I came across a KPMG study last week covering a survey of 360 senior executives Forbes Insights did in 2016. There were a couple of key takeaways from the report:
- Manufacturers are planning on growth, but the overall market isn't likely to grow. This means companies will need to battle for a bigger piece of the pie.
- The need for supply chain visibility is greater than ever, yet only half of the executives surveyed say they have the visibility they need to make decisions and mitigate risk.
Let's dig into both of these highlights a bit more.
Growth within a static market
According to the study, most companies are planning to grow by entering new sectors, new geographic areas or by adding to the products and services on offer. The challenge is that other companies are looking to grow (73 percent of companies say growth in the next two years is a high to extremely high priority).
“Every company wants profitable growth. But according to our data, today’s manufacturers are much more focused on driving new growth than ever before.”
At the same time, baseline growth is expected to be limited. This means that for your company to be successful, you’ll need to outperform the other companies vying for the same market share. Your supply chain plays a key role: getting your product to market with excellent quality, in the quantity needed, at the right price, with the right design.
Supply chain visibility
This is actually tied to the first point. If you suffer a supply chain failure, you are potentially opening an opportunity for your competitors to steal market share. The study frames this around the need to identify supply chain failure risk factors.
“With much now riding on their supply chain’s ability to meet new demands and growth expectations, many are increasingly worried about an unexpected supply chain failure.”
Supply chain failure can be anything from a significant quality issue (exploding phones anyone?), to a supplier not able to meet a shipping deadline, to a factory being shut down due to geopolitical issues, labor disruptions or (more frequently it seems) natural disasters. According to the study authors, the key to mitigating the risk of supply chain failure is visibility across your supply chain.
“The best way to reduce the risk of supply chain failure is by achieving greater visibility, and managing it cross-functionally deeper into the end-to-end supply chain,”
We aren't talking about a crystal ball, here. I’m not aware of offerings from any supply chain software vendor that can predict when a strike will occur or when the next hurricane will shut down production. However, when those events do occur, having software that provides true end-to-end visibility of your supply chain can mean the difference between maintaining, or gaining, market share, or not. So what does end-to-end visibility mean? It means a single system that:
- Brings data in from multiple disparate systems into a single view. How many ERP systems do you have in your supply chain? Sites that were introduced through mergers and acquisition often run different ERP software. How do you bring that planning data together?
- Emulates the analytics within each of those systems so that when you view the data together, the results align to the results you would get from each system.
- Allows users to create and evaluate as many scenarios as they need to effectively anticipate and resolve supply chain issues.
- Senses and responds to supply chain events. Sensing not just an event, but through the power of the interconnected analytics, understanding that the event will have an impact on inventory, customer service, revenue and/or margin.
- Allows for collaboration between users across the extended supply chain to effectively respond to supply chain issues when they occur. This means not just knowing what part is at risk four levels down your supply chain, but WHO to work with to resolve that risk…and facilitating the discussion to drive to a solution.
- Presents data from across the supply chain in a logical, understandable and customizable format so the data becomes actionable information.
You and your competitors are going to be battling to grow while baseline growth is limited, meaning you’ll need to tackle new markets, new geographies, new sectors and new products. The key to making this happen is a supply chain that’s capable of supporting that growth. A supply chain that’s flexible can react quickly to changing demand signals and can sense and respond when events happen. How is your supply chain positioned today? What steps have you taken to better prepare your supply chain? Comment back and let us know!
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