Product Quality Is Top Supply Chain Priority in 2010

May 7, 2010
Product quality is the most important supply chain initiative for manufacturers and retailers in 2010, according to a recent survey conducted by analyst firm IDC.

The survey results reflect the growing number of recalls in categories such as automotive, toys, and grocery and increasing pressure on brands from retail private label.

Reducing costs, meanwhile, is the top supply chain priority for respondents, and there is significant interest in improving forecasting capability and accuracy as well as improving responsiveness to demand changes. As companies begin to recover from the recession, managing the ability to respond to change and prepare for the return of demand is increasingly critical for business success, according to IDC.

When asked about the top three supply chain IT application investments planned for the next 12 months, sales and operations planning (S&OP) topped the list for both retailers and manufacturers.

For manufacturers, investment in strategic sourcing was the second-most frequently selected application investment, as many manufacturers plan to use it to control costs. Retailers selected advanced inventory management or inventory optimization as second-most important. Among manufacturing companies with more than 10,000 employees, manufacturing execution systems was the second-most common response after strategic sourcing, which reflects a renewed interest among large manufacturers in standardizing how they run their factories.

According to Leslie Hand, research director, IDC Retail Insights, “The IT investment priorities for retailers reflect the current requirement to more effectively manage top and bottom lines, as well as sales growth in the web and mobile channels, making better synchronization critical in the coming year. It's also clear from our results that retailers have received the consumer message that quality, value and transparency are all equally important by ranking product quality as the most important initiative this year.”

The survey, jointly conducted by IDC Manufacturing Insights and IDC Retail Insights, reveals the priorities of 415 manufacturers and 179 retailers in the United States. Respondents have various roles across their organizations, including procurement, supply chain, manufacturing/operations, merchandising and IT.