There’s no dispute about the benefits obtainable through use of supply chain management. There’s also no question that during the economic downturn, companies relied on supply chain management to weather the storm. I must admit, however, that I am somewhat surprised by the results of a recent survey, in which respondents reported a drop in the amount of overall cost savings as well as lower increases to revenues as a result of supply chain management initiatives.
The survey, 2010 Global Survey of Supply Chain Progress, was jointly conducted by CSC, Supply Chain Management Review (SCMR), and Michigan State University, with assistance by the Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine. Twenty industries were represented in this year’s survey, and respondents included representatives from both large and mid-sized companies, with sales ranging from $250 million to over $1 billion.
One of the surprising—at least to me, anyway—findings was that when asked about the overall impact of supply chain initiatives on cost reduction over the past three years, the number of respondents answering “none” or “don’t know/not sure” grew from 13 percent in 2009 to 20 percent this year. And as a follow-up, when asked about the overall impact of supply chain initiatives on increasing revenue over the past three years, the percentage of respondents indicating “none” or “don’t know/not sure” rose from 30 percent in 2009 to 47 percent in 2010.
How should that be interpreted? Is it actually a lack of impact, or a lack of direct measurement to understand the impact? I am encouraged by other results (which, to a degree, are counter-intuitive to the stats above). For instance, supply chain management is largely held to be of considerable importance. In fact, 82 percent of the respondents replied that supply chain management is considered to be a core importance for their organization, and when asked how much influence supply chain management has on running the business, 52 percent replied “to a great degree”--while another 35 percent indicated a “moderate degree.”
Supply chain management also is a logical operation for companies to use to battle the effects of the economy. Indeed, 78 percent of the participants indicated that their firms increased emphasis on supply chain management this year. Additionally, given the growing emphasis on supply chain management, it only stands to reason that S&OP is increasingly valued as well.
For instance, 66 percent of the respondents reported a moderate to high degree of impact using S&OP to improve the company’s agility so it can better respond to changes in customer demand. I believe this will be a trend that will continue for a long time to come.
SCM and S&OP are sure to grow in importance given that increasing levels of outsourcing, globalization of demand, requirements for product innovation and demand volatility combine to have a profound impact on companies’ business performance.
Supply chain is becoming known as the sweet spot for impacting competitive advantage and operational and financial success.