Study Links Revenue Growth to Supply Chain Efficiency

An efficient supply chain is not only essential to maintaining prices on goods and services, but it’s key to generating new revenues. That was one of the top takeaways from the eighth annual "Global Survey of Supply Chain Progress," conducted by Supply Chain Management Review, The Eli Broad Graduate School of Management at Michigan State University and CSC, with assistance from The Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine. The Survey attracted 164 complete responses internationally, split evenly between manufacturing and service organizations.

Without a strong supply chain capability, firms would have trouble accommodating the price reduction requests of key customers, according to the report’s authors. In fact solid supply chain management capabilities helped most of the respondents get through the recent economic downturn, although with varied levels of success as determined by costs, revenues, market shares, internal adjustments and customer satisfaction.

Some of the most interesting findings had to do with the role of environmental sustainability. Almost half (49%) indicated they were implementing options and another 31 percent said they were evaluating options. Twenty percent were neither implementing nor evaluating.

When asked if green practices resulted in savings, 39 percent reporting none yet and another 34 percent indicated only 1 to 5 percent. Revenues weren’t much improved either, with 72 percent seeing no revenue growth from green and another 24 percent saying only 1 to 5 percent. There were regional differences in revenue, however. In North America, only 24 percent of organizations had improved revenues with less than 1 percent achieving over 11 percent. In Europe 45 percent enjoyed improved revenues and, although based on a small data set, over 6 percent achieved greater than 11 percent.

“We did find that the supply chain leaders are making greater inroads in green initiatives,” the study concluded. “They reported greater savings in all areas, especially in transportation, warehousing, and packaging.”

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