Corporate culture can block agility

If your company seems to take an unusually long time to make supply chain improvements, it could be because cultural issues are creating resistance to change. A recent survey of 164 manufacturers conducted by Hitachi Consulting of Dallas, Texas, USA and AMR Research of Boston, Massachusetts, USA found that corporate cultures often block supply chain innovation and responsiveness.

The 2009 Supply Chain Responsive ness Survey notes that cost pressures are forcing manufacturers to make their supply chains more responsive to customer demands and market conditions, yet they are encountering stiff resistance to change within their own walls. When asked to name the biggest barrier to improving supply chain agility, 18 percent of respondents said "culture."

"One of the biggest surprises in these results is that respondents said the top barrier to improving [supply chain] responsiveness is their own culture," said Tim Vaio of Hitachi Consulting's Industrial Products Group. "We believe this indicates that most performance measures are inhibiting change by rewarding 'siloed' behavior. To become responsive, companies need to take a holistic approach across all supply chain functions and develop processes and metrics that reward end-to-end supply chain success."

The study also found that manufacturers saw a 1-percent improvement in return on assets for every four years of investment in supply chain excellence. Other findings included:

• Demand variability is still affecting forecast accuracy;
• Cost pressure is the biggest factor driving companies to be responsive;
• Despite years of investments, order lead times have not improved; and
• Complexity is increasing in the form of more outsourcing, greater item complexity, and stock-keeping unit (SKU) proliferation.

For a summary of the survey results, go to www.hitachiconsulting.com/responsiveness.