A new survey confirms that business leaders around the world are focused on efficiencies in supply chain management as a key to competitive advantage in an ever more interconnected global marketplace.
PricewaterhouseCooper’s 2013 global supply chain survey is titled “Next-generation Supply Chains: Efficient, Fast and Tailored.” It included surveys of more than 500 participants from manufacturing and service industries. The bottom line shows clearly that organizational leaders are looking for relief from the pinch of constant volatility – from natural disasters to technology to up-and-down markets.
“The increasing use of online channels is driving the reduction of response times and forcing supply chain managers to find new answers for global micro-delivery of multiple small-customer orders, instead of the large-batch movements,” the authors wrote. “Maximizing supply chain flexibility and managing multiple supply chain configurations have become the new imperatives for today’s supply chain executives.”
The authors used executive interviews to come up with six key findings that point the way toward a future where supply chains are more efficient, transparent, dexterous and customized to an individual company’s needs.
Here’s a look at the six key findings in PwC’s 2013 report:
- ‘You Can Have It All’: The study said companies with better supply chain management than the competition also achieved significantly better financial results. However, those companies often don’t recognize that superior supply chains are to credit for the good results. Supply chain leaders delivered OTIF (“on time, in full”) more than 95 percent of the time and had more than 15 inventory turns a year. Companies the study defined as “laggards” averaged under four inventory turns.“Perhaps more important,” the study noted,” “leaders show it’s possible to deliver orders very efficiently without driving up their working capital, which refutes the still widely held belief that delivery performance is a function of inventory.”Researchers found that just 48 percent of the top echelons in the “leading” supply chain outfits recognize mature supply chains as an important competitive advantage. Once the C-suite comes around, the study says, “it will be easier to persuade executives to make the investments needed to bring supply chains up to the next level.”
- ‘Leaders Focus on Best-in-Class Delivery:’ Executives are focused on maximizing profitability in supply chains, while reducing costs and getting more responsive to customers. One respondent told survey researchers: “We’re juggling multiple supply chain balls faster and faster and just hope that none of the efficiency or customer satisfaction balls drops to the ground.”With that in mind, two-thirds of execs say their top priority is looking to stay more resilient to shifts in volume. Sixty-nine percent are most focused on meeting increased customer requirements. Sixty-one percent want the ability to respond to competitive pressures.
- ‘One Size Doesn’t Fit All’: More than 83 percent of supply-chain leaders optimize their supply chains to meet the needs of specific customer groups. For example, they might have various configurations for high-end and low-end products, or different configurations based on desired delivery times.
- ‘Global Control of Core Strategic Functions’: Leaders in the survey may outsource some production and delivery functions, but they retain global control of core functions, such as customer order desks. Outsourcing, overall, might have plateaued as companies seek to mitigate risks.
- ‘Supply Chain Capabilities Are a Differentiator’: Leaders as defined by the study already take cost-effective supply chains as a precondition for doing business. Now, they’ve moved on to “differentiating capabilities” that provide competitive advantage, things like collaboration with key partners to maximize delivery performance and creation of supply chain redundancies.
Leading organizations are adopting innovative supply chain technologies, such as RFID tracking in warehouse management, and other digital tools. More than 50 percent of respondents said they are implementing or plan new tools that increase automation and visibility, and nearly two-thirds say automation will be “vital” in the next two years.
“The technologies companies are deploying are far more sophisticated than before,” the study concludes. “Companies in every sector are looking for holistic solutions that encompass everything from order to delivery — solutions that are supported by enterprise applications and that draw on so-called big data to provide greater transparency within the supply chain and to help them optimize their logistics and distribution operations.”