But Risk Losing Sight of Supply Chain Strategy, Says Accenture
NEW YORK, Feb. 6, 2002 – According to a survey released today by Accenture, 80 percent of executives said their companies were able to cut costs, improve efficiencies, enhance customer service and revenues, or improve competitiveness with supply chain management initiatives. Also, slightly more than 50 percent considered outsourcing non-core functions, such as transportation and logistics, critical to improving supply chain management, and therefore achieving excellence, in their company’s operations.
Moreover, a growing number of companies are considering outsourcing additional supply chain activities such as procurement to enhance performance. Bill Copacino, the global managing partner for Accenture’s Supply Chain Management Practice, said the trend toward outsourcing supply chain functions is being accelerated by the recession and the pressing need to enhance competitiveness. However, focusing solely on cost cutting can overshadow long-term strategic needs, which can be counterproductive at a time when supply chains need to become more global and customer focused.
“We’ve seen an increase in outsourcing in the economic downturn because it can often save companies significant costs, reduce fixed costs and assets, and create greater operating flexibility,” said Bill Copacino. “We are also seeing a willingness to consider outsourcing non-traditional activities such as procurement, supply chain IT applications development and maintenance, and even supply chain planning to enhance effectiveness in these critical activities.”
But survey participants also said that the difficulty in scaling pilot programs across functions or divisions was one of the greatest challenges to achieving positive results from supply chain improvement. The least difficult challenge was garnering senior executive sponsorship of these initiatives – another indication that supply chain management is seen as a major strategic thrust in achieving corporate objectives.
“We are encouraged by the results of this survey that seem to indicate corporate executives are increasingly seeing supply chain initiatives as a means of improving operational performance, and not just another cost cutting measure,” said Bill Copacino. “Still, too many are missing the opportunity to refine their company’s strategy by making supply chain capabilities the core of the company’s business model. Effective supply chain management is critical in linking supply with demand, and integrating the individual functions or departments within companies together into a harmonious operating model.”
The survey revealed the integral role the Internet plays in supply chain management success. More than 70 percent see the Internet as one of the most important factors in facilitating greater collaboration with key trading partners because of the visibility it provides upstream and downstream in the supply chain.
Finally, seventy percent of executives see creative partnering agreements that move beyond traditional time and materials agreements as critical to successful supply chain management. “Outsourcing key supply chain activities involves major changes. When approaching these endeavors, we advise clients to view it as a merger rather than as outsourcing,” added Bill Copacino. “If the relationship is more transaction-based, it’s not likely to work as well. Company leaders need the right mindset and that includes moving beyond the status quo when outsourcing because they are really building a new supply chain.”
Accenture is the world’s leading management and technology services organization. Through its network of businesses approach -- in which the company enhances its consulting and outsourcing expertise through alliances, affiliated companies and other capabilities -- Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.44 billion for the fiscal year ended August 31, 2001. Its home page is www.accenture.com.
Accenture conducted the survey in conjunction with Wirthlin Worldwide. Wirthlin’s periodic Executive Omnibus survey is designed to find out what the nation’s top corporate leaders think about the issues affecting business today. Executive Omnibus provides a comprehensive source of information about current attitudes of leading executives in Fortune 1000 companies, including CEOs, chairpersons, and executive vice presidents.
Wirthlin interviewed, by telephone, a representative sample of 150 of the leading executives in the Fortune 1000 in December 2001. A broad range of industries, services, locales, and sizes of companies are equally represented. Breakdowns of executive opinion by type of industry or service, geographic location, company size, level of executive and other variables help explain attitudes and behavior.