Cost Reduction is Key Supply Chain Strategy

In a ground-breaking global supply chain survey of 800 companies conducted by Manufacturing Insights, an IDC Company (Framingham, Mass.), results reveal a disconnect between business objectives and supply chain strategy. According to survey findings, the majority of respondents (71%) cited increased quality and customer satisfaction as their top business objective, followed by reducing overall cost and improving productivity (66%), and increasing revenues and exploiting new markets (62%).

Yet, despite the desire to improve service levels, almost half (48%) of respondents cited reducing material, manufacturing, and logistics costs as their top supply chain strategy. “As a whole, it does appear that manufacturing firms surveyed are still looking at a cost strategy in their supply chains, as opposed to speed, flexibility, or service-enhanced supply chain strategies,” says Kimberly Knickle, program director and lead analyst on the survey.

The second and third supply strategies cited, respectively, were more responsive and timely decision-making across the global supply chain (39%), and more responsiveness to changes in the marketplace (36%). “The fact that these strategies were the top two and three picks indicates that manufacturers are aware of the need for more intelligent decision-making in supply chain management,” Knickle adds.

When asked to identify “the most important IT investment areas in terms of their impact on global supply chain performance over the next two years,” the top three answers most often cited by respondents were advanced supply network planning or manufacturing scheduling, advanced inventory management or optimization, and supply chain execution, logistics control and management.

“Ideally, companies should map their business objectives with supply chain priorities to make the most effective IT investments, “ Knickle continues. “The survey results indicate that many companies have a gap between their overall objectives and how they execute in the supply chain,” she adds.

These survey findings, and more, can be found in Knickle’s 31-page report, Worldwide Supply Chain Innovation: Driving IT Investments to Support the Business (Doc #MI207169), the first in a series of reports covering global supply chain strategies. The report is available at www.manufacturing-insights.com.

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