Global Supply Chain Survey 2013

This year’s global supply chain survey by

PwC shows how Leaders are moving ahead
of the pack. They’re tailoring their supply
chains to customer needs and investing in
next-generation capabilities while keeping
the focus on supply chains that are both fast
and efficient.

Next-generation
supply chains
Efficient, fast and
tailored

www.pwc.com/GlobalSupplyChainSurvey2013
 Contents Executive summary

Successful management of extreme But even with this kind of innovation

Executive summary 3 Macroeconomic cycles market and demand volatility has available to enhance efficiency, supply
become the new mantra of supply chain executives everywhere face
Introduction 6 of growth, contraction chain managers around the globe. some tough challenges. So, how are

Detailed survey findings 8 and recovery have Macroeconomic cycles of growth,

contraction and recovery have become
they handling them? In this report we
share the findings from our ninth and
become erratic. Together erratic, making reliable end-to-end largest-ever global supply chain survey.
Industry-specific dashboards 20
with natural disasters supply and demand planning
increasingly challenging. Disruptions
We’ve drawn on the insights of more
than 500 supply chain experts in
About the survey 32 that affect both caused by recent natural disasters Europe, North America and Asia, from
Acknowledgements 33 operations and sales, have added to supply chain volatility. companies of all sizes and across a
wide range of industries. We’ve also
Related reading 34 they have made reliable In business-to-business relationships, picked out two groups of companies
end-to-end supply and long-term loyalty and predictable order
flow seem to have become relics of the
and compared their performance.
The Leaders, as we’ve called them,
demand planning past. At the same time, customers are have consistently outperformed their
increasingly challenging. tightening their requirements in terms
of throughput time and perfect-order
peers, while the Laggards have
consistently underperformed —
delivery while demanding continuous both financially and operationally.
reductions in supply chain cost.
The Leaders in our survey point to
The increasing use of online channels the future. They have supply chains
is driving the reduction of response that are efficient, fast and tailored —
times and forcing supply chain a model that lets companies serve their
managers to find new answers for customers reliably in turbulent market
global micro-delivery of multiple conditions and that differentiates
small-customer orders, instead of between the needs of different sets of
the large-batch movements. customers. We’ve come up with six key
More than 500 findings that point the way towards
Maximising supply chain flexibility how they do it.
participants from and managing multiple supply chain
manufacturing configurations have become the new
imperatives for today’s supply chain
and service industries executives. In addition, radio-
contributed to frequency identification (RFID) and
other digital technologies lead to new
this year’s survey, frontiers in supply chain transparency
with data collected and process automation. Those
technologies enable multiple supply
from May to chain partners along the value chain
July 2012. to seamlessly interact in the joint
design, manufacture, delivery and
service of complex customer orders.

2 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 3
 Figure 1: 45% of the participants acknowledge that supply chain is seen
as a strategic asset in their company [% of participants]

9% 9%
Technology and Telecom 56
Automotive 50
Industrial Products 46

Six key findings from PwC’s

Chemicals and Process 43
46%
Pharmaceuticals 41
and Life Sciences
36%

Global Supply Chain Survey 2013

Retail and Consumer Goods 40
Other 26

Our supply chain…

… supports the company in constantly outperforming the market
… is at an advantage to peers
… is at parity with industry peers
… is at a disadvantage to industry peers

Source: PwC, Global Supply Chain Survey 2013

2 Leaders focus on
best-in-class delivery,
cost and flexibility to meet

1 3
increasingly demanding The Leaders have succeeded in coping But they keep core strategic functions Finding 6: Interest in next-
You can have it all: One size does not fit all:
companies that customer requirements Leaders tailor their with those challenges by focusing on such as sales and operations planning generation technologies and
acknowledge supply supply chains to the three key drivers: perfect order (S&OP), strategic procurement and sustainable supply chains is growing
chain as a strategic needs of different delivery, cost reductions and supply research and development (R&D)
asset achieve 70% customer segments The existing suite of innovative supply
higher performance chain flexibility. They’ve invested in in-house.
chain technologies includes RFID and
new tools and technologies, built
They also manage most core strategic other digital capabilities, new visibility
extensive supply chain networks
functions centrally while steering more and statistical decision tools and
to maximise the flexibility and
than three-quarters of their manufac- technology to facilitate further process
responsiveness of their supply chains
turing and logistics activities regionally. automation and efficiency. Many
and simplified their processes
Regional manufacturing and distribu- companies aren’t yet taking advantage
wherever possible. That’s helping
tion give them greater flexibility and of all those possibilities. But that looks
them respond to customers, whose
make it easier for them to respond to set to change: more than half of all
requirements are becoming
local customer requirements. respondents say they’re implementing,
increasingly demanding.
or they plan to implement, new tools to
Finding 5: Leaders in mature improve visibility and provide more
Finding 3: One size does not fit
and emerging markets invest more process automation. Those in the
all: Leaders tailor their supply
heavily in differentiating supply Pharmaceuticals and Life Sciences,
Interest in Leaders outsource chains to the needs of different
next-generation production and delivery chain capabilities Technology and Telecom and Retail

4
customer segments

6 technologies and
sustainable supply
chains is growing
Leaders in mature and
emerging markets
but retain global control
of core strategic
functions
The Leaders recognise that one size
Most companies have implemented the
basic capabilities required to deliver
and Consumer Goods industries plan
to make particularly significant

5
does not fit all. They’ve created investments in those areas over the
invest more heavily in efficiently and cost-effectively. Leaders
differentiating supply different supply chain configurations next couple of years.
have gone much further than only
chain capabilities for different customer segments by
mastering the basics. They’ve also More than two-thirds of all
using distinct processes and supply
introduced differentiating processes, respondents also say sustainability will
networks to offer different levels of
such as integrated real-time demand- play a more important role in the
service at different prices. They’re also
Finding 1: You can have it all: line; the Leaders in our survey enjoy Finding 2: Leaders focus on and-supply planning with key suppliers supply chains of the future. A number
more focused in the ways they go to
companies that acknowledge supply average earnings before interest and best-in-class delivery, cost and and customers, effective supplier and of companies have already started
market: 35% use only one channel,
chain as a strategic asset achieve taxes (EBIT) margins of 15.6%, whereas flexibility to meet increasingly partner management or tax-efficient (1) investing in technologies to reduce
whereas 80% of the Laggards have
70% higher performance the Laggards can manage only 7.3%. demanding customer requirements supply chains. their carbon dioxide emissions and
more than one. Clear channel focus,
That includes supply chain Leaders (2) excluding any supply chain
Companies that beat the competition on But, surprisingly, only 45% of Supply chain executives are coping while configuring the supply chain
from the emerging markets. They have partners that don’t adhere to the
supply chain performance also achieve respondents say their companies view with a wide range of challenges, to meet the needs of individual
rapidly adopted best-in-class practices highest ethical standards.
significantly better financial results. the supply chain as a strategic asset, and with profitability and cost management customers, has proved to be a
and avoided the painfully slow But such examples are not yet
Supply chain Leaders deliver on time in just 9% say the supply chain is helping topping the list, followed by supply winning formula.
development process used by many widespread — aspirations tend to
full (OTIF) on 95.7% of occasions and them outperform their peers. That chain flexibility and the need to Finding 4: Leaders outsource exceed action unless there is a clear
have an impressive 15.3 inventory needs to change, because better supply meet customer requirements. But of the traditional-market companies.
production and delivery but cost reduction benefit or regulatory
turns, while the Laggards achieve only chain efficiency has a measurable those represent just the tip of the And many emerging-market Leaders
retain global control of core requirement being met.
3.8 turns. That means greater efficiency impact. Supply chain managers across iceberg — adapting to competitive are now leading the way by introducing
strategic functions
and customer satisfaction without the globe need to step up to their top pressures, volatility, skills gaps, new and innovative supply chain
driving up working capital — management and claim their rightful sustainability — because the range of The Leaders typically outsource about practices to the global supply chain
essentially, having it all. Those are place as one of the major elements in increasingly important trends that 60% of their warehousing and logistics community, especially in the areas
metrics that really impact the bottom the success — or failure — of affect supply chain success is wide. activities and nearly 50% of their of supply chain flexibility and
their company. manufacturing and assembly activities. cost efficiency.

4 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 5
 Introduction

In our ninth — and largest-ever — global supply

chain survey, we heard from over 500 executives
around the world which key trends they see
reshaping the supply chain.

The need to cope with a whole range and the Laggards are illuminating.
of supply chain challenges is putting The most-successful companies have
greater pressure than ever on supply configured their supply chains for
chain executives. In our ninth — and specific customer segments, adopted
largest-ever — global supply chain differentiating practices such as
survey, we heard from over 500 collaborative planning with customers
executives around the world which key and suppliers and reduced complexity.
trends they see reshaping the supply
chain. Coming from companies large The Leaders in our survey point to
and small, across a wide range of the future. They have next-generation
industries, our respondents shared supply chains that are fast, flexible
details of their operating models and and responsive — a model that
the practices their companies are enables companies to serve their
using, outlined the ways they’re customers accurately and efficiently
organising their supply chains and in turbulent market conditions and
described the levers they’re pulling differentiates between the needs of
to maximise the value of those different sets of customers.
supply chains.
We’ve discussed our main findings in
We’ve supplemented this research with the following pages. We’ve also included
a comparison of two distinct cohorts six dashboards with details of how
of companies: those in the top quintile well the supply chains of companies in
and those in the bottom quintile (per different industries perform, how those
industry sector), measured in terms of supply chains are typically organised
financial and operational performance. and the value drivers that matter most.
The differences between those Leaders

6 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 7
 Detailed survey findings

Finding 1: Companies that focus on improving Perhaps more important, Leaders show Our analysis suggests that the
Figure 2: Companies that focus on improving their supply chain performance
You can have it all: their supply chain performance achieve that it’s possible to deliver orders very importance of the supply chain is consistently outperform their peers financially
companies that acknowledge much better financial and operational efficiently without driving up still insufficiently recognised in the
supply chain as a strategic results than their peers do. The top their working capital, which refutes boardroom. In fact, even supply chain Average EBIT margin (%) Average delivery Average inventory
asset achieve 70% companies we surveyed deliver the still widely held belief that executives themselves usually don’t Opportunity performance (OTIF) (%) turns per year (#)
Opportunity Opportunity
higher performance OTIF at 96% compared with 89% on delivery performance is a function of realise the full value they bring to their
average. In addition, they have 87% inventory. More than half of them organisations, or they don’t promote +30% +8% +87%
more inventory turns per year than deliver OTIF more than 95% of the that value sufficiently to the C-suite.
companies with average results do. time and have more than 15 inventory That’s because most supply chain
That doesn’t just mean more satisfied turns a year — evidence that delivery executives are focusing on the
customers. It directly affects the performance is the product of a day-to-day aspects of establishing and
bottom line: Leaders also enjoy 30% mature supply chain set-up, processes managing an end-to-end supply chain
higher EBIT margins than the average and systems. By contrast, 96% of the and fostering collaboration both with
(see Figure 2). Laggards in our survey are supply other functions and within the supply 7 12 16 79 89 96 4 8 15
chain rookies. Their delivery chain itself. But taking the time to Laggards Average Leaders Laggards Average Leaders Laggards Average Leaders
performance, inventory turns and EBIT promote the importance of the supply
margins are much lower than those of chain can have significant benefits. Source: PwC, Global Supply Chain Survey 2013
the Leaders (see Figure 3).
Once the C-suite recognises that a
mature supply chain is truly a source of
important competitive advantage, it Figure 3: Leaders deliver on time in full more frequently and simultaneously optimise
will be easier to persuade executives to their working capital
make the investments needed to bring
supply chains up to the next level. >98 Delivery heroes Supply chain top performers

Delivery performance (%)

1 18 0 53

Laggards Leaders Laggards Leaders

<95
Supply chain rookies Working capital optimisers

96 3 3 26

Laggards Leaders Laggards Leaders

<75
1 15 >20
Inventory turns (#)
% of Laggards % of Leaders

Source: PwC, Global Supply Chain Survey 2013

8 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 9
 Figure 5: Leaders pull seven levers to maximise the value of their supply chains

Complexity management
Maximum delivery

Supply chain
value driver
performance Maximum volume
flexibility and Tax optimisation
Minimised risks and efficiency
responsiveness
Minimised costs Sustainability

PATH TO SUPPLY CHAIN VALUE CREATION

Value creation
Activated value drivers

Source: PwC, Global Supply Chain Survey 2013

Finding 2: Supply chain executives see increasing Staying resilient is one way to cope
Leaders focus on best-in-class the profitability of their companies’ with customer requirements. Nearly
delivery, cost and flexibility to supply chain and reducing total supply two-thirds of supply chain executives
meet increasingly demanding chains costs as their top priorities say they’ll need to build in greater
customer requirements (see Figure 4). In addition, more than flexibility to respond to shifts
two-thirds say it’s vital to meet the in volume. Here, too, the importance
requirements of customers, who are will increase by 2015, which is
Indeed, the war for talent is already in years to implement. But they provide volume flexibility in their internal
becoming more demanding about the consistent with the shift we noted
full swing. Nearly three-fifths of our much greater transparency and manufacturing or shift models,
delivery performance, flexibility in our 2010-2012 trends report.
survey respondents see the acquisition process automation throughout the improving supply-and-demand
and service levels they expect. And
or development of supply chain talent entire supply chain, so they can help balancing and collaborating closely
awareness of the need to keep up with That’s only the beginning of the
and skills as essential to their current reduce costs and increase efficiency. with their partners. They make sure
customer demands is increasing; challenges supply chain executives face.
success. Even more rate it as important Hence the fact that many supply chain their supply chains are responsive
that number will jump to 78% by Respondents see a whole range of trends
for 2013-2015. Some companies have executives now regard them as vital. and that volatility risks are shared
2015. As one respondent put it, “We’re as increasing in importance, from the
responded by establishing dedicated with partners and suppliers.
juggling multiple supply chain balls need to respond to competitive
supply chain academies to train their So, in light of all these challenges,
faster and faster and just hope that pressures and ensuring supplier
own staffs. They’re also offering what priorities are Leaders setting to Once they’ve pulled those three levers,
none of the efficiency or customer performance through to concerns over
attractive compensation and benefits maximise the value of their supply the Leaders tend to focus on reducing
satisfaction balls drops to the ground.” risk and skills (see Figure 4).
packages to acquire and retain chains? As Figure 5 shows, many of risk and managing complexity. Just
successful supply chain managers. them have focused on the same values how do they do it? One way is by (1)
drivers, and it’s the first levers that working together with R&D and sales
Figure 4: Costs, profitability and increasingly demanding customers top the agenda
Respondents say supply chains also provide the highest impact. executives to reduce the number of
need to support demand growth in product platforms and variants and
% increase by
Significant1 supply chain trends in 2013 [%] In 2013-20152 [%] 2015 vs. 2013 emerging markets and be more The two levers that create the highest (2) consistently pruning obsolete
sustainable. Most companies have so value are maximising delivery components. This results in lower
Managing profitability of total supply chain 79 8 +10%
far devoted relatively little effort to the performance and minimising supply inventories and reduced supply chain
Reducing total supply chain cost 80 5 +6%
idea of the sustainable supply chain, chain costs: 90% of all Leaders have complexity. In addition, the Leaders
Meeting increasing customer requirements 69 10 +14% largely because their customers seem achieved a delivery performance of manage key suppliers more
Preparing supply chain for up/downwards volume flexibility 64 9 +14% unwilling to pay for it. But the more than 96%, thanks to integrated professionally, automate supply chain
Responding to competitive pressures 61 11 +18% importance is now rising sharply — supply chain planning, throughput/ processes that can be automated and
Acquiring and developing supply chain talent and skills 58 11 +19%
one-third more respondents say cycle time reductions and optimisation switch from make-to-stock to make-
sustainability will play a major role of their buffer stocks. Many of them are to-order whenever possible. Finally,
Ensuring supply and supplier performance 60 9 +15%
in 2013-2015 compared with now. also using best-cost country sourcing the Leaders turn to reorganising their
Implementing techniques to automate and increase transparency 52 14 +26%
and lean management techniques and supply chains to minimise
Supporting demand growth in emerging markets 52 10 +19% All of these challenges present a lot are simplifying their processes in order tax exposure.
Managing supply chain security and risk 46 14 +31% to deal with at one time, but the to cut costs.
Making the supply chain more sustainable 42 14 +34% introduction of digital technologies such The result? The Leaders consistently
as RFID and process automation tools Maximising volume flexibility and achieve above-average supply chain
Responding to changing regulatory requirements 36 4 +12%
is likewise rising up the agenda. responsiveness comes next: 75% performance and financial results,
Importance increase by: > 20% 10% and < 20% < 10%
Top 4 supply chain trends
Such technologies require massive of Leaders regard it as important. while the Laggards get bogged down
Source: PwC, Global Supply Chain Survey 2013 Remaining supply chain trends
investment and typically take several They’re creating value by increasing by ever-increasing supply chain costs,
Notes
1 % participants who judge trend as critical or significant in 2013. complexities and inefficiencies.
2 % participants who say that trend is significant, critical or moderately important in 2013 and who say it will increase
by 2015, or who think that trend is critical or significant in 2013 and believe it will stay the same for the next two years

10 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 11
 Clear channel focus, while configuring the supply
chain to meet the needs of individual customers,
has proved to be a winning formula.

Finding 3: More than 83% of all Leaders configure Of course, many organisations recognise That’s not the only difference between
Figure 6: Leaders configure their supply chains for different customer segments
One size does not their supply chains for different customer that different customers have different the Leaders and the rest of the survey
fit all: Leaders tailor their segments. And, on average, they use needs — and hence different supply population, though. The Leaders also
# supply chain configurations # channels # configurations per channel
supply chains to the needs of 55% more configurations per channel chain requirements, too. But it’s only have a clearly defined go-to-market
different customer segments than the Laggards do (see Figure 6). the Leaders that have started using approach: 35% focus on only one +40% -10% +55%
In other words, the Leaders recognise the concept of configuration to design channel versus 20% of the Laggards,
that one size doesn’t fit all. The demands their supply chains from the outside in. and on average, they generate 66%
imposed on a supply chain are as much This enables them to provide optimal more revenue per channel than
a function of the channel the supply services for a wide range of customers the other companies in our sample. 3.1 4.3 2.3 2.0 1.4 2.1
chain serves and of the requirements by making the best trade-offs between This suggests that critical mass is a Laggards Leaders Laggards Leaders Laggards Leaders
of the customers who use that channel, delivery performance, cost and prerequisite for creating tailored
as they are of the products a company flexibility to satisfy each customer supply chain configurations. Leaders operate Leaders are more focused Leaders operate up to
sells and the technologies the company segment (see Figure 7). So, supply more supply chain than Laggards because they 50% more configurations per
configurations operate in fewer channels channel than Laggards
uses. Each combination results in a chain configurations are major
different set of customer needs that elements in achieving superior supply
Source: PwC, Global Supply Chain Survey 2013
require a tailored solution. chain performance.

Figure 7: With different supply chain configurations, companies can make the best trade-offs to satisfy each customer segment

What is a supply chain configuration? Market characteristics Supply chain requirements Supply chain architecture
A supply chain configuration is a version of the supply chain that has been
optimised to meet the needs of a specific customer group. For example,

ts

Differentiated offering
Geography/Country

os
Supply chain configuration 1
a manufacturer might have two different supply chain configurations:

performance C
one for complex/high-end products and one for standard products. Each

Leaders:
Delivery
Supply chain configuration 2
configuration might serve the same customers and source from the same
suppliers by using different production locations and even, perhaps, different Supply chain configuration 3
distribution networks. Similarly, a manufacturer might have two different Flexibility/Responsiveness
transportation and logistics configurations: one with fast delivery times and a
higher cost for top customers and one with lower performance for price- Market/
Demand
conscious customers.

ts
os

One-size-fits-all
performance C

Laggards:
One-size-fits-all

Delivery
supply chain configuration

Product/ Channel/
Technology Market Flexibility/Responsiveness

Source: PwC, Global Supply Chain Survey 2013

12 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 13
 Interesting to note is that on average,
Finding 4: As a rule, the Leaders in our survey recognising that lead times are parts of only 36% of manufacturing and assembly
Leaders outsource production manage core strategic activities such as the total cost of ownership. But both
and delivery but retain strategic procurement, S&OP and new Leaders and Laggards use very similar
is being outsourced, indicating that
global control of core product development globally while organisational models, suggesting that functions like manufacturing and sourcing
strategic functions positioning production and delivery organisational models alone are not
regionally (see Figure 8). This allows main elements in higher performance.
remain cores of the supply chain and
them to maintain control over standards It is, rather, a company’s practices and keys to achieving tighter supply
and maximise synergies while capabilities that determine how well
remaining flexible and responsive the company’s supply chain operates.
chain integration.
to local needs.
While the outsourcing of supply chain
Many Leaders also use near-shoring functions has grown rapidly in the past
to keep prices competitive. And the years, our 2013 survey indicates that
most-advanced companies are the percentage of value creation participants do outsource are confined
Figure 9: Leaders and Laggards alike are very wary about outsourcing all functions
switching from low-cost country achieved by partners has reached a primarily to the areas of manufacturing but their manufacturing and distribution
sourcing to best-cost country sourcing, plateau. The activities that survey and distribution, and even then,
they’re very selective. Due to global % of supply chain activities outsourced 0 25 50
disasters in past years, some companies Demand planning 5%
have actually brought some supply Plan
S&OP 2%
chain activities back, close to home, to
Figure 8: Leaders manage strategic functions globally and execute functions regionally reduce risks. Strategic procurement 5%
Source
Operational procurement 6%
Leaders’ organisational model Leaders’ geographic organisation Both Leaders and Laggards outsource
Manufacturing and assembly 36%
100% half of their transportation and Make 22%
46 76 New product development 70 30 Service
warehousing activities, regarding them
Strategic procurement 66 34 as commodities that can be handled by 11%
Customer order desk
45%
Supply chain centre of excellence 60 40 a partner. But they keep the customer Deliver Warehousing
S&OP 49 51 order desk in-house to maintain control Inbound and outbound logistics

Manufacturing and assembly 38 63 over interaction with customers. And 12%

49%
New product development
they outsource only 36% of their Enabler
Demand planning 34 66 Supply chain centre of excellence
manufacturing and assembly activities, 7%
Customer order desk 24 76
suggesting that many companies still
54 24 Source: PwC, Global Supply Chain Survey 2013 Leaders Laggards
Service 24 76 see manufacturing as a core component
Strategic Execution
functions functions Operational procurement 22 78 of the supply chain and one of the vital
Warehousing 20 80 elements in achieving closer supply
Global Regional
Inbound and outbound logistics 18 82 chain integration (see Figure 9).
• Strategic functions: Demand planning, S&OP,
% of global and regional functions
Strategic procurement, New product development,
Supply chain centre of excellence Global Regional
• Execution functions: Operational procurement,
Customer order desk, Inbound and outbound logistics, Regional: Regional and local functions
Manufacturing and assembly, Service Global: Global business unit (cross regional and cross enterprise)

Source: PwC, Global Supply Chain Survey 2013

14 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 15
 According to our analysis, Leaders achieve
excellence and competitive advantage by focusing
on differentiating capabilities.

Finding 5: Two-thirds of the companies in our Conversely, the Leaders have already This emphasis on differentiating
Figure 11: Leaders are investing in a number of differentiating practices
Leaders in mature and survey are still focusing on the basics of mastered the basics. They’re more capabilities is characteristic of Leaders
emerging markets invest more running a supply chain in a cost-effective concerned with the skills that separate in both mature and emerging markets.
heavily in differentiating manner and delivering goods sufficiently a company from the crowd: 51% say One of the most notable features of
Supply chain value driver Top three differentiating practices of Leaders
supply chain capabilities well to satisfy their customers. They’re differentiating capabilities are the this year’s survey is the number of
concentrating on achieving continuous real keys to success. Figure 11 shows emerging-market companies with Maximum delivery 1. Collaboration with key customers on planning
improvements in cost, lead times and the main areas in which those strong supply chains and high EBIT performance (e.g., effective forecasting)
waste reduction. But those basic companies are investing to create margins. In fact, 26% of the Leaders in 2. End-to-end supply chain planning and visibility
capabilities are simply preconditions added value. But before attempting to our sample are based in the emerging 3. Vendor-managed-inventory direct-replenishment
for doing business; they don’t enable a implement such practices, it’s essential economies. And on average, emerging- model
company to outperform the market. to make sure the basics are in place. market companies command EBIT Minimised costs 1. Best-cost country sourcing
The Leaders already excel in terms of margins that are 22% higher than 2. Differentiated order-to-delivery time
delivery, cost and flexibility. That’s those enjoyed by mature-market
3. Differentiated service level, including potential
given them a robust platform on which companies (see Figure 10). They’ve reduction
to invest in more-advanced capabilities. almost caught up with mature-market
companies in terms of inventory turns Maximum volume flexibility 1. Internal capacity flexibility 80%-120%
and responsiveness
and delivery performance. 2. Flexible shift models/payment structure
3. Regional supply chain set-up
That’s especially impressive given
Minimised risks 1. Multiplication of sources and sole-sourcing
that emerging markets are typically
avoidance
Figure 10: The supply chain performance of companies in emerging markets is more volatile and more competitive.
2. Regular review of suppliers’ financial risk and
already close to that of companies in mature markets Mastering differentiating capabilities mitigation through risk-sharing partnerships
has played a large part in emerging-
3. Visibility and regular monitoring of main suppliers’
EBIT margin [avg.] Inventory turns [avg.] market companies’ success. A remarkable operational indicators
+22% -7%
44% of emerging-market companies
are investing in differentiating Complexity management 1. Development of multiskilled employees to cope
capabilities — evidence that they’re with complexity
rapidly implementing best practices 2. Late-stage product customisation
without going through the painful 3. Use of distributors and other channel partners
11% 14% 8.4 7.8 learning curve many mature-market
Sustainability 1. Agreement with supply chain partners to adhere
Mature Emerging Mature Emerging companies have endured. And many to highest ethical standards
Delivery performance [avg.] Differentiating supply chain capabilities [avg.]
emerging-market Leaders are even 2. Responsible supply chain partner footprint and
leading the way by introducing procurement framework
-4% 0% innovative supply chain practices to 3. Internal carbon footprint optimisation
the global supply chain community, and improvement
especially in the areas of supply chain
Tax optimisation and efficiency 1. Manufacturing and assembly optimisation
flexibility and cost efficiency.
(toll manufacturing)
90% 86% 44% 44%
2. Localisation of inventory ownership in tax-efficient
Mature Emerging Mature Emerging countries
Based on participant’s country of origin. 3. Localisation of procurement organisation in
Source: PwC, Global Supply Chain Survey 2013 tax-efficient countries (e.g., Singapore, Switzerland,
Cayman Islands)

16 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 17
 A full 81% of respondents who rate sustainability as
important favour collaborating with their suppliers
to create a responsible supply chain footprint and
procurement framework.

Finding 6: The suite of innovative supply chain supported by enterprise applications That means a company has to keep
Figure 12: Pharmaceuticals and Life Sciences, Technology and Telecom and
Interest in next-generation technologies now available includes and that draw on so-called big data track of all the risks in its supply Chemicals and Process Industry companies see automation as particularly important
technologies and sustainable RFID and other digital capabilities, to provide greater transparency chain to in addition to its as well as
supply chains is growing new visibility and statistical decision within the supply chain and to help profiting from opportunities the
High importance1 of Increase % Increase by
tools, as well as technology to enable them optimise their logistics and sustainability movement might offer. automation in 2013 [%] by 20152 [%] 2015 vs. 2013
further process automation and distribution operations. At present, respondents see four main Pharmaceuticals and Life Sciences 54 23 +43%
efficiency. Those technologies reasons for investing in sustainable
Technology and Telecom 51 25 +49%
open new frontiers in supply chain Designing a holistic planning platform supply chain management: to manage
Chemicals and Process 50 19 +38%
transparency and process automation. that can be implemented across the the risk of unintended environmental
Survey respondents recognise the supply chain is challenging, though. or social damage, to manage their Retail and Consumer Goods 54 5 +10%

importance of moving their supply Unfortunately, many organisations company’s reputation and the Automotive 53 5 +9%
chains to this next level: over have adopted point solutions focusing expectations of its shareholders, to Industrial 41 16 +39%
50% report that they are implementing on particular issues, which has reduce costs and realise productivity
or planning to implement new tools prevented them from addressing all improvements and to create Importance increase by: > 20% 10% and < 20% < 10%

for better process automation or of their business objectives equally. sustainable products, thereby Notes
1 % participants who judge trend as critical or significant in 2013.
transparency. And nearly two-thirds increasing revenues and enhancing 2 % participants who say that trend is significant, critical or moderately important
see automation as being vital by 2015. A growing number of companies are the corporate brand. in 2013 and who say it will increase by 2015 or who indicate critical or
significant for 2013 and indicate that it will stay same for the next two years.
This is a consistent theme across all also beginning to pay closer attention
Source: PwC, Global Supply Chain Survey 2013
industries, but the Pharmaceuticals to the concept of the sustainable Optimising their own internal carbon
and Life Sciences, Technology and supply chain. Managing a supply footprint is the top priority for 87%
Telecom and Chemicals and Process chain in a sustainable manner entails of those respondents who say
industries are leading supply chain taking account of the impact of major sustainability is highly important.
technology innovation (see Figure 12). environmental, social and economic But there’s an equally strong trend,
factors throughout the life cycle of a as more companies begin to adopt
In some cases, the dramatic increase product. In the long term, it’s also what sustainable supply chain practices: Figure 13: Creating a sustainable supply chain requires collaboration with suppliers
in interest in automation reflects gives a company its licence to operate. to provide support for suppliers
fundamental changes that are while assessing and auditing them. Importance of sustainability Important practices for sustainability adherence
happening in those sectors. For example, To date, most firms have done very As Figure 13 shows, 87% of those Internal carbon footprint
optimisation and improvement 87
demographic shifts and the emergence little on the sustainability front, but respondents who say sustainability is
Agreement to adhere to
of e-health are reshaping demand demand for sustainable products very important are saying it’s best to highest ethical standards
87

patterns for Pharmaceuticals and manufactured with sustainable raw reach an agreement with their 42% Responsible footprint and 81
procurement framework
Life Sciences companies, while the materials is increasing; indeed, it now suppliers on adhering to the highest Effective track-and-trace 71
emerging dominance of mobile outstrips supply. Investors’ expectations ethical standards. Similarly, 81% favour capabilities

devices is having a major impact on are also rising, and manufacturing collaborating with their suppliers to 58% Integrated risk management 58

the Technology and Telecom sector. regulations are getting tighter. At the create a responsible supply chain Peer cooperation and strategic
alliances to align on target 55
same time, greater use of low-cost and footprint and procurement Return supply chain
48
The technologies companies are best-cost country sourcing is making it framework. And 71% say effective to manage recycling

deploying are far more sophisticated more difficult to control sustainability track-and-trace capabilities are Highly important (critical and significant)

than before. Companies in every sector through the entire supply chain. important, too. As public expectations Less important

are looking for holistic solutions that And though a company can outsource rise, companies will come under Source: PwC, Global Supply Chain Survey 2013
encompass everything from order to specific business activities, it can’t increasing pressure to report on the
delivery — solutions that are abdicate responsibility for them. environmental and social impacts of
their activities and on the steps they’re
taking to mitigate those impacts.

18 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 19
 Industry-specific dashboards

Automotive:
Leaders achieve lowest EBIT margins with highest inventory
turns and strong delivery performance

Figure 14: The key attributes of Automotive companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Automotive companies typically The most important value drivers for • Decreased manufacturing costs through reduction
manage their planning, Geographic organisation Local Regional Global Automotive companies are minimised of waste
for supply chain functions
manufacturing, operational costs (90%), maximum delivery
Demand planning • Inventory reduction
procurement and delivery functions Plan performance (87%), maximum volume
regionally, and their new product S&OP
flexibility and responsiveness (83%) • Best-cost country sourcing
development and strategic Strategic procurement and complexity management (67%).
Source
Operational procurement
• Collaborative planning with key suppliers
procurement functions globally. The Leaders focus on continuous
Manufacturing and assembly • Collaboration with key customers on planning
They outsource less than 10% of Make improvements in production efficiency
Service and execution
their planning, sourcing and enabling and inventory management — together
Customer order desk • Order fulfilment cycle-time reduction improve
activities; a relatively low, 15% of with best-cost country sourcing, to
Deliver Warehousing manufacturing time
their manufacturing and assembly drive down costs and on collaborations
Inbound and outbound logistics
activities; and 10%-35% of their with key customers and suppliers. • Flexible shift models/payment structure
New product development
delivery activities. Enabler
SC centre of excellence • Internal capacity flexibility 80%-120%

% of supply chain Leading practices supply chain value driver (%) • End-to-end supply chain planning and visibility
activities outsourced
• Making to order
Minimised costs 90
0 18 36 55 • Automation of processes in order to cope with complexity
Outsourcing level Geographic organisation
Maximum delivery 87
• A ssortment/inventory policies distinguished by
performance product family and storing location
Maximum volume flexibility 83 • Multiplication of sources and sole-sourcing avoidance
and responsiveness
• Visibility and regular monitoring of main suppliers’
Supply chain performance: Supply chain performance Complexity management 67 operational indicators
The leading Automotive companies • Regular review of suppliers’ financial risk and mitigation
EBIT margin (%) Inventory turns (#) Delivery performance (%) Minimised risks 67
achieve the lowest EBIT margins through risk-sharing partnerships
+82% +199% +24%
compared with other industries • Agreement of supply chain partners to adhere to
Sustainability 53
(10.4%). But they have the highest highest ethical standards
number of inventory turns (18.2)
Tax optimisation/Efficency 48 • Internal carbon footprint optimisation and improvement
and a nearly best-in-class delivery
performance (97.3%). The • Return of supply chain to manage recycling
% of participants indicating very important
performance gap between the Leaders or important. • L ocalisation of procurement organisation in
and Laggards is quite small, signalling tax-efficient countries
5.7 10.4 6.1 18.2 78.7 97.3
that the industry has already adopted Source: PwC, Global Supply Chain Survey 2013
• Intellectual property and patent royalty optimisation
mature supply chain practices. Laggards Leaders Laggards Leaders Laggards Leaders
• Import/export optimisation (e.g., bonded warehouse)

20 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 21
 Chemicals and Process Industry:
Leaders achieve average EBIT margins with high inventory
turns and strong delivery performance

Figure 15: The key attributes of Chemicals and Process Industry companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Chemicals and Process Industry The most important value drivers for • Inventory reduction
companies typically manage their Geographic organisation Local Regional Global Chemicals and Process Industry • Decreased manufacturing costs through reduction
for supply chain functions
planning, manufacturing, companies are minimised costs (87%), of wastes
operational procurement and delivery Demand planning maximum delivery performance (87%),
Plan
S&OP • Reduction in process flow complexity
functions regionally, and their enabling maximum volume flexibility and
and strategic procurement functions Source
Strategic procurement responsiveness (77%) and complexity • End-to-end supply chain planning and visibility
Operational procurement
globally. They outsource about 5% of management (72%). The Leaders focus • Collaboration with key customers on planning
Manufacturing and assembly
their planning, sourcing and enabling Make on continuous improvements in (e.g., effective forecasting)
Service
activities; only 13% of their manu- production efficiency and inventory • Order fulfilment cycle-time reduction to improve
Customer order desk
facturing and assembly activities; and management — coupled with process information flow
Deliver Warehousing
7%-45% of their delivery activities. simplification — to drive down costs
Inbound and outbound logistics • Internal capacity flexibility 80%-120%
and on end-to-end supply chain
Enabler
New product development
planning and visibility. • End-to-end supply chain planning and visibility
SC centre of excellence
• Involvement of partners for capacity reservation
% of supply chain Leading practices supply chain value driver (%) • Development of multiskilled employees in order to cope
activities outsourced
with complexity
0 18 36 55 Minimised costs 87 • Making to order
Outsourcing level Geographic organisation
Maximum delivery • A ssortment/inventory policies distinguished by product
87
performance family and storing location
Maximum volume flexibility
77 • Multiplication of sources and sole-sourcing avoidance
and responsiveness
• Visibility over short-term supply through order
Supply chain performance: Supply chain performance Complexity management 72 traceability, vendor-managed inventory and so on
The leading Chemicals and Process • Visibility and regular monitoring of main suppliers’
EBIT margin (%) Inventory turns (#) Delivery performance (%)
Industry companies achieve average Minimised risks 58 operational indicators
+29% +166% +22%
EBIT margins (13.5%) with a high • Responsible supply chain partner footprint and
Sustainability 52 procurement framework
number of inventory turns (17.3) and
a better delivery performance than • Integrated risk management
Tax optimisation/Efficency 42
does any other industry except Retail
• Agreement of supply chain partners to adhere to highest
and Consumer Goods (97.5%). ethical standards
% of participants indicating very important
The supply chain performance gap or important.
between the Leaders and Laggards • Transfer pricing
10.5 13.5 6.5 17.3 80.2 97.5 • L ocalisation of procurement organisation in tax-
is also the smallest. Source: PwC, Global Supply Chain Survey 2013
Laggards Leaders Laggards Leaders Laggards Leaders efficient countries
• Manufacturing and assembly optimisation
(toll manufacturing)

22 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 23
 Industrial Products:
Leaders achieve high EBIT margins despite low inventory
turns and low delivery performance

Figure 16: The key attributes of Industrial Products companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Industrial Products companies The most important value drivers • Collaborative planning with key suppliers
typically manage their planning, Geographic organisation Local Regional Global for Industrial Products companies are • Collaboration with key customers on planning
for supply chain functions
manufacturing, operational minimised costs (98%), maximum (e.g., effective forecasting)
procurement and delivery functions Demand planning delivery performance (93%), maximum
Plan
S&OP • Order fulfilment cycle-time reduction improve
regionally, and their enabling and volume flexibility and responsiveness
Strategic procurement information flow
strategic procurement functions Source (74%) and complexity management
Operational procurement • Decreased manufacturing costs through reduction
globally. They outsource about 7% of (61%). The Leaders focus on
their planning, sourcing and enabling Make
Manufacturing and assembly
collaboration with key customers and of wastes
Service
activities; nearly 35% of their suppliers and continue to place great • Inventory reduction
Customer order desk
manufacturing activities; and up to weight on continuous improvement • Decreased overhead costs through increased
Deliver Warehousing
50% of their delivery activities. and lean processes to reduce labour productiveness
Inbound and outbound logistics
order fulfilment cycle time and
New product development • Internal capacity flexibility 80%-120%
Enabler decrease costs.
SC centre of excellence • End-to-end supply chain planning and visibility
% of supply chain Leading practices supply chain value driver (%) • Regional supply chain set-up
activities outsourced
• Making to order
0 18 36 55 Minimised costs 98 • Late-stage product customisation
Outsourcing level Geographic organisation
Maximum delivery • Differentiated distribution strategies
performance 93
• Multiplication of sources and sole-sourcing avoidance
Maximum volume flexibility
and responsiveness 74 • Visibility and regular monitoring of main suppliers’
operational indicators
Supply chain performance: Supply chain performance Complexity management 61 • Regular review of suppliers’ financial risk and mitigation
The leading Industrial Products through risk-sharing partnerships
EBIT margin (%) Inventory turns (#) Delivery performance (%) Minimised risks 60
companies achieve relatively high EBIT • Agreement of supply chain partners to adhere to
+173% +283% +19%
margins (17.3%) despite low inventory highest ethical standards
Sustainability 38
turns (12.1) and a lower delivery • Internal carbon footprint optimisation and improvement
performance than any other industry
Tax optimisation/Efficency 38 • Responsible supply chain partner footprint and
(92.9%). The marked gap between
procurement framework
the supply chain performance of the
% of participants indicating very important
Leaders and Laggards represents a big or important.
• L ocalisation of procurement organisation in tax-
opportunity for Laggards to improve efficient countries
6.3 17.3 3.2 12.1 77.9 92.9 • Import/export optimisation
their financial results. Source: PwC, Global Supply Chain Survey 2013
Laggards Leaders Laggards Leaders Laggards Leaders
• Transfer pricing

24 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 25
 Pharmaceuticals and Life Sciences:
Leaders achieve average EBIT margins with high inventory
turns and strong delivery performance

Figure 17: The key attributes of Pharmaceuticals and Life Sciences companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Pharmaceuticals and Life Sciences The most important value drivers for • End-to-end supply chain planning and visibility
companies typically manage their Geographic organisation Local Regional Global Pharmaceuticals and Life Sciences • Order fulfilment cycle-time reduction improve
for supply chain functions
planning, operational procurement companies are minimised costs manufacturing time
and delivery functions regionally, and Demand planning (100%), maximum delivery
Plan
S&OP • Collaborative planning with key suppliers
their enabling, manufacturing and performance (94%), maximum volume
assembly and strategic procurement Source
Strategic procurement flexibility and responsiveness (78%) • Decreased manufacturing costs through reduction
Operational procurement of wastes
functions globally. They outsource and complexity management (78%).
Manufacturing and assembly
about 6% of their planning and sourcing Make The Leaders focus on collaboration • Inventory reduction
Service
activities; a relatively high, 25% of with key customers and suppliers and • Decreased overhead costs through increased
Customer order desk
their new product development end-to-end supply chain planning. labour productiveness
Deliver Warehousing
activities; and 20%-40% of their They also continue to place great
Inbound and outbound logistics • End-to-end supply chain planning and visibility
delivery activities. weight on continuous improvements
Enabler
New product development
in manufacturing. • Outsourcing to service provider
SC centre of excellence
• Involvement of partners for capacity reservation
% of supply chain Leading practices supply chain value driver (%) • Multiplication of sources and sole-sourcing avoidance
activities outsourced
• Regular review of suppliers’ financial risk and
0 18 36 55 Minimised costs 100 mitigation through risk-sharing partnerships
Outsourcing level Geographic organisation
Maximum delivery • Visibility over short-term supply through order
94
performance traceability, vendor-managed inventory and so on
Maximum volume flexibility 78
• Use of distributors and other channel partners
and responsiveness
• Differentiated distribution strategies
Supply chain performance: Supply chain performance Complexity management 78 • Development of multiskilled employees in order to
The leading Pharmaceuticals and Life cope with complexity
EBIT margin (%) Inventory turns (#) Delivery performance (%) Minimised risks 72
Sciences companies achieve average • Return of supply chain to manage recycling
+52% +326% +21%
EBIT margins (16.9%) with a high • Responsible supply chain partner footprint and
Sustainability 67
number of inventory turns (16.3) procurement framework
and excellent delivery performance
Tax optimisation/Efficency 53 • Integrated risk management
(97.4%). The gap between the Leaders
and Laggards is relatively low when it • Import/export optimisation (e.g., bonded warehouse)
% of participants indicating very important
comes to EBIT margins and delivery or important. • Intellectual property and patent royalty optimisation
performance but relatively high • L ocalisation of inventory ownership in tax-
11.1 16.9 3.8 16.3 80.5 97.4
when it comes to inventory Source: PwC, Global Supply Chain Survey 2013
efficient countries
turns (16.3 turns versus 3.8 Laggards Leaders Laggards Leaders Laggards Leaders

turns, respectively).

26 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 27
 Retail and Consumer Goods:
Leaders achieve average EBIT margins with highest number
of inventory turns and best delivery performance

Figure 18: The key attributes of Retail and Consumer Goods companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Retail and Consumer Goods companies The most important value drivers • Collaborative planning with key suppliers
typically manage their planning, Geographic organisation Local Regional Global for Retail and Consumer Goods • End-to-end supply chain planning and visibility
for supply chain functions
manufacturing, operational companies are minimised costs (95%),
procurement and delivery functions Demand planning maximum delivery performance • Vendor-managed-inventory direct-replenishment model
Plan
S&OP • Decreased overhead costs through increased labour
regionally and their enabling and (90%), maximum volume flexibility
strategic procurement functions Source
Strategic procurement and responsiveness (79%) and productiveness
Operational procurement
globally. They outsource about 7% complexity management (70%). The • Decreased manufacturing costs through reduction
Manufacturing and assembly
of their planning, sourcing and Make Leaders focus on collaboration with of wastes
Service
enabling activities; only 30% of their key suppliers and vendor-managed • Inventory reduction
Customer order desk
manufacturing activities; and inventory and continue to place
Deliver Warehousing • Internal capacity flexibility 80%-120%
10%-55% of their delivery activities. great importance on continuous
Inbound and outbound logistics
improvements in production efficiency • End-to-end supply chain planning and visibility
New product development
Enabler and inventory management. • Flexible shift models/payment structure
SC centre of excellence
• Automation of processes in order to cope with complexity
% of supply chain Leading practices supply chain value driver (%)
activities outsourced • Development of multiskilled employees in order to cope
with complexity
0 18 36 55 Minimised costs 95
• A ssortment/Inventory policies distinguished by
Outsourcing level Geographic organisation Maximum delivery product family and storing location
90
performance
• Visibility and regular monitoring of main suppliers’
Maximum volume flexibility 79 operational indicators
and responsiveness
• Multiplication of sources and sole-sourcing avoidance
Supply chain performance: Supply chain performance Complexity management 70 • Regular review of suppliers’ financial risk and mitigation
The leading Retail and Consumer through risk-sharing partnerships
EBIT margin (%) Inventory turns (#) Delivery performance (%) Minimised risks 60
Goods companies achieve average • Transfer pricing
+131% +461% +27%
EBIT margins (14.2%) with the highest • Import/export optimisation (e.g., bonded warehouse)
Tax optimisation/Efficency 46
number of inventory turns (18.2)
and a better delivery performance • Manufacturing and assembly optimisation (toll
Sustainability 45 manufacturing)
than companies in any other industry
(<97.5%). The supply chain • Agreement of supply chain partners to adhere to highest
% of participants indicating very important
performance gap between the Leaders or important.
ethical standards
and Laggards is about average, but • Internal carbon footprint optimisation and improvement
6.2 14.2 3.3 18.2 76.4 97.5
Laggards have a major opportunity Source: PwC, Global Supply Chain Survey 2013
• E ffective track-and-trace capabilities to ensure
to improve their inventory turns and Laggards Leaders Laggards Leaders Laggards Leaders
sustainable supply chain
delivery performance.

28 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 29
 Technology and Telecom:
Leaders achieve best EBIT margins with fewest inventory turns
and average delivery performance

Figure 19: The key attributes of Technology and Telecom companies

Organisational set-up: Organisational set-up Leading practices: Top differentiating practices

Technology and Telecom companies The most important value drivers for • Collaborative planning with key suppliers
typically manage their planning, Geographic organisation Local Regional Global Technology and Telecom companies • Collaboration with key customers on planning
for supply chain functions
manufacturing, operational are minimised costs (94%), maximum (e.g., effective forecasting)
procurement and delivery functions Demand planning delivery performance (90%), maximum
Plan
S&OP • End-to-end supply chain planning and visibility
regionally, and their enabling and volume flexibility and responsiveness
strategic procurement functions Source
Strategic procurement (83%) and complexity management • Multisourcing/dual sourcing
Operational procurement
globally. They outsource about 15% (71%). The Leaders focus on collaboration • Outsourcing to service provider
Manufacturing and assembly
of their planning, sourcing and Make with key customers and suppliers and • Regional supply chain set-up
Service
enabling activities; as much as 55% end-to-end transparency. They also
of their manufacturing and assembly
Customer order desk
continue to place great weight on • Inventory reduction
Deliver Warehousing
activities; and 20%-50% of their dual sourcing with key electronics • Best-cost country sourcing
Inbound and outbound logistics
delivery activities. manufacturing services providers • Decreased overhead costs through increased
New product development
Enabler and regional supply chain set-ups. labour productiveness
SC centre of excellence
• Outsourcing
% of supply chain Leading practices supply chain value driver (%)
activities outsourced • Making to order
Minimised costs 94 • Automation of processes in order to cope with complexity
0 18 36 55
• Multiplication of sources and sole-sourcing avoidance
Outsourcing level Geographic organisation
Maximum delivery
performance 90 • Visibility and regular monitoring of main suppliers’
operational indicators
Maximum volume flexibility
83
and responsiveness • Visibility over short-term supply through order
traceability, vendor-managed inventory and so on
Supply chain performance: Supply chain performance Complexity management 71
• Internal carbon footprint optimisation and improvement
The leading Technology and Telecom
EBIT margin (%) Inventory turns (#) Delivery performance (%) Minimised risks 58 • Agreement of supply chain partners to adhere to
companies achieve the highest EBIT
+344% +170% +17% highest ethical standards
margins (19.8%) with the fewest
inventory turns (11.9) and an average Sustainability 50 • Return of supply chain to manage recycling
delivery performance (95.5%). There’s • Import/export optimisation (e.g., bonded warehouse)
a bigger gap between the EBIT margins Tax optimisation/Efficency 50
• Manufacturing and assembly optimisation
of the Leaders and the Laggards (toll manufacturing)
% of participants indicating very important
than there is in any other industry, or important.
• Transfer pricing
but their inventory turns and delivery
4.4 19.8 4.4 11.9 81.9 95.5
performance are relatively similar. Source: PwC, Global Supply Chain Survey 2013
Laggards Leaders Laggards Leaders Laggards Leaders

30 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 31
 About the survey Acknowledgements

Global supply chain create a total performance score,

Figure 21: Geographic distribution
Core Editorial Team
survey overview comprising 35% of the financial
This year’s survey is the ninth such performance score and 65% of the Asia
22%
supply chain survey to be conducted supply chain performance score.
by PwC. From May to July 2012, we Europe
surveyed 503 supply chain executives We used these total performance scores 48%

in a wide range of industries. Forty- to find two groups of companies within

four percent of them hold senior each industry sector: Leaders (the top
Americas
management positions, while 34% hold 20% of the sector population) and 30%

C-level posts. (Figure 23 provides full Laggards (the bottom 20%).

details of the survey population.) We compared those two groups with
each other to find out which features Dr. Reinhard Geissbauer Joseph Roussel Stefan Schrauf Mark A. Strom
Figure 22: Company size Germany France Germany US
As part of our research, we assessed make the Leaders so successful. reinhard.geissbauer@de.pwc.com joseph.roussel@fr.pwc.com stefan.schrauf@de.pwc.com mark.a.strom@us.pwc.com
each company by using two criteria: its > USD 5B
financial performance (based on its We also distinguished between basic 30%

EBIT margins and revenue growth) and differentiating supply chain < USD 1B Editorial Board Advisory Group
and its supply chain performance capabilities. We defined basic 45%
Vincent Espie, France Koen Cobbaert, Belgium
(based on the average annual number capabilities as those that Leaders and
Mark Fabisch, Germany Gordon Colborn, UK
of inventory turns and the percentage Laggards regard as equally important
William B. Householder, US Joseph Ippolito, UK
of occasions on which it delivered on or where there’s very little difference in USD 1B –
USD 5B Dr. Elizabeth Montgomery, Germany Craig Kerr, China
time in full). We gave each company a their views. We defined differentiating 25% Oz Ozturk, Switzerland Hans Kühn, Germany
score for each performance category. capabilities as those that Leaders treat
Dr. Eric Pohlmann, Germany Johnathon Marshall, UK
Then we combined the two scores to differently than Laggards do. Figure 23: Seniority level
Nitin Soundale, India Bernhard Raschke, UK
Non-management
Costas Vassiliadis, Greece James E. Takach, US
22% CXO
34%
Research and Data Analysis Marketing and Project Management
Figure 20: Industry affiliation
Study population
PwC’s Performance Measurement Group Helen Gill, UK
characteristics
Steffen Holm, Germany Viktoria Kaminski, Germany
8% Other • 503 completed questionnaires Kara Kardon, US Shannon Schreibman, US
8% Automotive
9% Pharma/Life Sciences • All three global regions are Management Judith Vaupel, Germany
12% Technology and Telecom 44%
well represented Design
15% Chemicals/Process
• The participants represent a Source: PwC, Global Supply Chain Survey 2013 Odgis + Company
20% Retail and balanced mix of company sizes
Consumer Goods

28% Industrial Products • More than half of the participants

are senior executives

32 Next-generation supply chains: Efficient, fast and tailored Next-generation supply chains: Efficient, fast and tailored 33
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www.pwc.com/GlobalSupplyChainSurvey2013
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