Indeed, 68% of respondents ranked new market expansion as a high or very high value result of running a high-performance supply chain.
Important Factors for Ways to Create Value through Supply Chain Excellence The underlying factors that contribute to the success of the aforementioned areas of value creation will be examined herein. Figure 4 reveals the key factors respondents felt important and relevant in driving corresponding means of value creation. As indicated earlier, building customer loyalty through customer service is the most highly rated means for value creation through supply chain excellence. Success comes from the ability to convert customer loyalty to revenue gains and is dependent upon whether the customer views service as a criterion for making sourcing decisions and/or a positive customer service experience leading to repeat purchases. When all such factors exist, strong value creation is a potential outcome.
Figure 4
On-schedule product introduc8on Ability to ramp up fast

3.7% 2.1%
16.3%
38.8% 39.0%
31.8% 4.6% 1.9% 17.9% 30.2% 6.6% 3.4% 19.8% 25.7% 21.2% 25.6% 26.3% 20.9% 22.1%
43.7%
Ability to manage product transi8ons Bthe simultaneous phasing out of eKis8ng product and Hroduct development cycle 8me reduc8on Avoid cost over-runs Fast response to engineering changes
40.0%
5 4 3 2
39.2%
9.2% 4.8%
39.7%
6.5% 1.9%
43.7%
9.0% 4.4%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
Figure 5 Figure 4: Which of the following are relevant factors that link supply chain excellence and
successful new product introduction (1=no value, 5=very high value)

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In the case of new product introduction, speed and reliability are still what matter, where speed refers to efficient product introduction and capacity ramp up when a product takes off. Of interest is that respondents also identified product transition management (the simultaneous management of the ramping down of current products and the ramping up of new products) as highly important. With regard to new geographical market expansion, the ability to customise products for local needs or regulatory requirements and efficient distribution of the products to the customers are both viewed as highly relevant. Since many of the new geographical markets are in emerging economies, where customer tastes and requirements are potential drivers, and logistics and distribution infrastructure lesser developed, it is no surprise that supply chain executives view being able to customise products for local needs and subsequently distribute them efficiently as important drivers of success. It should be noted that some respondents made specific reference to the importance of designing the right service to go with the product in new markets.
Chapter Summary and Key Takeaways
Supply chain executives view supply chain improvement as crucial for operating cost reduction, with 51% ranking such improvements as extremely important and a further 37% selecting important Information visibility and lead time reliability improvements are the two levers which senior-level supply chain professionals most associate with helping deliver value, with 79% ranking these two factors as at least important Eighty three per cent of respondents strongly believe that supply chain excellence creates value through customer service (leading to customer loyalty), ranking such a lever as at least important New Product Introduction ranked highly amongst respondents as a means of driving value through a high-performing supply chain, with 70% selecting a rating of important or above
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GLObaLISaTION aND EMERGING ECONOMIES
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Globalisation and Emerging Economies
Figure 4
Globalisation Managing the Big Picture 38.8% 39.0% 16.3% On-schedule product introduc8on 3.7% 2.1% many years the notion of supply chain For 31.8% globalisation was synonymous with low 43.7% 17.9% Ability to ramp up fast cost country sourcing, especially where 4.6% ... over 80% report selling and shipping to 1.9% emerging economies were concerned. New 5 emerging markets, with a large portion saying Ability to m anage product 30.2% data shows that this old image is no longer 40.0% 19.8% transi8ons Bthe simultaneous that their supply chain strategies for emerging 4 majority 6.6% accurate, with an overwhelming 3.4% phasing out of eKis8ng product and markets were primarily oriented to selling and of supply chain professionals approaching 3 25.7% 39.2% Hroduct development cycle 8me globalisation today as a two way street; delivering in these markets 21.2% 9.2% reduc8on 2 Figure 5 both sourcing from and selling to. 4.8% illustrates that25.6% over 80% of the 750 supply 1 39.7% chain executives 26.3% surveyed report selling Avoid cost over-runs 6.5% 1.9% with a large portion (38% of the total and shipping to emerging markets, 20.9% for emerging markets were sample) saying that their supply chain strategies 43.7% Fast response to engineering 22.1% markets. In contrast, only primarily oriented to selling and delivering in these 9.0% changes 18% described their strategies for 4.4% emerging markets as primarily oriented to sourcing from such locations. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Figure 5
About equally sourcing from and selling to emerging markets
44.0%
Oriented primarily around selling delivering to emerging markets
37.6%
Oriented primarily around sourcing from emerging markets 0.0%
18.4%
10.0% 20.0% 30.0% 40.0% 50.0%
13
Figure 5: Your supply chain strategy for emerging markets is data point says a lot about how the global supply chain has evolved in This recent years both in terms of the maturation of these emerging economies and in terms of the sophistication and strategic impact of the supply chain discipline. In the first instance, we were interested to learn not only how much activity was being managed globally across the value chain, but whether the trend was increasing or decreasing. For sourcing, manufacturing assembly activities, a great many companies are heavily dependent on or non-home country work. Figures 6 and 7 illustrate that around a quarter of all companies say they source and manufacture abroad for between 75100% of their total volumes, while a minority (17% and 30% respectively) do less than 10% of such work in non-home country locations. Furthermore, the portion of respondents who see these volumes increasing is dramatically higher five to one and eight to one respectively. It is clear that global sourcing and manufacturing both remain and, more importantly, are still growing fast.
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10%-50% Below 10% 0.0% 5.0% 10.0%
13.5% 16.6% 15.0% 20.0% 25.0% 30.0%

Figure 6
75%-100% 50%-75% 25%-50% 10%-50% Below 10% 0.0% 5.0% 10.0% 15.0% 13.5% 16.6% 20.0% 25.0% 30.0% 22.2% 20.9% 26.8%
Figure 7
75%-100% 50%-75% 25%-50% 10%-50% Below 10% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 13.5% 11.2% 30.1% 30.0% 35.0% 20.8% 24.4%
Figure 7 Figure 6: What percentage of your sourcing is Figure 7: What percentage of your manufacturing / drawn from outside your home country? (defined assembly / production is conducted outside your home as headquarter location and seat of executive country? 75%-100% management) 24.4% 50%-75% 20.8% 25%-50% 13.5% Other value chain activity, however, is less likely to be done outside of the home country, in particular design work. Over 50% of respondents state 10%-50% 11.2% being done abroad (Figure 8) and, that less than 10% of design work is year-on-year, a big majority (63%) although 30% are increasing this share Below 10% 30.1% plan no change at all. 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% Figure 8
75%-100% 50%-75% 25%-50% 10%-50% Below 10% 0.0%
8.5% 10.9% 12.1% 18.0% 50.5% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Figure 8: What percentage of your design activities is conducted outside your home country
Figure 9
Despite much talk of the armies of engineers graduating each year from 26.0% 75%-100% Chinese and Indian universities, most companies around the world would still rather keep their creative duties close to headquarters. A similar observation 50%-75% 19.4% control. Despite large flows of relates to the exercise of direct managerial activity in sourcing and manufacturing abroad, the overwhelming majority of25%-50% companies have only minor portions of either direct report staff or owned 18.3% facilities located outside of the home country. The implication supporting much anecdotal evidence is that analysis and/or capital-intensive work tends 14.6% relationships with third party suppliers to10%-50% cluster close to home. Arms length or partners may enable substantial material conversion and movement outside Below 10% of the home country, but most fixed 21.7% costs and heavily invested resources (employees, property, plant and equipment) are kept under a much closer 0.0% watch. 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

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Figure 8
The most striking data gathered in this research, however, points to the 8.5% 75%-100% surge in efforts to extend supply chains into the customer bases of emerging economies. Not only do most companies sell and deliver substantial amounts outside their home countries (Figure 9), but the share 50%-75% of business 10.9% that reports an increase over the last year is nearly 10 times that which reports a decrease (Figure 10). This ratio of increase to decrease is the 25%-50% 12.1% highest of any activity on which we collected data. What seems increasingly clear is that globalisation of supply chain is a matter of building physical 10%-50% and relationships 18.0% networks that are equally capable of finding and exploiting cost advantages as well as discovering and serving new markets. A brake on this remains in areas where Below 10% leveling of the global economy, however, 50.5% high leverage work among functions like planning, product design and management remain centralised most companies. 0.0% 10.0% 20.0% 30.0% for 40.0% 50.0% 60.0%
Figure 9
75%-100% 50%-75% 25%-50% 10%-50% Below 10%

0.0% 5.0% 10.0% 15.0% 20.0%
26.0% 19.4% 18.3% 14.6% 21.7%

25.0% 30.0%
Figure 9: What percentage of your sales/deliveries goes to customers outside your homes country?
Figure 10 Increasing Decreasing

About the same
Figure 10: Compared to last year, non-home sales / deliveries are
51.9%
5.5%
42.6%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Figure 11
China USA 12.5% 11.0% 10.6% 7.7% 20.3% 36.6%
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Figure 10
Globalisation Country Winners and Losers Increasing
51.9%
Figure 11
The research asked supply chain professionals to name their top three nonhome country locations in terms of sourcing, manufacturing/assembly/ production and sales. Across all industries, China emerged well ahead in terms of sourcing, with nearly 37% of respondents calling it their number Decreasing 5.5% one non-home country location (see Figure 11). Overall, 60% cited China as their number one, two or three sourcing location. The closest follower was the USA, identified as the number one non-home country sourcing location by 20% of respondents and 39% listing the USA as number one, two or three. Well down the list was Japan which, despite its economic might, was About the same 42.6% identified as a top three sourcing location by only 10% of all respondents. What emerges from this data is that China, the USA and Germany appear far more integrated into the worlds manufacturing supply chains than 0.0% 10.0% most 20.0% 30.0% 40.0% 50.0% 60.0% competing territories, notably Japan.
Figure 11: What are the top three countries you source from?
China USA Germany France India United Kingdom Italy Canada Japan
12.5% 11.0% 10.6% 7.7% 7.4% 9.4% 10.6% 3.9% 4.4% 5.2% 3.2% 6.3% 6.1% 2.9% 4.2% 3.8% 2.3% 3.5% 3.3% 1.9% 2.3% 2.1% 1.9% 4.4% 3.8% 1.5% 1.8% 1.9% 20.3%
36.6%
1 2 3
Brazil
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
What emerges is that China, the USA and Germany appear far more integrated into the worlds manufacturing supply chains than competing territories, most notably Japan
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When the topic moves from sourcing to manufacturing/assembly/production, a new entrant makes the top three list, Mexico. Looking at Figure 12, although only 6% of respondents cite Mexico as their number one non-home country manufacturing location, a further 8% list it as their number two location and another 6% their third. India is also referenced, but not as a top location, with only 2% stating it to be their number China still one non-home country for manufacturing. Almost 7% identify India emerges as a clear as their number two manufacturing location and just over 7% cite leader in non-home it as their number three. China still emerges as a clear leader in non-home manufacturing, but there is certainly room for additional manufacturing, but emerging markets, with many apparently happy to consider India or there is certainly Mexico as their secondary or tertiary locations for owned or contract room for additional manufacture. What is surprising, however, is the relative absence emerging markets, of emerging economies often discussed as potential winners in a with many apparently global supply chain. Among those less prominent than expected were Poland and Hungary, neither of which made the top five as a happy to consider first, second or third favourite for non-home country manufacturing. India or Mexico Even more surprising was the absence of Brazil, which does not even make the top seven.
Figure 12
China USA Germany Mexico France Hungary Poland
8.2% 6.7% 7.2% 9.9%
15.6%
34.5%
7.6% 5.3% 6.2% 6.0% 8.1% 5.8% 4.0% 3.6% 4.5% 2.8% 1.3% 4.1% 2.6% 1.7% 2.1% 2.4% 2.2% 4.1% 2.1% 3.6% 2.1% 1.9% 6.7% 7.2%
1 2 3
Brazil Canada India 0.0%
17
Figure 12: What are the top three non-home countries you manufacture / assemble / produce in? SCM World 2011
5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Design activities which, as noted above, are still far less likely to happen abroad, are nonetheless increasingly being done away from the headquarter location. Figure 13 shows that the countries winning business on this dimension include the USA, China and India, each of which sees dozens of companies locating substantial design work within their borders, but also Germany and the United Kingdom. This group of countries was consistently among the top five cited as a number one, two or three location for design work, with the USA and China essentially tied at the top and the United Kingdom and Germany tied in fourth place. One observation this data suggests is that globalisation is in fact reaching past the traditional image of looking for low cost labour. While some design work can be classified as low-cost labour (in particular things like CAD support in India and design activity for ODM electronics businesses in China) it is fair to assume that reliance on designers in Germany, the United Kingdom and the USA is based on something other than cheap wages. Earning surprisingly little respect from respondents were the countries of the former Soviet sphere of influence, where only Poland, Hungary and Czech Republic received meaningful mention, while Russia was not cited at all as a top three design location. It is apparent that a strong engineering educational foundation is not enough to drive business in the global supply chain.
Figure 13
USA China India Germany United Kingdom France Netherlands Canada Japan Italy 0.0%
3.9% 3.1% 2.8% 3.0% 2.2% 1.7% 2.7% 2.2% 2.8% 3.4% 2.2% 3.4% 2.4% 2.6% 3.9% 9.6% 11.2% 18.0%
Figure 13: What are the top three nonhome countries your design work is in?
17.7% 0.6% 10.2% 10.5% 9.0% 6.6% 6.6% 7.9% 6.6% 7.5% 7.3%
21.5%
1 2 3
5.0%
10.0%
15.0%
20.0%
25.0%
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Supply chain strategies aimed at selling outside the home country should reflect market attractiveness. Unsurprisingly, the worlds biggest single market, the USA, was far and away the top choice for companies number one destination for selling and distribution activities. Equally predictable is that Germany, France and the United Kingdom all show up close to the top as delivery targets for supply chain strategists. Emerging markets, however, also feature prominently among non-home countries high on the radar of supply chain strategists. China is identified as the number one nonhome country market for almost 11% of respondents and number two or three for an additional 13% (see Figure 14). But India, which was rarely mentioned as a top market, was nonetheless identified as a second or third most important market by 6% of those surveyed. Brazil shows in a virtual dead heat with Japan as a target market, and even Russia which saw no traction as a supply partner, was among the top ten target markets among our survey respondents. The much discussed BRIC countries are clearly as engaged in this increasingly connected global supply chain as the developed countries and it is by no means a matter of chasing low cost labour around the world.
Figure 14
USA Germany China Canada United Kingdom France Brazil Japan Russia India
3.6% 7.8% 2.3% 3.1% 3.2% 2.0% 4.4% 4.9% 3.2% 5.7% 6.4% 5.7% 5.7% 10.8% 11.0% 10.3% 9.0% 6.9% 5.2% 11.4% 13.1% 13.1% 10.7% 31.4%
Figure 14: What are the top three countries you sell / deliver to?
1 2 3
1.6% 2.8% 2.6% 0.4% 1.7% 4.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Figure 15
2.84 2.76 2.84
Brazil
2.84 BRIC countries are clearly as engaged in this The much discussed increasingly connected 2.51 global supply chain as the developed countries 2.09 and it is by no 2.32 means a matter of chasing low cost labour Russia 2.59 around the world 2.51
3.33
Cost
19
India
2.66 2.71
3.81 3.58 3.81
Reliability Risk
SCM World 2011

Emerging Economies and Supply Chain Strategy Reputation Matters
To understand what is driving decisions about engaging partners abroad, we asked for assessments of key qualitative factors that might influence choices Figure 14 where to source product or where to carry out manufacturing and about assembly operations. The data confirms most of what conventional wisdom might predict, but indicates a few gaps that are surprisingly large, as well 31.4% 6.9% USA as a few that are surprisingly small. Figure 15 shows that, from a sourcing 5.2% perspective for instance, China offers the lowest cost, but only by a relatively 11.4% 13.1% second for cost competitiveness. thin Germany margin over India, which came 13.1% This narrowing gap is expected what with Chinese labour, real estate and 10.7% administrative costs rising 5.7% rapidly in recent years. China, however, still China 9.0% retains a huge lead over India when it comes to being identified as a top 6.4% dimensions of attractiveness as a sourcing sourcing country. On other 5.7% Canada 3.2% location, however, China and India appear essentially tied, with near identical scores for risk and future potential. India is marginally behind China from a 5.7% 10.8% United Kingdom reputation perspective it seems, but still lags substantially in a share of the 1 11.0% total sourcing pie. The implication is that India will likely gain ground. 2
7.8% In contrast, the other two BRIC countries Brazil and Russia fared 3 2.3% dramatically in the opinions of the 750 supply chain professionals Brazil worse3.1% 3.2% surveyed. Brazil, for instance, is far behind both India and China in cost competitiveness, 2.0% but only slightly better than India in terms of reliability 4.4% Japan and risk. Even on the 4.9% dimension of future potential, Brazil trails both China and India. Russia is worse on all dimensions, with a poor showing for cost 1.6% 2.8% Russia competitiveness as well as dismal assessments for reliability and risk. We 2.6% also gathered data on South Africa to see whether the African opportunity 0.4% was meaningful to the 4.6% wider supply chain community and, although its India 1.7% reliability and risk appear reasonable, its score concerning cost position appears unlikely attract 10.0% much business a global sourcing hub. 35.0% 0.0% to 5.0% 15.0% as 20.0% 25.0% 30.0%
France
3.6%
10.3%
Figure 15
2.84 2.76 2.84 2.84 2.51 2.09 2.32 2.59 2.51 3.81 3.58 3.81 4.06 3.59
Figure 15: From a sourcing perspective, average rating out of 5 against the following criteria (1=poor, 5=excellent)
Brazil
3.33
Russia
Cost Reliability Risk Future poten8al Average
India
2.66 2.71
China
2.96 2.75
4.06
South Africa
2.48 2.53 2.59 2.42 2.48
20

SCM World 2011
The story for supply chain professionals considering BRIC countries for manufacturing is essentially the same as we see in sourcing. Figure 16 reveals that China and India have substantial cost advantages and, although Brazils reputation for quality is significantly better than that of India, the overall attractiveness of these locations clearly favours the IC in BRIC.
Figure 16
2.78 3.1 2.5 2.51 3.76 Cost Quality 4.06
Brazil
Russia
India
2.86
China 2.43 2.63 0 1 2 3
3.13
South Africa
Figure 16: From a manufacturing perspective, average rating out of 5 against the following criteria Figure 17 (1=poor, 5=excellent)
65.0% Emerging markets are more than full partners in the globalisation of supply and board chain, driving huge swings of activity away from home countries in search of cost advantages skills abroad. Not all emerging Pressure and from specific customers 45.7% economies are created equal, however, with a clear leader in China and a fast approaching challenger in India. What may finally close the loop in global supply chains is the increasing importance of emerging markets as sales and distribution 35.0% Pressure from government targets for companies. Russia may be a loser on the supply side but its appeal as an end market will open doors for suppliers in that country to Pressure from ac8vists and similar 16.2% compete for a slice of the pie. stakeholders Push by some leading suppliers 11.2%
Pressure from senior management
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
21
SCM World 2011
Over 80% of supply chain executives report selling and shipping to emerging markets with a large portion 38% of the total saying that their supply chain strategies for emerging markets are primarily oriented to selling and delivering in these markets Design work is less likely to be conducted outside the home country, with over half of the respondents asserting that less than 10% of design work is executed abroad Not only are most companies selling and delivering substantial amounts of business outside their home country, but the portion reporting an increase over the last year equates to approximately ten times the share that reports a decrease China emerges as the leader in terms of sourcing, with nearly 37% of respondents naming it their number one non-home priority With regard manufacturing/assembly/production, Mexico is on the rise as a non-home country, with 6% citing the nation as their number one location, 8% as their number two location and 6% asserting Mexico as their third most important foreign manufacturing country
22
SCM World 2011
23
SUSTaINabILITY
SCM World 2011
Sustainability
Sustainability has become a new battleground of supply chain competitiveness, with high profile initiatives recently taken by the likes of Wal-Mart and Nike to take sustainability performance of the supply chain to a higher level. Sustainability often includes both environmental responsibility and social responsibility; the former referring to control and containment of the carbon footprint, energy usage and pollution of the supply chain, and the latter focusing on the health, safety and treatment of labour, as well as contributing to the well-being of local communities. Indeed, Wal-Mart has discovered that, although there are potentially great savings to be gained from sustainability efforts internally, the potential is much greater with their extended supply chain.
Figure 16
To what extent is sustainability part of supply chain managements DNA? What are the sources that drive companies sustainability efforts? Do we see substantial 2.78 differences in the environmental versus social dimensions of sustainability? Brazil What have been the results and what is the3.1 future outlook?
2.5 improvement, the strongest driving Just as many big initiatives in supply chain Russia 2.51 force of sustainability initiatives derive from top management; namely, senior management and the board, with Figure 17 revealing that 65% of respondents characterise pressure from senior management and the source of 3.76 the board as Cost India their sustainability efforts. Having top management as the source often means 2.86 Quality for the that the support of top management is also in place, which is important success of such efforts. The second source of sustainability efforts is pressure 4.06 China from customers (46%), followed by pressure from government (35%). The role 3.13 of activists and similar stakeholders, and of leading suppliers, tends to be small. In this dynamic market, many companies feel pressure from customers and the 2.43 government to pay attention to sustainability, but it is even more often the case South Africa 2.63 that top leaders of firms see the need and lead the efforts themselves. Why would the board, as the top leader of a company, push for sustainability? 0 1 2 3 4 5
Figure 17
Pressure from senior management and board Pressure from customers Pressure from government
65.0% 45.7% 35.0% 16.2% 11.2%
Pressure from ac8vists and similar stakeholders Push by some leading suppliers
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Figure 17: How would you characterise the source of your sustainability efforts?
24
SCM World 2011
Sustainability
It turns out that the overwhelming majority (75%) is concerned with creating a positive customer image and enhancing brand equity see Figure 18. Interestingly, some companies are directing their sustainability efforts due to customer pressure directly, while many more due to top management. But the reason for such direction at board-level also lies in positively winning customers through brand image. However, many respondents (42%) also feel that the board is concerned with sustainability in order to satisfy government regulations, pursuing sustainability due to governmental pressure directly or indirectly. In general, company boards appear very sensitive to a variety of sources that require them to pursue sustainability: to fend off shareholder or external PR concerns; to ensure no disruption of supply; to ensure return on investment through cost savings; and to deliver return on investment through sales increase. However, the most significant underlying forces that drive companies sustainability efforts are customer pressure and image or government pressure and regulations, which then result in top management leading such efforts.
Figure 18
To create posi8ve customer image and enhance brand equity
75.0%
To sa8sfy government regula8ons
42.2%
To have return on investment through cost savings To have return on investment through sales increase
32.0%
30.5%
To ensure no disrup8on of supply
30.1%
To fend o shareholder or external PR concerns
22.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Figure 18: What is your judgement of your boards view on sustainability?
Figure 19
Qustainability measures Bsuch as viola8ons of environmental standards or government regula8ons)
76.1% 30.1%
26.4% The Six Sigma process cycle is a good framework for us to look at when considering the sustainability efforts of companies. Just like quality improvements, the Six Sigma process calls for the Measure, Identify, Analyse, Act cycle. Firstly, it is necessary to measure the characteristics and quality of 77.3% the process in order Internally to gauge any errors, which can then be identified and resolved. This is the Carbon footprint measures 24.1% Immediate suppliers fundamental approach for quality management and, similarly with sustainability, 27.5% we have to start with measurement. Of course, it goes without Extended saying that suppy network performance measurement is not useful if it is not used by management, so this is about management having visibility over performance measures. 75.0% 29.0% 27.8%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Qocial sustainability measures Bsuch as viola8ons of labor compliance)
25
SCM World 2011
SUSTaINabILITY
Six Sigma Improvement Cycle
New measure System update Structural correction
Measure
Tracking Visibility accessibility
Figure 18
act
Identify
75.0%
To create posi8ve customer image and enhance brand equity Resolution execution Communication Restoration to To in-control sa8sfy government regula8ons
analyse
42.2%
What is out of control? What if scenarios Diagnosis/Root cause analysis
To have return on investment through cost savings
32.0%
Indeed, signifi cant majority To have ra eturn on investment through puts sales performance visibility measures in place, with 30.5% increase claiming they have visibility of environmental sustainability 75% of respondents performances (figure 19), such as violations of environmental standards or government regulations across their internal operations. 77.3% have visibility To ensure no disrup8on of supply 30.1% while 76.1% have similar of the carbon footprint across their internal operations, visibility of their social sustainability measures, such as violations of labour compliances across their internal operations. There is therefore a strong sense To fend regarding o shareholder or external PR of the Six Sigma process for sustainability of success the first step 22.0% concerns efforts across internal operations.
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Figure 19: How do you gain visibility of ?
Figure 19
Qustainability measures Bsuch as viola8ons of environmental standards or government regula8ons)

76.1% 30.1% 26.4%
77.3% Carbon footprint measures 24.1% 27.5%
Internally Immediate suppliers Extended suppy network
75.0% Qocial sustainability measures Bsuch as viola8ons of labor compliance) 29.0% 27.8%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
26
SCM World 2011
Sustainability
However, on analysing visibility externally across immediate suppliers or the extended supply network, it is a different story. There is far greater concern regarding violations of environmental standards, government regulations or labour compliances, with Figure 20 highlighting that only 19-30% have visibility over such matters. Additionally, most respondents do not have visibility over immediate suppliers or the extended network regarding carbon footprint violations either. This represents a significant vacuum and, although it probably requires much greater effort to gain such visibility compared with internal operations, it is the external environment which potentially represents the most vulnerable part of the overall supply chain. Companies therefore need to work on the visibility of the extended supply chain to even begin the Six Sigma process cycle for sustainability.
Figure 20
Figure 20: How have you implemented monitoring systems in place ?
Carbon footprint measures
79.1% 27.8% 21.8% Internally 81.0% 28.8% 19.9%
Sustainability performance measures (such as viola8ons of environmental standards or Social sustainability measures (such as viola8ons of labour compliance)
Immediate Suppliers Extended supply network 81.6%
22.9% 19.7%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0%
Figure 21
12.6% is identification, which requires The second step of the Six Sigma process cycle 14.8% 27.6% measures and, in No measurable returns verify and validate performance monitoring systems to check, 32.3% effect, turn visibility into a monitoring process. Similar to visibility, around 80% 12.6% of respondents are monitoring their internal operations with respect to violations 24.3% in the environmental and social front, as well as carbon footprints. Significantly 24.5% Internal resistance 29.2% suppliers or the less (between 20-29%), however, are monitoring immediate 18.2% 3.9% extended supply network on such measures. Once again, a large vacuum exists. 1 23.2% Once errors are identified and assignable causes and opportunities are analysed, Supplier resistance 36.5% the quality improvement process then moves to the Act step, where any2 faults 21.3% 4.7% are resolved, process modifications are made and products are potentially 3 fail redesigned for quality improvement. Unfortunately, companies sometimes 9.7% 19.9% Customers d o n ot c are a nd p rice to act in making such necessary sustainability investments. Respondents 4 were 28.0% pressure 27.8% invited to describe the obstacles by rating them on a scale of one to five, with 14.6% 5 five being the most valid. Figure 21 illustrates that the three top barriers to 12.8% of four or five); no measurable action are: a lack of resources (45% with rating 18.5% Lack of knowledge and lack exper8se to returns (45%); and of customer care and price pressure (42%). 33.6% To a lesser pursue improvement projects 27.5% extent appears the lack of knowledge and expertise to pursue improvement 7.5% projects (35%). 10.1% Lack of resources 16.3% 28.6% 32.1%
SCM World 2011
14.3%
27
13.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Sustainability performance Sustainability measures (such as viola8ons of environmental standards or
Internally 81.0% 28.8% 19.9% Immediate Suppliers Extended supply network
It has been observed that, with customer pressure directly or indirectly, Social sustainability 81.6% companies react by moving forward with sustainability efforts, either directly or measures ( such a s through top management leadership. But the reverse is also true. When there is 22.9% viola8ons of labour lack of customer pressure, sustainability efforts can stall. In order for companies 19.7% compliance) to make concrete steps in implementing sustainability projects, the right level of resources has to be there and a clearly quantifiable measure of returns should also be in place. 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% Figure 21
12.6% 14.8% 12.6% Internal resistance 3.9% Supplier resistance 4.7% Customers do not care and price pressure 9.7%
No measurable returns
27.6% 32.3% 24.3% 24.5% 29.2%
18.2% 14.3%
23.2% 21.3% 19.9%
36.5%
1 2 3
14.6% 12.8% 7.5% 10.1% 16.3% 18.5%
28.0% 27.8%
4 5 33.6%
Lack of knowledge and exper8se to pursue improvement projects
27.5%
Lack of resources
13.0%
28.6% 32.1%
Figure 21: What do you see as the major obstacles on sustainability investments? In supply chain sustainability, the need to act often requires working with suppliers for improvement. Such a form of supplier collaboration in turn requires both sticks and carrots. Regarding the sticks, companies appear to react to supplier breaches in sustainability standards by warning and then taking punitive actions, while some act even more promptly without warning. Warning or not, Figure 22 shows that most companies use reduced business as the stick (73% would reduce business after warning and 56% would reduce business without warning), while some act even more drastically, terminating the business relationship with suppliers (36% after warning and 42% without warning).
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Very few companies use monetary fines as a means to penalise suppliers (12% with our without warning). Indeed, the impact of sustainability breaches is often not something that one can measure financially. This could explain why few companies use monetary fines as a means to pressure suppliers (which could also have the added effect of setting a precedent for other suppliers). Indeed, faced with the risk of reduced business or termination of relationships, suppliers are far more sensitive to the pressure from customers on sustainability. This actually gives further credence to the observation earlier that many companies pursue sustainability due to a direct or indirect push by customers.
SCM World 2011
28
Sustainability
Figure 22
Figure 22: If suppliers are found to have breaches in sustainability standards, what are the penalties?
12.5% Warning rst, followed by 35.5% 72.7%
Monetary nes Reduced business
11.7% No warning. Immediate ac8on taSen as 55.9% 41.9%
Immediate termina8on of business rela8onship
Figure 22
Figure 23
0.0% 20.0% 40.0% 60.0% 80.0% 12.5%
Warning rst, followed 72.7% by The smost is still to pressure suppliers through Preferred upplier effective (priority for means future Monetary nes 35.5% businessbusiness) volumes or termination of the business relationship 66.3%
Increased business engagements
Reduced business 47.7%
Figure 23 reveals how companies have also used a variety of incentives to serve 11.7% Immediate termina8on of as carrots for sustainability improvements. Stronger business You inAest in training and educa8on 43.6% relationships business r ela8onship No warning. Immediate in the form of preferred supplier status or increased business engagements 55.9% ac8on taSen as incentives that most companies seem to use (66% and 48% are the positive Public recogni8on (similar to "Qupplier of respectively). Other positive incentives include: supporting suppliers with 31.6% 41.9% the Year") investment in training and education (44%); public recognition (similar to a Supplier of the Year Award- 32%); and improved terms and conditions (21.5%), \eger terms and c ondi8ons as an incentive 21.5% while very few use price premiums (8%). It is interesting that 0.0% 20.0% 40.0% 60.0% 80.0% companies neither like to use direct monetary fines nor monetary rewards for sticks and carrots. Figure 23 Price premiums 7.6%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% Preferred supplier (priority for future 66.3% business) 47.7% 43.6% 31.6% 21.5% 7.6%
Increased business engagements You inAest in training and educa8on Public recogni8on (similar to "Qupplier of the Year") \eger terms and condi8ons Price premiums
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
29
Figure 23: What incentives do you put in place to support sustainability improvements of your suppliers?
SCM World 2011
Sustainability
Rather, potential impact to the business relationship tends to be the strongest means to penalise or to incentivise suppliers. The Six Sigma Process Cycle then reverts to measurement, where the results of a companys actions are then measured and understood. It is therefore vital to observe the results that respondents have secured and, interestingly, they have been quite positive in multiple ways. Again, respondents assessed the different Ultimately, dimensions by a scale of insignificant to substantial, with five signifying most substantial. Analysing Figure 24, the most significant impact customer is customer satisfaction improvement (47%), followed by reduced relationships violations of government regulations (44%). Other benefits include and business supplier relationship improvement (34.5%); new or improved sales opportunities (32%); and operating cost reduction (31%). These opportunities with results echo the earlier conclusion as to why companies pursue customers form sustainability. It was indicated above that this is due to customer or the most important governmental pressure, which results in top management leadership cornerstone of pushing sustainability improvements. Indeed, such improvement efforts result in greater customer satisfaction levels and reduced breaches all sustainability of regulations and standards. Ultimately, customer relationships and activities business opportunities form the most important cornerstone of all sustainability activities.
Figure 24
deduced Aiola8ons oO goAernment regula8ons and laws Gpera8ng cost reduc8on
7.7% 8.9% 13.5% 21.8% 20.3% 18.3% 15.6% 19.2% 23.1% 13.8% 12.2% 12.0% 26.1%
34.4%
1 2
Customer sa8sOac8on improAement
29.9%
35.2%
3 4
Qupplier rela8ons<ip improAement

5.9%
17.3% 28.6%
36.1%
Zew or improAed sales opportuni8es

8.4%
15.2% 18.3% 23.9%
34.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Figure 25 Figure 24: What kind of results have you obtained from your sustainability efforts? (1=insignificant, 5=substantial)
1.8% 3.4%
It is gratifying to see a significant number of respondents indicating that they 16.1% are stepping up their efforts on sustainability initiatives. It is also insightful 2.4% to see that their initiatives are taking multiple directions, with no single path 5.2% 36.1% Internal p roduct d esign significantly dominating any other. Respondents were asked to rate the outlook 37.5% 1 18.8% of sustainability efforts on a scale of one to five, with five representing a significant increase in efforts. As can be seen from Figure 25, companies are 1.2% 2 6.2% internal operations (63%); internal product design increasing efforts across 41.0% Immediate suppliers 3 (51%); (56%); immediate suppliers (51%); the extended 40.6% supply network 11.0% and customers (51%). Hence, there is no single direction to which companies 4 1.8% gravitate as they recognise that sustainability improvements must be worked 7.8% on in multiple the results 5 do indeed 39.7% Extended supply network ways. The important point here is that 38.9% indicate that sustainability forms an integral part of a companys supply chain 11.8% improvement journey.
2.6%
Internal opera8ons
31.9%
46.8%
30
Customers
6.7% 16.0% 34.7%
40.0%
SCM World 2011
Qupplier rela8ons<ip improAement

5.9%
28.6% 15.2% 18.3%
36.1%
Sustainability Zew or improAed sales opportuni8es

8.4%
23.9%
34.2%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%
Figure 25
1.8% 3.4% 16.1% 2.4% 5.2% 18.8% 1.2% 6.2% 11.0% 1.8% 7.8% 11.8% 2.6% 6.7% 16.0% 34.7%
Internal opera8ons
31.9%
46.8%
Internal product design
36.1% 37.5%
1 2
Immediate suppliers
41.0% 40.6%
3 4
Extended supply network
39.7% 38.9%
Customers
40.0%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%
Figure 25: What is the future outlook on sustainability efforts? (1=significantly reduce efforts, 3=no change, 5=significantly increase efforts
Sixty five per cent of respondents characterise pressure from senior management and the board as the sources of sustainability efforts A mere 19-30% have visibility over immediate suppliers regarding potential violations of environmental standards, governmental regulations or labour compliances Most companies use reduced business as a penalty for supplier breaches of standards, with 73% asserting they would reduce business after a warning and 56% doing so without a warning As a means of incentivising suppliers, 66% of respondents offer preferred supplier status as a business relationship while 48% offer the prospect of increased business engagements
31
SCM World 2011
TaLENT MaNaGEMENT aND SKILLS DEVELOPMENT
32
SCM World 2011
Talent Management and Skills Development
Much discussion has centred on the topic of supply chain talent of late; how to find it, develop it and retain it. Underlying much of the talk is an implicit assumption that todays supply chain professional needs far more general business acumen than the materials management technician of old. To understand how real this problem is, and where meaningful change might be possible, respondents were asked a series of questions about what types of skills are valued, how they are identified and managed and whether there are any consistent weak points in the system of people development that feeds our profession. The net takeaways are that institutional skill development is severely lacking not only on the job but also prior to any hiring decisions, while problems are most acute at the middle management level. Supply Chain Talent Gap The first question asked whether talent acquisition and development is truly a problem and, if so, how serious. Figure 26 clearly confirms that there is a problem, with over 90% of respondents calling it at least an important challenge. Interestingly, the portion who described talent acquisition and development one of their top challenges was four times the percentage saying that it was not a problem. Considering how many fire drills the typical supply chain professional faces on a daily basis, it seems significant that over a third of those surveyed classified staffing as such an important challenge. This data suggests we have an issue here which, while unlikely to be as urgent as the typical plant or shipping emergency, is nonetheless perceived to be of great importance.
Figure 26
An important challenge
56.5%
One of your top challenges
34.9%
Not a challenge
8.6%
0.0%
10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Figure 27 Figure 26: The acquisition and development of supply chain talent in your organisation is
Always been a challenge
63.1%
Become more dicult in the past three years
22.1%
SCM World 2011
33

Figure 26
personnel To the question of whether this problem is worsening, the data indicates development a clear, albeit not overwhelming, trend to the negative. Figure 27 not only shows that 22% of respondents believe the issue to have become procedures in supply more of a challenge over the past three years against 14% who say chain organisations One of your top challenges 34.9% it has become easier, but that the majority (63%) describe it as a may still be tuned to perennial problem. It is likely that depressed economic conditions since bringing on board and 2008 have softened the job market for supply chain professionals as they have elsewhere, which may explain the portion of companies managing technical citing easier talent acquisition recently. With this caveat in mind, it skills rather than Not a challenge 8.6% seems significant that more find hiring to have actually worsened than broader business eased. As the economy reignites, one wonders whether this gap will begin to really hurt. skills
An important challenge
56.5%
0.0%
10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Figure 27
Always been a challenge
63.1%
Become more dicult in the past three years
22.1%
Become easier now than three years ago
14.8%
34
Figure 27: The acquisition and development of supply chain talent has Digging into the lifecycle of talent management offers some clues as to where have our biggest challenges. Finding talent up-front is a clear pain point, we 17% of respondents rating this task as most challenging. Things appear with to be less problematic with those already on board where, developing talent and measuring and differentiating skills is increasingly easy. Where the lifecycle of talent again poses management problems is with career progression. Respondents fairly decisively defined offering talented staff a compelling career progression as their biggest overall challenge. Following this pressure point, many also found retaining talent to be an issue. One implication of this data is that personnel development procedures in supply chain organisations may still be tuned to bringing on board and managing technical skills rather than broader business skills. This hypothesis might explain the relative ease of measurement basic development, as traditional skills dominate the early part of a typical and supply chain career, but then break down as responsibilities broaden to include business decision making.
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%
SCM World 2011
This hypothesis is further supported by data from another question which asked where in the reporting hierarchy of organisations the challenge of talent management is most problematic. As Figure 28 highlights, 39% of respondents selected mid management as the point at which talent management is most difficult. Only 17% said the issue was worst at senior management level and a mere 7% felt the problem was worst at entry level. It is therefore evident that respondents encounter an impasse achieving career progression at that point where basic skills are no longer enough but senior authority has not yet been gained. Not only is the offering of compelling career progression a problem, but general management of talent at this crucial juncture is also difficult. These people are of course the most active in interacting with outsiders, including customers and suppliers, as well as acting as mentors and caretakers for the base Figure 2 8 of the organisation.
More of a problem at mid level func8onal posi8ons
39.0%
Similar across all levels
36.2%
More of a problem at senior leadership posi8ons
17.4%
More of a problem at entry level posi8ons
7.4%
0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Figure 29
Figure 28: Talent management is
19.1% [ssocia8on cRespondents er8Uca8on B[PLCS, LSM, encounter an impasse at the point 41.4% where basic skills SCC etc) 25.1%
7.7%
are no longer enough but senior 6.6% authority has not yet been gained
1.9% 7.8%
1 32.5% University degrees An interesting angle also involves the sophistication of supply chain professionals 45.3% outside the organisation with whom12.4% professionals need to collaborate,2 whether they be suppliers, service partners or customers. After all, much of what supply 3 more chain wrestles with is inter-enterprise collaboration. The data indicates 0.4% 1.5% trouble with customers and materials suppliers than with service providers. It 4 5.9% Professional experience, industry is hardly surprising that service providers fare relatively 38.1% well in this assessment as so many strive to offer solutions to their customers, 54.1% but the gap 5 is, if anything, smaller than one might expect. Also surprising is the virtual tie in 4.8% the data between materials suppliers and customers. Customers, one could 12.0% assume, might expect more of the burden for collaborative problem-solving to 34.0% Professional experience, consul8ng fall on suppliers. The data, however, shows little 35.8% difference. It is possible that suppliers still see themselves more 13.3% narrowly than their own marketing pitches typically claim. 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
35
SCM World 2011
Filling the Gap Sources of Talent Figure 2 8 One remedy to the problem of finding talent might be to look for external markers of skill that could reliably be used to screen wider pools of recruitment. More Four of a problem at mid level func8onal categories of such external markers were put forward to respondents: 39.0% posi8ons Professional Associations providing certification such as APICS, ISM or Supply Chain Council
Universities, graduate or undergraduate Similar across all levels Previous professional experience, specifically in industry Previous professional experience, specifically in consulting
36.2%
Figure 29
More of a problem at senior leadership 17.4% The aggregate data shows a strong preference for professional experience within posi8ons industry. An overwhelming 54% described this as the most useful external marker for talent (see Figure 29). The gap between industry experience and the second most valued marker, a university degree, was huge. It is clear that supply chain organisations would rather build their teams with raw material More of a problem at entry level posi8ons 7.4% taken from competitors than try to build it from scratch with general supply chain skills. University pedigree and consulting background scored reasonably well across the research sample, with a slight edge to university training as a 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% second screen after industry experience.
7.7%
[ssocia8on cer8Uca8on B[PLCS, LSM, SCC etc)
19.1% 25.1%
41.4%
6.6% 1.9% 7.8% 12.4% 0.4% 1.5% 5.9%
University degrees
32.5%
1
45.3%
2 3
Professional experience, industry
38.1%
4
54.1%
4.8%
Professional experience, consul8ng
12.0% 13.3%
34.0% 35.8%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
36
Figure 29: Please rate the following external markers of talent (1=least valuable and 5=most valuable
SCM World 2011
The most surprising and telling information comes from the data for association certifications. These entities, many of which have been established for decades and which generally have thousands of paying members, are specifically chartered to advance professional skills. They are, in fact, meant to solve the talent management problem for both the employer and the employed by providing training, testing and certification against a raft of traditional technical supply chain management skills. Despite this, respondents decisively rated association certification at the bottom of the stack. The explanation for this poor showing may lie in the governance of most of these bodies. Many are non-profit organisations run by boards with a small number of professional administrators or permanent staff. Their decision making process is thus somewhat political and can be slow. It is possible that changes affecting the profession are only gradually working their way into the mission and curricula of these organisations. Whatever the cause, it is apparent that associations which should be particularly useful for mid-career professionals are missing the mark. We also wanted to get some idea of which associations, universities and consulting firms provided the best hunting ground for talent. Respondents were asked to name the top three of each, in order of preference, and although the data is by no means scientific, it does offer some idea as to the leading institutions. Figure 30 reveals that at the top of the list are two universities with established supply chain programmes as well as top tier business schools: Stanford and MIT, both of which also have strong engineering schools and established supply chain research programmes. Michigan State University also scores very well with 21 total mentions by respondents, including 10 as a first preference. Harvard, which lacks the engineering base common to most of the schools on the list, scores well, perhaps because of its strong and large MBA programme, while Cranfield, Penn State and Arizona State all appear frequently in the research, presumably because of their dedicated supply chain functional depth. Rounding out the 10 featured here are Cambridge University, INSEAD and Michigan, none of which can be said to be specialists in supply chain but all of which have deep, established programmes with strength in some combination of business, economics and engineering. Figure 30
Stanford MIT Michigan State University Harvard
0 4 2 4 5 2 3 3 5 4 2 2 4 7 7 7 7 7 10 10 17
3 5
11
Craneld School of Management Penn State Arizona State Cambridge Univ. of Michigan INSEAD 0 2
1
#1
8 8
#2 #3
10
12
14
16
18
Figure 31
37
Figure 30: Please indicate your top three University preferences
87
SCM World 2011
Figure 30

Stanford MIT Michigan State University
0 3 5
7 7 10 10
17
11
Among the associations, opinions were far more polarised with only three entities 7 7 Harvard of respondents. identified by large numbers 4 As can be seen from Figure 31, by far the most commonly cited number one preference for certification bodies was 7 4 Operations Management, although Craneld School is of officially Management APICS. APICS the Association for 2 the acronym originally stood for American Production and Inventory Control 5 8 been in existence for over Society. Boasting over 40,000 Penn State members, this body has 8 fifty years with a mission to educate supply chain professionals. It was cited as 2 the number one choice 87 times, substantially more than the second and third 4 Arizona S tate 5 most common top choices; Institute for Supply Management (ISM) and the 3 Supply Chain Council (SCC). In fact all other named associations outside of these 3 Cambridge 2 three accounted for only 71 total mentions as top choice. The concentration of 5 and third preferred associations opinion around these three held for second 1 Univ. of Michigan 4 among respondents. What is clear from the data is that APICS, as well as ISM and SCC, are well known and well regarded. What is problematic, however, is 4 2 INSEAD among the the poor state of satisfaction 2 very individuals these bodies are meant to serve; that is, mid-career professionals needing skill development. 0 2 4 6 8 10 12 14 16 18
#1 #2 #3
Figure 31
87
Figure 31: Please indicate your top three Association certification preferences
APICS
16 15 18 18 14 20 3 3 1 0 2 0 0 5 9 27
35
SCC
ISM
#1 #2 #3
CIPS
CPSM
CILT
Previous experience with consulting organisations should indicate some familiarity with conceptual models of supply chain, technology enablement and other important skills like change management, project management and governance. As such, consulting backgrounds offer a marker for some skills that
are generally hard to find elsewhere. Looking at Figure 32, Accenture features prominently, achieving the most mentions as first, second or third preference consultancy among hiring supply chain organisations. Following closely were McKinsey and SAP.
20
40
60
80
100
38
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Figure 32
Accenture McKinsey SAP IBM Rel9ige AT Kearney Oracle BCG KPMG PRTM 0
0 1 4 4 3 4 3 3 3 3 5 2 4 7 6 8 7 7 7 7 13 10 17 19
#1 #2 #3
2 2
2 2
10
15
20
39
Figure 32: Please indicate your top three sources of professional experience by consultancy
The story of these top three consulting firms as markers of talent is reflective of the wider challenge playing out in the supply chain talent discussion. SAP is first and foremost a software company selling and installing ERP (Enterprise Resource Planning) systems to thousands of companies around the world. Consultants from SAP should bring deep knowledge of technology enablement, business process design and project management; skills that assume a sound business strategy exists before process and system design commences. McKinsey on the other hand is the quintessential strategy consulting firm with general business expertise built on the back of thousands of MBAs around the world. Consultants from McKinsey work on the assumption that someone will follow their strategic advice with appropriate technical plumbing. Accenture tops this list perhaps in part by virtue of its sheer size, but also because it promises to bring both strategy and technology in equal measure to its clients. The wider supply chain talent challenge is all about building business value on a technical foundation. This list of consulting pedigree preferences reflects that aim. Looking at the other firms receiving frequent mentions from our respondents, one sees the same mix of skills implicit in these well known names: IBM, Deloitte, AT Kearney, Oracle, BCG, KPMG and PRTM.
SCM World 2011

Essential Supply Chain Skills When someone hears the term supply chain, some immediately think logistics and transportation, while others think sourcing and procurement. APICS, as discussed above, casts the net more widely to encompass operations, a term that is both established yet vague. Survey respondents were asked to identify specifically which skills are essential, which are nice to have and which are not part of supply chain at all. The model applied to this effort was the eleven station supply chain talent model developed and published by AMR Research several years ago and maintained with the help of a Planning, it group of practitioners from industry and by a team of researchers at seems, is the nucleus Gartner. This model includes seven functional skills ranging from the around which the obvious (plan, source, make, deliver) to the emerging (new product modern supply chain development and launch, customer management, post-sales support) as well as four enabling skill sets (governance, change management, professional is built performance management and technology enablement).
At the aggregate level, the data shows a discipline in transition with large percentages of responses citing as essential the four core skills of supply chain: plan, source, make and deliver. Figure 33 reveals that, among these four, planning came top with 85% of respondents identifying this skill as essential. This is no surprise as supply chain organisations, whether all-encompassing with thousands of direct reports or shared service overlay with only a handful of staff, must invariably provide the core demand forecasting, inventory planning and production scheduling skills needed to coordinate orders across the business. Only 1% of respondents went so far as to say the planning is not part of supply chain. Planning, it seems, is the nucleus around which the modern supply chain professional is built.
Figure 33
Governance Change management Performance management Technology enablement Plan Source
2.8% 2.2% 4.4% 1.2% 3.2% 9.3% 3.2% 7.6% 10.6% 37.1% 20.8% 17.3% 47.9% 47.7% 13.8% 28.0% 38.2% 19.4% 27.6% 22.8% 28.1% 21.9% 17.6% 49.1% 60.5% 85.0% 68.8% 52.4% 77.4% 64.8% 52.2%
Figure 33: Please identify the skills you consider essential, nice to have or not part of the supply chain within your organisations talent management
76.4% 80.5%
Not part of supply chain Nice to have Vssen8al
Make Deliver Customer management Post-sales support NPDL

0.0%
10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Figure 34
40
Zero
2.0%
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Adjacent core skills like delivery and sourcing are generally considered essential by the great majority, suggesting that the most stripped down version of a modern supply chain professional is someone who can plan materials movement both inbound and outbound. Make, a term derived from its bigger brother manufacture, remains something that supply chain still, occasionally at least, does not control. Over 9% of respondents went so far as to say that this is not even part of supply chain. Other research has shown that manufacturing is steadily moving under the sway of the wider supply chain and our data does indeed say that over half of respondents consider manufacturing an essential skill, but still organisational structure seems to stand in the way of a true endto-end flow of materials from upstream source to ultimate customer delivery. Customer management, in fact, may be one of the most important breakthroughs evident in the data, identified by almost 65% of respondents as essential. The implications of this very strong preference for customer skills include not only a graduation of supply chain from its heritage as a pure cost centre, but also an appetite for understanding demand as a driver of the entire supply chain. In contrast, lesser weight was assigned to the two other functional skills that round out a complete and closed loop supply chain: post-sales support; and new product design (NPDL) and launch. Despite the fact that customer satisfaction and retention certainly drive repeat buying and profitability, only 28% of respondents felt this skill was essential to supply chain. Worse still, NPDL, which allows all functions a chance to learn and improve with iterative trips through sourcing, ramping, delivering and retiring generations of product, was regarded as not part of supply chain more frequently than it was called essential. Supply chain professionals are expected to learn from customers, but apparently not from the full lifecycle of the products they make and deliver. A key finding in the data points to the high value placed on enabling skills, especially performance management and change management. That these skills are considered essential by four fifths of respondents clearly indicates that most supply chain organisations see their place in the company as a driver of strategy, not merely support for the business. Even technology enablement, a function with a clear owner in the office of the Chief Information Officer, is viewed as essential by nearly half of the population and nice to have by the majority of the rest. These skills are not easy to find in technical training courses and certification programmes, especially when combined with business strategy and process design.
That these skills are considered essential by four fifths of respondents indicates clearly that most supply chain organisations see their place in the company as a driver of strategy, not merely support for the business
41
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Managing the Talent You Have Recalling that measuring and differentiating talent was the least challenging phase of the talent lifecycle, data on approaches to metrics shows a degree of sophistication that is encouraging. Almost two thirds of respondents say they use Figure 33 both qualitative and quantitative measures to manage their people. Considering the importance placed on skills sometimes regarded as soft like change 10.6% 52.2% Governance 37.1% management, it is no surprise that qualitative measures matter. Of course, 2.8% traditional core skills like planning and delivery lend themselves to quantitative 20.8% Change management 76.4% metrics like forecast accuracy or on-time, in-full delivery. If anything, the bias 2.2% in favour of qualitative measurement in the results suggests supply chain talent 17.3% Performance management 80.5% management is resistant to the temptation to reduce performance to the purely 4.4% 47.9% Technology enablement numerical standards so easy to come by in much of the daily work of supply 47.7% chain. 1.2%
Plan
13.8%
Beyond measuring talent, a large majority is willing to invest in training and other 3.2% 28.0% Source Nice to have 68.8% only 2% of education to try to build it. Figure 34 illustrates that respondents 9.3% money while 16% say they spend over 5% admitted toMake spending no of the fully Vssen8al 38.2% 52.4% loaded cost of personnel on training. The overall average spend on training 3.2% appears toDeliver be at least 3%19.4% of personnel expenses which is significantly more 77.4% than the cost of an occasional online course or group workshop. Management 7.6% Customer management appears prepared to put their 27.6% money where their mouth is on this matter and 64.8% largely on faith. 22.8%
Post-sales support NPDL
0.0% 28.1% 21.9% 17.6% 49.1% 60.5%
85.0%
Not part of supply chain
10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0%
Figure 34
Zero
2.0%
0-2%
39.9%
2-5%
42.1%
5%+
16.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%
Figure 34: How much, as a percentage of fully loaded cost, do you spend on training / skills development / external education?
0.0%
42
SCM World 2011
Figure 35
As Figure 35 highlights, the percentage of respondents who track performance improvement following training as an ROI measure (22%) is dwarfed by the portion that doesnt measure ROI at all (60%). Talent development, it seems, is worth paying for.
We don't
57.0%
We track performance improvements of trained sta
22.0%
We track comp6e8onnu86isa8on rates
21.0%
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%
Figure 35: How do you measure ROI on training expenditures? Coming full circle on the talent lifecycle also calls for a look at what happens when
talent is lost. We asked our respondents to rank, in order of severity, the problems they face when talent walks out the door. The findings point to an increasing role for supply chain as a source of strategic value to the competitiveness of companies. Least worrying by a wide margin was lost production, something that should rise to the top in a low skill domain where replacement staff are readily available but work stoppages hurt. More concerning was lost product intellectual property, suggesting that supply chain personnel are part of making the product a success and able to inflict some damage if they walk away with that skill. Still higher ranking as a concern was the cost of transition to a replacement. Skills apparently are not so easily captured in a manual and handed from person to person. The top concern, however, says it all: lost process intellectual property. Coupling this finding with data on preferred markers of talent for new hires (industry experience dominates) and the strong willingness to invest in training clearly shows that top supply chain talent is part of the make-up that makes a company successful. Talent management is a priority for supply chain professionals because the game is changing from a basic set of technical tasks to an integrated web of business and engineering trade-offs. Senior executives find it difficult to locate these skills in the marketplace and harder still to hold a team together as knowledge builds over the course of a career. Where once there were jobs, we now have a profession.
43
SCM World 2011
Talent acquisition and development truly is a problem, with over 90% of respondents asserting that it is at least an important challenge Twenty two per cent of respondents claim that talent management has become more of a challenge over the past three years against a mere 14% who believe it has become easier Talent development appears to become an issue at middle management level, suggesting a challenge when basic skills are no longer sufficient but senior authority has not yet been gained With an overwhelming 54%, the data illustrates a strong preference for professional experience within the industry as an external marker of talent
44
SCM World 2011
conclusion and recommendations
In his introductory remarks to this report, Pier Luigi Sigismondi refers to the undoubted changing role of supply chain management, continuing its journey as a fully-fledged driver of business value. Indeed a crisis like that witnessed in Japan this year only serves to put this further into perspective. So with this in mind, it has proved intriguing to analyse some of the results garnered during the course of this study. Gaining Competitive Advantage through a Value-Driving Supply Chain Indeed, the discussion surrounding supply chains as a driver of value was a key part of this years research. Such a notion was given significantly further credence, with 83% of survey respondents firmly believing that supply chain excellence creates value through customer service, leading to customer loyalty, while 70% also affirmed New Product Introduction (NPI) as a crucial means of delivering that value. With this, we can safely conclude that viewing supply chain as a foundation of value creation is no longer limited to those more innovative companies and that, if your company still only perceives the supply chain as a means of reducing operating costs, then you are likely to fall behind your competitors. Setting-Up Supply Chains for Growth across Emerging Economies Evidence of further changing trends in supply chain relates to the findings on globalisation. Traditionally, emerging markets have been seen as the means of delivering low cost country sourcing. The emerging economies were where manufacturers would source from in order to sell to mature markets. However, the data from this years study reveals that this long-established picture is no longer accurate, with a vast majority of respondents seeing globalisation and emerging economies as a two-way street: markets where you source from and, importantly, sell to as well. Indeed, over 80% of supply chain professionals reported selling and shipping to emerging markets, while approximately 38% in fact asserted that their global supply chain strategy is primarily oriented around selling and delivering to these regions. Enhancing the Corporate Brand through Sustainability Furthermore, when it comes to sustainability, it is widely accepted now that sustainability and Corporate Social Responsibility (CSR) have become a key area of competitiveness and that, in turn, the supply chain has assumed a position to enhance the corporate brand and deliver further value. The findings during this study highlight the now cemented perception that sustainability is a core value driver, with 65% and 46% identifying senior management and customers respectively as the vital source of sustainability efforts. What was an exercise in ticking boxes under strict pressure from regulators and governments is now an initiative led by senior management and the board, recognising the positive image it creates for customers and the subsequent value this can generate.
45
SCM World 2011
conclusion and recommendations
Developing Supply Chain Talent into Future Business Leaders Finally, as the supply chain function transforms from an operational tool to a bona fide competitive weapon, the need for a revised skill set across the supply chain workforce becomes ever-more critical. Board-level responsibilities, strategic decision-making and new internal relationships with other business units symbolise the role of the next-generation supply chain leader and the emerging crop of talent must be properly equipped with these necessary competencies and responsibilities. It is therefore unsurprising to observe that 90% of supply chain executives see talent acquisition and development as at least an important challenge. Perhaps adding further weight to the claim lies in the fact that just under 40% of respondents believe talent management to be more of a problem at mid-management level, suggesting companies struggle when basic skills are no longer sufficient, with more General Manager type skills now required. A recurring theme during the study has been change. That is, change in the role of supply chain; how it delivers value, how it serves new markets and how the skill set is now evolving. Supply chain is now at the forefront of the business, serving customers and delivering top line growth. If your supply chain is not ready to meet these new dynamics, then it is most probable that your business will fall short in the competitive game.
46
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About SCM World

SCM World, a RaptureWorld company, is the leading global institute for supply chain executives. Hosting a dynamic and interactive annual programme of end-user and academic-led webinars & events for its members, SCM World is fast becoming the de-facto benchmark for forward-thinking supply chain leaders and their global teams to stay current through cutting edge content. Organisations from across multiple industry verticals use SCM World to further enhance supply chain learning and development, including the likes of HP, Nestle, Tyco, RIM, xerox, Nike, GlaxoSmithKline, baxter Healthcare, Emerson, Motorola, Levis, The Dow Chemical Co, baSf, applied Materials and many more.
About E2open
E2open is a leading provider of cloud-based supply chain management solutions. The company provides software and services that enable visibility, collaboration and control across large trading partner networks. brand owners and global manufacturers with complex supply chains use the companys b2b integration services and supply chain business process management solutions to maintain optimal alignment of supply and demand for lower costs and better service. E2open customers include The boeing Company, Celestica, Cisco, Dell, Hitachi, IbM, LSI Corporation, Motorola, Panasonic, Research In Motion, Seagate Technology and Vodafone.
This document is the result of primary research performed by RaptureWorld Ltd. RaptureWorlds methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by RaptureWorld Ltd. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by RaptureWorld Ltd. (6443794).
SCM World, a RaptureWorld Company. all rights reserved.

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The Chief Supply Chain Officer Report 2011

www.scmworld.com | SCM World, a RaptureWorld Company

Dr. Hau Lee Chairman SCM World

Kevin OMarah Group Vice President, Supply Chain Research Gartner

SCM World 2011

by Pier Luigi Sigismondi, Chief Supply Chain Officer, Unilever

The Chief Supply Chain Officer Report 2011

SCM World 2011

The Chief Supply Chain Officer Report 2011

Pier Luigi Sigismondi Chief Supply Chain Officer

SCM World 2011

SUPPLY CHaIN MaNaGEMENT aND VaLUE CREaTION

The Chief Supply Chain Officer Report 2011

SCM World 2011

Supply Chain Management and Value Creation

The Chief Supply Chain Officer Report 2011

SCM World 2011

Supply Chain Management and Value Creation

Gpera8ng cost reduc8on

9.0% 2.3% 0.7%

4a6ue crea8on through increasing revenue

26.2% 34.7% 27.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

The Chief Supply Chain Officer Report 2011

Supply Chain Management and Value Creation

Improvin# lead 8me reliability

Remand mana#ement Bforecas8n#, demand shapin# throu#h promo8on etcF

42.4% 5 42.7% 4 3 2 48.6% 1

Timely, accurate and comprehensive performance measurement

Inventory turn increase

5.6% 1.3% 8.3%

Partnership incen8ve ali#nment 3.9% 7.6% Postponement 5.5%

28.2% 21.1% 25.2% 20.3%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

SCM World 2011

Supply Chain Management and Value Creation

Zew product introduc8on

Expansion to new market segments within exis8ng geographies or new geographies

28.0% 8.9% 3.0% 20.0%

The Chief Supply Chain Officer Report 2011

5 25.6% 24.1% 44.0% 4 3 2 23.0% 25.8% 39.6% 1

Qtronger supplier rela8onships

Expanded oerings of value-added services

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0%

SCM World 2011

Supply Chain Management and Value Creation

On-schedule product introduc8on Ability to ramp up fast

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

Supply Chain Management and Value Creation

Chapter Summary and Key Takeaways

The Chief Supply Chain Officer Report 2011

SCM World 2011

GLObaLISaTION aND EMERGING ECONOMIES

The Chief Supply Chain Officer Report 2011

SCM World 2011

Globalisation and Emerging Economies

About equally sourcing from and selling to emerging markets

Oriented primarily around selling delivering to emerging markets

Oriented primarily around sourcing from emerging markets 0.0%

10.0% 20.0% 30.0% 40.0% 50.0%

The Chief Supply Chain Officer Report 2011

SCM World 2011

10%-50% Below 10% 0.0% 5.0% 10.0%