Supply chains are facing broader and deeper challenges than ever before. Traditional supply chain business models are giving way to the emergence of new horizontally integrated, high-performance, on demand value chain networks. These new supply chain strategies open up competitive advantage opportunities to those able to execute with partners at a high level of performance. Companies that will not energize their supply chain through implementing new and innovative business models may face significant obstacles to delivering expected profitability on a long-term basis. Results of the 2003 IndustryWeek Value Chain Survey show that key trends are emerging and evolving:
- Supply chains increasingly include outsourcing and partnerships, presenting ever greater challenges in managing demand and supply and controlling logistics spend.
- Realtime and accurate access to relevant customer and supply chain operational data -- such as inventory, orders and shipments -- is essential to meet customer service level requirements.
- Pure product innovation is lessening in importance as focus moves toward the product time to market and lifecycle management to support higher sales and profitability objectives. There is also increased importance being placed on product "afterlife" management.
- Optimizing supply chain performance, productivity and responsiveness is increasingly important to achieve cost- and service-level objectives.
- Technology components with proven and rapid return on investment are favored to support critical supply chain processes, such as leaner manufacturing processes, demand-driven supply chains and customer responsiveness. New technologies, such as RFID are changing the game in SCM.
Our research has highlighted three major areas of focus to meet the new business agenda:
- Profitability
- Performance
- Partnership
Profitability has become the new top objective of SCM. Pure cost reduction and pure revenue increase are secondary objectives if they do not lead to increased profitability. The quest for profitability is demonstrated through supply chain initiatives that can deliver a rapid return on investment. There is renewed focus on performance in the supply chain. Companies are challenged to continuously improve their performance indicators (reduced time to market, reduced lead times, on-time delivery) and increase their compliance (adherence to plan, perfect order). They are broadening the reach of their key performance indicators to measure the extended value chain network that includes customers, suppliers, service providers and other partners. Collaboration is becoming the next frontier of improvement to reach a new level of operational excellence. True partnerships are required to develop new products and services (faster, better and more complex), produce hybrid and cost-effective products and services and deliver them to multiple channels. During the past years, companies have focused on supply chain improvements with initiatives centered on operational excellence (rapid return on investment) and cost cutting. New SCM business models are required to meet the expected level of profitability, performance and partnership. Following best-in-class supply chain leaders, companies are now investigating how they can leverage the supply chain to outperform their competitors and progress in supply chain maturity. Today's business environment is rapidly and dynamically changing. Leading companies have demonstrated that supply chain management not only concerns operational excellence and cost reduction objectives, but more and more is focused on developing new business strategies and managing new business models to outperform competition and to satisfy customers, while contributing to shareholder value. Companies that intend to transform their SCM processes and value chain networks into a competitive advantage need to excel not only in one or two of the three focus areas, but in all of them. The insights presented in this report provide a framework for companies to begin redefining their strategies, fine-tuning their performance objectives and continuing the transformation journey of supply chain evolution towards maturity -- thus, energizing the supply chain to deliver superior performance and increased profitability. To read the complete study, download the PDF file at the top of this page. | 
