recession impact on supply chain spending - a capgemini survey

Crisis dominates the supply chain agenda in 2009

Which projects will hold out in these difficult times?

March 2009

SUPPLY CHAIN MANAGEMENT

Supply Chain Agenda 2009 2

Crisis dominates supply chain agenda in 2009

The financial crisis leads the list of most influencing factors for

the supply chain agenda in 2009. Over 65 percent of the

questioned managers engaged in logistics affairs, say that their

strategy is affected by the crisis. Another striking finding is that

34 percent of the managers mentioned “sustainability” as a topic

on their agenda. These are the results of Capgemini Consulting‘s

international study under 300 companies. The study reflects the

most important factors that influence the supply chain agenda of

2009 and shows the impact of the economic crisis on that agenda.

300 respondents shared their supply chain agenda with

Capgemini

The study was executed by means of a survey, which has been

completed by over 300 respondents in Europe (62%), the US and

Canada (16%), Asia (13%) and Latin America (5%). In addition to the

survey, several interviews with Supply Chain Managers have taken

place.

Financial crisis most important motive for 2009

To the question “what are the most influencing factors on the supply

chain agenda 2009”, 65% of the respondents answered that the

financial crisis is the most important topic. Next to that, meeting

(changing) customer requirements and sustainability appear to be

important motives for the supply chain manager.

10%

12%

21%

17%

25%

26%

29%

37%

46%

65%

0% 20% 40% 60% 80%

Other

New (type of) competition

Supply Chain Security

Regulatory compliance

Emerging markets

Introduction of new product-market combinations

Globalisation

Sustainability

Meeting (changing) customer requirements

Economic downturn

Business Drivers 2009

(Multiple answers per participant allowed)


Capgemini Consulting is the strategy and transformation consulting brand of Capgemini Group

TOP 10 Supply Chain projects 2009

The business drivers have direct influence on the activities and

projects that supply chain managers will execute in the coming period.

By average, supply chain managers have included seven projects in

the 2009 agenda. The study provided insight in the most important

projects in the area of supply chain strategy, sourcing of logistics

services, transportation, warehousing and supply chain planning and

control, per industry. The hereunder shown graph shows the

consolidated (all industries) top ten of most occurring projects.

48%

45%

44%

41%

39%

36%

35%

31%

30%

29%

0% 10% 20% 30% 40% 50% 60%

1. Inventory Optimization

2. Supply chain strategy project

3. Improve long term forecasting /planning

4. Network redesign

5. Improve supply chain visibility

6. Sales and Operation Planning

7. Contract renewal strategic logistic partner(s)

8. Warehouse centralisation or decentralisation

9. Sustainability program

10. Outsourcing of logistic services

Top 10 Supply Chain Projects

(Multiple answers per participant allowed)

Top of the list shows projects that lead to reduction of inventory and

logistic cost. Beside the fact that these are traditional areas of

attention, due to the financial crisis supply chain managers will focus

even more on realising these projects.


“……...the crisis has lead to

very short-term thinking. Nearly

all investments have been sus-

pended and decisions con-

cerning new investments are

taken on corporate level ….”

“….IT investments have been

suspended. This is a shame

since in our industry, IT in many

cases makes the difference; a

difference that we could use….”

Focus of supply chain managers shifts towards short term results

Capgemini asked the respondents to list the projects that were on the

supply chain agenda before the financial crisis, and the projects that

are (still) on the agenda after the commencement of the financial crisis.

The top ten of supply chain projects shows a shift caused by the

downturn. Projects that are aimed at the reduction of inventory and the

renewal of contracts with current or new logistics service providers,

show a clear increase. More ‘long-winded’ projects, such as network

redesign and supply chain strategy projects have been removed from

the agenda.

9%

-14%

-4%

-4%

6%

5%

11%

1%

-4%

-3%

-20% -15% -10% -5% 0% 5% 10% 15% 20%

1. Inventory Optimization

2. Supply chain strategy project

3. Improve long term forecasting /planning

4. Network redesign

5. Improve supply chain visibility

6. Sales and Operation Planning

7. Contract renewal strategic logistic partner(s)

8. Warehouse centralisation or decentralisation

9. Sustainability program

10. Outsourcing of logistic services

Shift in Top 10 Supply Chain Projects due to crisis

New IT investments are postponed

The postponement of long-term investments becomes very clear when

looking at the projects that were planned for 2009 but suspended since

the crisis started. All top five projects on this list concern logistics IT

projects. The number of large and complex projects planned

(TMS/WMS) deminishes by more than 20 percent.

-30%

-26%

-26%

-23%

-16%

-35% -30% -25% -20% -15% -10% -5% 0%

Technology based warehouse innovation (e.g. RFID / Voice picking)

Transport Management System (selection or implementation)

Design and implementation of logistic software solutions

Warehouse Management System (selection or implementation)

Advanced Planning Systems (APS) implementation

Top suspended Supply Chain Projects



“…….Sustainability is not

explicitly on our agenda

anymore. It is however a fact

that sustainable logistics go

hand-in-hand with cost

reduction.....”

Sustainable initiatives remain important

Another striking conclusion is that sustainability both populates the

agendas before (32%) and after the beginning of the financial crisis

(30%). In many projects both sustainability and logisitcs costs

reduction are achieved, which most likely explains why companies

keep on putting effort in it.

Is 2009 going to be a lost year?

The troublesome economical situation asks for proper action on short

notice in order to adjust the cost level to the declining demand, caused

by the recession. The risk in this is that other business drivers, that

may dominate the agenda on longer term, may not be taken into

account. Beside some inevitable interventions, the supply chain

manager’s challenge is to actualise cost reduction by innovations and

optimised supply chain processes. This will not only make a supply

chain more cost efficient on short notice, but will also result in a supply

chain that provides a significant competitive advantage after the

recession.


Papendorpseweg 100 – P.O.Box 2575 3500 GN Utrecht – the Netherlands Tel.: +31(0)30 689 00 00 · Fax: +31(0)30 689 99 99 www.capgemini.com/consulting

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 – the

Collaborative Business Experience™ – and

through a global delivery model called

Rightshore®, which aims to offer the right

resources in the right location at competitive

cost. Present in 36 countries, Capgemini

reported 2007 global revenues of EUR 8.7 billion

and employs over 88,000 people worldwide.

www.capgemini.com

Capgemini Consulting is the strategy and

transformation consulting division of the

Capgemini Group, with a team of over 4,000

consultants worldwide. Leveraging its deep

sector and business expertise, Capgemini

Consulting advises and supports organizations in

transforming their business, from strategy

through to execution. Working side by side with

its clients, Capgemini Consulting crafts

innovative strategies and transformation

roadmaps to deliver sustainable performance

improvement.

For more information:

www.capgemini.com/consulting

Authors

Hugo Haarman ([email protected])

Erwin den Exter ([email protected])

Jasper van der Schaar ([email protected])

Wouter van Heijst ([email protected])

recession impact on supply chain spending - a capgemini survey

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