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Stuttgart, November 2015

The Supply Chain Excellence Study 2015

2 SCE Study 2015_long version_final.pptx

Contents Page

This document shall be treated as confidential. It has been compiled for the exclusive, internal use by our client and is not complete without the underlying detail analyses and the oral presentation.

It may not be passed on and/or may not be made available to third parties without prior written consent from .

© Roland Berger

A. Management summary 3

B. Study objectives and design 8

C. Supply Chain Excellence across industries 12

D. Supply Chain Excellence industry insights 31

E. Contacts 88


A. Management summary


Management summary (1/4)

Study background and objectives

> Supply chains spanning all activities from Plan and Source to Make and Deliver form the backbone of manufacturing companies' business success

> The importance of supply chains is ever increasing owing to – More and more volatile, uncertain, complex and ambiguous (VUCA) operating

environments and – Higher requirements from customers on a multitude of aspects such as cost, flexibility,

lead times, etc.

> However, new technologies and concepts help supply chains to meet those requirements in line with their increased importance

> This study therefore aims at providing CEOs, COOs and Supply Chain Managers with insights into trends, targets and levers in the context of supply chains in order to help in making the right decisions



Key results

> Many trends are having a major impact on supply chains and manufacturing companies are focusing their activities/allocating resources accordingly

– The importance of the various top trends that have an impact on supply chains differs only marginally, which leaves companies with a wide range of objectives and difficulties in focusing

– Rising requirements regarding reliability (on time in full) and flexibility (individualization of products, volume, time, …) are the most important trends, together with increasing demand volatility; higher requirements regarding cost is also an important trend, though this comes in behind delivery performance trends in terms of relevance

– Transparency on customer requirements is moderate to high overall, with B2B industries clearly lagging behind industries with direct contact to final customers and consumers

– More and more customers want individualized products and solutions. Though this is enabled by technological advancements (e.g. additive manufacturing), it makes supply chain flexibility and efficient customer response even more important



Key results

> Supply chains have to meet many targets at the same time – Today, reliability and cost are most important, closely followed by flexibility and lead time;

transparency and sustainability are comparatively less important – In five years' time, all targets are expected to be nearly equally important, putting even

more pressure on supply chains

> The importance of different supply chain levers in improving performance differs significantly by category – Companies assign greater importance to fulfillment levers (Source, Make, Deliver);

coordination levers (SC Design and Plan) tend to be underrated – Maturity of lever application is only moderately high on average – Supply chain levers in the Source and Deliver categories are considered the most

important – The Automotive industry is still leading in the application of levers in most categories;

Consumer Goods and Med-Tech are leading in single categories (Deliver and SC Design, respectively)



Automotive > Flexibility and reliability are the most relevant SC

targets and trends > Source levers are considered most important but

leave room for improvement

High-Tech > Most active industry in managing a VUCA

environment > Forecasting and end-to-end supply chain integration

are important levers

Chemicals > The most active in managing the important trend of

increasing governmental regulations > Industry with the strongest focus on coordination

levers (SC Design and Plan)

Construction > Least active industry on the most important trends

Med-Tech & Pharma > The most impacted by globalization and cost

pressure > Supply Chain Design levers are considered most

important

Engineered Products > Reliability, lead time and demand volatility are the

most important SC targets and trends > Levers in the Source category are considered most

important, especially supplier selection

Consumer Goods > Reliability, volatility and heterogeneous customer

requirements are the most relevant SC trends > Systematic inventory management and reliable

forecasts are key levers

Key results

> Supply Chain Excellence differs by industry. For detailed industry-specific insights on any of the following industries, please refer to the latter section of this study


B. Study objectives and design


Background

Supply chains are an important factor in maintaining and improving companies' overall performance:

> Companies increasingly operate in a VUCA world (volatile, uncertain, complex and ambiguous)

> Requirements regarding the supply chain are continuously increasing

> At the same time, new technologies and concepts such as Industry 4.0 and digitization are offering new opportunities

Objectives

Provide CEOs, COOs and Supply Chain Managers with insights into:

> The most relevant trends impacting their supply chains

> Importance of different supply chain levers as well as maturity of application

> Best practice industries in terms of lever application

In light of the increasing importance of supply chains for companies' business success, this study provides insights into trends and levers


This study covers seven core industries – More than 150 participants from relevant positions contributed to the results

Participants' industries Participants' operating regions

Overview of Supply Chain Excellence Study 2015 participants

Construction

7% Pharma/

Med-Tech 6%

Chemicals

10%

Automotive

12%

High-Tech

15%

Engineered

Products

19%

Consumer Goods 25%

6%

Other

62%50%

74%

62%

80%74%

83%

79%

90%

83%

94%

93%

+7%

+12%

+1%

+12%

+3%

+7%

Western Europe

North America

Asia

South America

Africa

Eastern Europe

Operating in region in 2015 Expecting to operate in region in 2020


This study is structured along four dimensions: trends, supply chain targets and their importance as well as applicable levers

Study design and key questions

Trends

> How strong is the impact of different trends on the supply chain?

> How active are companies concerning those trends?

Supply chain targets

> How important are the different supply chain targets in relation to each other?

> How is this expected to change in the future?

Levers

> What are the most important levers to increase supply chain performance?

> How mature are companies in applying those levers?

Supply chain importance

> How important is the supply chain performance in differentiating against competitors?

> What is the supply chain function responsible for and at which level in the organization is it represented?


C. Supply Chain Excellence across industries


Rising requirements regarding reliability and flexibility paired with increased volatility are the trends with the biggest impact on the SC

1 = Low impact of a trend on the supply chain 5 = High impact

Top 10 trends impacting the supply chain

Trend Impact on supply chain

4.3

4.1

4.0

3.9

3.9

3.9

3.8

3.7

3.6

3.6

Rising customer requirements regarding reliability (on time in full)

Rising customer requirements regarding flexibility

Increasing demand volatility (e.g. driven by project business, promotions)

Rising customer requirements regarding lead times

Rising customer requirements regarding cost

Increasing uncertainty (e.g. lack of forecast accuracy, disruptive innovations)

Increasing complexity (e.g. higher number of SKUs or customers)

Increasing globalization (e.g. additional markets to serve, importance of emerging markets, global network)

Low High

Increasingly heterogeneous customer requirements (e.g. for different customer groups or markets)

Increasing speed of change (e.g. more frequent product phase-ins/outs, shortened product lifecycles)

Trend-related activities


Transparency of customer requirements across industries

Automotive

High-Tech

Chemicals

Med-Tech & Pharma

Engineered Products

Construction

Consumer Goods

3.3

3.4

3.5

3.6

3.6

3.6

3.7

4.1

Overall average

Industries with above-average transparency

Industries with below-average transparency

Automotive and Consumer Goods companies know most about their customers' requirements – B2B industries distinctly below average

1 = Very low transparency, 5 = Very high transparency


Importance of supply chain as a differentiator is increasing – SC function tends to be organized as division or at board level

Importance of supply chain as a differentiator by industry – Highest hierarchical level

Automotive

Construction

Engineered Products

Chemicals

High-Tech

Consumer Goods

+10%

86%

57%

67%

92%

73%

83%

+19%

+17%

+29%

86%

74%

86%

75%

100%

83%

93%

83%

+11%

+17%

+12%

Board Division Depart-ment

Unit

Med-Tech & Pharma

Very important Important Importance in 3-5 years

Very important Important Importance today

> Automotive and Construction companies assign greatest importance to supply chain as a differentiator, whereas High-Tech, Med-Tech and Pharma see it as less important

> Across all industries, supply chain is becoming more important as a means of differentiating against the competition

> The supply chain function is either a division or there is a board member with supply chain responsibility

> Construction companies tend to organize SC function at the highest level – Chemicals firms at the lowest

Importance of supply chain performance as differentiator

Highest hierarchical level


Responsibility of supply chain functions differs by industry – Most Consumer Goods companies feature end-to-end responsibility

Importance of supply chain as a differentiator by industry – Responsibility for SC

83%

73%

74%

100%

75%

86%

86%

92%

57%

+10%

83%

+19%

+11%

67%

+17%

+12%

86%

93%

83%

+29%

+17%

1) % of SC departments that are fully responsible for the SC categories

Plan Source Make Deliver/Return

27%

63%

26%

50%

63%

75%

58%

73%

57%

57%

71%

74%

75%

46%

20%

0%

17%

50%

42%

25%

33%

70%

71%

54%

77%

47%

81%

65%

> The supply chain function's responsibility differs by industry

> Majority of supply chains are fully responsible for delivery and sourcing

> Make category mostly not under the responsibility of the supply chain

> Supply chain functions in Consumer Goods companies are mostly full orchestrators of all categories from planning to delivery

Automotive

Construction

Engineered Products

Chemicals

High-Tech

Consumer Goods

Med-Tech & Pharma

Importance of supply chain performance as differentiator

Full responsibility1)

Supply chain department is fully responsible for respective function for more than 50% of companies


SCs have to meet multiple targets simultaneously – Targets that are now less important will catch up to become more or equally important

Importance of supply chain targets

SC targets in relation, 2015 vs. 2020

Average importance 2015 Expected average importance 2020

Reliability

Transparency and traceability

Flexibility

Lead time

Sustainability

Cost

5: Very important

1: Not important

5

Expected average importance 2020

4

5

3

2

1

4

3

2

1 Average importance 2015

> Reliability and cost are the most important supply chain targets today – Transparency and traceability as well as sustainability are comparatively less important

> All targets gain in importance within the next five years, especially those that are less important today


18

SCM embraces suppliers and customers to offer an end-to-end perspective – Supply Chain Design as the overall enabler

Supplier Customer

Plan

Deliver/Return Make

Fore- casting

Demand planning

Supply planning

Distribution planning

Procurement planning

Ordering/ call-off

> Warehousing > Transportation > Order fulfillment

Production planning

Coordination

Fulfillment

Supply Chain Design

Supply chain – Overview of lever categories


Across all industries, the greatest importance is placed on fulfillment today – SC coordination tends to be underrated

Low High

64%

54%

61%

70%

57%

Current importance of all levers Current maturity

Importance of supply chain lever categories

Supply Chain Design

Plan

Source

Make

Deliver/ Return

1

2

3

4

Very important Important

> Levers in the Source category considered most important

> Planning and Deliver/Return levers rank in midfield

> Levers in the Make and Supply Chain Design category considered least important

> Maturity of lever application is only moderately high and not in proportion to importance of levers

5

FU

LFILL-

ME

NT

C

OO

RD

I- N

AT

ION


Best

Construction lags behind on maturity in all supply chain categories – Automotive is leading in most

Current maturity of lever application per SC category – Industry benchmarking

1) Percentage of respondents ranking supply chain as important or very important as a differentiator in their industry

B W Worst

Importance of SC as a

differentiator1) Supply Chain Design

1 Plan

2 Source

3 Make

4

Low High

Deliver/ Return

W

B

83%

83%

75%

74%

67%

57%

73%

W

B

W

B

W

B

W

B

Low High Low High Low High Low High

5

Automotive

Construction

Engineered Products

Chemicals

Consumer Goods

High-Tech

Med-Tech & Pharma


End-to-end SC integration is the most important lever in the Design category – Service supply chain and new technologies less crucial

45%

48%

60%

60%

61%

66%

40%

Importance and maturity of Supply Chain Design levers (sorted by importance)

Supply Chain Design 1

Low High


End-to-end SC integration, i.e. SC as orchestrator of complete chain from customer order to customer delivery

Traceability incl. inputs and finished goods

Optimized supply chain configuration (e.g. postponement strategies, push vs. pull steering)

SC segmentation, i.e. different SC service levels and solutions per customer segment

Make-or-buy optimization (e.g. via 3PL/4PL)

Equal attention on developing the service supply chain as on the product supply chain

Current importance Current maturity

Use of new technologies (e.g. automation solutions for production or warehousing, big data analysis to optimize route planning)

> End-to-end supply chain integration considered the most important lever within SC Design category

> Assigning equal attention to the service supply chain and the product supply chain and use of new technologies considered less important – Maturity consequently below a moderate level


Application of SC Design levers most mature in Med-Tech & Pharma – Construction has largest gap between importance and maturity

Importance/maturity of SC Design levers – Industry performance (sorted by maturity)

Supply Chain Design

Cross-industry results

Current importance of all Supply Chain Design levers

1

64%

50%

43%

59%

55%

60%

47%

54%

Med-Tech and Pharma

Consumer Goods

Chemicals

Engineered Products

High-Tech

Automotive

Construction

Low High

Current maturity

> Supply Chain Design levers in Consumer Goods, High-Tech and Construction more important than in other industries

> Maturity of SC Design lever application in most industries is moderately high – Med-Tech & Pharma slightly more and Construction less mature



Plan 2

Reliable demand forecasts and systematic alignment of supply and demand very important levers for SC optimization in Plan category


Importance and maturity of Plan levers (sorted by importance)

40%

56%

61%

71%

76%

Low High

Reliable demand forecast aligned across functions and regions

Systematic alignment of demand and supply/capacity planning (e.g. as part of S&OP process)

Collaborative planning with customers (e.g. forecast exchange, regular joint business reviews, …)

Integration of S&OP process with other planning activities (e.g. financial/business planning, strategic sales planning)

Balancing of demand and supply for service business (e.g. production slot allocation, planning rules, …)


> Aligned demand forecasts and systematic S&OP processes are the most important levers within Plan category

> S&OP process is the most mature Plan lever

> Integration of service business in planning is the least important and mature lever


Plan 2

Automotive stands out as most mature in application of Plan levers – Planning very important for Construction and Consumer Goods

Importance/maturity of Plan levers – Industry performance (sorted by maturity)

Current importance of all Plan levers

Automotive

Med-Tech and Pharma

Construction

Low High

Current maturity

> Application of Plan levers shows moderate maturity in all industries except for Automotive, where maturity is significantly higher, and Construction, where it is lower

> Importance of planning levers above average in Construction, Automotive and Consumer Goods

> Med-Tech and Pharma assign little importance to Plan levers


78%

57%

59%

52%

69%

33%

67%

61%

Consumer Goods

Engineered Products

Chemicals

High-Tech



Source 3

Source levers play an important role in optimizing the SC – Supplier selection, development and risk management very important


Importance and maturity of Source levers (sorted by importance)

58%

70%

72%

81%

Low High

Consideration of SC requirements in supplier selection and contracting (e.g. lead times, volume flexibility)

Supplier development to optimize value chain (e.g. regarding lead times, stock)

Implementation of supplier risk management (e.g. early warning system, backup strategies)

Seamless information flow to suppliers (e.g. forecast and order data exchange via EDI)


> Considering supply chain requirements in supplier selection is given a significantly high level of importance – Maturity above average but still shows distinct room for improvement

> Supplier development and active risk management also of high importance

> Information flow to supplier least important and mature lever in Source category


Source 3

In line with the importance of Source levers, Automotive is also very mature in their application

Importance/maturity of Source levers – Industry performance (sorted by maturity)


Current importance of all Source levers Low High

Current maturity

> Automotive, High-Tech and Construction assign above-average importance to Source levers

> Med-Tech and Pharma see Source levers as less important but they have already reached above-average maturity levels

> Consumer Goods, Chemicals and Construction show below-average maturity of Source lever application in supply chain optimization


Automotive

High-Tech

Engineered Products

Consumer Goods

Med-Tech and Pharma

Chemicals

Construction 81%

58%

67%

38%

74%

81%

85%

70%


Make 4

Manufacturing footprint optimization and transparency on production capacities are the most important levers in the Make category


Importance and maturity of Make levers (sorted by importance)

44%

57%

63%

63%

Low High

Manufacturing footprint optimization

Transparent view on available internal capacities for main production steps incl. interdependencies

Flexibility measures in production (e.g. job hoppers, multi-purpose equipment, external backups)

Integration of production steps/ defragmentation (e.g. one-piece flow)


> Footprint optimization and transparency on available production capacities are the two most important levers, with maturity above a moderate level

> Integration of production steps or defragmentation is the least important Make lever

> Overall, moderate level and little deviation in maturity among levers for supply chain optimization in production


Make 4

Automotive and High-Tech companies consider Make levers more important than other industries and attained highest maturity levels

Importance/maturity of Make levers – Industry performance (sorted by maturity)

Current importance of all Make levers Low High

Current maturity

> Automotive and High-Tech industries significantly above-average in terms of importance of levers in the Make category – Correspondingly, the maturity of lever application is also comparatively high

> Other industries show a moderate maturity level and slightly below-average importance of levers in production


Automotive

High-Tech

Engineered Products

Consumer Goods

Med-Tech and Pharma

Chemicals

Construction

55%

70%

68%

57%

49%

51%

53%

47%



Deliver/Return

Inventory management is the most important lever in the Deliver/ Return category


Importance and maturity of Deliver/Return levers (sorted by importance)

5

60%

62%

74%

62%

Low High

Systematic inventory management (e.g. make-to-stock vs. make-to-order decisions, slow mover handling, sales vs. after sales business)

Leverage of alternative inventory strategies (e.g. VMI – Vendor Managed Inventory, consignment stock)

Warehouse footprint optimization (number of warehouses, crossdocking, hubs, …)

Systematic transportation logistics optimization (e.g. mode of transportation, routing)


> Systematic inventory management is the most important lever for delivery

> Alternative inventory strategies (with suppliers) stands out as least mature lever despite comparatively high importance

> Pure logistics widely considered comparatively mature


Deliver/Return

Deliver/Return levers are most important in Consumer Goods and Automotive industries, where the highest maturity is reached

Importance/maturity of Deliver/Return levers – Industry performance (sorted by maturity)

Current importance of all Deliver/Return levers Low High

Current maturity

> Consumer Goods and Automotive assign distinctly above-average importance to Deliver/Return levers and show highest maturity levels

> Med-Tech/Pharma and Chemicals see less importance in delivery levers

> Maturity of Deliver/Return lever application is above a moderate level in all industries except Construction


Consumer Goods

Automotive

Engineered Products

Chemicals

Construction 63%

52%

61%

44%

59%

73%

78%

64%

High-Tech

5

Med-Tech and Pharma



D. Supply Chain Excellence industry insights



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Automotive supply chains are mainly impacted by flexibility and reliability requirements – Source levers are the most important

Automotive

> Covering customer requirements on flexibility, reliability and complexity are the trends with the biggest impact on supply chains in Automotive – Activity levels in those areas are correspondingly high and only topped by cost measures

> Both sustainability and technological advancements have comparatively little impact on Automotive supply chains

Trends


Levers

> Reliability and flexibility are the most important targets in supply chain considerations – This is also expected to remain the case in the future

> Sustainability, currently clearly ranked as the least important target, is expected to increase in importance over the coming years but still falls short in comparison to others

> Supply chain levers in the Source category are clearly considered the most important – The gap to the maturity of lever application, however, is significant, leaving room for improvement

> Besides the Source levers, certain levers from other categories are considered to be of outstanding importance for Automotive supply chain optimization; those are manufacturing footprint optimization and alignment of demand and supply/capacity planning through S&OP

Summary


On seven out of the ten top trends, Automotive is among the three most active industries – Lowest activity on managing uncertainty

Rising reliability requirements

Rising flexibility requirements

Increasing demand volatility

Rising cost requirements

Increasing complexity

Increasingly heterogeneous customer requirements

Activity level for top 10 trends across industries – Industry ranking

Current activity level for industries [average activity; 1 = Not active … 5 = Very active]

Increasing speed of change

Increasing globalization

Increasing uncertainty

Rising lead time requirements

Construction Med-Tech and Pharma Engineered Products High-Tech Automotive Chemicals Consumer Goods

4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1

Most important trends

Automotive

Most active industry Least active industry


Focus in Auto is on covering customer requirements on flexibility, reliability and complexity – Still moderate activity on bottom 3 trends

Three trends with the highest impact on the supply chain 1 = Low impact of a trend on the supply chain 5 = High impact


Automotive




Average of all trends

Industry 4.0 (e.g. autonomous vehicles, connected machines)

Technological advancements (e.g. 3D printing/additive manufacturing, RFID-based tracking)

Rising customer requirements regarding sustainability and a "green" supply chain

Low High


Top 3 and bottom 3 trends

2.7

3.4

3.4

3.8

4.2

4.3

4.4

Three trends with the lowest impact on the supply chain


Flexibility ranked top with high level of activities – Cost requirements rank in the middle of the top trends but have highest activity level

4.1

4.3

4.4

4.2

4.2

3.9

3.9

4.0



Automotive








Top 8 of 17 trends – Impact on supply chain and activity level

Trend Impact on supply chain Low High



For the bottom trends, activity levels fall with the impact on the supply chain – Sustainability clearly ranked lowest on SC impact

3.9

3.8

3.8

3.8

3.7

3.4

3.4

3.4

2.7 Rising customer requirements regarding sustainability and a "green" supply chain

Automotive



Rising customer requirements regarding transparency and traceability

Digitization (e.g. big data, real time routing)

Increasing relevance of the "service supply chain" (e.g. for value-added services or spare parts)



Bottom 9 of 17 trends – Impact on supply chain and activity level

Increasing governmental regulations (e.g. REACH, emission quotas, local content requirements)

Low High

Trend Impact on supply chain Trend-related activities



Today's bottom trend, sustainability, is expected to increase the most over the next five years – Biggest importance/maturity gap in sourcing

Supply chain targets and importance of lever categories

100%

73%

60%

27%

87%

47%

87%

73%

93%

87%

93%

53%

Very important Important Importance in 5 years


4

Flexibility

1

Cost 2

Reliability (on time in full)

3

Lead time

5 Transparency and traceability

6 Sustainability/"green" supply chain

Importance

Automotive

1 2 3 4


-0.7

-0.3

-0.6

-0.2

-0.5

3.4

3.6

4.3

2.9

3.4

3.8 3.9

3.6 3.6

4.0

Importance and maturity of lever categories

Maturity Importance

Average: 1 = Not important/mature; 5 = Very important/mature

5 Plan Source Make Deliver/Return SC Design


Optimization of manufacturing footprint is by far the most important lever – Overall, fairly high maturity on all top ten levers

Top 10 Automotive levers across all SC categories by importance

85%

87%

87%

87%

93%

80%

79%

73%

73%

80%


Low High Current maturity Current importance

SC category: Plan Source Make Deliver/Return SC Design







Systematic inventory management (e.g. make-to-stock vs. make-to-order decisions, slow mover handling, …)




Automotive



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Supply chains in High-Tech mainly impacted by uncertainty and demand volatility – Sourcing levers are most important

> Covering customer requirements on uncertainty, demand volatility and flexibility are the trends with the biggest impact on supply chains in High-Tech – Activity levels in those areas are correspondingly high and only reliability measures showing a similar level of activity

> Both sustainability and technological advancements have comparatively little impact on High-Tech supply chains

Trends


Levers

> Reliability, lead time and flexibility are the most important targets in supply chain considerations – However, transparency is expected to become a top three target in the future


> Supply chain levers in the Source category are clearly considered the most important – The gap to the maturity of lever application, however, is significant, leaving room for improvement

> Besides the Source levers, certain levers from other categories have comparatively high importance levels for High-Tech supply chain optimization; those are reliable demand forecast, end-to-end SC integration and transparent view on available internal capacities

Summary

High-Tech


High-Tech industry most active in managing a VUCA environment – Focus on rising flexibility requirements, volatility and uncertainty







Industry ranking for top 10 trends across industries






4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


High-Tech




Overall, activity level in High-Tech is in line with SC impact – Comparatively little impact and few activities in Industry 4.0









Low High



4.2

4.3

2.5

2.5

4.1

2.6

3.5

High-Tech

Three trends with the highest impact on the supply chain 1 = Low impact of a trend on the supply chain 5 = High impact Three trends with the lowest impact on the supply chain


High-impact trends receive high levels of attention – Increasing cost pressure still ranks among the top trends, albeit at the bottom end

3.8

3.7

3.9

4.0

4.1

4.2

4.3

3.7









Top 8 of 17 trends

Low High

High-Tech




Notably, consistent with the limited expected impact of Industry 4.0, technological advancements also show the lowest activity levels

3.6

2.6

2.5

2.5

3.6

3.5

3.5

3.5

3.0









Bottom 9 of 17 trends


Low High

High-Tech





89%

11%

74%

53%

37%

89%

74%

89%

95%

33%

84%

84%



4

Flexibility

1

Lead time 2


3

Cost



Importance

1 2 3 4

-0.7

-0.3

-0.5

3.4

3.9

3.6

3.3

-0.6

4.1

-0.6

3.3

3.6

3.0

3.6

2.9

Maturity Importance


High-Tech

5

Supply chain targets Importance and maturity of lever categories

Plan Source Make Deliver/Return SC Design

Today's bottom trend, transparency, is expected to increase the most over the next five years – Biggest importance/maturity gap in sourcing


Across all SC categories, importance of sourcing ranks highest in High-Tech – Overall, maturity of all top ten levers is on the high side

Top 10 High-Tech levers across all SC categories by importance

79%

83%

84%

89%

89%

79%

74%

74%

74%

74%













Flexibility measures in production (e.g. job hoppers, multi-purpose equipment, external backups)

High-Tech



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Flexibility and reliability are the most relevant for Chemicals supply chains – Companies are active concerning governmental regulations

> Covering customer requirements on flexibility and reliability are the trends with the biggest impact on Chemicals supply chains

> Even though increasing governmental regulations is "only" the third most important trend, the activity levels in this area are highest

> Both sustainability and technological advancements have very little impact on Chemicals supply chains – Customer requirements regarding cost rank only in midfield

Trends


Levers

> Reliability and flexibility are and will remain the most important targets in supply chain considerations

> In the future, the other targets will gain relative importance in comparison to cost targets, which becomes especially apparent for the target of sustainability

> Supply chain levers in the Supply Chain Design and Plan categories are clearly considered the most important – The gap to the maturity of lever application, however, is very high, leaving room for improvement

> Collaborative planning with customers is considered an important lever but the maturity of application lags behind that of other levers

Summary

Chemicals


Chemicals companies are less active than those in other industries on most of the important trends













4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


Chemicals




Flexibility, reliability & regulations are the most important trends for Chemicals SCs – Few activities in new technologies & sustainability









Low High



2.4

2.4

2.5

3.4

3.9

4.1

4.2

Chemicals



The most important trends are reliable deliveries within given lead times despite the required flexibility in a volatile environment

3.6

3.6

3.8

3.6

4.1

3.8

4.2

3.9










Low High

Chemicals




Technological trends do not play a major role for Chemicals SCs – Requirements regarding cost are also among the bottom trends

3.6

3.5

3.5

3.1

3.1

2.8

2.5

2.4

2.4 Technological advancements (e.g. 3D printing/additive manufacturing, RFID-based tracking)










Low High

Chemicals




Gap between importance and current maturity of SC levers is high – Reliability and flexibility are and will remain of greatest importance


77%

23%

77%

69%

77%

54%

85%

62%

69%

100%

92%

85%



4

Cost

1

Flexibility 2


3

Transparency and traceability

5 Lead time


Importance

1 2 3 4

3.5

3.4

-0.4 -0.4

3.0

3.7

-0.5

3.0

3.1

3.5

3.4

3.1

-0.7

3.1

-0.3

Importance Maturity


Chemicals

5




SC segmentation and reliable demand forecasts are most important levers, while maturity on the top 10 levers is only moderate

Top 10 Chemicals levers across all SC categories by importance

69%

75%

77%

77%

85%

69%

67%

62%

62%

69%














Chemicals



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Flexibility and uncertainty impact Construction companies the most – Maturity of Plan and Source levers very low despite high importance

> Covering customer requirements on flexibility in a more and more uncertain environment paired with increasing regulations are the trends with the biggest impact on Construction supply chains

> Construction companies focus their activities most on dealing with increasing governmental regulations and complexity

> Digitization and technological advancements have very little impact on Construction supply chains

Trends


Levers

> The supply chain targets within the Construction industry can be clustered in three groups: Most important are lead time and reliability; flexibility and cost are somewhat less important but still at a high level; transparency and sustainability are of minor importance

> In the future, all targets are expected to be of equal importance as today's less important targets gain significantly in importance

> Supply chain levers in the Plan and Source categories are most important but still exhibit a massive gap to the maturity of lever application

> Besides the levers from the Plan and Source categories, certain Supply Chain Design levers stand out in importance, such as use of new automation technologies and supply chain integration

Summary

Construction


Construction is the least active industry concerning the ten most important trends across all industries, ranking last seven times













4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


Construction




Despite the high impact of rising customer requirements regarding flexibility, the Construction industry lags far behind with its activities








Low High


2.6

2.9

2.9

3.6

4.1

4.3

4.4

Construction




Construction companies are very active concerning increasing governmental regulations and increasing complexity

3.6

3.8

3.9

4.0

4.1

4.1

4.3

4.4 Rising customer requirements regarding flexibility









Low High

Construction




Technological trends are ranked as having very low impact in Construction and companies are very inactive in this area

3.6

3.4

3.3

3.3

3.3

3.1

2.9

2.9

2.6 Technological advancements (e.g. 3D printing/additive manufacturing, RFID-based tracking)










Low High

Construction




Gap between importance and current maturity of SC levers is significantly high – Importance of top SC targets will remain the same


75%

88%

88%

88%

63%

38%

75%

25%

75%

88%

88%

75%



4

Flexibility

1


2

Lead time

3

Cost



Importance

1 2 3 4

4.2

-1.2

3.5

2.7

-1.4

2.3

3.6

-1.5

2.6

-1.4

2.6

-0.9 3.8

2.4

4.0

Importance Maturity


Construction

5




SC Design, Plan and Source levers are the most important in Construction – Some highly important levers have very low maturity

Top 10 Construction levers across all SC categories by importance

75%

88%

88%

88%

88%

88%

88%

88%

88%

100%





Integration of S&OP process with other planning activities (e.g. financial/business planning, strategic sales planning)

Use of new technologies (e.g. automation solutions for production or warehousing, …)







Systematic inventory management (e.g. make-to-stock vs. make-to-order decisions, slow mover handling, sales vs. after sales business)

Construction



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Med-Tech/Pharma SCs are influenced by globalization and cost pressure – SC Design levers most important but also highly developed

> The trends with the biggest impact on supply chains in Med-Tech and Pharma are increasing globalization, cost pressure and reliability requirements – Companies also focus their activities in those high-impact areas

> Both sustainability and technological advancements have comparatively little impact on Med-Tech and Pharma supply chains

Trends


Levers

> Reliability and cost are clearly the most important targets in supply chain considerations – This is also expected to remain the case in the future

> Lead time and flexibility, currently ranked as being of only moderate importance, will gain significantly in importance over the next five years

> Supply Chain Design levers are considered the most important within Med-Tech and Pharma

> Overall, Med-Tech and Pharma companies see no major gap between the importance of supply chain levers and their current maturity

> Traceability of inputs and finished goods stands out as an important lever within Med-Tech/ Pharma but is already considered quite well developed

Summary

Med-Tech and Pharma


Med-Tech and Pharma industry ranks in the midfield on activities concerning the top trends in comparison to other industries













4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


Med-Tech and Pharma




Globalization has a major impact on Med-Tech and Pharma supply chains – Sustainability has the lowest impact on supply chains








Low High


3.4

3.9

4.1

4.3

2.5

2.8

2.8

Med-Tech and Pharma




Globalization and costs have very high impact on Med-Tech/Pharma SCs, closely followed by reliability and attention to services

3.6

4.1

4.3

3.9

3.9

3.5

3.6

3.6










Low High

Med-Tech and Pharma




Increasing governmental regulations stand out with high activity level among the bottom trends – Technology & sustainability insignificant

3.4

3.4

3.4

3.4

3.3

3.1

2.8

2.8











Low High

Med-Tech and Pharma




Today, supply chains are driven by reliability and cost targets –Maturity and importance of SC levers are in alignment


63%

100%

38%

88%

88%

88%

13%

75%

25%

38%

50%

57%



4

Lead time

1

Cost 2


3

Flexibility



Importance

1 2 3 4

3.3

-0.2

0.0

0.0

3.3

3.0

3.1

+0.1

3.3

3.0

3.1

3.3

3.5

-0.1 3.2

Maturity Importance


Med-Tech and Pharma

5




SC Design levers are considered to be of high importance, while maturity levels match importance levels

Top 10 Med-Tech and Pharma levers across all SC categories by importance

50%

50%

50%

50%

50%

57%

63%

63%

63%

88%








Make-or-buy optimization (e.g. via 3PL/4PL)






Med-Tech and Pharma



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Engineered Products

Engineered Products supply chains are mainly impacted by reliability and lead time requirements – Source levers are important

> Covering customer requirements on reliability, lead times and demand volatility are the trends with the biggest impact on supply chains in Engineered Products – Activity levels in these areas are correspondingly high but companies are at least equally active in flexibility and cost measures

> Sustainability, technological advancements and Industry 4.0 have comparatively little impact on Engineered Products supply chains

Trends


Levers

> Cost and reliability are the most important targets in supply chain considerations – However, lead time and flexibility, nowadays of moderate importance, will be of high importance in the future


> Supply chain levers in sourcing are considered the most important – The gap between importance and maturity is, however, significant and leaves room for improvement

> Among sourcing levers, consideration of SC requirements in supplier selection is by far the most important single lever

Summary


Engineered Products industry is more active than most on the top 10 trends – Focus on complexity, uncertainty, costs and lead time













4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


Engineered Products




The activity level corresponds strongly to the impact level of the top and bottom 3 trends – Currently, Industry 4.0 at lower end of trends








Low High


2.5

3.0

3.0

3.6

4.1

4.1

4.2

Engineered Products




Activities per trend are consistently at a high level, corresponding to the overall high impact of the 8 most important trends

3.8

3.8

3.9

4.0

4.0

4.1

4.1

4.2 Rising customer requirements regarding reliability (on time in full)








Top 8 of 17 trends

Low High

Engineered Products


1 = Low impact of an trend on the supply chain 5 = High impact


Activity level is increasing moderately, correlating to the impact level of the 9 less important trends – Industry is behind on digitization

3.7

3.7

3.3

3.3

3.1

3.0

3.0

3.0











Low High

Engineered Products




In 2020, the industry will be mainly driven by costs, reliability, lead time and flexibility – Maturity level trails behind importance in all categories


26%

96%

78%

87%

55%

65%

22%

70%

91%

48%

87%

87%



4

Lead time

1


2

Cost

3

Flexibility



Importance

1 2 3 4

3.5

3.0

-0.3 -0.3

3.5

-0.5

3.5

3.8

3.2 3.2 3.2

-0.6

3.3

3.0

-0.3

Importance Maturity


Engineered Products

5




Sourcing levers are of highest importance, followed by Return and Make levers – Overall, maturity is currently at a fairly moderate level

Top 10 Engineered Products levers across all SC categories by importance

59%

59%

61%

61%

64%

70%

70%

74%

74%

83%










Systematic transportation logistics optimization (e.g. mode of transportation, routing)



Integration of production steps/defragmentation (e.g. one-piece flow)

Engineered Products



Automotive

High-Tech

Chemicals

Med-Tech and Pharma

Engineered Products

Construction

Consumer Goods


Consumer Goods

Consumer Goods supply chains are mainly impacted by reliability and demand volatility – Make levers are the least important

> Covering customer requirements regarding reliability and demand volatility, along with heterogeneous customer requirements are the trends with the biggest impact on supply chains in Consumer Goods – Activity levels, particularly in the first two areas, are correspondingly high

> Industry 4.0, technological advancements and sustainability have comparatively little impact on Consumer Goods supply chains

Trends


Levers

> Reliability and costs are the most important targets in supply chain considerations – However, in the future lead time, flexibility and transparency will substantially gain in importance


> The Make supply chain lever category is the least important, while the others are almost equally important – The gap between lever importance and maturity with respect to Plan and Source is most significant, leaving room for improvement

> The most important single levers are systematic inventory management and reliable demand forecast

Summary


Consumer Goods companies rank above average on their activity level in the top 10 trends across industries













4.2

3.9

4.1

4.4

3.9

3.5

3.7

4.4

3.9

3.9

4.2

3.9

4.0

4.0

3.8

3.4

3.6

4.2

3.7

3.8

4.0

3.9

3.8

3.9

3.8

3.4

3.5

3.8

3.5

3.7

4.0

3.7

3.6

3.9

3.8

3.3

3.1

3.6

3.4

3.6

4.0

3.7

3.5

3.7

3.7

3.2

3.1

3.6

3.4

3.5

3.6

3.4

3.3

3.2

3.6

3.2

3.1

3.3

3.3

3.5

3.3

2.9

3.1

3.1

3.5

3.0

2.9

3.1

3.2

3.1


Consumer Goods




Rising reliability requirements paired with demand volatility have the biggest impact on Consumer Goods supply chains








Low High


2.5

2.7

3.0

3.6

4.0

4.2

4.5

Consumer Goods




Top trends in Consumer Goods all relate to meeting higher delivery performance requirements in less stable environments

3.8

3.9

3.9

3.9

3.9

4.0

4.2

4.5 Rising customer requirements regarding reliability (on time in full)








Top 8 of 17 trends

Low High

Consumer Goods




For the bottom 9 trends, the activity level largely correlates to SC impact – Exceptions are sustainability and transparency/traceability

3.7

3.5

3.4

3.4

3.4

3.1

3.0

2.7

2.5 Industry 4.0 (e.g. autonomous vehicles, connected machines)










Low High

Consumer Goods




For 2020, transparency and sustainability targets are on the rise – Maturity level significantly below importance for Plan and Source


87%

87%

86%

77%

83%

38%

80%

63%

7%

93%

97%

67%



4

Lead time

1

Cost 2


3

Flexibility



Importance

1 2 3 4

3.6

3.1

3.8

3.0

-0.4

-0.4

3.0

3.5

3.9

3.4

3.7

-0.7

-0.5

3.1

-0.7

Importance Maturity


Consumer Goods

5




Most levers are of equal importance with the exception of those in Make category – Maturity level lags behind, especially for Plan levers

Top 10 Consumer Goods levers across all SC categories by importance

69%

69%

70%

72%

72%

83%

83%

83%

86%

90%














Consumer Goods


E. Contacts


Study authors

Matthias Kohl

Dr.-Ing. Carsten Bock Principal

Tel.: +49 (711) 3275-7223 Mobile: +49 (160) 744-7223 [email protected]

Senior Consultant

Tel.: +49 (211) 4389-2938 Mobile: +49 (160) 744-2938 [email protected]

Dr.-Ing. Henry Widera Project Manager

Tel.: +49 30 39927-3572 Mobile: +49 (160) 744-3572 [email protected]


We have a strong international Operations Strategy network with more than 500 operations professionals globally

90

500 operations professionals globally, 300 projects delivered over the past 3 years

International Operations network

Nether-lands

Alexander Belderok

Ryuji Ono

Japan

Sweden

Per I. Nilsson

Canada

Serge Lhoste

Roland Falb

Austria

Wu Qi

China

Wilfried Aulbur

India

Alberto de Monte

Italy

Switzer-land

Sven Siepen

France

Michel Jacob

Emmanuel Bonnaud

Max Blanchet (Global Head)

Thomas Rinn (Global Head)

Jochen Gleisberg

Oliver Knapp

Germany

Sebastian Feldmann

Steffen Gackstatter

Michael Zollenkop

Tomasz Narloch

Poland

USA

Jonathan Wright

Brazil

Martin Bodewig

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http://mysite-eu.rolandberger.net/Person.aspx?accountname=ROLANDBERGER/M706015


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