Supply Chain Still Seen as Cost-reducer, not Competitive Differentiator, Study Finds

Boardroom survey by Cranfield School of Management and Solving Efeso

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Bedford, England — July 2, 2010 — The supply chain function is now widely recognized as an important part of the business, with around two-thirds of companies having senior supply chain representation in the boardroom, but too many organizations are developing their supply chain strategies disconnected from the business, according to new research from Cranfield School of Management and consulting firm Solving Efeso.

The research, based on a survey of more than 180 senior global supply chain professionals, analyzed the strategic development and implementation process in some of the world's leading organizations, with the goal of revealing key ingredients to successful supply chain strategies.

Alignment with corporate strategy and customer service were identified as the leading functional drivers of supply chain strategy. The most important supply chain performance drivers were found to be cost focus, customer lead-time and customer quality.

"It is clear that in some organizations, supply chain management is still perceived as a means of reducing cost not as a means of achieving competitive advantage," noted Professor Richard Wilding from Cranfield's Centre for Logistics and Supply Chain Management. "Supply chain strategies should not be developed by individuals in isolation. Other departments such as Marketing, IT and Finance need to be held accountable, rather than just consulted, in the development and delivery of a firm's supply chain strategy."

The report highlighted that the supply chain strategy review process was highly cross-functional and in many cases a continuous process with regular monitoring and continuous adaptation, according to circumstances. Within organizations that did not have a continuous strategic planning and review process, customer service and cost were identified as the main triggers for a supply chain strategy review.

"Only 2 percent of respondents confirmed that their supply chain strategy implementation ran smoothly and on-time and on-budget," said Alan Waller, vice president of supply chain innovation at Solving Efeso and a visiting provider and advisory board member at Cranfield. "The three main causes of implementation failure were company culture, lack of leadership and poor supply chain visibility. Barriers to strategic success were predominantly people-related, rather than due to technical barriers."

The report concluded that implementations that are successful have top-level support and use vision-led, quantitative modeling and risk management techniques. Success was also found to be higher when Finance, Marketing and IT departments were actively involved and accountable in the strategy development process.

The report is available at

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