One interesting presentation that I attended was delivered by The Performance Measurement Group (PMG), the benchmarking consulting arm of consulting firm PRTM. The session was titled Global Supply Chain Trends: Operational Practices and Performance Metrics, and the key takeaway for me, as well as the audience, was the fact that recent benchmarking data indicates that companies are feeling the impacts of elongated global supply chain processes, specifically in customer-facing performance.
Readers may recall that PMG benchmarking is defined across four stages of supply chain maturity, Stages 1 and 2 being less mature, and Stages 3 and 4 being more advanced. It was again interesting to observe that data continues to reinforce that less mature ratings continue to dominate the population, with more than 60% of the PMG population rated in either Stage 1 or 2 maturities.
Benchmarking data continues to indicate that the more mature companies invest significantly in operational innovation, with much of the data reinforcing better performance in operational improvements such as overall cost, return on working capital, on-time delivery to customer request date, as well as other metrics.
Of greater and timelier interest is the finding that companies with extended global supply chains performed significantly worse than companies with a regional supply chain footprint, on customer-facing metrics such as perfect order performance, but slightly better on internal metrics such as cost-of-goods sold as a percentage of revenue, or total SCM costs. As an example, globally based supply chains experienced 20% worse than their counterpart regional supply chains in on-time delivery, 28% worse in perfect order fulfillment. In my view, this points to the tradeoff of seeking lower costs in a low-cost region, vs. increased transportation and coordination exposures. PMG also made a statement that the gap is widening in working capital improvement.
From a specific industry perspective, it was interesting to note that the consumer packaged goods industry has the more mature practices in customer service performance, while the high-tech industry demonstrates the lowest supply chain management costs. Again, by my observation, the high tech crowd has had far more experience in lower-cost sourcing, as well as servicing global customers, but continues to tradeoff overall service performance for cost.
I would be interested in comments from industry practioners on this post.