Shortages of raw materials and components top the list of risks that respondents are most worried about (a third are “very concerned”). Shipping disruptions, natural disasters and other incidents affect supplier facilities—and the failure of key suppliers is close behind.
More than eight out of 10 companies have been hit by supply- and demand-side disruptions during the past two years. Almost half have suffered a loss of sales/revenue and more than a third have experienced lower profits.
Strategy alignment and value creation
Firms look to their supply chain functions for smarter product launches, greater customer loyalty and higher sales—not just operational excellence.
While almost two-thirds of executives said operating cost reduction was a “very important” driver for their supply chain function, half also said the same about increasing sales revenue and differentiating customer service from that of competitors.
The most significant ways in which supply chain excellence boosts top-line growth, according to survey respondents, are the ability to launch new products on schedule; ramp up production quickly; ensure repeat purchases through greater customer loyalty; and receive priority treatment from suppliers when key materials and components are in short supply.
“Our research shows that more and more companies are using supply chain excellence as a means to create value and competitive advantage,” said Dr. Hau Lee, Chairman of SCM World and Thoma Professor of Operations, Information and Technology at Stanford University. “Those that still view supply chain management as a supporting function, or see it only as a way to reduce operating costs have a lot of catching up to do. They are missing great opportunities.”
And capitalizing on these opportunities demands close alignment between supply chain activities and business objectives, Lee added.
“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,” Lee continued. “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.”
For more information regarding “The Chief Supply Chain Officer Report 2012,” visit www.scmworld.com.