Survey of supply chain executives reveals new insights

by | Oct 11, 2012

The annual Chief Supply Chain Officer Report was recently revealed, giving new insight as to how companies manage and view their supply chains.

Keeping costs down

Nearly two-thirds of the executives surveyed revealed that cost reduction was a significant factor in how their supply chains function. Even though savings are a concern, participants say supply chain efficiency is key. Many surveyed said their supply chains need to be able to have new products ready on scheduled dates and increase production quickly when certain products are in-demand.

While keeping costs low is important, it may not always be easy. Two-thirds of survey respondents were concerned about the increasing cost of doing business in China, and more than half are worried about talented employees leaving the company. Large businesses used to send production and jobs overseas to take advantage of China’s cheap labor costs, but respondents found that is quickly becoming more expensive.

Besides increasing costs, the survey also found that China isn’t as desirable as it once was because it is seen as the riskiest country to operate in. The country also ranked poorly in terms of value for money for companies doing business there.

Staying prepared

Executives aren’t just concerned about keeping costs down. They’re also trying to prepare for unexpected events to minimize supply chain and production disruptions. One-third of executives are very concerned about raw material or component shortages that could hurt their businesses.

In hopes that they won’t experience shortages, some companies are implementing new sourcing policies. Multi-sourcing has become more common, serving as protection in the event that one supplier fails or can no longer provide the company with resources.

Optimizing the chains

Because more executives are worried about their supply chain optimization, it is becoming a more important function for many companies. The survey found that 60 percent of executives agreed that “supply chain is understood as an equally important part of business success as sales and marketing or R&D/product development.”

These numbers indicate that more executives are taking an interest in the important role their supply chains play in their businesses. With more effective procurement practices, manufacturing policies and logistics operations, a company can use its supply chain to its benefit.

“A value-creation view of supply chain management requires supply chain executives to work closely as an integrated part of the company’s top executive team,” said the report co-author, Dr. Hau Lee. “The supply chain function is not in the background in driving the company’s strategic performance; rather, it becomes part of the steering team in the executive suite.”

From: Strategic Sourceror

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