Accenture Research Shows Clear Connection Between Supply Chain and Stock Market Performance

June 1, 2003
NEW YORK -- Findings of a global research effort by Accenture (NYSE:ACN) and leading research universities INSEAD and Stanford show a clear link between

NEW YORK -- Findings of a global research effort by Accenture (NYSE:ACN) and leading research universities INSEAD and Stanford show a clear link between supply chain and stock market performance.

Companies whose supply chain performance identified them as 'supply chain leaders' were found to have a market capitalization compound average growth rate (CAGR) of up to 26 percentage points above the industry average growth rate. Those companies whose supply chain performance fell into the 'decliners' category saw their relative market cap CAGR fall an average of 25 percentage points.

The research was performed to understand how the supply chain has become strategic to companies and how its use can drive and create competitive advantage. To obtain the findings, Accenture worked with its research partners during a one-year period to analyze supply chain and financial performance data reported in the corporate disclosures of the Global 3000; interview and survey senior executives across multiple industries; and analyze over 300 examples of supply chain innovations. The research was finalized in December 2002. Other key findings include:

- Supply chains are increasingly strategic across diverse industries and companies.

- The best supply chain companies create business strategies, selectively enable key supply chain capabilities to execute the business strategy, and continuously innovate in supply chain operations.

- Successful companies selectively use novel supply chain tactics (such as outsourcing, spinouts/venturing and alliances) combined with new infrastructures and information technologies to transform key supply chain capabilities and create competitive differentiation.

"For many businesses, the supply chain is a tremendous opportunity area, yet many companies continue to do business as usual, looking only to shave additional costs from their existing operations," said William Copacino, managing partner for Accenture's global supply chain group. "An increasing number of successful supply chain companies are looking for new strategies that gain market share by getting closer to their customer, revolutionizing their cost structure, or delivering innovative products and services".

The importance of supply chains to business success was also supported by a survey of 104 supply chain executives from North America and Europe. A large majority (89 percent) viewed the supply chain as critical or very important to their businesses, and a similar percentage reported the supply chain had become more important in their industry over the past three years (89 percent).

Despite the greater pressure for cost savings brought on by the slowing economy, almost one quarter of the survey respondents indicated that increasing revenue was the primary focus of supply chain initiatives in their companies over the past three years.

The survey also found the three most important supply chain capabilities that create future opportunities are: supply chain planning, links with customers and links with suppliers.

About the research

Accenture, in conjunction with Stanford University and INSEAD, conducted a yearlong research study to investigate how supply chain excellence and transformation impact financial performance and competitive advantage. Accenture began with a detailed analysis of public disclosure data from selected Global 3000 corporations, classifying companies into supply chain leaders, transformers, decliners and laggards based on their supply chain performance profiles over time. It then statistically related these supply chain categories to shareholder value growth rates and patterns over time. Accenture conducted more than sixty in-depth interviews with companies across all categories, often with multiple executives responsible for supply chain strategy and operations. The interviews complemented an online survey of 104 additional supply chain executives from companies that spanned in excess of twenty-five industries in North America and Europe.

Accenture is a leading management consulting and technology services organization. Accenture delivers innovations that help clients across all industries quickly realize their visions. Its home page is