Challenges in the Supply Chain Make a 'Logistics Playbook' A Necessity, According to New Study

Business Wire, Oct 22, 2007

PHILADELPHIA -- Companies are facing a multitude of challenges in supply chain, transportation and logistics including increasing transportation costs, labor issues, escalating energy costs and changing customer requirements, according to the 16(th) annual "Logistics Playbook"; a report on trends in logistics and transportation produced jointly by Capgemini U.S. LLC, Georgia Southern University and the University of Tennessee. The results were released at the Council of Supply Chain Management Professionals annual conference. This year 1,376 supply chain executives participated in the survey and more than 14 industrial sectors participated in the study, led by manufacturing.

The 2007 report lays out a playbook of actions to take based on market situations and company profile. The focus of the report is on three functions: sales and operations planning, distribution management, and transportation management. With 19.5% of firms reporting there to be little to no integration of supply planning systems and 10.8% of firms confirming their transportation and distribution functions are separate, the need for a playbook to strategically align logistics and transportation is of high importance.

The report concludes that the playbook for a company should be based on a number of characteristics that include size, financial performance, visibility into the supply chain, and strategy. However, there are four overarching plays that most companies should take in some manner:

* Focus on understanding how your supply chain meets the needs of customers.

* Focus on recruiting the best talent and providing them with access to real time information.

* Focus on working together with customers and suppliers on logistics. Participants suggest they spend 10% or less of their time on collaborating with customers, suppliers, and other departments across the company.

* Focus on a few key metrics.

Peter Moore, Supply Chain Services Leader for Capgemini said, "Globalization and economic shifts have made supply chains too complex to manage without strategic planning and a playbook that accounts for different possible situations."

"Supply chain complexity has created an opportunity for leading firms to use supply chain capabilities as a source of competitive advantage," added Mary Holcomb, study co-author and Associate Professor of Logistics at the University of Tennessee. "At the forefront of this source of competitive advantage is visibility."

Other key findings from the study include:

* In 2007, 29.2% of participants reported they spent more than 5 percent of sales on domestic transportation

* For all the different categories of Strategic Planning and Operations information, 70% or more of respondents receive information in real time or are updated daily.

* Only in 36.6% of the cases does a single manager control both transportation and distribution.

* 43.7% of all distribution volume is sent directly to the customer.

* The biggest size firms (those with $3 billion or more in annual sales) report having more integrated systems across all functions than medium and small firms report.

"While leading firms have turned complexity into competitive advantage, many firms have made little progress over the past six years in integrating basic logistics processes," said Karl Manrodt, study co-author and Associate Professor of Logistics at Georgia Southern University. "This is not a reflection of the lack of technology; to the contrary, software capabilities have improved greatly. What is missing is taking a true process view of the firm's internal and external processes, and the ability to manage them."

The full 2007 Logistics Playbook is available online. Please visit http://www.us.capgemini.com.

About Capgemini

Capgemini, one of the world's foremost providers of consulting, technology and outsourcing services, enables its clients to transform and perform through technologies. Capgemini provides its clients with insights and capabilities that boost their freedom to achieve superior results through a unique way of working, which it calls the Collaborative Business Experience. Capgemini reported 2006 global revenues of EUR 7.7 billion (approximately US$10 billion) and employs more than 80,000 people worldwide.

More information is available at http://www.us.capgemini.com.

About Georgia Southern University

Georgia Southern University is a growing nationally recognized logistics program located in Statesboro, Georgia. The university is a major teaching and research institution. The faculty publishes in a wide range of topics and is invited to speak at events across the globe. The Southern Center for Intermodal Transportation offers a wide range of research services and resides in the College of Business. For further information, please visit http://www.georgiasouthern.edu/ or http://www.manrodt.com/

About The University of Tennessee

The internationally recognized logistics program at The University of Tennessee, Knoxville, is one of the most comprehensive and contemporary programs in the nation. The faculty publishes widely on topics of current industry concern and explores future trends through research and studies.