Intelligence Total
Business
October 2003 Accenture and leading research universities Stanford and
INSEAD have released global research that links supply chain improvements with
a company's enhanced financial performance.
Accenture, Stanford and INSEAD analysed financial data from more than 600 global companies and applied statistical models to assess supply chain performance relative to market-capitalisation growth. The results confirm that supply chain excellence is rewarded: Supply chain leaders (companies with frequent inventory turns, low cost of goods sold as a percent of revenue, and high return on assets) were shown to have a market capitalisation compound annual growth rate (CAGR) between seven and 26 percentage points higher than their industry averages. At the same time, the market gap CAGRs of companies with poorly performing supply chains trailed the industry average growth rate by up to five percentage points. These results were consistent across nearly all of the 24 industries studied. "The supply chain, and the key outcome measures of Product
Availability and Working Capital, is an increasingly frequent target of senior
executive attention," said Sally Bean, director-Accenture. "A growing number of
companies are looking to the supply chain to help transform their cost
structures, open new channels and fundamentally improve their business. This
study validates those choices with clear evidence that superior supply chains
enhance companies' ability to grow."
Accenture, Stanford and INSEAD consulted with industry
analysts and academic experts, and conducted in-depth interviews with more than
75 executives from 60 companies to identify and document the success factors
that lead to supply chain insights and experiences of leading executives from
more than 100 companies across the world.
Results in this area indicate that executives universally recognise the value and impact of supply chain management. In fact, nearly 90
percent of respondents stated that the supply chain is very important or
critical to their business.
The study also focused on supply chain transformation: how
leading companies incorporate supply chain into their business strategies; how
supply chain innovation is reflected in companies' operating models; and how
supply chain leaders executed against their strategies and capabilities and
adapt them to changing market needs.
The report analyses and discusses the operating strategies
of more than 20 leading companies, including 7-Eleven, Coca-Cola, Dell, DuPont,
Li & Fung, and Nokia. The document also introduces a template for supply
chain transformation, identifies key success factors that are common to all
supply chain transformation efforts, and looks into the future to project the
influence of supply chain transformation on the evolving business landscape.
"The research is among the most in-depth analysis ever
completed to look at the relationship between supply chain leadership and
superior financial performance. The combination of quantitative analysis and
detailed interviews with executives enabled us to confirm the qualities and
characteristics of companies with leading supply chain capabilities," said Dr.
Hau Lee, professor-Stanford University.
About the Research
Accenture, in conjunction with Stanford University and INSEAD, conducted a multifaceted research study to investigate how supply chain excellence and transformation affect financial performance and competitive advantage. Accenture began with a detailed analysis of public disclosure data from selected Global 3000 corporations, classifying companies into supply chain leaders, transformers, decliners and laggards based on their supply chain performance profiles over time. It then statistically related these supply chain categories to shareholder value growth rates and patterns over time. Accenture also conducted more than 60 in-depth interviews
with executives responsible for supply chain strategy and operations. The
interviews complemented an online survey of 104 additional supply chain
executives in North America and Europe representing companies in more than 25
industries.
About the Stanford Global Supply Chain Management
Forum
Headed by Dr. Hau Lee and Dr. Seungjin Whang, the Stanford Global Supply Chain Management Forum is a leading research institute in partnership with industry experts and the School of Engineering and Graduate School of Business at the Stanford University. The forum's mission is to advance the theory and practice of excellence in global supply chain management. Working with Accenture and many industrial organisations, it is actively engaged with a broad cross section of leading and emerging industries to identify, document, research, develop and disseminate best practices in a dynamic and increasingly global economic business environment. About the INSEAD Global Supply Chain
Forum
The INSEAD Global Supply Chain Forum, headed by Dr. Luk
N. Van Wassenhove, is a leading research institute in partnership with
industry. The forum is part of INSEAD's Center for International Manufacturing
and Service Operations. The forum's mission is to collaborate with global
businesses to advance state-of-the-art supply chain management theory and
practice, and to define supply chains of the future. Current key research
projects involve closed-loop supply chains, disaster logistics, risk management
in global supply chains and linking supply chain management to the bottom line
through supply chain metrics.
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