Underutilization of Technology Seen as Barrier to Supply Chain Improvement

Majority of supply chain professionals in chemicals industry study report getting insufficient supply chain training, Accenture study finds

Majority of supply chain professionals in chemicals industry study report getting insufficient supply chain training, Accenture study finds

New York — May 12, 2006 — Supply chain professionals in the chemicals industry view the underutilization of supply chain technology as a barrier to improving overall supply chain performance in the industry, according to an Accenture report released recently. The study also revealed gaps in training for supply chain professionals.

The Accenture report, designed to identify supply chain best practices in the global chemicals industry, was based on a study of more than 250 business units with over 1,000 contributors in the industry across North America, Europe and the Asia Pacific region. In addition, Accenture recruited executives from 10 chemicals companies to form a steering committee charged with designing and overseeing the study.

Among the key findings: fewer than 10 percent of respondents believe that their supporting supply chain technology is performing at an "excellent" level across all 11 functional areas studied, including commercial optimization, demand planning, inventory target setting and deployment.

Training Gaps

In addition, although more than 70 percent of respondents reported using integrated systems for the order management and commercial optimization categories, fewer than 30 percent of respondents felt their technology was fully utilized.

The study also found that supply chain training shows significant room for improvement. For example, more than three-quarters (78 percent) of respondents said they either do not receive formal supply chain training or let functional areas define their own training needs, ultimately incorporating cross supply chain issues to varying degrees.

Furthermore, collaboration with customers appears to be a challenge for chemicals companies, as more than two-thirds of respondents indicated they do not engage suppliers in joint planning processes.

"Far from Best Practice"

"Results from the study demonstrate that chemical company supply chains, while unquestionably valuable to a company's performance, are far from achieving best-practice status," said Christopher Lange, a senior executive in Accenture's Chemicals industry group and the study's author. "The study findings, which we plan to make available to any company that participates in the study, should benefit chemical professionals at every level in identifying gaps in their supply chains and using this information to drive the necessary changes."

Accenture said that it recognized the limitation of providing a single final report with findings and therefore developed a query tool that provides participants direct access to the underlying database of responses. "This query tool enables users to identify best practices in the industry customized to the needs of the participants," the consultancy said.

For the survey, Accenture surveyed chemical supply chain executives globally to identify the levers that drive measurable supply chain growth in the chemicals industry. Direction for the study was provided by a steering committee comprising executives from 10 leading chemical companies: Those companies include Air Liquide, BASF, Bayer, Dow, DuPont, Huntsman, Lyondell, Shell Chemicals, Sumitomo and TOTAL Petrochemicals. Accenture issued the study in different versions for each of four geographic markets — the Americas, Europe, Asia Pacific and Japan — to reflect what it called "geographic differences in supply chain management." Respondents completed the study online in late 2005, and the results were tabulated in early 2006.

Additional Articles of Interest

— How do you avoid losing a limb as you're working with new technologies? A supply chain icon offers his take on this conundrum. Read more in "Executive Memo: Stepping into the Deep Water," in the February/March 2006 issue of Supply & Demand Chain Executive.

— To build a competency in supply network design, this consumer products company first had to build confidence. Read more in "Designing the Best Supply Chain Gillette Can Get," in the February/March 2006 issue of Supply & Demand Chain Executive.