In-House or Outsourced?

One: Most everybody knows that supply chains are ripe for transformation and are a critical strategic area for the inter-net economy.

Two: Many companies nevertheless don't know what their supply chain management strategy is, or even how well their operations perform.

Those are the common conclusions of two recent surveys of senior executives regarding supply chain management. One survey of 80 Fortune 500 executives -- "Moving the Supply Chain into the Digital Age: Integrating Demand and Supply" -- comes from London's Economist Intelligence Unit (EIU), which is a member of global communications company Economist Group, and Meritus Consulting in New York City. The second poll -- "The Millennium Manufacturing Supply Chain Survey" -- is from Reston, Va.-based consultancy Compass America, with a response base of 258 senior supply chain executives in North America, Europe and Australia.

In the EIU survey, 82 percent of the respondents said they believe the internet will have a major impact -- or even completely transform -- supply chain performance over the next three years. Yet nearly a third of them were unable to estimate the supply chain performance of their own organizations. Similarly, 70 percent of the Compass respondents indicated that a supply chain strategy is necessary for achieving competitive advantage. However, nearly 60 percent said their own strategy is either nonexistent or lacking detail, and 50 percent described "limited formal means of measuring supply chain performance." The upshot, according to Andrew Johnson, head of Compass's practice for manufacturing, is that executives have trouble understanding what effect their strategy decisions truly have on supply chain performance.

What's even more interesting, of course, is how companies plan to solve that problem. Compass says many respondents are looking to IT for the solution; 60 percent anticipate rising technology expenditures to address SCM. That number matches up interestingly with the EIU finding that 40 percent of its respondents plan to outsource their distribution and transportation functions within the next three years.

For the EIU survey, visit www.eiu.com. More information on the Compass study can be found at www.compassamerica.com.

This story, "In-House or Outsourced?" was originally published by CIO.

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