Supply chain study reveals inadequate processes

Nearly a third of all supply chain processes are inadequate, according to research from Crimson & Co.

This insight was generated by analysing data from scprime, an improvement approach designed to generate step-change improvement of the supply chain in line with a business’s strategy. Since 2010, over 1,000 scprime assessments have been completed in 20 countries across a range of sectors, making this one of the largest and most comprehensive independent studies in supply chains.

The analysis showed that 71 percent of processes in most organisations are executed effectively, achieving a ‘competent’ or higher rating. This means that a third of all processes are carried out inadequately, representing a significant risk to the reliability of operations and allowing competitors to operate more effectively and with greater responsiveness.

Only five percent of processes achieved ‘mastery’, i.e. proven best practice performance, with the highest proportion scored as only ‘competent’. This presents an opportunity to those businesses that understand the competitive advantage that a supply chain can generate; by focusing on the right areas, a business can steal a march on its competitors.

Other notable trends identified include that Europe and North America appear to lag behind the rest of the world when it comes to process maturity, with fewer companies reaching the basic competency level - 32 percent of companies’ processes in Europe and North America were inadequate vs. only 22 percent overall. This is a surprising result which may reflect the tendency of processes to get worse over time. It may also be a result of the move of manufacturing out of the old markets, removing good process discipline from those markets.

Crimson & Co’s Helen Chiswell said: “It’s clear that businesses are struggling to evolve their supply chain processes to match business needs. This results from a 'business-as-usual' mindset where companies prefer to maintain the status quo instead of understanding the drivers of competitive advantage and adapting accordingly. This is a real risk to organisational performance.

“Every company needs to configure its processes to support priorities, allowing the supply chain to deliver against business objectives. The supply chain is increasingly recognised as a key enabler of competitive advantage but understanding requirements is a major challenge.

“Process improvement tools, such as scprime, provide a framework for this. Supply chain assessments identify the areas which need to be improved to maximise performance. A key stage in this is recognising the supply chain as a whole rather than simply an aggregation of functions.”

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