Top 10 supply chain facts of 2014

Posted by Kevin O'Marah

We just released our fourth annual Chief Supply Chain Officer Report, and although I have no methodology for choosing this particular Top 10, I wanted to offer a few nuggets. I also hope to draw some of you into the data orgy we enjoy with 1,068 respondents answering 129 questions each. We cut the data constantly as part of our ongoing research and you, as SCM World community members, are welcome do so yourself.

For those of you preferring the easy option, here you go:

1. 53% of supply chain practitioners surveyed across industry think of cloud computing as “interesting, but unclear usefulness”. This is a pretty tepid view considering the zeal that most in IT show for cloud. My guess is that cloud is cool for those used to selling ERP, B2B or whatever craze happens to be in vogue. Supply chainers, it seems are in no rush to rip out what’s there already.
2. 10% say they are supporting a smaller number of SKUs in response to digital demand. This flies in the face of the macro trend towards more SKU complexity but hints at a key opportunity, which is delivering product personalisation post-sale. The obvious example is apps or other software enablement “shipped” electronically to consumers already in possession of a mobile device.

3. The second highest rated “disruptive and important” technology among respondents is digital supply chain. This is the light-speed version of production and distribution delivering any value-add that can be digitised. Software and content is obvious, but consider also digitised artwork and print-on-demand packaging, vehicle entertainment systems or anything else that customers will pay for, but that need not be made of atoms.
4. 31% say they use social media to inform product innovation priorities. This number keeps rising, while the share of respondents who see “no effect” of social media on their supply chain strategies keeps falling. No one is very good at this yet, but skipping it altogether is starting to look stupid.
5. Fewer than 17% view emerging markets primarily as low-cost sourcing opportunities; 34% are looking mainly for new sales growth and 48% equally seek sourcing and sales in emerging markets. It seems fair to say that the era of “low-cost country” sourcing is close to over. Globalisation from here on out is very much a two-way street.
6. Mexico is the sixth highest rated growth opportunity among the 920 respondents who answered this question, trailing only the BRICs and the United States. In total, 93 individuals chose it as one of their top three growth countries. Mexico is also only 20th on our list of countries deemed “too risky to operate in”. Good business awaits south of the border in spite of worries about gang warfare.
7. Geopolitical instability jumped 20 percentage points as a risk concern between 2013 and 2014. This is by far the biggest jump, well ahead of natural disasters, which rose eight points. On the other hand, financial failure of a critical customer fell significantly. Economic risk is trending down while political risk is trending up. War in Ukraine and the Middle East certainly fits here, but so does political incompetence in both Washington and Brussels. And who isn’t at least a little bit worried about what Beijing will declare next?

8. 35% of hi-tech companies say they have fully implemented social and environmental responsibility initiatives with key suppliers. Compare this to healthcare and pharmaceuticals where only 9% have made such moves. This gap is too large.
9. 31% declare sales an “essential” skill for supply chain professionals. This may mean direct experience in sales or just an ability to persuade. Considering how highly respondents rate change management (74% say it is essential), perhaps this is really about selling internally.
10. 26% say that finding supply chain talent is “extremely challenging”. This is well up on previous years and is now the number one people management problem. We have to make supply chain cool or the kids won’t want to play. Millennials demand meaningful work and we can give it to them.

Everyone has people to persuade, business cases to develop, and presentations to make. I hope some of this data helps.