While creating a seamless view of enterprise information for suppliers and trading partners is often cited as the ultimate vision for supply chain technologies, a survey shows that most companies primarily want cost savings.
According to a supply chain survey of 800 companies conducted by Manufacturing Insights, an IDC Company, almost half (48 percent) of respondents cited reducing material, manufacturing, and/or logistics costs as their top supply chain strategy. The second and third supply strategies cited, respectively, were more responsive and timely decision-making across the global supply chain (39 percent), and more responsiveness to changes in the marketplace (36 percent).
"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," said Kimberly Knickle, program director on the survey.
Critically, according to Manufacturing Insights, the survey revealed a disconnect between supply chain goals (wringing out costs) and primary business objectives. According to findings, the majority of respondents (71 percent) cited increased quality and customer satisfaction as their top business objective, followed by reducing overall cost and improving productivity (66 percent), and increasing revenues and exploiting new markets (62 percent).
"Ideally, companies should map their business objectives with supply chain priorities to make the most effective IT investments," Ms. Knickle adds. "The survey results indicate that many companies have a gap between their overall objectives and how they execute in the supply chain."
Ms. Knickle told Managing Automation that IT managers understand what supply chain technologies can accomplish. However, if the CFO doesn't have the same understanding, he or she might not be so quick to sign the check to pay for the technology.
"Our results may indicate that manufacturers in mature regions are still struggling in winning the global competitive match, and therefore many of them are still prioritizing cost-cutting initiatives versus funding product innovation," the study also pointed out. "We expect more regions to recognize that supply chain performance can and should be tightly interwoven with innovation priorities."
The survey of manufacturing and retail companies worldwide was conducted in January and February 2007. Roughly 20 percent of respondents held titles indicating they are part of the IT organization, while more than 80 percent represented lines of business in their organizations, such as supply chain operations, materials management or procurement.
Discussion Questions: Do you see a disconnect between business and supply chain strategies? Is this a natural search for cost savings to drive short-term ROI? Or are companies not fully committed to or believers in the full promise of supply chain technologies?