Global Chief Supply Chain Officer Strategy Report

Transcription

1 Global Chief Supply Chain Officer Strategy Report A brief analysis of eyefortransport s recent survey 2013 For further details, please contact Sophie Farrow eyefortransport World Phone: US Toll Free: ext 7587 Canada Toll Free: ext 7587 sfarrow@eft.com

2 Table of Contents I. Introduction II. Methodology and Approach III. Profile of Respondents IV. Supply Chain Priorities and Challenges V. Relationships (3PL/Supplier/Peer) VI. Omnichannel Retail VII. Supply Chain Sustainability VIII. Future of Supply Chain IX. Conclusion List of Charts Geographic Region Annual Revenue Company Type Industry Representatives Respondent Job Titles Top 3 Business Challenges Driving Your Supply Chain Agenda 2013/2014 Effective Methods for Cutting Supply Chain Costs Head of Supply Chain on the Operational Board or the Executive Management Team Investing in Horizontal Collaboration Key Drivers Level of Supply Chain Contingency Planning Emerging Markets Outsourcing of Supply Chain Functions Important Factors When Selecting a Supply Chain Service Provider Proactivity of Solution Providers in Suggesting Supply Chain Improvements Expansion of Omnichannel Capabilities Biggest Concern in Omnichannel Expansion Importance of Supply Chain Sustainability Biggest Challenge in Achieving Supply Chain Sustainability Role of Big Data in the Supply Chain 3D Printing in Manufacturing

3 I. Introduction Supply chain executives continue to face never ending challenges in their bid to address increasing customer demand and ensure business growth. Unsurprisingly, cost cutting remains a top business priority for supply chain executives in the coming 12 months. Omnichannel retail has emerged as a big opportunity for retailers and manufacturers in the next year. Over 50% of those surveyed declared that they were going to expand their omnichannel capabilities within the next 12 months or were investigating the possibility to do so. However, it is clear that companies need to sufficiently prepare for the changing dynamics of the retail industry and thoroughly assess their network efficiency, inventory management, online and mobile strategies and 3PL relationships. This report provides you with a small snapshot of the current and future challenges and trends facing supply chain executives in the next few months. The report explores, alongside other issues: The key emerging markets for 2014 The most effective methods for cutting supply chain costs The most important factors when selecting a supply chain service provider The biggest concern in omnichannel retail expansion Through surveying supply chain executives from a variety of industries, eyefortransport have endeavoured to provide a detailed overview of the key concerns and priorities driving supply chain forward. The issues mentioned in this report will be discussed and debated by senior supply chain executives at the European Chief Supply Chain Officer Forum in Amsterdam, November th. For details visit

4 II. Methodology and Approach This survey was conducted in August 2013 with responses solicited by targeted e mail lists, select trade association memberships, various related industry databases and other targeted methods. No individual responses were analyzed, but rather all responses were consolidated.

5 III. Profile of Respondents Geographical Region Almost half of this year s survey respondents represented companies thatt are based in Europe, whilst 27.6% were from North America. The remainingg respondents were either based in Asia Pacific (14.7%), Middle Eastt & Africa (5.8%) and South S America (2.9%) Annual Revenue Over half of those billion. surveyed worked for companies with annual revenues exceeding $1

6 Company Type The largest proportion of respondents represented manufacturers, but there was also a notable response from servicee providers. 11.2% were retailers. Industries Represented A wide range of industries were represented in the survey withh retail/fmcg, hi tech, manufacturing, life sciences and transportation/logistics being the most prominent.

7 Respondent Job Titles More than 20% of those surveyed had either C Level, VP, EVP or GM job titles.

8 IV. Priorities and Challenges Top 3 Business Challenges Driving Your Supply Chain Agenda 2013/20144 Respondents weree asked to select the top 3 business challenges driving their supply chain agenda in 2013/2014. Cost reductions and demandd variability (forecasting) were tied in first place with 35.9%. These weree closely followed by inventory managementt and optimization (31.1%) and supply chain visibility (30.1%). In recent years, natural disasters such as earthquakes and tsunamis, ass well as rapidly changing customer requirements, have made demandd variability an acute issue. Gartner recently revealed that t 70% of f the companies they are researched are at level 2 (or lower) of the S&OP maturity scale, which is a good indication as to why demand variability is still posing a challenge. Unsurprisingly, lastt year s results also revealed cost reductions as the main obstacle for supply chainn executives.

9 Effective Methods for Cutting Supply Chain Costs When asked to identify the most effective measuress for cuttingg supply chain costs in the last year (and the respondents selected all that applied) ), improvingg internal efficiencies came out on top (74%). Re negotiating existingg transport contracts ( 45%) and improved forecasting (45%) also rated highly. It is apparent that in an effort to cut costs companies are looking to address internal functional silos to improve overall efficiency.

10 Head of Supply Chain on the Operational Board or the Executive Management Team On a very positive note 62.5% of companies revealed that theyy had their Head of Supply Chain on the Operational Board or the Executive Management Team, withh 5.4% anticipating that they would do so within the t next 2 years. This gives a good indicationn that the value of supply chain within businesses is gradually increasing and the influence off these executives on overall corporate strategy has been heightened.

11 Investing in Horizontal Collaboration Key Drivers Respondents weree asked which key drivers (up to 3) would prompt their company to invest (or further invest) in horizontal collaboration. The top three emerged as establishment of gain sharing models, a very viable proposal from a 3PL or 4PL and moree 3PLs or 4PLs who are open to innovation in thiss area. As horizontal activity becomes the new normal, a multilateral legal framework has been developed to ensure fair gain sharing and clear cut partnership boundaries. This,, therefore,, may contribute to more horizontal collaboration and allay the concerns of the prospectivee investors.

12 Level of Supply Chain Contingency Planning Respondents weree asked to rate their supply chain contingency y planning for unforeseen interruptions (e.g. ash clouds,, flooding, strikes etc). Nearly 30% % rated their planning as above average or excellent. With 2 yearss since the Thailand floods and the Japanese earthquake it appears that companies have started prioritisingg supply chain contingency planning. However, with almost 50% only rating their planningg as satisfactory it seems that there is still some work to be done.

13 Emerging Markets Respondents weree asked which emergingg markets they were looking to expand into or are currently working in. China (44.6%), India (37.8%) and Brazil (36.5%) weree selected as the top three markets. As part off the BRIC contingent, this is not really surprising, but it is interesting to see that Eastern Europe sits in 4 th place. Despitee the rising labour costs, China clearly remains an important market while in Brazil local manufacturing incentives and an ever improving infrastructure due to upcoming sporting eventss such as the 2014 FIFA World Cup and the 2016 Olympic Games are making this South American giant a more attractive option. A recent study from Prologis andd eyefortransport revealed that Eastern and Central Europe are set to grow in popularity as favoured destinations for f warehousing and manufacturing due to the region s economic growth potential and the closeness to the Russian market.

14 V.Relationships (3PL/Supplier/Peer) Outsourcing of Supply Chain Functions When respondentss were asked what supply chain functions they outsource, 37.7% declared that they outsource all of transport & distribution. Manufacturing was thee next area with the highest degreee of outsourcing, closely followed by warehousing. Procurement was the least outsourced supply chain function. More than half saidd that were outsourcing less than a quarter of their reverse logistics or after sales services. This shows that there are some key opportun ities for solution providers in this area.

15 Important Factors When Selecting a Supply Chain Service Provider The survey went on to look att the importance of factors when choosing a new solution provider. 93.1% of those surveyed primarily look at quality of service. s Cost featured as the next most important factor, while industry expertisee fell in the 3 rd position. In numerous interviews conducted with supply chain executives, those fromm the pharmaceutical and medical devices industries in particular noted that lack of industry expertise was the key reason for not pursing a relationship withh an outsourcing partner.

16 Proactivity of Solution Providers in Suggesting Supply Chain Improvements Nearly 60% of those surveyed agreed (orr strongly agreed) that their supply chain solution providers were proactive in suggesting new ways to improve supply chainn operations. With solution providers facing increased competition and needing too differentiate themselves in the market, this may explain why nearly two thirds of respondents acknowledge thatt their providers are being proactive. It seems greater collaboration iss being strived for and relationships are gradually being strengthened.

17 VI. Omnichannel Retail Expansion of Omnichannel Capabilities More than 50% of those surveyed said that they were going to expand their omnichannel capabilities within the next 12 months orr were investigating the possibility. As customers demandd more from their shopping experience, such as multiple delivery options and purchasing choices, businesses will need to configure their distribution models, manufacturing strategies and supply chain accordingly.

18 Biggest Concern in Omnichannel Expansion Integration of IT systems between multiple channels was seen as the biggest concernn in omnichannel expansion. In order to avoid information silos and ensure full visibility, it is key that all technology is aligned, especially with suppliers and solution providers. Customer satisfaction was also cited as a cause of anxiety for respondent ts. With multiple channels available to consumers, ensuring stock iss in the right place at the right time and fulfilling the expectation of freee and same delivery, are adding to the pressure.

19 VII. Supply Chain Sustainability Importance of Supply Chain Sustainabili ity Over 70% of those surveyed declared that supply chain sustainability was very or fairly important to their business. It seems evident that making supply chain sustainability a business imperative can not only improve ROI but also mitigatee risk and enhance brand reputation.

20 Biggest Challenge in Achieving Supply Chain Sustainability The main barrier to achieving greater supply chain sustainabilit ty was voted as a lack of resources. This was followed by implementation costs and then lack of shared values.

21 VIII.Future of Supply Chain Role of Big Data in the Supply Chain With 2. 5 exabytes of data being generated every day and givenn that 84% of supply chain and logisticss executives consider itt a game changer for their company, big dataa cannot be ignored. Using big data to improve supply chain operations is only o in the initial stages at many companies but the potential for the industry is huge. This survey question looked to understand wheree the respondents saw the greatest supply chain big dataa ROI. Choosing just one answer, over a quarter opted for increased visibility. This T was closely followed by enhancement of demand planning capabilities and then product and market segmentation strategies. With ncreasingly complex supply chains and the need to knoww not only where goods are but how they are being used, it is not surprising thatt visibility came out on top.

22 3D Printing in Manufacturing Over a quarter of those surveyed saw 3DD printing as becoming a small or significant part of their manufacturing processes in the next 2 years. Given such a short time period, this clearly shows the potential off 3D printingg in the future. Recent developments in the world of 3D printing suggest that itt has the capacity to t changee the face of manufacturing, with regards to locality of productio n and thee manufacturing of spare parts.

23 IX. Conclusion As cost control remains a key priority for supply chain executives, and no doubt will remain so for a few more years yet, initiatives such as horizontal collaboration and supply chain sustainability are becoming more important to supply chain strategy. New technologies are changing the face of supply chain and manufacturing. Although the survey revealed that few are currently investing in 3D printing it will be interesting to see the evolution of this in the next few years. Emerging markets are still being considered as valuable investment hubs. Understandably the BRIC countries are attracting considerable attention but with rising labour costs in China, for example, markets such as Eastern and Central Europe are playing more prominent roles. Relationships between supply chain executives and solution providers to the industry are increasingly improving as these providers are perceived to be more proactive in suggesting supply chain improvements to their customers. Supply chain continues to represent an increasingly valuable part of businesses. Nearly two thirds of executives noted that they had their Head of Supply Chain on the Operational Board or the Executive Management Team. This indicates that more and more supply chain professionals are potentially having an influence on corporate strategy and hopefully this is set to increase.

24 Want to learn more? Smarten your Supply Chain to Reduce Costs and Drive Growth Join the European Chief Supply Chain Officer Forum, co located with the 11 th 3PL Summit, to hear from world class speakers, get involved in crucial industry debate and network with your senior supply chain peers. November th, Steigenberger Airport Hotel, Amsterdam The is your prime opportunity to learn how to expand your omnichannel retail capabilities to optimize inventory and increase sales, discuss the best ways to overcome demand volatility, get the low down on investing in Africa, as well as giving you crucial insight on how you can maximise your supply chain team to enhance your professional brand. Join your peers in the industry to tackle the top issues facing your company and your competitors. Top Speakers for 2013 Include: Dino Rocos, Operations Director & Management Board Member, John Lewis Grag Javor, SVP Supply Chain, Starbucks Coffee Company Rob Scholte, Chief Sales & Supply Chain Officer, Metro Cash & Carry Calum Lewis, Operations Director, Lego Kari Kulojarvi, SVP Smart Devices Supply Chain, Nokia Paul Reilly, Group Head of Logistics and Supply Chain Network Design. British American Tobacco Chris Haighton, Head of Retail Logistics, Shop Direct Group Complimentary passes are available! If you are a an executive working in a senior supply chain role for a retailer or manufacturer you could qualify for a complimentary pass. Save your space today: For more information on the Chief Supply Chain Officer Forum, taking place on November th in Amsterdam, please go on the event website or contact the event director: Sophie Farrow sfarrow@eft.com +44 (0)

25 About eyefortransport Established in 1998, eyefortransport has become one of the leading providers of business intelligence, independent research, news and executive level events for the supply chain & logistics industries. eyefortransport has two primary focuses: 1) To provide executive networking opportunities in the supply chain & logistics industries via the more than 15 events, we annually organize and host in North America, Europe and Asia and online via the tens of thousands of users of The events are designed to complement and enhance the business connections available through our online network, and bring together the industry elite. Regularly attended by CEOs and senior management from the transport and logistics industry and Heads of Supply Chain of major companies, the events focus on current developments and latest trends, and are enhanced by high level, exclusive networking opportunities. 2) To deliver industry education through dozens of industry reports, surveys, newsletters, webinars and senior level presentations at leading events. For the list of current research, news and conferences we produce please visit