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                                    Energize your supply chain network ­
                                    A European perspective
                                    New competitive advantage from existing investments
                                    In partnership with L'Usine Nouvelle magazine, IBM® Business Consulting Services
                                    conducted the 2004 IBM European supply chain survey to better understand how
                                    supply chain management (SCM) is evolving in Europe. There were a total of 1,174
                                    respondents, the majority from the consumer products and industrial products
                                    industries. The survey identifies current practices, captures significant trends
                                    and establishes operational performance benchmarks in five key areas of SCM:
                                    new product development, supply chain planning, customer order management,
                                    procurement and logistics.

                                    New product development (NPD) ­ Cost and time are paramount, driving the
                                    NPD strategy.
                                    Product innovation management is essential to optimize the return on investment
                                    for NPD. Companies are developing strategies for cost reduction, such as
                                    increasing the level of commonality of components, platforms and assets for
                                    reuse and for revenue growth, such as improving speed-to-market. Also, many are
                                    implementing integrated, collaborative processes with partners to manage product
                                    change and new, derivative product launches.

                                    Supply chain planning ­ It's all about sensing and responding.
                                    Advanced planning systems and leading supply chain practices have been
                                    implemented or piloted to increase the responsiveness to customer demand.
                                    The complexity of products and markets results in companies extending their
                                    strategy to their end-to-end extended supply network. Leaders are increasing their
                                    capability to sense market changes while developing capabilities to respond faster
  To request a copy of the full     through collaboration with partners.
 version of this paper, e-mail us
       at iibv@us.ibm.com           Customer order management ­ Realtime processing leads to superior
                                    customer experience.
                                    Order management processing is paramount to attainment of superior customer
                                    service and perfect order standards. On-time delivery and inability to fulfill sales
                                    orders due to out-of-stock continue to be challenges in meeting customer
                                    responsiveness and satisfaction targets. Companies are slow to embrace leading
                                    customer relationship management (CRM) practices of self-service, automated
                                    cross-selling and up-selling and purchasing customer focus groups.




ibm.com/bcs                                                                                                                1
                                                                                         © Copyright IBM Corporation 2005
Procurement ­ Globalizing to go to the next level of advantage.
The trend toward global sourcing is on the rise, with growth rates of over 20 percent      IBM Global Services
                                                                                           Route 100
from three years ago. Attainment of perfect order delivery to original request date        Somers, NY 10589
                                                                                           U.S.A.
is growing rapidly, but supplier lead times have remained somewhat static. Greater
                                                                                           Produced in the United States of America
than 34 percent of the respondents indicated average supplier lead times of 20-plus        08-05
days. Information technology focus is on integration of internal procurement and           All Rights Reserved

supplier management functions, as well as external integration with trading partners.      IBM and the IBM logo are trademarks or
                                                                                           registered trademarks of International Business
                                                                                           Machines Corporation in the United States,
                                                                                           other countries, or both.
Logistics ­ Focusing on differentiating competencies through outsourcing.
                                                                                           Other company, product and service names
Specifically in logistics transportation, warehousing/distribution and handling of         may be trademarks or service marks of others.
product returns, outsourcing was a theme for the respondents. Companies are
                                                                                           References in this publication to IBM products
implementing flow-through strategies (cross-docking, merge-in-transit) to provide          and services do not imply that IBM intends to
                                                                                           make them available in all countries in which
specialized logistics services by customer segment. Only 30 percent of the                 IBM operates.
respondents are achieving order fill rates of 97 percent or greater and only 30
percent of the respondents are achieving ontime delivery rates of 97 percent or
greater. New technologies, such as RFID, are creating significant change in logistics
performance and inventory control.

Conclusion
Today's business environment is rapidly and dynamically changing. Leading
companies have demonstrated that supply chain management not only concerns
operational excellence and cost reduction objectives, but is more and more focused
on developing new business strategies.

The survey provides insight into the adoption of leading practices by capturing
significant trends and operational performance benchmarks. The insights presented
in this report provide a framework for companies to begin redefining their strategies,
fine-tuning their performance objectives, and continuing the transformation journey
of supply chain evolution towards maturity ­ thus, energizing the supply chain to
delivery superior performance and increased profitability.

Authors
Marc Bourdé, IBM Business Consulting Services
Karen Butner, IBM Institute for Business Value




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