PRTM survey focuses on supply chain flexibility

Supply chain flexibility is the new imperative for growing company revenues while keeping supply chain costs under control

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High volatility, massive swings in customer demand, and challenges in ensuring sufficient supply are the current reality for global supply chain executives—making supply chain flexibility the new imperative for growing company revenues while keeping supply chain costs under control.

The findings are part of a new survey—2011 Global Supply Chain Trends—from global management consulting firm PRTM. Based on interviews with senior executives from 150 companies across industries, this 2011 supplement to PRTM’s 2010-2012 Global Supply Chain Trends report identifies five levers that increase operational flexibility, drive revenues and cut costs.

Companies that have implemented the five supply chain flexibility levers have, on average, achieved a 12 to 15 percent revenue increase and reduced supply chain costs by 8 to 10 percent, according to PRTM. However, PRTM found that operational flexibility requires significant investment as well as a top-down commitment from supply chain executives. In the survey, supply chain leaders are defined as the top 20 percent of supply chain performers, while laggards are the bottom 20 percent. Companies were evaluated according to various quantitative criteria and PRTM’s Supply Chain Maturity Matrix, which is based on the Supply-Chain Operations Reference-model (SCOR).

“Volatility is the new norm for supply chain operations, and continuing economic uncertainty is affecting demand by driving shorter capital investment cycles and tighter inventories,” said Dr. Reinhard Geissbauer, director at PRTM and leader of the study. He continued, “At the same time, political unrest, growing competition for resources, and a supply base not yet fully recovered from the financial crisis is generating supply shortages. And that outlook does not even include singular events such as Fukushima, Icelandic volcanoes, and other natural events.”

In an interview with SCMR, Brad Householder, director of PRTM’s supply chain practice, said that the report represents “a cautionary tale,” separating the haves and have-nots.

“Those with end-to-end visibility will continue to manage inventories and labor with more forecasting prowess,” he said. “And they will be at an advantage in spotting leaks or bubbles in the supply chain.

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About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

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