Supply Chain Trends and Visibility
Supply chain visibility and analytics contribute the most to making a company’s logistics and supply chain management a success – and that success translates directly to the company’s growth.
Those that have both strong supply chain visibility and analytics capabilities are almost twice as likely to be in the top 20% of business growth than firms that don’t, according to CSC’s ninth annual Global Survey of Supply Chain Progress, conducted along with TCU’s Neely School of Business and Supply Chain Management Review.
"Supply chain has shifted its role from defense and survival last year to contributing to profitable growth," said Ron Johnson, Partner at CSC. "Over the nine years there is a steady elevation of supply chain as a strategic entity within the enterprise, versus a back-office transaction component."
Across the board, respondents reported that logistics and supply chain management initiatives are making an ever-increasing difference to their businesses, but leaders in this area see the most benefit. The three-year average of supply chain’s contribution to revenue jumped from 4.0 percent last year to 8.5 percent this year, but leaders are seeing contributions upwards of 10 percent. Supply chain management is also chipping away at costs, contributing an average of 6.9 percent to cost reduction – but that number is 8.0 percent among supply chain leaders.
CSC and its partners surveyed manufacturers and service organizations across 20 industries, with company size ranging from $250 million to well over $1 billion, to find what separates a supply chain leader from a laggard.
For one, leaders are more likely to put logistics and supply chain management directly into the hands of top officers – they are 1.5 times more likely to make the supply chain chief one of the “C” level executives, and twice as likely to have the supply chain manager report directly to a corporate officer, such as an executive vice president or COO.
Importance of Supply Chain Visibility
Secondly, supply chain visibility is a key advantage for the leaders, which rated their visibility higher than the rest, across 10 different criteria. That is, they had the best visibility into their customers’ sales information, promotional plans and demand forecasts; and their suppliers’ inventory, order lead times and delivery dates.
Still, on average, businesses aren’t too excited about the quality of the supply chain data they have visibility into. When asked about the timeliness, accuracy, completeness and usability of the data, completeness received the lowest scores – but even the other categories only had 50 percent to 60 percent of respondents agreeing that their data met those criteria.
Leaders are twice as likely as laggards to be experienced users of data analytics software, and they are able to extract more useful information from their supply chain visibility data.
They are also flexible enough to quickly change their supply chain solutions to respond to new threats or opportunities. The survey gauged many different aspects of flexibility. One was how quickly a business is able to change the volume of products it makes. Businesses that were flexible in this area also scored better on the survey in cost reduction. If the business also had high supply chain visibility, its cost reduction was even greater.
Interestingly, leaders had the greatest advantage in two areas of flexibility: product customization and organization flexibility, which the report concludes are the “leading edge areas of improvement potential.”
Overall, the supply chain trends survey showed that companies with both high supply chain visibility and a high degree of flexibility had higher business growth and higher profits than those companies that had only one or the other, or neither. The ideal scenario, of course, is to have supply chain visibility, analytics skills, and the flexibility to take advantage of both.
Download the Full Report on the Supply Chain Management Survey.