The Quiet Revolution

Aberdeen: Streamlined supply management processes can improve performance by 40 percent

Aberdeen: Streamlined supply management processes can improve performance by 40 percent

Boston  July 22, 2004  Companies that take specific actions to improve supplier management processes can double or triple their chance of achieving 40 percent or greater performance improvements, an Aberdeen Group report said.

The report, "The Supplier Management Benchmark Report," indicated that 60 percent of companies believe that improving the way they connect to, coordinate with and monitor suppliers is now among their top five supply chain priorities. Two-thirds of companies say they are looking to supplier management improvements specifically as a way to gain advantages in speed, reliability and agility over their competition.

"A quiet revolution is occurring in supplier management," said Beth Enslow, vice president of enterprise research and author of the report. "Manufacturers, distributors and retailers of all sizes and shapes are changing the way they manage their day-to-day interactions with their direct material suppliers."

Customer demands for increased responsiveness and delivery perfection, price/margin pressures, and the globalization of supply chains have created a challenging business environment for many companies. Aberdeen recommendations that can improve their supplier management processes include:

* Treat suppliers as a point of flexibility, pushing inventory and value-added tasks back to suppliers

* Evaluate your internal processes and organizational structures and move to centralized accountability for supplier management

* Eliminate e-mail, phone and fax interactions for transacting orders with suppliers

* Place greater emphasis on monitoring supplier events to reduce lead times and improve perfect order performance

"The Supplier Management Benchmark Report" distinguishes the current challenges of supplier management programs, as well as the specific strategies and operational actions undertaken by enterprises with current supplier management processes. It also recommends specific improvement priorities that companies should pursue to increase the business value delivered from their own supplier management activities.