Supply chain optimisation can deliver ROI within four months, finds AMR Research

Combining creativity with clever use of technology can reap big rewards for a relatively small investment in supply chain systems, according to a leading analyst

Companies can see the business benefits of optimising their supply chain infrastructure in as little as four months, according to AMR Research.

A report, Insights into Supply Chain Innovation in Europe - published today (25 April) at the analyst firm's European Supply Chain Conference - has found that businesses can achieve a fast return on investment for relatively little outlay.

AMR Research's supply chain optimisation concept, the Demand Driven Supply Network, relies on improving the visibility of customers and the need for a single view of data.

Among the end-user companies featured in the research, AMR found that processes were built from the "outside-in". They are based on a clear view of the customer, what is important to the customer, and the requirements for account profitability, according to the report.

"These companies become zealots on new product introductions and using their supply networks to shape and respond to demand," AMR said.

With projects costing as little as £103,000, AMR Research urged users to look at supply chain optimisation.

The research found that businesses achieved clear, quantifiable, short-term benefits. Along with the four-month payback, AMR Research found that the businesses that took part in the study were seeing an average reduction in finished goods inventory of 31.56%.

The companies AMR spoke to  also achieved an average improvement in on-time performance of 27.5%. And the average margin of improvement was 3.68%, according to AMR's data.

In the paper AMR noted that successful projects required strong collaboration between participants and a process and organisational focus.

In terms of collaboration, AMR said users need to focus on project definition, funding and technology providers.

Getting data right was a key step in supply chain optimisation, according to Nigel Montgomery, director of European research at AMR. Without a single view of its data it was difficult for a business to be more responsive to its customers.

AMR also urged users to embed the technology in their organisation. The research highlighted the complexity of the organisational and cultural challenges users face in optimising their supply chains.

"By its nature, innovation is disruptive to organisations," AMR said.

Of all the areas in which European companies face a challenge, developing channel-driven fulfilment is the greatest, AMR warned. Channel-driven fulfilment is the redesign of order processes to become demand-driven, not order-driven.


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