Industrial products industry findings: Global Supply Chain Survey 2013

Supply chain performance

Supply chain performance

Supply chain performance:

The leading Industrial products companies achieve relatively high EBIT margins (17.3%) despite low inventory turns (12.1) and a lower delivery performance than any other industry (92.9%). The marked gap between the supply chain performance of the Leaders and Laggards represents a big opportunity for Laggards to improve their financial results.

Organisational set-up:

Industrial products companies typically manage their planning, manufacturing, operational procurement and delivery functions regionally, and their enabling and strategic procurement functions globally. They outsource about 7% of their planning, sourcing and enabling activities; nearly 35% of their manufacturing activities; and up to 50% of their delivery activities.

The key attributes of Industrial Products companies

Organisational set-up

Leading practices

Leading practices

Leading practices:

The most important value drivers for Industrial products companies are minimised costs (98%), maximum delivery performance (93%), maximum volume flexibility and responsiveness (74%) and complexity management (61%). The Leaders focus on collaboration with key customers and suppliers and continue to place great weight on continuous improvement and lean processes to reduce order fulfilment cycle time and decrease costs.

Top differentiating practices

  • Collaborative planning with key suppliers
  • Collaboration with key customers on planning (e.g., effective forecasting)
  • Order fulfilment cycle-time reduction improve information flow
  • Decreased manufacturing costs through reduction of wastes
  • Inventory reduction
  • Decreased overhead costs through increased labour productiveness
  • Internal capacity flexibility 80%-120%
  • End-to-end supply chain planning and visibility
  • Regional supply chain set-up
  • Making to order
  • Late-stage product customisation
  • Differentiated distribution strategies
  • Multiplication of sources and sole-sourcing avoidance
  • Visibility and regular monitoring of main suppliers’ operational indicators
  • Regular review of suppliers’ financial risk and mitigation through risk-sharing partnerships
  • Agreement of supply chain partners to adhere to highest ethical standards
  • Internal carbon footprint optimisation and improvement
  • Responsible supply chain partner footprint and procurement framework
  • Localisation of procurement organisation in taxefficient countries
  • Import/export optimisation
  • Transfer pricing