supply chain

IN-FOCUS

Linking Supply-Chain Improvements t o Enhanced Financial Performance

Management consulting and technology services company Accenture in conjunction with research universities Stanford and INSEAD has released giobai research that iinks supply-chain performance 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 soid as a percentage of revenue and high return on assets - were shown to have a market capitalisation compound annual growth rate (CAGR) 7-26 percentage points higher than their industry averages. At the same time, the market cap 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 is an area of tremendous growth opportunity and an increasingly frequent target of senior executive attention," says William Copacino, Managing Partner of the Accenture giobai supply-chain management practice. "A growing number of companies are iooking to the supply-chain to help transform their cost structures, open new channels and fundamentally improve their lousiness. This study validates those choices with clear evidence that superior supply-chains enhance companies' ability to grow."

Additionally Accenture, Stanford and INSEAD consulted 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 dominance. They developed a Web-based survey to capture the supply-chain insights and experiences of leading executives from more than 100 companies across North America and Europe.

Results in this area indicate that executives universally recognise the value and impact of supply-chain management. In fact, nearly 90% of respondents stated that the supply-chain is very important, or critical, to their business. Overall assessments of supply-chain importance to North

American and European respondents received similar ratings. However, the research also revealed that executives from North America were significantly more likely than their European counterparts to designate supply-chain management as critical - 57% versus 32%.

The enquiry also focused on supply-chain transformation: how leading companies incorporate supply-chains into their business strategies; how supply-chain innovation is reflected in companies' operating models; how supply-chain leaders execute 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, U & Fung and Nokia. The document also introduces a template for suppiy-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.

About the research

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 pattems 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.

The report includes case studies on a number of companies including Thames Water, Nokia and Spanish clothing manufacturer/retailer Zara.

Further information and a free copy of the report, contact: Sarah Jones, Accenture. Email: [email protected] Web site:www.accenture.com * ^

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