Given the extensive time, effort, and commitment
of resources involved, is design and execution of a
comprehensive supply-chain strategy really worth
it all? An evaluation of the bottom-line numbers
is the best way to respond to this question. According
to A.T. Kearney’s research, supply chain
inefficiencies can waste up to 25% of a company’s
operating costs. With profit margins of only 3 to
4%, then, even a 5% reduction in supply-chain
waste can double a company’s profitability.
Through its comprehensive Integrated Supply
Chain Benchmarking Study, Pittiglio Rabin Todd
& McGrath (PRTM) found that best practice supply
chain management companies enjoyed a 45%
total supply chain cost advantage over their median
competitors. Specifically, their supply chain costs
as a percentage of revenues were anywhere from
3 to 7% less than the median, depending on the
industry (see Figure 3).