Aberdeen Group recently found a tremendous gap between best-in-class organizations and their peers. The Aberdeen study surveyed 74 companies in the process industries, including chemicals, pharmaceuticals, food and beverage, oil and gas, and pulp and paper sectors.

Three-quarters of all process industry companies in the survey are focusing on supply chain transformation in order to address and contain manufacturing and logistics costs, according to the report, entitled Supply Chain Cost-cutting Strategies: How Top Process Industry Performers Take Radically Different Actions.

The typical increase in logistics costs for a process manufacturer over the past two years: 8 percent.

To achieve enormous advantages over their peers, best-in-class companies have taken radically different actions in organization structure and supply chain technology investment, notes the report's executive summary.

Best-in-class companies are strikingly ahead of their peers in achieving their transformation goals and are much more aggressive in adopting supply chain technology as part of their improvement initiatives.

"Best-in-class companies are four times more likely than their lower-performing peers to have established a centralized supply chain management organization and to have achieved data and process visibility across their supply chain, enabled by their higher adoption rate of technology," Beth Enslow, senior vice president of enterprise research at Aberdeen and author of the report, said at Supply & Demand-Chain Executive.

A majority of study respondents plan to upgrade their technology as part of a supply chain restructuring, with 82 percent of the companies surveyed having spending plans for new supply chain technology projects in 2007.

When it comes to logistics in the process industries, 75 percent of process companies have either restructured or plan to restructure their supply chains this year. Already, more than 60 percent of best-in-class process manufacturers have implemented a transportation management system.

The study found that "the marriage of technology with process has allowed best-in-class companies to achieve a plethora of results," including lower manufacturing costs, improved order metrics and inventory reduction, Supply & Demand-Chain Executive reports.

"Best-in-class companies have a 2.5X to 9X advantage in key performance improvements since 2005, including improving perfect order percentages and lowering supply chain costs," according to Enslow.

"In the face of the steady run up in manufacturing and logistics costs, the old strategies for cost containment no longer have the same punch."