SOURCE: Bristlecone

Bristlecone

February 11, 2009 09:00 ET

Bristlecone and Supply and Demand Chain Executive Magazine Publish Special Report: "The Hidden Risk in Your Supply Chain"

Report Reveals Increased Supply Chain Risk Due to Lack of Resources Dedicated to Ongoing Fine-Tuning of Supply Chain Systems

MILPITAS, CA--(Marketwire - February 11, 2009) - Bristlecone, one of the industry's most trusted supply chain business advisors and solution providers, today announced the publication of a study, "The Hidden Risk in Your Supply Chain," carried out in conjunction with Supply & Demand Chain Executive magazine. The research, which sought to gauge the ability of corporations to identify and manage the internal risk to their supply chains, provides revealing insight into this critical and often overlooked area of corporate risk. The web-based survey questioned executives from manager to C-suite level at 90 companies with annual revenues over $500 million.

The survey shows that most companies invest in understanding and minimizing external risk factors to their supply chain, and are using supply chain management (SCM) systems to optimize their supply chain and ensure precise supply and demand plans. However, the study also reveals that most have not paid enough attention to their internal supply chain systems -- risk factors clearly within their control. In fact, 77% of the executives surveyed noted that their own company's information systems pose a high or medium risk.

Today's most commonly used supply chain systems rely on complex statistical models and algorithms to model demand based on internal factors such as product obsolescence or new product introduction or promotional plans, as well as external factors such as market dynamics and competitive issues, and use that information to make recommendations on supply based on material and capacity constraints, cost and service level objectives as well as sourcing rules. While IT organizations are laser-focused on operational systems risks -- such as data security and uptime -- they do not have the resources and skills required to continually adjust the models and algorithm heuristics as these external and internal variable factors inevitably change. As a result, planning recommendations derived from these systems deteriorate over time and introduce another element of risk within the supply chain.

"The lack of attention to supply chain management fine-tuning is especially problematic because the business rules, algorithms and statistical models which constitute the technical backbone of these systems are based on fluctuating environmental factors ranging from supplier viability to shifting commodity costs to natural disasters, as well as internal factors such as new product introduction and promotional plans. As these factors change, if the models are not adjusted in the supply chain systems on an ongoing basis, the supply and demand forecasts will be inaccurate, creating a significant risk to a company's bottom line," said Andrew Reese, editor, Supply & Demand Chain Executive.

Highlighting the gap between identified risk and resources devoted to mitigating those same risks, the report includes the following key findings:

--  More than three-quarters of respondents (77%) rated internal risk to
    their supply chain as medium to high.
--  A total of 93.6% of respondents agreed or strongly agreed that the
    deterioration of data within supply chain planning systems can create
    unexpected disruptions to those same systems.
--  Less than half of respondents have full time employees managing supply
    chain optimization algorithms, heuristics, models and business rules.
--  Fully one-quarter of respondents have absolutely no resources working
    on demand forecasting models.
    

"This has been a year where companies have been understandably scrambling to proactively identify issues for potential supply chain risk, thanks to global economic uncertainty and volatile oil prices," said Ashok Santhanam, President & CEO of Bristlecone. "Unfortunately for those same companies, this report reveals that one of the greatest sources of risk to corporate supply chains, internal risk factors that are entirely within their control, is not being addressed due to lack of resources applied to this area. By using Managed Services, organizations can reduce this risk at a lower cost and without needing to hire dedicated employees that add to the fixed costs in the current times."

For additional findings or to download a full copy of the report, please visit our website at www.bcone.com.

About Bristlecone

Bristlecone, (www.bcone.com) is a leading consulting and systems integration firm focused on helping clients maximize the strategic value of their supply chains. Across over 100 engagements ranging from supply chain strategy and network design to supply chain system implementations, Bristlecone clients have realized the promise of the Bristlecone Advantage: value through focus; first-hand, real world experience; focus on business results; rapid time to value; and full accountability through fixed fee/fixed time service delivery. Headquartered in Silicon Valley, CA, Bristlecone helps clients across North America, Europe and the Asia/Pacific regions realize high business impact from improved supply chain planning, sourcing, execution, analytics, and data management, and has been continually acknowledged by industry analysts as a leader in solutions for the extended supply chain. Bristlecone clients include globally recognized companies such as ABB, Applied Materials, BP, Exxon/Mobil, Freescale Semiconductor, Georgia Pacific, HP, LSI, Mahindra & Mahindra, Nike, Qatar Petroleum, Petronas, Ranbaxy, Silicon Labs, Sony, Unilever and Whirlpool. For more information please visit www.bcone.com.

About Supply & Demand Chain Executive

Supply & Demand Chain Executive is the executive's user manual for successful supply and demand chain transformation, utilizing hard-hitting analysis, viewpoints and unbiased case studies to steer executives and supply management professionals through the complicated, yet critical, world of supply and demand chain enablement to gain competitive advantage. On the Web at www.SDCExec.com.

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