How winners beat supply chain logjam

Report identifies way leading companies are able to operate

Leading companies spend 45% less on supply chain management than their average competitors, saving 3-7% of annual revenue, says a report this week. The companies are found to meet delivery dates 17% more often than average firms.

Supply chain costs of average companies in many industrial sectors are static. This is despite cost-cutting efforts.

The findings come in the fourth Integrated Supply-Chain Benchmarking Study conducted by consultant Pittiglio Rabin Todd & McGrath. PRTM’s supply chain benchmarking system has been adopted by the Supply Chain Council which was launched in February.

The study of 225 manufacturers covered automotive, appliance/industrial, chemical, computers and electronic equipment, packaged goods, pharmaceuticals, semiconductors and telecoms.

Leading companies’ savings on the supply chain give them an edge over rivals, says the report.

Other findings were that top companies required up to 60% fewer days of inventory supply than the industrial average.

Best-in-class companies had increased productivity since the previous survey, lowering overall costs. In the electronics industry, value-added productivity per employee was 44% lower than the median.

Top companies spent 50% less on materials acquisition by assessing total supplier costs, not just purchase price.