Operational excellence: Enabling sustained growth Spotlight on the Americas

Transcription

1 Operational excellence: Enabling sustained growth An Economist Intelligence Unit report sponsored by SAP

2 Operational excellence: Enabling sustained growth Preface Operational excellence: Enabling sustained growth is an Economist Intelligence Unit report sponsored by SAP. The Economist Intelligence Unit bears sole responsibility for this report. The Economist Intelligence Unit s editorial team conducted the interviews and wrote the report. The findings and views expressed in this report do not necessarily reflect the views of the sponsor. Ken Waldie was the author of the report and Dan Armstrong was the editor. Mike Kenny was responsible for layout and design. Our thanks are due to all of the survey respondents and interviewees for their time and insights. May 2008 The Economist Intelligence Unit Limited

3 Operational excellence: Enabling sustained growth Operational excellence: Enabling sustained growth T he Americas should be a hotbed operational excellence activity. The scientists and businessmen who first applied statistics to process improvement Deming, Taylor and others hailed from the United States. In the 1980s, Royal Bank of Canada pioneered the use of customer relationship management (CRM) software, while Procter & Gamble rolled out an early business intelligence (BI) system. In the 1990s, Dell, Southwest, Amazon and Wal-Mart achieved dramatic growth by making their operations world-class. Companies in the Americas should lead the world in growing through operational excellence. But they don t at least not among the universe of firms with US$20m through US$500m in revenues highlighted in this study. Mid-sized companies in the Americas are as focused on growth as those anywhere in the world, yet they lag their counterparts in achieving growth through operational excellence. Less than half are promoting visibility into operations by investing in enterprise resource planning (ERP) and customer relationship management (CRM) software, while more than half are doing so in the rest of the world. Mid-sized companies in the Americas also lag Asia-Pacific firms in revenue growth, margin growth, customer satisfaction and new product launches. This is despite the fact that companies in the Americas are more likely to say they recognise operational excellence principles in their strategy and planning. Of the 946 executives who participated in the 2008 Economist Intelligence Unit operational excellence survey sponsored by SAP, 264 (28%) were located in the Americas. Among the Americas respondents, 235 (89%) came from the US and Canada, while 29 (11%) came from Latin America. This paper one of three regional papers is based on their responses as well as follow-up interviews with senior executives in the region. About the survey In a survey completed in January 2008, the Economist Intelligence Unit surveyed operational, financial, IT, and sales and marketing executives around the world on the role of operational excellence in their business strategies. The survey yielded 946 responses from mid-sized companies with annual revenues of $20m-$500m. Nearly one-third of respondents were from the Asia-Pacific region, followed by 28% in Western Europe and 28% in the Americas. Approximately 34% of the respondents worked in finance, 24% in marketing and sales, 23% in operations and 19% in IT. USA 74% Canada 15% Argentina 2% Brazil 3% Mexico 2% Latin America 4% Source: Economist Intelligence Unit survey, January Locations of the Americas respondents 2 The Economist Intelligence Unit Limited 2008

4 Operational excellence: Enabling sustained growth How to build an infrastructure for growth Mid-sized companies in the Americas are inclined to make bold statements about their commitments to operational excellence. But many executives admit that they have failed to back up these commitments with consistent action. As a result, their Asia-Pacific competitors have already left them behind, and now they risk being eclipsed by firms in Eastern Europe. Mid-sized Americas companies lag Asia-Pacific in actions taken on every one of 11 strategies for driving growth included in the survey. And the EMEA region is rapidly overtaking the Americas, which leads it by very slight margins in only two of the 11 strategies. Regional rank of 11 overall strategies for driving growth Organic growth EMEA Asia-Pacific Identifying core people assets that contribute to competitive advantage 54% 53% 68% Adding functionality to existing systems to support growth 50% 54% 58% Anticipating customer needs as they emerge 46% Supporting idea development to identify, assess and execute opportunities for innovation 41% 40% 50% Providing integrated, single-view data reporting for management decision making 29% 33% 46% Focusing on faster time-to-market when launching new products 25% 38% 35% 66% 62% Providing individual employees with role-based information that allows them to continuously innovate within their own space 23% 30% 42% Source: Economist Intelligence Unit survey, January Acquisition-led growth Identifying gaps in product/service offerings that can be filled by acquisitions Developing more efficient processes for integration of systems of acquired companies 43% 46% Developing more efficient processes for due diligence of proposed acquisitions Implementing systems easily adapted to different currencies, regulatory regimes or business models 18% 31% 27% Source: Economist Intelligence Unit survey, January % 43% 52% 52% EMEA Asia-Pacific 54% 60% 59% In interviews, executives of companies in the Americas described their operational excellence strategies as works in progress. Many said that while they recognised the value of end-to-end visibility, they had not yet fully achieved it. s pointed to cultural factors as impediments to rapidly rolling out their strategies. They provided frank insights into the obstacles they face and advice about how these hurdles might be overcome. Taking an enterprise-wide approach Operational excellence works best as a growth driver when it is implemented across the enterprise. But less than two-thirds of Americas survey respondents said that their companies are taking an enterprisewide approach to evaluating and improving business processes, compared with almost 80% in Asia-Pacific. Recognising the unique role of IT and finance Enhancing visibility into the value chain often requires investments in building and integrating ERP, CRM other technologies. And establishing performance metrics requires expertise that often resides in the finance function. Yet functional specialists in IT and The Economist Intelligence Unit Limited

5 Operational excellence: Enabling sustained growth finance complain that organisational silos limit their scope, preventing them from pushing for innovations outside of their own turf. Making continuous change the new status quo ranks last among the three global regions in the use of operational excellence to drive growth. Yet senior corporate leaders say it is difficult to promote continuous improvement among employees that consider their processes to be quite successful. Some executives say that the problem lies in a general tendency to resist change and a failure to recognise that the status quo is not an option. Promoting ownership and accountability Operations specialists say that empowering people to innovate is difficult in a setting where they see waste in their own processes but have not traditionally been expected to do anything about it. The solution lies in setting up appropriate incentives and giving employees necessary information and control to improve their own processes. Embracing integration and scalability ranks last of the three regions in terms of IT investments to support growth. As the chart at right shows, companies in the Americas lag Asia- Pacific in all six categories of operational excellence technology, and lag EMEA in five out of six. To remain competitive, greater focus is needed on the areas with the biggest deficits: aligning systems with business needs, working to ensure legacy systems can be easily integrated with those of acquisitions and partners, and building scalable systems from the ground up. About a quarter of Americas mid-sized companies say their operational systems are not sufficiently scalable, and the same proportion say that legacy systems represent a constraint on growth. Operational excellence-related technology investments by region What technologies is your company investing in? (Choose as many as apply) Integrated ERP systems Customer Relationship Management (CRM) systems 42% Inventory management systems Demand planning systems Production planning systems 23% Business intelligence or analytics systems 20% 27% 32% 37% 36% 36% 35% Source: Economist Intelligence Unit survey, January % 41% 41% 40% 44% 48% 50% EMEA Asia-Pacific 54% 59% Adopting common data standards Enterprise-wide data standards are essential for breaking down silos, building linkages among departments and creating end-to-end visibility for senior management. However, some IT executives say that they cannot manage their exponentially-growing data holdings because data ownership and therefore the right to set standards is spread across the organisation. Often finance (which owns management reporting) sets standards for both financial and operational data. But regardless of who owns it, the standards should be publicised and enforced. Then people will accept the information even come to rely on it and use it to make decisions. 4 The Economist Intelligence Unit Limited 2008

6 Operational excellence: Enabling sustained growth How Latin America is different Latin American firms have an aggressive, but so far underdeveloped, approach to operational excellence. While North American firms are nearly four times as likely to have a formal operational excellence strategy, Latin America is catching up quickly. More than 43% are in the process of developing a strategy, compared with 27% in North America. North American companies have more experience with operational excellence than their southern counterparts. But Latin American firms report greater success in each of the four performance indicators: revenue growth, margin expansion, launches of new products and customer satisfaction. One explanation for this unexpected result is that Latin American firms operate mainly in developing markets where operational excellence pays off even more than in mature markets. Similar differences are seen between Western and Eastern Europe. More specifically, Latin American mid-sized firms are aggressively investing in technology to support operational excellence: They report more investment than North American companies in integrated ERP systems, production planning systems and business intelligence or analytics systems. They are also much more likely to say they are improving tracking and analysis of customer purchase patterns. At a much higher rate than in North America, Latin American firms are refining systems to align more closely with business needs, reducing total cost of technology ownership, and improving IT training systems. Two-thirds say they are improving management visibility into operational functions and integrating processes in sales, marketing, manufacturing, product development, customer service and other functional areas. And half say they are establishing end-to-end visibility of processes throughout the organisation. Latin American companies are nearly twice as likely as their northern counterparts to cite integration with outside partners as a key to growth. And they say their marketing/sales teams are devoting more effort to building both external collaboration and internal integration of sales, production and delivery systems. The Economist Intelligence Unit Limited

7 Operational excellence: Enabling sustained growth What is operational excellence? In its simplest terms, operational excellence means consistently doing things well across the value chain as a way of gaining competitive advantage. In its broadest terms, it is a discipline that drives corporate strategy. In their book The Discipline of Market Leadership, Michael Treacy and Fred Wiersema suggest that operational excellence is one of three value disciplines that a successful organisation must chose from as its underlying operational model. In practice, operational excellence is a means to achieving the other value disciplines: product leadership and customer intimacy. Doing things well across the organisation is fundamental, but most successful companies do one thing exceedingly well and identifying and reinforcing core competitive strengths is part of operational excellence. The defi nition in this paper has three elements: superior performance and visibility across the value chain value-added delivered to customers effective integration with external partners. While the concept of operational excellence is simple enough, execution is another matter. A drive for effi ciency is implicit, but this must be achieved in a coordinated way by building links across the organisation so that all functions share a harmonised set of performance metrics. The ultimate goal is a single source of truth where senior executives have shared visibility into all parts of the organisation, enabling management by facts. The ideal result is a high-level dashboard for senior executives with the ability to drill down into different business functions, including operations, fi nance, IT, and sales and marketing. 6 The Economist Intelligence Unit Limited 2008

8 Operational excellence: Enabling sustained growth Conclusion Growth is a priority among companies in the Americas, just as it is elsewhere in the world. And when asked about the impact of operational excellence initiatives, American executives admit that they do help to drive growth. Over 60% say, for instance, that investments in ERP, CRM or other software to streamline and expose business processes have been successful or very successful in driving growth in revenues, margins and customer satisfaction. The problem is that mid-sized companies in the Americas are falling behind those in the rest of the world. This is particularly true for North America, which lags Asia-Pacific on nearly every indicator and manages to outperform EMEA on only a few more. Latin America does better, exceeding world averages on three of four performance indicators, while still lagging Asia-Pacific. The key to better performance lies in more consistent enterprise-wide execution of operational excellence. Companies in the Americas say they recognise operational principles, but in interviews executives point to myriad cultural and practical problems. These hurdles stand in the way of driving operational excellence principles into every corner of the value chain. Companies in the region need to more aggressively attack these obstacles if they want to avoid being left behind as companies in the rest of the world especially in the Asia-Pacific region entrench operational excellence in their corporate cultures. More bluntly, corporate leaders need to drive the message through their organisations that doing one thing well isn t good enough anymore. The Economist Intelligence Unit Limited

9 Operational excellence: Enabling sustained growth Appendix: Survey results Americas only Between November 2007 and January 2008, the Economist Intelligence Unit conducted a global online survey of 946 senior executives from various industries, of which 216 were from the operations function. Please note that not all answers add up to 100% because of rounding or because respondents were able to provide multiple answers to some questions. In which region are you personally based? The Americas 89 North America 0 11 Latin America 0 0 Asia-Pacific 0 0 Eastern Europe 10 0 Western Europe 70 0 Middle East 20 and Africa Rest of the world What is your title? SVP/VP/Director 29 8 Manager CFO/Treasurer/Comptroller 9 11 CIO/Technology director 9 5 Head of Business Unit 7 7 Head of Department 7 11 CEO/President/Managing director 6 8 Board member 4 3 C-level executive What is your primary industry? IT and technology 12 7 Energy oil & gas 9 3 Transportation and travel 9 5 Logistics service providers 7 3 Consumer products - durables 5 5 Financial services 5 13 Apparel and footwear 4 4 Automotive 4 4 Government/ Public sector 4 4 Industrial machinery and components 4 4 Pharmaceuticals 4 4 Consumer products non-durables 3 5 Education 3 2 Healthcare 3 3 Mill products (including fabricated metals, packaging, paper) 3 4 Professional services 3 4 Wholesale distribution 3 4 Retail 3 4 Manufacturing 2 4 Construction, engineering, operations 2 7 Chemicals 1 5 Energy/ natural resources non-oil & gas 1 1 Entertainment, media and publishing 1 3 Agriculture and agribusiness 1 Telecoms The Economist Intelligence Unit Limited 2008

10 Appendix: Survey results Operational excellence: Enabling sustained growth 1. What is your principal functional role in your organisation? The Americas 30 Operations Information 18 technology 21 Marketing 23 and sales 20 Finance 39 Rest of the world 2. What are your company s annual global revenues in US dollars? The Americas 16 $20m to $50m $50m to $100m $100m to $250m $250m to $500m 15 Rest of the world 3. Which of the following statements best describes your company s approach to operational excellence? We recognise the concept of operational excellence in our strategy or planning, but do not have a formal operational excellence strategy We are in the process of developing a formal operational excellence strategy We have implemented a formal operational excellence strategy We do not include operational excellence in our strategy or planning 10 9 Don t know Which of the following do you consider the most important component of operational excellence? The ability to have end-to-end visibility into financial performance, operational activities and customer relationships across all business units and geographies The ability to add value for customers through the entire product lifecycle The ability to integrate quickly with external systems and partners to facilitate collaboration and exchange Don t know/not applicable Which of the following statements best describes your company s view of the perceived benefits of operational excellence? Select up to three. Greater efficiency Reduced operating costs Increased revenues Improved customer service Faster responses to changing demand Improved regulatory compliance Improved ability to expand into new markets Improved customer insights to facilitate development of new products and services Faster responses to the actions of competitors The Economist Intelligence Unit Limited

11 Appendix: Survey results Operational excellence: Enabling sustained growth 6. How does your company plan to grow during the next two to three years? Organically (by entering new markets, by increasing capacity, by acquiring new customers or by selling more to existing customers) Both organic growth and M&A Growth is not a priority for our company 9 8 Through mergers and acquisitions 9 10 Don t know What are the biggest obstacles to your company in achieving operational excellence, in your view? Select up to three. Lack of essential people skills in critical operational areas Lack of end-to-end real-time visibility into operational processes for senior management More complexity in products, manufacturing and/or service operations Inadequate linkages among internal departmental systems Inadequate integration/collaboration with external partners Shortened product life cycle and time-to-market delays in launching new products or brands Increased geographical dispersion of internal operations Delays and/or inability in carrying out financial analysis to support new investments Don t know What are the biggest obstacles to your company s ability to grow organically, in your view? Select up to two. Inability to move quickly enough to exploit market opportunities and challenge competitors Lack of scalability of operational systems Time-to-market delays in launching new products and services Difficulty in integrating and/or expanding legacy systems Lack of capacity for product-line growth and expansion into new geographical areas Don t know How is your company enabling future organic growth? Select all that apply. Identifying core people assets that contribute to competitive advantage Adding functionality to existing systems to support growth Anticipating customer needs as they emerge Supporting idea development to identify, assess and execute opportunities for innovation Providing integrated, single-view data reporting for management decision making Focusing on faster time-to-market when launching new products Providing individual employees with role-based information that allows them to continuously innovate within their own space Don t know The Economist Intelligence Unit Limited 2008

12 Appendix: Survey results Operational excellence: Enabling sustained growth 10. What are the biggest obstacles to your company s ability to grow through acquisitions, in your view? Select up to two. Inability to quickly integrate acquisitions into existing operations Inability to identify and assess acquisition opportunities before competitors Inability to obtain sufficient value from acquisitions after they are assimilated Inability to manage acquisitions in unfamiliar business lines or geographical areas Don t know How is your company enabling future growth through acquisitions? Select all that apply. Identifying gaps in product/service offerings that can be filled by acquisitions More efficient processes for integration of systems of acquired companies More efficient processes for due diligence of proposed acquisitions Implementing systems easily adapted to different currencies, regulatory regimes or business models Don t know 3 7 Question for Sales and Marketing respondents only 12. How are your marketing and sales departments aligning to support the organisation s strategy for growth? Select up to two. Faster responses to evolving customer needs Improved visibility into market demand and customer behaviors Stronger collaboration with customers and partners More effective integration of sales, production and delivery systems Better customer care Higher service standards Question for Sales and Marketing respondents only 13. What is your company doing to ensure that your marketing and sales systems can support your organisation s growth strategy? Select all that apply. Enhancing Customer Relationship Management systems Improving tracking and analysis of customer purchase patterns Enabling remote access to customer information for sales teams Streamlining order tracking systems Expanding data sharing with customers and logistics providers Improving visibility into order fulfillment processes Increasing billing accuracy Don t know 1 The Economist Intelligence Unit Limited

13 Appendix: Survey results Operational excellence: Enabling sustained growth Question for Sales and Marketing respondents only 13a. In the previous question, you checked the following actions your organisation is taking to ensure that its sales and marketing systems can support its growth strategy. Which one of the actions you chose is the most important? Enhancing Customer Relationship Management systems Improving tracking and analysis of customer purchase patterns Expanding data sharing with customers and logistics providers 11 8 Enabling remote access to customer information for sales teams 8 7 Streamlining order tracking systems 7 3 Increasing billing accuracy 3 5 Improving visibility into order fulfillment processes Question for Sales and Marketing respondents only 13b. What was the effect of your first-ranked choice on the following areas? Very Successful Neither Unsuccessful Very Don t successful successful nor unsuccessful know unsuccessful Promoting growth in revenues (Asia-Pacific) Promoting growth in revenues (rest of the world) Promoting growth in margins (Asia-Pacific) Promoting growth in margins (rest of the world) Increasing launches of new products and services (Asia-Pacific) Increasing launches of new products and services (rest of the world) Question for Finance respondents only 12. How is your finance department aligning to support the organisation s strategy for growth? Select all that apply. Tighter control of financial assets, liabilities and cash flow Faster, more relevant and more accurate financial reporting Improved due diligence to support mergers and acquisitions Improved ability to integrate foreign regulatory regimes 6 12 Improved ability to handle (international) financial transactions Not applicable/don t know 22 Question for Finance respondents only 13. What is your company doing to ensure that your financial systems can support your organisation s growth strategy? Select all that apply. Better integration of financial planning to all departmental and control systems Improved transactional efficiency, visibility and security More timely and accurate customer billing to reduce delayed receivables More reliable systems for ensuring compliance and avoiding penalties More appropriate levels of granularity in financial data Improved access to financial information about acquisition targets Not applicable/don t know 1 Promoting higher customer satisfaction (Asia-Pacific) Promoting higher customer satisfaction (rest of the world) The Economist Intelligence Unit Limited 2008

14 Appendix: Survey results Operational excellence: Enabling sustained growth Question for Finance respondents only 13a. In the previous question, you checked the following actions your organisation is taking to ensure that its financial systems can support its growth strategy. Which one of the actions you chose is the most important? Better integration of financial planning to all departmental and control systems Improved transactional efficiency, visibility and security More timely and accurate customer billing to reduce delayed receivables More appropriate levels of granularity in financial data 8 6 More reliable systems for ensuring compliance and avoiding penalties 4 6 Improved access to financial information about acquisition targets Question for Operations respondents only 12. How is your operational function aligning to support the organisation s strategy for growth? Select up to two. Improving management visibility into operational functions Increasing operational flexibility and agility Integrating processes across the value chain Creating organisational efficiencies to meet customer demand Planning for additional operational resources needed to meet customer demand Building new systems with scalability in mind Ensuring that the growth strategy is supported throughout all company entities Question for Finance respondents only 13b. What was the effect of your first-ranked choice on the following areas? Very Successful Neither Unsuccessful Very Don t successful successful nor unsuccessful know unsuccessful Promoting growth in revenues (Asia-Pacific) Promoting growth in revenues (rest of the world) Promoting growth in margins (Asia-Pacific) Promoting growth in margins (rest of the world) Increasing launches of new products and services (Asia-Pacific) Increasing launches of new products and services (rest of the world) Question for Operations respondents only 13. What is your company doing to ensure that your operational systems can support your organisation s growth strategy? Integrating processes in sales, marketing, manufacturing, product development, customer service and other functional areas Improving visibility into customer demand, including what, where and why Establishing end-to-end visibility of processes throughout the organisation Improving visibility into the supply chain, including suppliers and partners Not applicable/don t know 2 Promoting higher customer satisfaction (Asia-Pacific) Promoting higher customer satisfaction (rest of the world) The Economist Intelligence Unit Limited

15 Appendix: Survey results Operational excellence: Enabling sustained growth Question for Operations respondents only 13a. In the previous question, you checked the following actions your organisation is taking to ensure that its operational systems can support its growth strategy. Which one of the actions you chose is the most important? Integrating processes in sales, marketing, manufacturing, product development, customer service and other functional areas Establishing end-to-end visibility of processes throughout the organisation Improving visibility into customer demand, including what, where and why Improving visibility into the supply chain, including suppliers and partners 15 9 Question for Operations respondents only 13b. What was the effect of your first-ranked choice on the following areas? Very Successful Neither Unsuccessful Very Don t successful successful nor unsuccessful know unsuccessful Promoting growth in revenues (Asia-Pacific) Promoting growth in revenues (rest of the world) Promoting growth in margins (Asia-Pacific) Promoting growth in margins (rest of the world) Increasing launches of new products and services (Asia-Pacific) Increasing launches of new products and services (rest of the world) Promoting higher customer satisfaction (Asia-Pacific) Promoting higher customer satisfaction (rest of the world) Question for IT respondents only 12. What is your IT department doing to support your organization s strategy for growth? Select all that apply. Refining systems to align more closely with business needs Expanding existing systems Enhancing end user support Reducing total cost of ownership of technology Devising faster and more efficient deployment processes Designing role-based interfaces to improve user efficiency and to control data access Improving IT training systems Building in flexibility for future integration of legacy systems and systems of acquired companies and partners Building new scalable systems from the ground up Question for IT respondents only 13. In the previous question, you checked the following actions your organisation is taking to ensure that its IT systems can support its growth strategy. Which one of the actions you chose is the most important? Refining systems to align more closely with business needs Enhancing end user support Reducing total cost of ownership of technology 13 5 Expanding existing systems Building in flexibility for future integration of legacy systems and systems of acquired companies and partners 6 6 Designing role-based interfaces to improve user efficiency and to control data access 6 2 Devising faster and more efficient deployment processes 4 14 Building new scalable systems from the ground up 2 7 Improving IT training systems The Economist Intelligence Unit Limited 2008

16 Appendix: Survey results Operational excellence: Enabling sustained growth Question for IT respondents only 13a. What was the effect of your first-ranked choice on the following areas? Very Successful Neither Unsuccessful Very Don t successful successful nor unsuccessful know unsuccessful Promoting growth in revenues (Asia-Pacific) Promoting growth in revenues (rest of the world) Promoting growth in margins (Asia-Pacific) Promoting growth in margins (rest of the world) Increasing launches of new products and services (Asia-Pacific) Increasing launches of new products and services (rest of the world) Promoting higher customer satisfaction (Asia-Pacific) Promoting higher customer satisfaction (rest of the world) What is your company doing to improve efficiency? Select all that apply. Evaluating and improving overall business processes (HR, Finance, Operations and IT) Improving internal systems/processes so our employees can be more efficient in their daily activities Transforming raw data into useful information More effective alignment of people skills with emerging business needs Improving systems to make it easier for customers to work with us Improving agility to adapt to business cycles, shifting customer demand and the actions of competitors Improving systems to make it easier for external partners to work with us Not applicable/don t know In the previous question, you checked the following actions your organisation is taking to improve its efficiency. Which one of the actions you chose is the most important? Evaluating and improving overall business processes (HR, Finance, Operations and IT) Improving internal systems/processes so your employees can be more efficient in their daily activities More effective alignment of people skills with emerging business needs Improving agility to adapt to business cycles, shifting customer demand and the actions of competitors Transforming raw data into useful information 9 11 Improving systems to make it easier for customers to work with you 8 9 Improving systems to make it easier for external partners to work with you What strategies has your company established to maintain profitability during periods of slow economic growth? Select all that apply. Overall aggressive cost control Expanding into different market areas Reducing staff while retaining core competencies Aggressive pursuit of market share from competitors Innovating to create new products or services Increasing customer share of wallet, up-selling/cross-selling to existing customers Implementing scalable production processes Not applicable/don t know 2 4 The Economist Intelligence Unit Limited

17 Appendix: Survey results Operational excellence: Enabling sustained growth 17. In the previous question, you checked the following strategies your company established to maintain profitability during periods of slow economic growth. Which one of the strategies you chose is the most important? Overall aggressive cost control Innovating to create new products or services Expanding into different market areas Implementing scalable production processes 10 7 Increasing customer share of wallet, up-selling/cross-selling to existing customers 9 10 Aggressive pursuit of market share from competitors 8 10 Reducing staff while retaining core competencies Has your company invested in the following technologies to achieve its operational excellence goals? Select all that apply. Inventory management systems Integrated ERP system (Finance & HR) Customer Relationship Management (CRM) system Business intelligence or analytics systems Production planning systems Demand planning systems Not applicable/don t know In the previous question, you checked the following technologies in which your company has invested to achieve its operational excellence goals. Which one of the technologies you chose is the most important? Integrated ERP system (Finance & HR) Business intelligence or analytics systems Customer Relationship Management (CRM) system Inventory management systems 17 9 Production planning systems 7 10 Demand planning systems Does your company have initiatives underway to improve efficiency and drive down costs in your functional area? The Americas 64 Yes, we have 70 initiatives underway to improve efficiency and drive down costs 31 No, we do not 23 have any initiatives for improving efficiency and driving down costs 5 Don t know 7 Rest of the world While every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this report or any of the information, opinions or conclusions set out in the report. 16 The Economist Intelligence Unit Limited 2008

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