Despite the best efforts of supply chain executives, very little true collaboration is currently going on today, according to a study issued jointly by Capgemini, Georgia Southern University and the University of Tennessee and sponsored by Intel. Analysis shows that less than 10% of respondent firms are capable of full collaboration. The top three reasons identified as impediments to collaboration are technical issues (94%), strategies not aligned (86%) and lack of trust (82%).
More than 2,300 U.S. supply chain executives participated in the 2005 study, with nearly 50% of respondents from the manufacturing sector. Respondents are responsible for more than $86 billion in annual spending on transportation. The participants were subdivided into two categories -- leading-edge firms and laggards -- based on respondent's characteristics of excellence developed over the last six years of the report.
"Collaboration is more than just good business sense, as supply chain members that align their people, processes and technology can collaborate to make the 'right' decisions based on high integrity, high visibility information," says Peter Moore, vice president of supply chain and RFID at Capgemini. "Despite a consensus on the need for collaboration, however, this year's survey results demonstrate that technical and cultural barriers often keep organizations from reaching the desired level of integration across the supply chain."
"The first type of collaboration, coordination, or intragration, appears to be making slow improvement. One measure of this level of success is the Perfect Order Index, as it has increased over five percentage points in the past two years of the study," says Mary Holcomb, study co-author and professor of logistics at The University of Tennessee. "The element with the most significant level of improvement was sending a correct invoice to the customer. While that sounds simple at first, the reality is much different. This requires greater internal communication, as well as accurate information regarding inventory stocking levels."
Other key findings from the study include:
* Respondents had more success partnering with manufacturers than end-user consumers, retailers, or distributors.
* Since 2003, commercially purchased software packages have increased 6% at respondent companies.
* In addition, 47% of leading-edge firms use commercially-purchased software packages today, as compared to only 26% of laggard firms.
* "Just in time" is considered important or very important to seven in ten (71.7%) leading-edge firms compared to only four in ten (42.4%) of laggard firms.
* Prioritizing data visibility & synchronization was the other major difference between three-quarters of leading-edge firms who claim it is important or very important to them (78%) vs. less than half of laggard firms (43.8%).
* The two tools that have decreased in use since 2003 are software developed in-house (a 4% decrease) and third party providers (a nearly 2% decrease).
* The top five domestic distribution processes in use are inbound logistics management, consolidated shipments, drop-ship programs, core carrier programs and third-party distribution.
* Since the 2003 report, rail and express package on-time delivery performance has improved slightly, while three motor carrier modes (truckload, national LTL and regional LTL) on-time performance has decreased slightly.
"The final phase of collaboration -- coopetition -- is just now starting to emerge in the supply chain landscape, according to this year's report," says Karl Manrodt, study co-author and professor of management, marketing & logistics at Georgia Southern. "In the long run, this is where significant waste can be removed from supply chains. It will take a different mind-set, based on trust established with current partners, to fully extend beyond what is currently occurring."