Even this is
enough to sound overwhelming, but in order to complete one mustn’t omit, in
parallel there are a few more revolutions worth mentioning happening. They
happen in different locations at different paces and at different times, but it
is clear that they are here and that they are without doubt expanding
everywhere. The Consumer Revolution- Today’s consumers are more
technologically advanced, informed and knowledgeable, more connected to a wider
community of consumers, more demanding and have higher awareness to well-being,
health and sustainability. The Information Revolution- Today information
is generated in rates never experienced before (recent studies estimate that
every few minutes the amount of information generated is equal to the whole of
the information generated since the beginning of the universe). And finally The
Regulatory Revolution – Social trends, urbanization, care for the planet
and quality of life leads to increase regulatory intervention in areas it never
took part of before.
In-light of these realities, towards the end of 2012 a few
surveys were conducted to evaluate how they affect supply chain management. This
article brings the key findings of these surveys done by PwC, SCM World, Bloomberg
Business week Research Services and CSC that combined surveyed thousands of managers
in hundreds of organizations representing different markets, multiple
industries and a variety of business realities.
Each survey looked at the subject from a slightly different
angle and recorded its findings in their unique way, however they all show a
similar trend – supply chain excellence is a key contributor to value creation,
competitiveness and resilience. They are united in concluding that- Organizations that acknowledge and place the
supply chain function appropriately, align the supply chain strategy with the
organization’s strategy, and focus on achieving flexibility, speed, efficiency
and customer satisfaction, experience meaningfully better business performance.
According to PwC survey such organizations achieve 70% better performance vs.
those who lag behind.
- - Strategy and Organization
o
Placing the supply chain management function as part of top management.
CSC reports that 54% indicated immediate subordination to CEO/ President (This
trend is becoming more visible by the day, highlighting the growing importance
placed on supply chain excellence in today’s corporate reality. And it is hard
to ignore a case like Apple’s Tim Cook who headed operations and supply chain prior
to being nominated CEO).
- - Segmentation and
Differentiation
o
Creating multiple unique channels to reach the consumer. With
consumers having multiple alternative ways to buy, the creation of new and
multiple means of reaching the customer becomes mandatory. Meaning that one can
no longer use a one policy for all, but rather require a variety of policies to
fit different customers, supply chain partners and products. Companies
utilizing more than one policy are showing superior performance to those still
operating only one.
o
51% of PwC survey
participants and 75% of SCM’s indicated they are building supply chain capabilities designed to create market
differentiation. PwC survey indicates these efforts are particularly focusing
on: Maximum delivery performance, Minimum costs, Maximizing volume flexibility
and responsiveness, Minimized risks, Complexity management, Sustainability, Tax
Optimization and efficiency.
- - Outsourcing
o
There is a trend of focusing on core strategic supply chain
abilities and outsourcing the rest (such as: Warehousing, transportation,
manufacturing, operational purchasing etc.)
- - Technology
o
Most leading companies are already
using a variety of advanced IT solutions
and plan to continue increasing the array of tools in the coming years. These
tools are used to achieve visibility and transparency, ensure availability of
data and information for decision makers and automate some of the SC
activities, such as: inventory management, replenishment, new product launches
and more.
o
Creating higher visibility, transparency and analytical abilities improve
substantially the SC performance, cut costs, increase profits and increases the
gap from the laggards. CSC survey indicates though, that mostly these abilities
are prevalent for the upstream and less for downstream.
- - Operations
o
Efficiency, competitiveness, speed, flexibility (adaptable to high
fluctuations in demand) and delivering the highest customer satisfaction are
the key objective of supply chains, and they constantly must improve.
o
These abilities are achieved
via a few initiatives: Collaboration starting with information and all the way
to processes, infrastructures and resources; having excess capacities; demand
based replenishment; inventory optimization; POS data leveraging, and more.
- - Risk and Talent Management
o
More than 80% of the
companies participating in SCM’s survey reported experiencing disruptions to
supply in the last two years. 50% suffered losses and about a third reported
profitability and customer losses.
o
Managing the flow disruptions risks requires a new point of view
and a line of processes and tools for minimizing, avoiding and mitigating the
risk. This includes: Less long term supplier relationships, increased frequency
and quality of supplier communication, applying standard risk management tools,
creating supply back-ups and multiple sourcing.
o
The increased SC complexity
coupled with the challenges it faces mandates ensuring that resources engaged in the SC function are knowledgeable,
capable and skillful. Organizations are making meaningful progress in this
direction.
- - Sustainability and Social
Media
o
Sustainability is mostly considered as important for strengthening customer relations
and most companies indicate that they intend to continue investing attention
and money on sustainability.
o
In 2012 the trend of demanding suppliers to adhere to
sustainability requirements grew coupled with taking punitive actions when
suppliers failed to adhere up to discontinuation of the business engagements.
It seems though, that the trend changes to using positive incentives instead.
o
Social media still plays
insignificant role in organizations considerations but the importance is
growing and attention is diverted to managing
the risks associated with social media as well as harnessing the opportunities
it opens.
A clear trend is emerging – supply chain is becoming more
and more the key enabler of organizations survivability, competitiveness and
growth. This realization mandates that the organization takes a fresh look at
their supply chain approach and adopt a few basic principles: Organizing the supply chain organization in
a business unit reporting to the CEO/ President and focusing it on delivering
the highest customer satisfaction in the most economical and competitive way.
The core means for achieving that include: Aligning the SC
strategy with the organizations strategy; Adopting advanced means for creating
growing flexibility, operational efficiency and speed; Using the supply chain
to create differentiation; Using technology and collaboration for visibility,
transparency and analytical capabilities so that decisions making across the
supply chain are timely and adequate.
It all indicates to a pathway that has just begun. A pathway
that will continue to develop and evolve and that ultimately will dramatically
change the way businesses operate.
Sources:
1) PwC 16th Annual Global CEO
Survey, December 2012,
2) The Chief Supply Chain Officer
Report, SCM World, September 2012
3) Supply Chain Innovation Driving
Operational Improvements, An exclusive survey and research report from
Bloomberg Businessweek Research Services, January 2013
4) The ninth annual global survey
of supply chain progress, Findings from a survey jointly conducted by CSC,
Neeley Business School at TCU, and Supply Chain Management Review (SCMR), 2012
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