Reducing Overall Supply Chain Costs Top Priority Among Manufacturers

When IDC Manufacturing Insights announced the results of the 2012 U.S. Supply Chain Survey, analysts were surprised by some of the findings.

The survey which examines the state of the industry, and how manufacturers are adapting and improving their supply chains, also explores and how technology plays a role in enabling manufacturers to be more successful.

“We were expecting respondents to say they were continuing to invest in technology,” said IDC Manufacturing Insights Practice Director, Kimberly Knickle, “but we were pleasantly surprised that product quality was also ranked high on their list of priorities.”

“Business Strategy: 2012 Supply Chain Survey-Manufacturing Priorities and New Technology Adoption” is based on feedback from 350 U.S. manufacturers. It found more than despite being product-centric organizations, 80 percent of respondents rate reducing overall supply chain costs as the number one supply chain priority in the coming year. Nearly 55 percent suggest supply chain agility is second and 52 percent suggest improving product quality and safety is the third most important priority.

When asked to rate the level of importance of new technology areas, big data/analytics came out on top, followed by mobility, cloud computing/software as a service and social business tools.
In an interview, Knickle said “reverse logistics” represented a large piece of the puzzle.

While manufacturers face increasing complexity as customer demand diversifies and supply globalizes, supply chain organizations are adapting to respond to requirements such as:
• Complex and extended global supply networks
• Volatile demand
• Growing regulation, particularly in the area of traceability
• Pressure to be more agile and increase the clock speed of the supply chain
• The “rise” of the savvy consumer
To address these challenges, IDC Manufacturing Insights has found:
• Manufacturers continue to increase the amount of low-cost country sourcing. IDC Manufacturing Insights recommends revisiting the profitable proximity sourcing approach and how that concept, supported by IT, can ensure sourcing decisions to create a competitive edge.
• Most manufacturers view their supply chains as focused primarily on product quality, yet their supply chain priorities usually start with reducing costs, followed by responding to supply or demand changes, ahead of product quality and customer service.
• With IT-based solutions for demand planning and forecasting and production scheduling viewed as key to manufacturers’ business performance over the next year, this could signal a genuine shift to a more holistic approach to truly integrated business planning, inclusive of fulfillment excellence.
• Big data and mobility are the most important new technologies for manufacturers’ supply chains. IDC Manufacturing Insights believes there is substantial value to how manufacturers can use these to improve their agility and customer service.

“According to our findings, the key supply chain challenge facing all manufacturers today is the juxtaposing of complex and extended supply networks with increasingly fast and volatile demand networks – and the increasingly ineffective role for inventory as a way to buffer cadence mismatches,” said Simon Ellis, Practice Director.

“While there is anecdotal evidence to suggest that 2012 may indeed represent the most challenging time in the history of the manufacturing supply chain, significant opportunities also abound in terms of the supply chain this year,” he added.