Executive Overview Growth is slowing and the complexity in today’s supply chain is unprecedented. No two centers of excellence are the same, and no two supply chains are alike. There are different drivers and obstacles to building and running a Center of Excellence. However, if done right, the organization rates itself as more aligned, proactive and agile. The high-level results from our study are shown in Figure 2. Figure 2. Centers of Excellence Infographic Based on our qualitative interviews with clients, we find that these seven drivers to build a Center of Excellence: • Increase in the Importance of Supply Chain Management. As growth slows, and the global multinational organization matures, more and more companies are interested in driving supply chain excellence. The reasons are many; but, at the top of the list is improving reliability in the face of volatility. How so? Demand volatility is increasing and supplier viability is growing more fragile. Driving reliability in global operations in the face of these challenges is fundamental to defining and executing supply chain excellence. • Building of Global Teams and the Development of Supply Chain Talent. With the shortage of students from academia, and the retirement of the first- and second-generation supply chain pioneers, more and more companies are developing and executing programs to build supply chain talent. There is a shortage of mid-management talent with pressure on planning job retention. There is a limited supply of supply chain knowledge workers: leaders that are technologically savvy, analytical problem solvers, and astute in business processes. • Continuation of Work on Enterprise Resource Planning (ERP). When companies complete a large ERP project, there is a strong impetus to get the value from the investment and ensure technology usage. The focus of the Center of Excellence often becomes an extension of the global implementation team. • Metrics and Implementation of Analytics. While the management of supply chain excellence sounds easy, it is not. The management of order-to-cash and procure-to-pay processes and the supply chain execution processes are easier because they are well-defined. Most companies struggle with the definition of planning and the use of new forms of analytics. • Network Design and the Orchestration of Flows. Most companies start on their supply chain design journey to save costs in logistics. With the increasing cost of transportation, and the fragility of freight networks, network design for transportation and logistics networks is paramount. One client likened it to “minting money.” • Testing of New Technologies. Cloud technologies. Supply chain operating networks. The Internet of Things. 3D Printing. New forms of analytics. The list of technology and process disruptors could go on and on. While most companies feel stuck in their existing, and more traditional, processes they want to understand and explore technology

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Supply Chain
Centers of Excellence Study
Summary Charts
October 2014 – March 2015

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Agenda
 Study Overview
 Have a Center of Excellence
 No Center of Excellence
 Supply Chain Network Design
 Alignment and Organization

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Study Overview

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Most Respondents Are Manufacturers in Process or
Discrete Industries, with $7B in Revenue on Average

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Top Industries for Respondents Include Consumer
Packaged Goods, Food & Beverage and Chemical

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The Majority of Respondents Work in a Supply Chain Role,
Primarily at the Director or Manager Levels

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Over Half of Respondents Have
a Supply Chain Center of Excellence

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Two-Fifths Have Both a Supply Chain Center of Excellence
and a Supply Chain Network Design Group

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Agenda
 Study Overview
 Have a Center of Excellence
 No Center of Excellence
 Supply Chain Network Design
 Alignment and Organization

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Those With a Center of Excellence Stand Out for Having
Higher Revenue, a Network Design Group and a
Self-Reported Agile Supply Chain

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Those With a Center of Excellence Stand Out for Having
Higher Revenue

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Respondents Have an Average of Two Centers of Excellence
and Have Had Any for an Average of Four Years

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Nearly Half Rate Their Primary Center of Excellence
as Effective

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Sample Responses to Why Supply Chain
Center of Excellence Is “Effective”

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Sample Responses to Why Supply Chain
Center of Excellence Is NOT “Effective”

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Sample Responses to What “Success” Means
for Supply Chain Centers of Excellence

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Those with a Center of Excellence Report 19 Full-Time
Employees and 2 Part-Time Employees Working in it

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Half Outsource Any of Their Center of Excellence Work;
the Work Is Evenly Push vs. Pull

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The Leader of the Center of Excellence Primarily Reports
to the Supply Chain Leader, While the Supply Chain Leader
Primarily Reports to the CEO/President or COO

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Nearly Half Report That with Their Center of Excellence,
Divisions Have the Power and Most Are Centralized

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The Prescriptive Approach Is the Most Common
for Supply Chain Centers of Excellence

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Primary Areas for Center of Excellence Audits Include
Supply and Demand Planning Maturity

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Primary Areas for Center of Excellence Audits Include
Supply and Demand Planning Maturity

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Most Important and Top Performing Element of
Centers of Excellence: Executive Support

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Most Important and Top Performing Element of
Centers of Excellence: Executive Support

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Greatest Gaps in Center of Excellence Performance:
Talent Management and Data Mining

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Those with a Center of Excellence Report Higher Performance
Than Those without on Metrics Modeling, Network Design
and Executive Support

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Top Three Challenges for Centers of Excellence Include
Cross-Functional Alignment, Executive Team Understanding
and Change Management

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Agenda
 Study Overview
 Have a Center of Excellence
 No Center of Excellence
 Supply Chain Network Design
 Alignment and Organization

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Of Those without a Center of Excellence, One-Tenth Had
One in the Past and Nearly Half Expect One in the Future

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Sample Responses to Why Do NOT Have
a Supply Chain Center of Excellence

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Sample Responses to Why PLANNING to Have
a Supply Chain Center of Excellence

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Most Important and Top Performing Elements of a Center of
Excellence for Those without One:
Executive Support and Demand Planning Oversight

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Greatest Gaps in Areas for Those without a Center of
Excellence: Supply Chain Innovations and Network Design

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Agenda
 Study Overview
 Have a Center of Excellence
 No Center of Excellence
 Supply Chain Network Design
 Alignment and Organization

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Over Half Have a Supply Chain Network Design Group

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Those with a Network Design Group Are More Likely to
Have Higher Revenue, a Center of Excellence and a
Self-Reported Agile Supply Chain

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On Average, Seven People Work in Network Design,
with 84% of the Work Done In-House

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Primary Drivers of Having Network Design Are Cost,
Transportation, and Distribution/Inventory

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Sourcing/Manufacturing and Distribution Facility
Footprint Are Top Work Areas for Network Design

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Top Opportunities for Improvement Lie in
Cost to Serve and Inventory Optimization

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Agenda
 Study Overview
 Have a Center of Excellence
 No Center of Excellence
 Supply Chain Network Design
 Alignment and Organization

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Top Team Alignment Reported for Sales & Marketing,
Manufacturing & Procurement, and Finance & Operations

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Those with a Center of Excellence Report Higher Alignment
Especially for Operations – with Finance, CSR & IT

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Those with a Network Design Group Report Higher Alignment
Especially for Marketing & Finance

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Top Supply Chain Challenges Include Being Reactive,
Tactical, Inside-Out and Fixed/Not Agile

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Those with a Center of Excellence Report Being More
Strategic, Proactive, Aligned and Outside-In

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Those with a Center of Excellence or Network Design Group
Describe Their Supply Chains More Positively

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Those with a Network Design Group Report Being More
Proactive, Aligned and Strategic – But Less “Many”

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One-Quarter Report That Their Supply Chain Is “Agile”

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Those with a Center of Excellence Report Higher
Supply Chain Agility

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Those with a Network Design Group Report Higher
Supply Chain Agility

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Those with Higher Revenue Report Higher
Supply Chain Agility