Upward trend

10 Supply Chain Trends That Boost Shareholder Value

Research conducted by the University of Tennessee has identified 10 definite “game-changing” supply chain ideas that can make companies more competitive. The UT supply chain management faculty identified the points after surveying 163 supply chain professionals from 132 companies.

“World-class companies need to revisit these trends on a regular basis to stay abreast in today’s dynamic and rapidly changing environment,” said Paul Dittmann, executive director of UT’s Global Supply Chain Institute. The trends are:

1. Customer relationship management: leading companies are segmenting products and customers and developing individual supply chain solutions for respective segments. One firm eliminated 48 per cent of its inventory while improving on-shelf availability from 96 per cent to nearly 100 per cent by doing so.

2. Collaborative relationships: collaborations between customer and supplier can produce dramatic effects. OfficeMax collaborated with supplier Avery Dennison to increase revenue by more than 22 per cent, and save more than $11 million (R116.6 million) in logistics costs.

3. Transformational strategy: the report claims that only 16 per cent of firms have a documented multi-year supply chain strategy. Whirlpool used a transformational strategy to deliver record-high service levels while decreasing logistics costs by $20 million (R212 million).

4. Process integration: according to the survey, integrating processes and eliminating silo walls can have tremendous impact.

5. Driver-based metrics: changing performance measurement and the firm’s goal-setting system.

6. Information sharing and visibility: sharing, linking and interpreting big data using business analytics tools.

7. Demand management: increasing forecasting accuracy along with integrating the demand and supply functions across the supply chain can drive higher revenue, lower working capital, and decrease costs.

8. Talent management: critical competencies in hiring top supply chain talent include global orientation, leadership and business skills, and technical savvy.

9. Virtual integration: a fundamental characteristic of a great supply chain is for a company to stick to its core competencies and outsource the rest to world-class service providers.

10. Value-based management: by delivering outstanding availability of goods and services, supply chain is able to create shareholder value.