Supply chain: PRTM’s Global Supply Chain Trends 2010–2012 survey carries mixed messages
Senior management is optimistic about economic recovery, but their global operations are ill-prepared to meet a significant upturn in demand, according to a new survey conducted by global management consultancy PRTM.
in the NewsIAM, IoT and the Connected Supply Chain New shipper survey reveals that small businesses face “import overhead” Happy 100th Birthday, New England Motor Freight! What a ride, chairman says U.S. rail carload and intermodal volumes are mixed for week ending February 10 Memo to Washington D.C.: Stop talking about raising the gas tax, go do it More News
Senior management is optimistic about economic recovery, but their global operations are ill-prepared to meet a significant upturn in demand, according to a new survey conducted by global management consultancy PRTM. The findings are part of PRTM’s Global Supply Chain Trends 2010–2012 Survey—the largest annual survey of global supply chains ever conducted by the firm.
With nearly 350 participants from across industries in Europe, the Americas and Asia, the survey provides insight into management efforts to recover from the recent financial crisis and to position supply chains as an enabler of revenue and margin growth.
While optimism abounds—more than half of survey respondents expect average gross margins to surpass 10 percent over the next three years—three-quarters of respondents cite demand and supply volatility, coupled with poor forecast accuracy, to be the biggest roadblocks they face in capturing profits from the economic upturn.
Driven by short-term exigencies, many survey participants did not strengthen critical capabilities during the recession. “Only a small percentage truly improved supply chain flexibility and the processes needed both to capture an increase in demand and to better manage volatility,” said Reinhard Geissbauer, director, PRTM’s Global Supply Chain Innovation practice.
Complexity also poses a significant concern. More than 85 percent of companies expect the complexity of their supply chains to grow significantly by 2012, due to the challenges of expanding services to new global customers—their primary source of revenue growth. Specifically, more than three-quarters of respondents expect an increase in the number of international customer locations; more than two-thirds expect a higher number of product variations will be required to fulfill local customer expectations and to counter shrinking revenues.
Geissbauer said serving customers in an increasingly complex global environment extends the risk management challenge across the entire supply chain. “Dealing with cost pressures of their own, many companies have increased efforts in asset management and have shifted supply chain risks upstream to their suppliers.” So it comes as no surprise to Geissbauer that between 65 and 75 percent of survey participants now list end-to-end supply chain practices like advanced inventory management or improved delivery to customers at the top of their management agendas.
The report summarizes five key supply chain challenges with which global companies are struggling: 1) Consumers are increasingly price sensitive and less brand-loyal, resulting in commoditization and a permanent increase in supply chain volatility, 2) While most participants are looking to international customers for future market growth, few are prepared for the complexity that results from serving global customers with regionally customized products, 3) End-to-end supply chain cost optimization will be critical in the future, 4) Risk and opportunity management should span the entire supply chain, including the supply chains of key partners, and 5) Existing supply chain organizations are not truly integrated or empowered—specifically, 30 percent of survey participants say that problems with the supply chain organization—such as lack of integration between product development and manufacturing functions—are standing in their way of capturing the benefits of the economic recovery.
About the AuthorPatrick 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]
Subscribe to Logistics Management Magazine!Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!
The Future of Retail Distribution Navigating the Reverse Supply Chain for Connected Devices View More From this Issue