Resilient.
Agile.
Competitive.
Supply chain transformation
for lasting innovation

RESEARCH AND ANALYSIS BY IDC

Contents2

Foreword

4

Companies say supply chain planning is acompetitive differentiator

6

Mature supply chain planning requires
collaboration across the entire company

14

Resiliency is the top priority for all companies,
regardless of their supply chain maturity

16

Key takeaways

17

How to begin your supply chaintransformation1Foreword
This eBook explores the results from an IDC research study about current and futurepressures on supply chain planning and how modern digital technologies are driving
supply chain transformation initiatives.
Supply chain transformation is both how companies improve efficiency and effectivenessin the short term, and how they drive for supply chain resiliency and agility in the longer
term to respond to business changes and avoid disruption.
Technology transformation is shifting from manual, Excel-based functional processes
to investments in end-to-end processes and sophisticated analytics including artificial
intelligence (AI) and machine learning. The IDC survey that underpins this study looked
across three broad topics: the overall business and supply chain environment, supply chaintransformation efforts and supply chain planning efforts specifically.

Survey demographics
The survey was conducted in the third quarter of 2019 and included 1,839 respondents
across three regions and six different subindustries within manufacturing. Figure 1 showsindustry demographics.

INDUSTRY DEMOGRAPHICS
AEROSPACE & DEFENCE
16.5%

AUTOMOTIVE
17%

INDUSTRIAL
16.6%

LIFE SCIENCES
16.7%

HIGH TECH
16.7%

CONSUMER PRODUCTS
16.6%

Source: IDC/Kinaxis’ 2019 Supply Chain Survey. N=1,839.

2

Key demographic information includes the following:yRespondents were evenly distributed across North America, EMEA, and APAC.

yOf the companies surveyed, 16% were large enterprise companies above $5 billion
in annual revenue, 70% were medium-sized companies with $1 billion to $5 billion inrevenue, and 14% were small companies with $500 million to $1 billion in revenue.

y

All respondents either work in or have significant influence over their supply chain
and self-identify as either supply chain planners (people doing the actual supply chain
planning) or supply chain planning leadership personas.

An important goal for the survey was to poll a broad audience to generate as rich and diverse
a set of results as possible. This eBook focuses on the overall findings while weaving innotable industry, region, persona, or company size insights.

About the analyst
Simon Ellis
Program Vice President, Supply Chain Strategies, IDC
As a program vice president, Simon Ellis is responsible forproviding research, analysis and guidance on key businessand IT issues for manufacturers. He currently leads the
Supply Chain Strategies practices at IDC Manufacturing
Insights, addressing market needs by providing fact-based
research and analysis on best practices and the use of
information technology to assist clients in improving theircapabilities in critical process areas.

3Companies say supply chain
planning is a competitive
differentiator

65%

of companies say supply chain planning capabilities will be a source ofcompetitive differentiation in the next year.*Supply chain leaders are expected to help businesses reach targets while remaining quick and cost-efficient. The survey
shows that companies with mature supply chains meet these goals and outperform their less mature peers.

Higher revenues
Companies with high maturity supply chains report greater revenues than companies withlow maturity supply chains. In the highest tier of revenue performance, 84% of companies
say their supply chain is a competitive differentiator compared to 15% of those who see
their supply chains as a competitive disadvantage or as on par with competitors.*

Increased agility
Companies with mature supply chains are less likely to report problems acting on real-timeinsights, particularly if they are using automation technologies. Over three-quarters ofcompanies with mature supply chains say they use artificial intelligence and machine learning(AI/ML) solutions that reduce the time planners spend completing low-value, repetitive tasks.*

Greater long-term stability
Companies that are proactive in undertaking supply chain digital transformation efforts are
two times more likely to predict their supply chain will be a source of competitive advantage
in 2023 compared to peers.*

How did we measure supply chain maturity?
This survey assessed supply chain maturity based on three factors: companies’ self-rating of supply chain planning, the levelof collaboration between supply chain planning and other functional areas like Sales or Marketing, and the technologicalfoundation of a company’s supply chain planning, such as the use of spreadsheets or custom planning applications. Supply
chain maturity across all companies tends to follow a bell curve, with most companies landing somewhere in the middle.

*IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

4Superior business performance
depends on supply chain
planning maturity
Top obstacles to achieving better supply chain planning:*
Nearly half of all companies lackthe technologies and processes
adopted by mature supply chains.

48%
47%
44%
44%

Data availability and quality

Visibility across the supply chain

Lack the necessary people to act on insights in real-time

Data and analytical capabilities are too slow

A reliance on spreadsheets is one of the greatest obstacles to visibility,
collaboration and real-time analysis. 53% of respondents say supply chain
planning is completed partially or entirely in spreadsheets.**IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

5

Mature supply chain planningrequires collaboration across theentire company
Alongside technological gaps, many companies also lack the cross-functional and cross-company collaboration that’s
essential to supply chain planning maturity.

A fifth of all companies conduct
supply chain planning withinfunctional or process silos.*On average only 40% ofcompanies say they actively
collaborate on supply chain
planning with internal andexternal stakeholders.*

Percent of companies actively collaborating withstakeholders in the following functions:*

21%
21%
20%
20%

Demand planning

S&OP

Supply planning

Inventory planning & optimization

Percent of companies actively collaborating with thefollowing stakeholders:*

50%
47%
38%
32%

Sales

Key customers

Key suppliers

Finance*IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

6Regional maturity differencesindicate opportunities fordifferentiation
Regional differences in supply chain maturity suggest that companies are influenced by best practices among their peers andneighbors. Differences in one region highlight opportunities for further competitive differentiation in another region – or pointout potential weaknesses that put companies at risk. Strengths and weaknesses along supply chain maturity benchmarks arelisted in the table below.

SUPPLY CHAIN
MATURITY FACTOR

APAC

EMEA

NORTH AMERICA

Self-reporting

Planning is very to

Planning is very to

Most likely to say supply

extremely important to

extremely important tochain planning doesn’t

overall success of theoverall success of theaffect the success of their

supply chain (95%)

supply chain (93%)

supply chain (12%)

Most likely to actively

Most likely to actively

Least likely tocollaborate withcollaborate with Sales

collaborate withcustomers (42%)(54%)

external stakeholders

Technological

Most likely to use an

Most likely to rely on

Most likely to be using

foundation

integrated supply chain

spreadsheets for key planning

AI/ML today (41%)

planning suite (15%)

processes (17%)

Most likely to take an

Least mature supply chain

Least likely to take an

optimized approachtransformation efforts ofad hoc or opportunistic

to supply chain

the regions

approach to supply

Collaboration

Transformation*transformation

chain transformation

Source: IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis*For more detail on the approaches to supply chain transformation, see page 97Mature supply chain capabilities
drive business opportunities at P&G
Citizen Developers
P&G’s digital transformation
revealed that employees often have
solutions to some of the company’s
greatest planning challenges, butthey don’t have the time andresources to implement solutions.
Today, the company makes data andtools accessible and democratized
to a group of Citizen Developers,
so they can solve key businesschallenges that move the rest of thecompany forward.

The commercial

How much of your day is devoted to solving yesterday’s problems? Before

leadership of ourProcter & Gamble transformed its supply chain planning processes, planningcompany recognizes
that the digital

director Pedro Noriega and his team, spent four or five hours of each day
learning about what had happened in the supply chain the previous day. This
limited the time P&G’s planners could devote to problem solving and prevented

transformation wethem from addressing challenges that couldn’t be solved in the four or five

have in planning is ahours that remained in the workday.

competitive advantage.”

But this changed after the company embarked on a digital transformation of

BOB HERZOG,GLOBAL/REGIONAL
PLANNING DIGITALSOLUTIONS LEADER AT
PROCTER & GAMBLE

its supply chain, selecting Kinaxis RapidResponse® for true end-to-end visibility
and alignment across the network. Now, Noriega has real-time insights into
his teams’ operations from a single, streamlined dashboard – no meetings, nowasted hours. His teams collaborate in real-time too, which means they cansolve problems as soon as they arise. Now, when Noriega and his teams meet,they focus on creating innovative solutions to tomorrow’s problems.

8Mature transformation practices
increase confidence in futurecompetitive differentiation

35%

of companies say their supply chain planning capabilities will be asource of competitive differentiation in the next three years.*That’s a 30% drop from the number of companies that believe their supply chain will be a source of competitive differentiationin the next year. Over 90% of companies say they are confident they’ll accomplish the priorities they’ve set for themselvesin the next year, so why do so many lose confidence in their capabilities just a few years later? Because they lack a matureapproach to supply chain transformation.

COMPANIES THAT VIEW SUPPLY CHAIN AS A COMPETITIVE ADVANTAGE*
Next 12 months
In 3 years

65%
35%

Companies that are more mature in their supply chain digital transformation
efforts are twice as likely to continue to see their supply chain as a competitive
differentiator in the future.*
SIMON ELLIS, PROGRAM VICE PRESIDENT, SUPPLY CHAIN STRATEGIES, IDC*IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

9

The biggest challenge:
Approaches to transformation are
ad hoc, opportunistic63%

of companies fall below the transformation maturity midpoint.*

The problem at the heart of businesses’ supply chain maturity issues is that most still struggle to make regular, strategic
updates to their processes and technology. Respondents were asked to rank their companies’ approach to supply chaintransformation using the following scale:

Ad hocSupply chain digital transformation is poorly defined, and efforts are

Opportunistic

Some basic digital capabilities and initial business cases have been

inconsistent. Success depends on individual effort.*

identified. Execution is on an isolated project basis, and progress
across the supply chain is neither predictable nor repeatable.*

Repeatable

Supply chain digital transformation is aligned to near-term strategy
and we have identified key business cases for product or service
delivery and customer experiences but are not yet focused on theirdisruptive potential.*

ManagedCapabilities for digital transformation are embedded in the supply
chain and tightly linked to overall strategic vision. The supply chain
delivers digitally enabled product and/or service experiences on acontinuous basis.*

Optimized

The supply chain is aggressively disruptive in the use of new digitaltechnologies and business models to affect our markets. There is clear
strategic executive alignment with comprehensive identification ofbusiness cases.**IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

10Companies should look to supply
chain planners for transformation
recommendations
Supply chain planners’ insights into day-to-day operations give them a more realistic view of supply chain planningchallenges and opportunities than other survey respondents. For example, when a majority of companies said their supply
chains would become competitive differentiators, planners tended to have a more sober outlook. They were more likely
to say their companies’ supply chains were a competitive liability and more likely to identify supply chain planning asimportant to the overall success of the supply chain.
The areas they prioritize align with supply chain maturity strengths found at top-performing companies.

Increasedcollaboration

Fasterresponse times

Fewer legacy
systems

Planners are more likely

Planners’ top use cases for

36% of planners list change

to list collaboration

analytics align with factors

management/legacy

as a priority forthat boost performancesystems resistance as one oftransformation in theand supply chain planning

the top three challenges tonext year. Suppliermaturity, including

supply chain transformation,

collaboration is a priority

improving businesscompared to 28% of supply

for 47% of planners andresponsiveness and planning

chain leaders. This reflects

41% of leaders. Customer

productivity. Leaders were

the prevalence of outdated

collaboration is a priority

more likely to use analytics

tools and technology, likefor 43% of planners andfor job retention and solving

spreadsheets, that still exist

39% of leaders.*

complex problems.*

in supply chains today. **IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

11Industries face uniquetransformation maturity
challenges
Highersupply chaintransformation
maturity

High-tech and electronics
High-tech companies are known for creating innovative products, and they apply thesame forward-thinking approach to supply chain transformation. This sector is the mostprogressed in transformation maturity across all industries.*

Consumer products
Consumer products companies also have high supply chain transformation maturity. Many ofthese companies have seen customers get used to on-demand services, like next-day shippingand highly-targeted advertising, which may be pushing them to innovate in the supply chain.*Life sciences
Life sciences companies have high existing supply chain maturity, which reflects theurgency given to serving global healthcare needs. Unfortunately, the sector lacks strategic,
ongoing transformation. For example, life sciences companies are 50% more likely to beusing spreadsheets for planning than other industries.*

Industrial
The industrial, automotive, and aerospace and defense industries face similar challenges.
All three sectors say their greatest obstacle to change is security concerns, and all threelack the technological expertise needed to make changes. However, the industrial sector’s
existing supply chain maturity is on par with industry averages.*

Automotive
The automotive industry may have pioneered early manufacturing improvements, buttoday, the industry’s custom supply chain solutions have become a liability. 40% of
automotive companies are ranked in the lowest tier of supply chain maturity. As a result,the industry’s transformation maturity also lags behind.*

Aerospace and defense
Lower

The aerospace and defense (A&D) sector is small but fiercely competitive, so it’s no surprise

supply chainthat 70% say their supply chains are a source of differentiation. However, keeping industry

transformation

secrets tightly guarded comes with a cost. A&D’s transformation efforts are the least mature

maturityof all industries.**IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

12MSD: Transformation across a
global supply chain

Mark Talens, Executive Director of Enterpirse Solutions at Merck, at Kinexions '17

It was great to see themore our RapidResponse
solution developed,
the more our business
partners started to show
more and more interest.
We were receiving manydifferent requirementsfrom the business as welland they started to ask if
we could speed up someof the timelines to makecertain functionality
available earlier.”

MSD (known as Merck & Co., Inc. in the US and Canada) is a global health andpharmaceutical powerhouse, comprised of more than 100 markets acrossfour geographical regions, including four planning hubs, over 80 distribution
centers, and more than 20 internal and external sites. But the company felt it
lagged behind other industries when it came to the supply chain. According
to global consulting firm McKinsey & Company, supply chain management
represents 35% of the profit and loss for businesses within the pharmaceuticalindustry. That’s compared to 8-12% in the consumer products industry.
MSD recognized a need to sync its supply chain data and enable access tothat data across divisions to support better business decisions. The company
embraced digital transformation and undertook an initiative to update global
demand planning, global supply planning, distribution requirements planning(DRP) and sales and operations planning (S&OP) using cloud-based, end-toend planning software.
Despite the massive scale of changes, the timing couldn’t have been better.
In 2017, the company was hit by a cyber attack that took down most of
its systems and halted manufacturing. The only tool available was Kinaxis

HENRIK FROJDH,

RapidResponse, MSD’s cloud-based supply chain planning tool. The tool

SUPPLY CHAIN PLANNING

enabled the company to keep parts of its supply chain working during the

LEAD AT MSD

disruption and reinforced the importance of adopting new planning solutions.
13Resiliency is the top priority for
all companies, regardless of their
supply chain maturity
What will be the biggest priority for companies in the future? When companies rank their top three priorities for the nextyear, supply chain resiliency is the greatest concern, outpacing concerns like customer centricity and product innovation by
as much as 20%. Resiliency is the top priority for all respondents regardless of their supply chain planning maturity.
Even companies that already rated themselves highly in resiliency said it is their top priority for the future. Agility is a
critical driver of resiliency.

SUPPLY CHAIN PRIORITIES*Supply chain resiliency

Operational efficiency
Improve product compliance, quality,
safety, or environmental sustainability
Become more customer
centric/improve service performance
Improve the process of bringing new
products to market

36

38

40

42

44

46

48

50

(%)

This analysis may understate companies’ prioritization of resiliency today. This survey was fielded in
September and October 2019 before the outbreak of the novel coronavirus and its related disease,
COVID-19, in 2020. At that time, concern about market or supply chain disruption was ranked among thelowest factors driving businesses to change. Only 18% of companies listed it as a motivator.**IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

14Keysight Technologies:
Resilient supply chain restoresorder after disaster

Plans are good.

When the Tubbs wildfire hit California in October 2017, it killed 22 people andSimulations help. But

destroyed over 5,600 structures, including parts of Keysight Technologies’

we use RapidResponse
as a key enabler aroundheadquarters. For a company with a deep, complex global supply chain – 11,000
components assembled into more than 1,500 different products at 10 sites
worldwide – the impact could have been devastating. But Keysight had built

this whole infrastructure:disaster preparedness into its operations, in part using Kinaxis RapidResponse.

pegging, contribution

Production at Keysight’s headquarters was shut down after the fire, but it had

analysis, and most

supplies coming in and orders that had to be filled. So, Keysight’s teams set up

importantly, monitoring

shop in a nearby makerspace and got to work. “We started pulling backlog reports

the health of our business
continuity plans.”
JASON WISLER,TECHNOLOGY SUPPLYCHAIN MANAGER AT
KEYSIGHT TECHNOLOGIES

and purchase orders out of RapidResponse to determine where supplies were andwhat shipments were at risk,” says NPI Supply Chain Engineering Manager Ethan
Hunt. Thanks to the detailed information available in RapidResponse, Keysight
was able to work with suppliers to have them hold materials and divert expected
deliveries to other sites. Local planners were able to collaborate with their peers
across the global network to continue fulfilling orders.
Because Keysight Technologies was able to re-organize its supply chain soquickly, no orders were canceled and no jobs were lost. Months into 2018, thecompany’s revenues had made a full recovery.
15

Key takeaways
01

Supply chain planning is now a form of competitive differentiation for companies.
65% of companies say supply chain planning will be a competitive differentiator in thenext year, but only 35% say their companies’ supply chain planning will be a competitive
differentiator in the next three years.*

02

Limited technological innovation prevents companies from developing mature
supply chain capabilities.
Nearly half of all companies lack processes and technologies that would advance their supply
chain planning capabilities. 47% lack end-to-end visibility across the supply chain and 53%
say supply chain planning is completed partially or entirely in spreadsheets.*

03

The key to long-term competitive differentiation is proactive, strategic investments indigital transformation.
Companies that are more mature in their supply chain digital transformation efforts are twice
as likely to continue to see their supply chain as a competitive differentiator in the future.*04

Supply chain resiliency will become the next competitive differentiator for companies.
Supply chain leaders and planners are concerned about their ability to address futurechallenges through supply chain planning. Supply chain resiliency is the top priority for
all companies and regions in the short-term and over the next three years. This is true
regardless of supply chain maturity or existing levels of resiliency.*

Additional resources
IDC white paper: Supply chain planning drives better business performance in themodern enterpriseOn-demand webinar series: Powering business gains from the supply chain*IDC White Paper, Sponsored by Kinaxis, Supply Chain Planning Drives Better Business Performance in the Modern Enterprise, May 2020
IDC 2020 Survey Data, sponsored by Kinaxis

16

How to begin your supply chaintransformation
Supply chains are receiving more recognition from companies than ever before, so it’s essential that supply chain leaders
seize on this momentum. This research outlines trends and opportunities for improvement across the entire supply chain
sector. Companies should apply these lessons to their long-term strategic plans to ensure their supply chains’ continued
growth, differentiation and resiliency.

What you can do next
The hardest part of supply chain transformation is that it has to be continuous, proactive and strategic. Many companies’
transformation efforts fail because they attempt to isolate parts of a larger planning problem. They update legacy platforms
but fail to get buy-in from users, or they invest in AI/ML capabilities without updating data collection processes. These ad
hoc approaches don’t provide lasting benefits, as this research has shown.
Only 30% of companies believe their supply chain will be a source of competitive differentiation in three years. Further, mostcompanies worry that their supply chains won’t be resilient enough to bounce back from unforeseen challenges. Going allin on supply chain transformation may seem like a significant investment of time and resources, but it reduces the need forcostly realignments later.

17

How Kinaxis can help
Few supply chain solutions solve the slow, cascaded planning problems that impair supply chain planning andtransformation. They bring parts of the planning process into the cloud, add algorithms and machine learning capabilities,
or include collaboration applications.
Kinaxis RapidResponse is the only platform powering true concurrent planning that connects data, processes and people, so
your entire supply chain is always in sync. No more spreadsheet sharing or alignment meetings. Instead, teams have end-toend visibility that keeps them connected and informed. If one person makes a change, everyone else instantly understands theimpact on themselves, their team and the organization as a whole.
Companies say it’s shortened their planning cycles, cut manufacturing lead times, trimmed finished-goods inventory andimproved on-time deliveries. These improvements not only increase supply chain planning maturity but also resiliency.
Planners have more time to make proactive improvements to supply chain processes. In moments of disruption, they don’t
waste time organizing disparate teams and data. Instead, they jump straight to action. In a rapidly-moving world, it’s thesecapabilities that give companies a competitive edge. Learn more about improving your supply chain planning maturity with
Kinaxis RapidResponse.

About Kinaxis
Kinaxis gives people the confidence to know they’re making the best planning decisions to maximize business performancein today’s volatile world. Plan for any future. Monitor risks and opportunities. Respond at the pace of change. Our platform
blends human and machine intelligence to solve complex planning problems in easy-to-understand ways. The result ishigher revenue, lower costs and fewer risks.

www.kinaxis.com

This publication is accurate as of the date published and may be updated by Kinaxis from time to time at its discretion. Copyright © 2020
Kinaxis Inc. All rights reserved. Kinaxis, the Kinaxis logo and RapidResponse are registered trademarks of Kinaxis Inc and its affiliates. All otherbrands and product names are trademarks or registered trademarks of their respective holders, and use of them does not imply any affiliation
with or endorsement by them. 05.20

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