Process Industries Focusing on Supply Chain Transformation to Contain Costs

Best-in-class companies ahead of peers in making changes, more aggressive in adopting technology, Aberdeen study finds


Wilmington, DE — April 16, 2007 — Three-quarters of all process industry companies in a recent survey are focusing on supply chain transformation in order to address and contain manufacturing and logistics costs, according to a new study released by Aberdeen Group and cosponsored by Supply Chain Consultants

The report, entitled " Supply Chain Cost-cutting Strategies: How Top Process Industry Performers Take Radically Different Actions," also found that best-in-class companies are strikingly ahead of their peers in achieving their transformation goals and are much more aggressive in adopting supply chain technology as part of their improvement initiatives.

"Best-in-class companies are four times more likely than their lower-performing peers to have established a centralized supply chain management organization and to have achieved data and process visibility across their supply chain, enabled by their higher adoption rate of technology," said Beth Enslow, senior vice president of enterprise research at Aberdeen and author of the report. "The study also found that best-in-class companies have a 2.5X to 9X advantage in key performance improvements since 2005, including improving perfect order percentages and lowering supply chain costs."

Marrying Technology with Process

The Aberdeen study surveyed 74 companies in the process industries, which include chemicals, pharmaceuticals, food and beverage, oil and gas, and pulp and paper sectors. Companies in these industries now widely realize that they must restructure their supply chains to reduce costs and maintain their customer service edge, according to the study.

A majority of study respondents plan to upgrade their technology as part of a supply chain restructuring, with 82 percent of the companies surveyed having spending plans for new supply chain technology projects in 2007. The study also finds that the marriage of technology with process has allowed the best-in-class companies to achieve a plethora of results, including lower manufacturing costs, improved order metrics and inventory reduction.

"The Aberdeen report reinforces the advantage that best-in-class companies have over their peers in transforming their supply chain strategies," said Dominick Corigliano, Supply Chain Consultants' vice president of sales and marketing. "We have seen this advantage with many of our own customers who are considered best-in-class for their innovative use of technology in their supply chain improvements."

The report is available for free, with registration, for a limited time at http://www.aberdeen.com/link/sponsor.asp?spid=30410685&cid=3962.

Contract Management and the CFO

Aberdeen Group currently is conducting research into the financial impact of better contract management on the enterprise, from both a customer and revenue perspective as well as a supplier and spend management perspective, highlighting the importance to senior finance executives. Respondents who complete the 10-minute survey will receive a copy of the report containing this study's results. The survey is available at http://www.aberdeen.com/survey/cmcfo%5Fa/.

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