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Three steps to improve your supply chain strategy

Is your supply chain strategy outdated and unsuited for the future of business? Half of all companies in a recent survey think so – although two-thirds of the survey's respondents said their companies' supply chain strategies are effective. But, according to the latest Roland Berger study, Supply Chain Planning 4.0 (Supercharge your supply chain planning performance), which surveyed more than 200 companies worldwide, it makes financial sense to modernise your supply chain planning. Not only does it increase companies' efficiency, the investment will be returned within two to four years, with an internal rate of return of 15 to 25 per cent, according to the German research firm.

Poor efficiency impacts productivity

Roland Berger's Sven Siepen said: “The purpose of supply chain planning is to accurately estimate the needs of customers to ensure that they receive the right product, through the right channel, in the right quantity and at the right time.” This would require accurate forecasting, lean inventory and highly responsive and efficient systems. However, the current business climate means that accurate forecasting and efficient supply chains is increasingly difficult due to political uncertainty, disruptive technologies and fast-evolving consumer demands. Siepen added: “This calls for agility, responsiveness and adaptability on the part of companies. And their supply chain planning must be able to accommodate that.”

And the company's Carsten Bock added: “Outdated supply chain planning practices reduce businesses' operational efficiency – partly because poor forecasting accuracy often means making adjustments at short notice. This will always impact productivity, even if it does not affect factory uptime directly.”

Supercharge your supply chain planning

The study sets out a three-phase approach for companies to supercharge their supply chain planning performance.

  1. Precisely analyse the firm's current position and identify any shortcomings.
  2. Shape a vision of the future, including the target processes, organisational setup and systems. One of the main requirements here is digitization, as there is still too little of that around: For 56 per cent of survey respondents, their current SCP IT system landscape is not capable of effectively supporting supply chain processes. Only one-quarter of firms have even digitized their demand planning processes.
  3. Implement this new vision – a gradual process that can take years to complete, depending on the maturity of the company's existing system.

This item appears in the following sections:
Trade & FSC Management
Financial Supply Chain Platforms
Working Capital Management
Order-to-Cash Cycle in WCM
Total Working Capital

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