One misstep in the supply chain can have an immediate impact on the way a consumer views a brand. As consumers have many different options to make their purchasing choices, one little blip in their experience can make all the difference between generating a loyal customer and generating one who turns to your competitors.
Today we are seeing how important an integrated supply chain is to meeting customer needs in addition to marketing and sales operations. However, supply chains are subject to a variety of challenges. From cost and currency fluctuations to supply disruptions, transportation capacity constraints and production recalls – these are the daily challenges of the supply chain. Manufacturers must learn to handle all of this volatility, and more, in a transparent manner. Clearly, it’s no longer enough to build supply chains that are efficient, demand-driven and transparent. Now, they must also be flexible, real-time, and smart.
As supply chains grow more global and interconnected, they increase their exposure to shocks and disruptions. The demand for supply chain speed only exacerbates the problem. Even minor missteps can have major consequences in these increasingly complex networks.
As part of IBM’s recent Global Chief Supply Chain Officer Study, discussions with 400 senior executives from around the world who are responsible for supply chain strategies and operations revealed that globalization ranks as a top supply chain challenge. According to the study, many companies are encountering issues with global sourcing, including unreliable delivery (65 percent), longer lead times (61 percent) and poor quality (61 percent).
So far, however, the financial advantages of globalization of their markets and operations outweigh these negatives. Nearly 40 percent of supply chain executives report improved margins, though this increase in profits is not necessarily tied to lower costs.
In fact, more than one-third of executives are experiencing increased costs, likely because of those earlier mentioned global sourcing challenges. Instead, these higher profits seem linked to sales increases, as reported by 43 percent of executives. These findings suggest globalization has contributed more to revenue growth than efficiency.
As supply chains grow more complex, costly and vulnerable, manufacturers are finding it increasingly difficult to respond to challenges, especially with conventional supply chain strategies and designs.
Many manufacturers are turning to Managed Service Providers (MSPs) to develop a cloud-based supply chain network that can provide better visibility and collaboration at a lower cost. With a cloud-based supply chain, manufacturers can benefit more from globalization. To date, globalization has resulted in higher profits mainly because of rapid revenue growth, but as supply chains embrace the cloud, manufacturers will be able to address efficiency issues.
For example, increased visibility from an always on, always connected supply chain will help companies identify and eliminate global delivery and quality problems. And, decisions about manufacturing locations and suppliers will no longer be dominated by a single cost element like labor. Cloud-based supply chains will have the analytic capability to evaluate supply, manufacturing and distribution alternatives, and then the flexibility to reconfigure as conditions change.
Analytics also can help manufacturers optimize cloud-based supply chains and improve business efficiency. In addition to saving costs, analytics can uncover insights and trends that manufacturers can use to better serve customers, locally and globally. Organizations are increasingly embracing analytics to optimize their supply chains and improve business efficiency. In addition to saving costs, analytics can uncover insights and trends marketers can use to better serve customers, as well as ensure products on their Web sites are kept in stock.
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