1) While global supply chains allow companies to source flexibly, their complexity increases vulnerability to disruptions that can damage a company's finances and brand. 2) However, many companies are not adequately monitoring and assessing supply chain risks, with only half of companies seeking to learn from past problems. Formal risk assessments often occur annually or less. 3) A significant minority of companies are relying on increased inventory to address resilience instead of more effective strategies like relationship building and multi-sourcing.
- 73% of respondents experienced at least one disruptive supply chain incident in the past 12 months, with an average of five incidents.
- 39% of analyzed disruptions originated below the immediate tier one supplier, underscoring the deep-rooted nature of disruptions.
- Unplanned IT or telecom outages jumped to the top cause of disruptions, affecting 52% of organizations to some or a high degree. Adverse weather also remained a prominent cause.
- Failure of service provision by outsourcing suppliers doubled from 2011 and joins the top three causes of disruptions.
1) While global supply chains allow companies to source flexibly, their complexity increases vulnerability to disruptions that can damage a company's finances and brand. 2) However, many companies are not adequately monitoring and assessing supply chain risks, with only half of companies seeking to learn from past problems. Formal risk assessments often occur annually or less. 3) A significant minority of companies are relying on increased inventory to address resilience instead of more effective strategies like relationship building and multi-sourcing.
Resilient Supply Chains: How to Dynamically Manage Risk, Opportunity, and Bus...IHS
Supply chain disruptions are occurring at an alarming rate. An unrelenting barrage of man-made risk and natural disasters has made a profound and highly-visible impact on many global operations. Despite immediate attention on short term recovery, companies affected experience sustained, long-term impacts to share price, shareholder value, and operating performance.
Companies can no longer afford to be unprepared for the inevitability of disruption. As simple players within large, globally-integrated supply chains, they must become resilient to the volatile factors threatening sustained performance. And, resilience will only be achieved when companies master the ability to sense and respond to changes -- before they occur.
Join this 1-hour webcast where IHS experts will discuss supply chain risk and outline the importance of becoming resilient:
Who is at risk from supply chain disruption?
What does it mean to be resilient?
Where do traditional approaches to risk fail?
Why are leaders re-tooling their super-lean supply chains?
How can your organization sense and respond to change?
A recording of this presentation can be viewed here: http://www.slideshare.net/ihs_supplychain/resilient-supply-chains-how-to-dynamically-manage-risk-opportunity-and-business-continuity-25924392
This document discusses frameworks for developing sustainable global supply chains. It identifies motivations for addressing social and environmental issues in supply chains such as customer demands, compliance with regulations, reducing costs, gaining competitive advantage, and moral obligations. Key levers for influencing supply chain sustainability are a company's purpose, policies, people, relationships with peers/partners, public policy environment, and power within the supply chain. The document recommends establishing a code of conduct, obtaining third-party certifications, selectively choosing suppliers, and monitoring suppliers as baseline practices for building a sustainable supply chain.
The document discusses the need for supply chain resilience in today's volatile global business environment. It outlines four major trends driving changes to supply chains: 1) consumerism and boundary bleed are spreading consumer expectations like instant service and personalization to all industries; 2) just-in-time practices create efficient but brittle supply chains; 3) emerging markets introduce new risks and opportunities; and 4) regionalism is on the rise as countries seek more local sources. To develop resilient supply chains, companies must understand these forces and continuously monitor risks beyond their borders rather than taking a reactive approach after disruptions occur.
The top three supply chain/procurement risks according to the survey are:
1) Supply interruption risk
2) Lack of an effective senior executive-led sales and operations planning (S&OP) process
3) Lack of timely and accurate information and spend analysis capability for strategic sourcing
The top three solutions that would have the greatest impact in minimizing risk are:
1) An integrated and supported supply chain and/or procurement strategic plan
2) A formal and effective enterprisewide supply chain risk management process
3) An effective corporatewide strategic sourcing process
The top three current key business priorities related to supply chain solutions are:
1) An integrated and supported supply chain and
The document discusses Medidata Solutions (MDSO) and provides an investment thesis on the company. Key points include:
- The investment hypothesis is that MDSO is poised for long-term success as biopharmaceutical development becomes more technologically driven, requiring more outsourcing to technology platforms.
- MDSO faces questions around how well positioned it is for business model disruption in biopharma, what capabilities it offers clients, and if its platform value proposition has strengthened.
- Key risks to the investment thesis include potential downward revisions to long-term growth targets and decelerations in clinical trial activity or funding.
- 73% of respondents experienced at least one disruptive supply chain incident in the past 12 months, with an average of five incidents.
- 39% of analyzed disruptions originated below the immediate tier one supplier, underscoring the deep-rooted nature of disruptions.
- Unplanned IT or telecom outages jumped to the top cause of disruptions, affecting 52% of organizations to some or a high degree. Adverse weather also remained a prominent cause.
- Failure of service provision by outsourcing suppliers doubled from 2011 and joins the top three causes of disruptions.
1) While global supply chains allow companies to source flexibly, their complexity increases vulnerability to disruptions that can damage a company's finances and brand. 2) However, many companies are not adequately monitoring and assessing supply chain risks, with only half of companies seeking to learn from past problems. Formal risk assessments often occur annually or less. 3) A significant minority of companies are relying on increased inventory to address resilience instead of more effective strategies like relationship building and multi-sourcing.
Resilient Supply Chains: How to Dynamically Manage Risk, Opportunity, and Bus...IHS
Supply chain disruptions are occurring at an alarming rate. An unrelenting barrage of man-made risk and natural disasters has made a profound and highly-visible impact on many global operations. Despite immediate attention on short term recovery, companies affected experience sustained, long-term impacts to share price, shareholder value, and operating performance.
Companies can no longer afford to be unprepared for the inevitability of disruption. As simple players within large, globally-integrated supply chains, they must become resilient to the volatile factors threatening sustained performance. And, resilience will only be achieved when companies master the ability to sense and respond to changes -- before they occur.
Join this 1-hour webcast where IHS experts will discuss supply chain risk and outline the importance of becoming resilient:
Who is at risk from supply chain disruption?
What does it mean to be resilient?
Where do traditional approaches to risk fail?
Why are leaders re-tooling their super-lean supply chains?
How can your organization sense and respond to change?
A recording of this presentation can be viewed here: http://www.slideshare.net/ihs_supplychain/resilient-supply-chains-how-to-dynamically-manage-risk-opportunity-and-business-continuity-25924392
This document discusses frameworks for developing sustainable global supply chains. It identifies motivations for addressing social and environmental issues in supply chains such as customer demands, compliance with regulations, reducing costs, gaining competitive advantage, and moral obligations. Key levers for influencing supply chain sustainability are a company's purpose, policies, people, relationships with peers/partners, public policy environment, and power within the supply chain. The document recommends establishing a code of conduct, obtaining third-party certifications, selectively choosing suppliers, and monitoring suppliers as baseline practices for building a sustainable supply chain.
The document discusses the need for supply chain resilience in today's volatile global business environment. It outlines four major trends driving changes to supply chains: 1) consumerism and boundary bleed are spreading consumer expectations like instant service and personalization to all industries; 2) just-in-time practices create efficient but brittle supply chains; 3) emerging markets introduce new risks and opportunities; and 4) regionalism is on the rise as countries seek more local sources. To develop resilient supply chains, companies must understand these forces and continuously monitor risks beyond their borders rather than taking a reactive approach after disruptions occur.
The top three supply chain/procurement risks according to the survey are:
1) Supply interruption risk
2) Lack of an effective senior executive-led sales and operations planning (S&OP) process
3) Lack of timely and accurate information and spend analysis capability for strategic sourcing
The top three solutions that would have the greatest impact in minimizing risk are:
1) An integrated and supported supply chain and/or procurement strategic plan
2) A formal and effective enterprisewide supply chain risk management process
3) An effective corporatewide strategic sourcing process
The top three current key business priorities related to supply chain solutions are:
1) An integrated and supported supply chain and
The document discusses Medidata Solutions (MDSO) and provides an investment thesis on the company. Key points include:
- The investment hypothesis is that MDSO is poised for long-term success as biopharmaceutical development becomes more technologically driven, requiring more outsourcing to technology platforms.
- MDSO faces questions around how well positioned it is for business model disruption in biopharma, what capabilities it offers clients, and if its platform value proposition has strengthened.
- Key risks to the investment thesis include potential downward revisions to long-term growth targets and decelerations in clinical trial activity or funding.
Mobile health (mHealth) holds great promise to transform healthcare through ubiquitous mobile technology, but faces challenges. Interest is growing as mobile subscriptions near 6 billion, yet healthcare systems remain hospital-centric and unsuited to modern needs. While expectations are high that mHealth can increase access and lower costs, most experts expect slow adoption due to healthcare's resistance to change and the need to prove solutions. Emerging markets may lead the way by leaping ahead through unmet needs and fewer entrenched interests slowing innovation.
This document discusses using Multiple Criteria Decision Analysis (MCDA) to help companies select countries for new business ventures. MCDA provides a formal, rigorous approach to evaluate multiple criteria, integrate both objective and subjective factors, and help decision-makers understand trade-offs between options. The document provides background on MCDA and reviews literature showing MCDA has not been widely used for country selection, especially among small businesses. It then presents an example MCDA model to analyze country selection criteria and rank potential countries.
This document discusses how leading organizations value superior service, scale, and results from their surplus asset management partners. A survey found that organizations desire partners that maximize value across their reverse supply chains through providing expert knowledge, customized solutions, risk mitigation, and sustainability support (superior service). They also value partners that can establish global standards, offer comprehensive services, and handle all surplus categories and volumes at scale (superior scale). Additionally, organizations seek partners that deliver maximum recovery, measurable results, and enhance productivity through process improvements and technology (superior results).
LLamasoft provides the technology and expertise to help companies visualize, optimize and simulate the supply chain for major improvements in cost, service, sustainability and risk mitigation. Design alternatives and explore the trade-offs associated with change. Test results under real-world conditions using simulation. With LLamasoft you can do it all in a single, integrated software platform.
This document summarizes an expert discussion on optimizing supply chain management. The experts make three key points:
1) Increasing globalization and complexity have made supply chain management mission-critical but difficult to measure performance. Companies need to understand customer needs and balance costs with service levels.
2) Coordination and collaboration between suppliers, plants, distributors and retailers are important but often overlooked elements of managing global supply chains efficiently.
3) Managing risks from disruptions requires understanding potential risks and increasing flexibility within reasonable cost limits to absorb disruptions without serious impacts.
The document discusses innovations in supply chain management. It makes three key points:
1. While new technologies and concepts allow for greater supply chain insights and responsiveness, many organizations struggle to implement innovations effectively due to unclear strategies and contradictory goals.
2. An integral model is proposed to better translate organizational strategies into supply chain strategies, focusing on nine levers of value like financial parameters, business models, and operational excellence.
3. Games and workshops can help organizations gain a shared understanding of how operational choices impact overall performance and identify supply chain priorities like costs, quality, lead times, and flexibility.
Original article from the Flevy business blog can be found here:
http://flevy.com/blog/building-resilience-into-supply-chains/
The supply chains of most companies, large and small, exploit a world of opportunities. But, increasing global exposure comes with an increasing range of risks. These companies’ complex networks of suppliers and customers are as diverse as the goods and resources they manage. Within the same supply chain, giant multinational companies can sit side-by side with small to medium enterprises (SMEs). Yet, among companies large and small, there is growing awareness that extreme weather and a changing climate pose new risks and opportunities to old ways of doing business.
Smart businesses know how to manage uncertainty. As their exposure to extreme weather increases, informed businesses are incorporating the risk of extreme weather into existing risk management. Meanwhile, business continuity planning is growing to embrace the need to think about how a changing climate impacts on business.
Worldwide companies are increasingly aware that their supply chains are exposed to greater weather extremes. International competition and cheap transportation have led to expansive supply chains linked by complex logistics, multiplying risks to business continuity. The Business Continuity Institute’s latest Horizon Scanning Survey, with results from 700 organizations in 62 countries, found 53% of the survey respondents were either ‘extremely concerned’ or ‘concerned’ about the impacts of adverse weather on their businesses (BCI 2013). Business leaders are now urging companies to think about climate change (Business Green, 2013).
This document summarizes key points from a group assurance of learning exercise for a strategic management class. It includes 3 sentences summarizing external and internal analyses conducted on McDonald's Corporation, including: An EFE matrix was developed that analyzed 62 external factors affecting McDonald's and was reduced to the most important 20 factors. A competitive profile matrix compared McDonald's, YUM! Brands, and Burger King on 9 critical success factors, finding McDonald's received the highest total score of 3.68. Issues for strategic analysis of opportunities and threats from economic, social, technological, and other trends on local Pizza Hut operations were also discussed.
The document discusses tactics for staying profitable in 2009 by optimizing supply chain infrastructure. It recommends reviewing the entire supply chain network from manufacturing to distribution to customer delivery. Having a robust process to evaluate changes and optimize infrastructure will help weather economic storms and position the company for future growth. The structure of the supply chain network determines most costs, so it is important to routinely re-evaluate operations and infrastructure to improve profitability.
The State of Logistics Outsourcing; 2009 Third Party Logistics StudyDennis Wereldsma
This report presents findings from the 2009
Fourteenth Annual Third-Party Logistics
Study, conducted in mid-2009. This study
examines the state of the global market
for 3PL services and explores key issues
affecting the industry: economic volatility,
the IT capability gap and the challenges of
supply chain orchestration.
The document discusses how the insurance industry can address its aging workforce by taking lessons from professional baseball. It notes that the insurance workforce is rapidly aging, with over a quarter soon being within 5-10 years of retirement. It recommends that insurers recruit and develop young talent through effective training programs that pair new hires with experienced employees, and by developing future leaders internally in a way that encourages retention and succession planning, similar to a minor league baseball system. It also suggests insurers modernize processes and leverage outsourcing, analytics, and automation to improve efficiencies and attract talent despite a shrinking experienced workforce.
201204 Nolan QNL: Life and Annuity Industry OutlookSteven Callahan
An abbreviated version of the industry forecast for 2012 pointing out the highlights of key issues, strategies, areas needing focus, and likely structural changes.
The document provides a summary of Tracey Lee Jackson's career experience in business continuity and emergency management. It details roles with various companies developing business continuity plans, tools, and training programs for diverse industries. It also outlines education including a Master's in Emergency Management and current pursuit of a Doctorate in Business Administration. The breadth of experience across different organizations, industries, and countries provided Jackson with skills in plan development, risk assessment, training, process development, and working across diverse teams and cultures.
Network of Networks Share Group Spring UpdateLora Cecere
This document discusses a pilot project to test sharing common core trading partner data across supply chain networks. It provides details on the test plan, timing, members involved and their roles. The goal is to load partner data from pilot participants into a central registry to test availability and accuracy. Common data elements and definitions will be agreed upon. The registry will be compliant with ISO 8000 standards for quality master data. An API will also be developed to allow synchronization of the shared partner data. The pilot aims to demonstrate benefits of sharing this critical partner information across company and system boundaries.
The Boston Consulting Group, MIT Sloan Management Review, and the United Nations Global Compact joined forces to provide an inside look at how companies are dealing with sustainability issues: http://on.bcg.com/1Ci1R8l.
1) The document discusses how automotive companies face challenges from globalization, economic uncertainty, new technologies, and increasing consumer demands. Their traditional business models may no longer be viable.
2) It introduces the concept of a digital loyalty network (DLN), which leverages digital technologies to integrate demand and supply chains. Companies pursuing a DLN strategy are up to 70% more profitable than others.
3) General Motors has made progress building a DLN through initiatives in customer relationship management and supply chain management. This allows them to better recognize customer wants, identify customers by value, and collaborate with suppliers to serve customers profitably.
How Can You Drive Opportunity If You Cannot Manage Risk?Lora Cecere
Report Details: The research for this report was conducted via an online survey from March 12 - May 11, 2018. Surveys were conducted among 93 respondents -- a mix of business users (manufacturers, wholesalers/distributors/co-operatives, and third-party logistics providers, n=34), vendors (software providers and consultants, n=39), and others (academics, analysts, unemployed, and others, n=20).
Objective: To understand the current and expected future state of supply chain risk management, the biggest drivers of risk, and the impact on supply chain disruptions. NOTE: supply chain risk management is defined as the proactive identification and assessment of potential risks to the supply chain, as well as the development of strategies to avoid these risks.
Highlight: Nearly two-thirds of respondents believe that their company performs better today on risk management practices than five years ago yet they had 3.5 disruptions last year on average. Managing risk requires a network approach. Today’s investments in end-to-end supply chain are by and large not effective in risk mitigation. Only 37% have visibility of extended-tier suppliers and most lack the solutions to manage global complexity.
The document discusses the results of a survey about traceability challenges in supply chains. It finds that while many executives express confidence in being able to trace problems up and down the supply chain, in reality most companies would take days or weeks to execute a recall. There are also low levels of automation and many concerns about risks like liability. However, upgrading traceability technology and handling recalls transparently could help build customer loyalty. Overall the challenges of compliance and complexity are significant but more companies investing in technology offers potential for improvement on the path to better traceability.
The document discusses the results of a survey about traceability challenges in supply chains. It finds that while many executives express confidence in being able to trace problems up and down the supply chain, nearly half of respondents said it would take days or weeks to execute a recall. Automation of trace processes is limited, and concerns around risks, costs, and regulatory compliance remain high. However, opportunities exist to improve traceability through technology upgrades and gain consumer loyalty by responsibly handling recalls.
Supply chain, a risk management survey results and analysisSimone Luca Giargia
This document provides a summary of a report on managing risk in the global supply chain. It finds that while supply chain risk is a major issue, many companies do little to formally manage it. Key findings include that no companies surveyed use outside expertise to assess risk, 90% do not quantify risk when outsourcing production, and only 25% of supply chains are assessed for risk. It also finds that while insurance can help mitigate risk, it is not a major consideration for most supply chain executives. The report provides recommendations for developing a three-step process to better identify, prioritize and mitigate supply chain risks.
Mobile health (mHealth) holds great promise to transform healthcare through ubiquitous mobile technology, but faces challenges. Interest is growing as mobile subscriptions near 6 billion, yet healthcare systems remain hospital-centric and unsuited to modern needs. While expectations are high that mHealth can increase access and lower costs, most experts expect slow adoption due to healthcare's resistance to change and the need to prove solutions. Emerging markets may lead the way by leaping ahead through unmet needs and fewer entrenched interests slowing innovation.
This document discusses using Multiple Criteria Decision Analysis (MCDA) to help companies select countries for new business ventures. MCDA provides a formal, rigorous approach to evaluate multiple criteria, integrate both objective and subjective factors, and help decision-makers understand trade-offs between options. The document provides background on MCDA and reviews literature showing MCDA has not been widely used for country selection, especially among small businesses. It then presents an example MCDA model to analyze country selection criteria and rank potential countries.
This document discusses how leading organizations value superior service, scale, and results from their surplus asset management partners. A survey found that organizations desire partners that maximize value across their reverse supply chains through providing expert knowledge, customized solutions, risk mitigation, and sustainability support (superior service). They also value partners that can establish global standards, offer comprehensive services, and handle all surplus categories and volumes at scale (superior scale). Additionally, organizations seek partners that deliver maximum recovery, measurable results, and enhance productivity through process improvements and technology (superior results).
LLamasoft provides the technology and expertise to help companies visualize, optimize and simulate the supply chain for major improvements in cost, service, sustainability and risk mitigation. Design alternatives and explore the trade-offs associated with change. Test results under real-world conditions using simulation. With LLamasoft you can do it all in a single, integrated software platform.
This document summarizes an expert discussion on optimizing supply chain management. The experts make three key points:
1) Increasing globalization and complexity have made supply chain management mission-critical but difficult to measure performance. Companies need to understand customer needs and balance costs with service levels.
2) Coordination and collaboration between suppliers, plants, distributors and retailers are important but often overlooked elements of managing global supply chains efficiently.
3) Managing risks from disruptions requires understanding potential risks and increasing flexibility within reasonable cost limits to absorb disruptions without serious impacts.
The document discusses innovations in supply chain management. It makes three key points:
1. While new technologies and concepts allow for greater supply chain insights and responsiveness, many organizations struggle to implement innovations effectively due to unclear strategies and contradictory goals.
2. An integral model is proposed to better translate organizational strategies into supply chain strategies, focusing on nine levers of value like financial parameters, business models, and operational excellence.
3. Games and workshops can help organizations gain a shared understanding of how operational choices impact overall performance and identify supply chain priorities like costs, quality, lead times, and flexibility.
Original article from the Flevy business blog can be found here:
http://flevy.com/blog/building-resilience-into-supply-chains/
The supply chains of most companies, large and small, exploit a world of opportunities. But, increasing global exposure comes with an increasing range of risks. These companies’ complex networks of suppliers and customers are as diverse as the goods and resources they manage. Within the same supply chain, giant multinational companies can sit side-by side with small to medium enterprises (SMEs). Yet, among companies large and small, there is growing awareness that extreme weather and a changing climate pose new risks and opportunities to old ways of doing business.
Smart businesses know how to manage uncertainty. As their exposure to extreme weather increases, informed businesses are incorporating the risk of extreme weather into existing risk management. Meanwhile, business continuity planning is growing to embrace the need to think about how a changing climate impacts on business.
Worldwide companies are increasingly aware that their supply chains are exposed to greater weather extremes. International competition and cheap transportation have led to expansive supply chains linked by complex logistics, multiplying risks to business continuity. The Business Continuity Institute’s latest Horizon Scanning Survey, with results from 700 organizations in 62 countries, found 53% of the survey respondents were either ‘extremely concerned’ or ‘concerned’ about the impacts of adverse weather on their businesses (BCI 2013). Business leaders are now urging companies to think about climate change (Business Green, 2013).
This document summarizes key points from a group assurance of learning exercise for a strategic management class. It includes 3 sentences summarizing external and internal analyses conducted on McDonald's Corporation, including: An EFE matrix was developed that analyzed 62 external factors affecting McDonald's and was reduced to the most important 20 factors. A competitive profile matrix compared McDonald's, YUM! Brands, and Burger King on 9 critical success factors, finding McDonald's received the highest total score of 3.68. Issues for strategic analysis of opportunities and threats from economic, social, technological, and other trends on local Pizza Hut operations were also discussed.
The document discusses tactics for staying profitable in 2009 by optimizing supply chain infrastructure. It recommends reviewing the entire supply chain network from manufacturing to distribution to customer delivery. Having a robust process to evaluate changes and optimize infrastructure will help weather economic storms and position the company for future growth. The structure of the supply chain network determines most costs, so it is important to routinely re-evaluate operations and infrastructure to improve profitability.
The State of Logistics Outsourcing; 2009 Third Party Logistics StudyDennis Wereldsma
This report presents findings from the 2009
Fourteenth Annual Third-Party Logistics
Study, conducted in mid-2009. This study
examines the state of the global market
for 3PL services and explores key issues
affecting the industry: economic volatility,
the IT capability gap and the challenges of
supply chain orchestration.
The document discusses how the insurance industry can address its aging workforce by taking lessons from professional baseball. It notes that the insurance workforce is rapidly aging, with over a quarter soon being within 5-10 years of retirement. It recommends that insurers recruit and develop young talent through effective training programs that pair new hires with experienced employees, and by developing future leaders internally in a way that encourages retention and succession planning, similar to a minor league baseball system. It also suggests insurers modernize processes and leverage outsourcing, analytics, and automation to improve efficiencies and attract talent despite a shrinking experienced workforce.
201204 Nolan QNL: Life and Annuity Industry OutlookSteven Callahan
An abbreviated version of the industry forecast for 2012 pointing out the highlights of key issues, strategies, areas needing focus, and likely structural changes.
The document provides a summary of Tracey Lee Jackson's career experience in business continuity and emergency management. It details roles with various companies developing business continuity plans, tools, and training programs for diverse industries. It also outlines education including a Master's in Emergency Management and current pursuit of a Doctorate in Business Administration. The breadth of experience across different organizations, industries, and countries provided Jackson with skills in plan development, risk assessment, training, process development, and working across diverse teams and cultures.
Network of Networks Share Group Spring UpdateLora Cecere
This document discusses a pilot project to test sharing common core trading partner data across supply chain networks. It provides details on the test plan, timing, members involved and their roles. The goal is to load partner data from pilot participants into a central registry to test availability and accuracy. Common data elements and definitions will be agreed upon. The registry will be compliant with ISO 8000 standards for quality master data. An API will also be developed to allow synchronization of the shared partner data. The pilot aims to demonstrate benefits of sharing this critical partner information across company and system boundaries.
The Boston Consulting Group, MIT Sloan Management Review, and the United Nations Global Compact joined forces to provide an inside look at how companies are dealing with sustainability issues: http://on.bcg.com/1Ci1R8l.
1) The document discusses how automotive companies face challenges from globalization, economic uncertainty, new technologies, and increasing consumer demands. Their traditional business models may no longer be viable.
2) It introduces the concept of a digital loyalty network (DLN), which leverages digital technologies to integrate demand and supply chains. Companies pursuing a DLN strategy are up to 70% more profitable than others.
3) General Motors has made progress building a DLN through initiatives in customer relationship management and supply chain management. This allows them to better recognize customer wants, identify customers by value, and collaborate with suppliers to serve customers profitably.
How Can You Drive Opportunity If You Cannot Manage Risk?Lora Cecere
Report Details: The research for this report was conducted via an online survey from March 12 - May 11, 2018. Surveys were conducted among 93 respondents -- a mix of business users (manufacturers, wholesalers/distributors/co-operatives, and third-party logistics providers, n=34), vendors (software providers and consultants, n=39), and others (academics, analysts, unemployed, and others, n=20).
Objective: To understand the current and expected future state of supply chain risk management, the biggest drivers of risk, and the impact on supply chain disruptions. NOTE: supply chain risk management is defined as the proactive identification and assessment of potential risks to the supply chain, as well as the development of strategies to avoid these risks.
Highlight: Nearly two-thirds of respondents believe that their company performs better today on risk management practices than five years ago yet they had 3.5 disruptions last year on average. Managing risk requires a network approach. Today’s investments in end-to-end supply chain are by and large not effective in risk mitigation. Only 37% have visibility of extended-tier suppliers and most lack the solutions to manage global complexity.
The document discusses the results of a survey about traceability challenges in supply chains. It finds that while many executives express confidence in being able to trace problems up and down the supply chain, in reality most companies would take days or weeks to execute a recall. There are also low levels of automation and many concerns about risks like liability. However, upgrading traceability technology and handling recalls transparently could help build customer loyalty. Overall the challenges of compliance and complexity are significant but more companies investing in technology offers potential for improvement on the path to better traceability.
The document discusses the results of a survey about traceability challenges in supply chains. It finds that while many executives express confidence in being able to trace problems up and down the supply chain, nearly half of respondents said it would take days or weeks to execute a recall. Automation of trace processes is limited, and concerns around risks, costs, and regulatory compliance remain high. However, opportunities exist to improve traceability through technology upgrades and gain consumer loyalty by responsibly handling recalls.
Supply chain, a risk management survey results and analysisSimone Luca Giargia
This document provides a summary of a report on managing risk in the global supply chain. It finds that while supply chain risk is a major issue, many companies do little to formally manage it. Key findings include that no companies surveyed use outside expertise to assess risk, 90% do not quantify risk when outsourcing production, and only 25% of supply chains are assessed for risk. It also finds that while insurance can help mitigate risk, it is not a major consideration for most supply chain executives. The report provides recommendations for developing a three-step process to better identify, prioritize and mitigate supply chain risks.
This document provides a summary of a report on managing risk in the global supply chain. It finds that while supply chain risk is a major issue, many companies do little to formally manage it. Key findings include that no companies surveyed use outside expertise to assess risk, 90% do not quantify risk when outsourcing production, and only 25% of supply chains are assessed for risk. It also finds that insurance is an underutilized tool for mitigating risk. The report provides recommendations for developing a three-step process to identify, prioritize and mitigate supply chain risks.
DHL_Resiliency_Umbrella_White_Paper_-_Feb_2014Ian Moore
The document discusses the need for supply chain resilience in today's volatile global business environment. It outlines four major trends driving changes to supply chains: 1) consumerism and boundary bleed are increasing demands on all industries and blurring sector boundaries, 2) lean supply chain practices have made chains fast but risky, 3) emerging markets are altering global flows, and 4) regionalism is on the rise. The document advocates for a resilient supply chain model that can maintain operations through disruptions, restore functions if needed, and potentially gain advantage from disruptive events.
The Global Supply Chain Ups the Ante for Risk ManagementLora Cecere
This document discusses the importance of risk management for companies with global supply chains. It summarizes the results of a quantitative study on current risk management practices. Some key findings are:
1) Risk management is seen as important for preventing disruptions but ranks lower than other business issues in terms of pain.
2) Supply chain disruptions, especially those involving ports, can have major impacts that linger for years.
3) Advanced risk management programs are led by top executives and focus on prevention, early detection of issues, and contingency planning.
4) Monitoring supplier financial health and developing suppliers are seen as important aspects of risk management by more mature programs.
Summary report of research on supply chain performance in the pandemic. During COVID-19, supply chains were significantly less agile. Innovative companies did better than laggards. When companies were mature in finite scheduling, sales and operations planning and Available to Promise (ATP), manufacturers were more agile and reponsive.
This report summarizes the findings of a study on managing risk in the global supply chain. The study surveyed 150 supply chain executives and conducted interviews. It found that while disruptions can significantly impact business performance, most companies do little to formally manage supply chain risk. They do not use outside expertise or quantify risks. On average, only 25% of supply chains are assessed for risk. The report provides recommendations for identifying, prioritizing and mitigating risks through measures like strong suppliers, visibility, insurance, and having backup plans.
This document discusses managing risk in the supply chain. It begins by explaining how today's marketplace is characterized by more turbulence and uncertainty, making supply chains more vulnerable. It then discusses understanding an organization's supply chain risk profile by identifying key drivers, critical infrastructure, vulnerabilities, modeling scenarios, developing risk mitigation responses, and monitoring the risk environment. The document provides examples and outlines a seven stage process for managing supply chain risk that includes understanding the entire supply chain, identifying risks, assessing impacts, prioritizing risks, developing strategies, implementing actions, and monitoring/reviewing. Overall, it stresses the importance of organizations developing programs to mitigate supply chain risks.
Every supply chain participant is experiencing unprecedented degrees of connection. Brands are more global and influential than ever before. More suppliers are being linked to more downstream partners in ways that we could not have predicted even a decade ago.
The document discusses the growing challenges that companies face from supply chain risk and how internal audit functions can help address these challenges. It notes that supply chain disruptions can significantly hurt profitability, shareholder value, and reputation. It recommends that companies take a holistic approach to identifying critical suppliers and assessing their financial health and stability to develop leading risk indicators. It also suggests that internal audit can help by reviewing supply chains to identify vulnerabilities, developing monitoring processes, and assessing risk controls. The overall message is that internal audit can play a key role in helping companies strengthen their supply chain risk management.
Strategy for Supply Chain OptimisationSanjay Sethi
This document discusses optimizing supply chain performance across organizations. It argues that to be competitive, companies need to focus on agility, innovation, and partnerships beyond just cost reduction. The supply chain extends beyond a single organization's control and requires information sharing and collaboration between partners. Properly managing objectives and risks requires balancing competing goals like inventory levels, costs, and customer satisfaction both within and across organizations. The document advocates for collaborative planning between suppliers and retailers to improve forecasting and replenishment and make the supply chain more efficient.
Nearly two thirds (62%) of managers report that cyber security threats are increasingly posing a serious risk to their business, with nearly a third of UK organisations (32%) having come under a cyber attack of some sort in the past 12 months, according to new research published by the Chartered Management Institute (CMI) today.
Corporate social responsibility joe simunovichJoeSimunovich
The document discusses sustainability reporting and the key questions that CEOs and boards should consider. More than 3,000 companies worldwide issue sustainability reports, including over two-thirds of the Fortune Global 500. While reporting is currently voluntary, the trend is toward greater transparency and disclosure as external stakeholders increasingly expect reports. Sustainability reports should communicate performance on environmental, social and economic issues as well as related risks and opportunities.
Corporate social responsibility joe simunovichJoeSimunovich
The document discusses sustainability reporting and the key questions that CEOs and boards should consider. More than 3,000 companies worldwide issue sustainability reports, including over two-thirds of the Fortune Global 500. While reporting is currently voluntary, the trend is toward greater transparency and disclosure as external stakeholders increasingly expect reports. Sustainability reports should demonstrate performance on environmental, social and economic issues as well as risks and opportunities.
Improving Supplier Reliability -15 June 2016 - ReportLora Cecere
Executive Summary
Trust, but verify. During the recession of 2007, trust in the extended supply chain was broken. As companies throttled-back production to adjust to falling demand, many suppliers who thought that they were strategic were left “holding the bag.” Risk was pushed backwards in the supply chain violating the tenants of many strategic relationships.
As a result, shipments were refused and orders canceled. Payments were delayed and trust was violated. Many supplier companies never recovered, tightening the supply of materials in discrete value chains like automotive and high-tech.
As growth slowed over last five years, the supply chain focused on an agenda to reduce costs. Commodity price volatility increased and procurement pressures to reduce costs resulted in transactional buying (a focus to minimize price variance). In many companies, strategic sourcing and commodity management through category buying programs took a “back seat.” Supplier programs become more reactive.
In this environment, as shown in Figure 2, supplier viability—an environment for a supplier to manage a successful business—became a pressing risk issue. Sitting four and five levels back in the value network, suppliers experienced a double-whammy—pressure to reduce price along with the lengthening of Days of Payables.
Ironically, while technology in supply chain finance progressively improved to enable a quick transfer of funds across industries, Days of Payables increased 30 and 60 days. The second irony is the cost of capital. While brand owners have a lower cost of capital than their suppliers, few companies extend their brand capabilities in supply chain finance to their suppliers. While companies talk supply chain finance, squeezing suppliers is the market reality.
In parallel, economic uncertainty and demand volatility increased, also putting pressure on the supplier base. While the adoption of demand-driven processes could improve supplier alignment, demand-driven process adoption is slow. Few companies are taking ownership of demand signals to their supply base.
Traditional processes dominate. Companies are strongly wedded to supply-centric processes based on traditional forecasting processes using order patterns. With the lengthening of order latency, and the lengthening of the long tail of the supply chain, the synchronization of suppliers into the value network is out-of-step, creating waste and obsolescence.
This document discusses 10 trends shaping the life insurance industry landscape:
1. Steady industry growth, but underlying issues of underinsurance and lack of innovation persist.
2. Insurers are challenged to rationalize legacy systems while maintaining valuable historical business, constraining growth.
3. Some insurers are outsourcing administration and systems management to leverage partnerships and convert costs.
4. Regulatory changes increase need for flexibility but also interfere with modernization efforts.
This paper introduces the concept of Supply Chain Risk
Management. It identifies various risks and explains the process of managing these risks. With technology in place, automation of some of the processes brings down the risks involved. Sadly, many companies are not adequately automated to address these issues. The paper also highlights how information technology can be adopted in certain areas in supply chain to ensure visibility and reduce risk occurrence.
The Genesis of BriansClub.cm Famous Dark WEb PlatformSabaaSudozai
BriansClub.cm, a famous platform on the dark web, has become one of the most infamous carding marketplaces, specializing in the sale of stolen credit card data.
Digital Marketing with a Focus on Sustainabilitysssourabhsharma
Digital Marketing best practices including influencer marketing, content creators, and omnichannel marketing for Sustainable Brands at the Sustainable Cosmetics Summit 2024 in New York
HOW TO START UP A COMPANY A STEP-BY-STEP GUIDE.pdf46adnanshahzad
How to Start Up a Company: A Step-by-Step Guide Starting a company is an exciting adventure that combines creativity, strategy, and hard work. It can seem overwhelming at first, but with the right guidance, anyone can transform a great idea into a successful business. Let's dive into how to start up a company, from the initial spark of an idea to securing funding and launching your startup.
Introduction
Have you ever dreamed of turning your innovative idea into a thriving business? Starting a company involves numerous steps and decisions, but don't worry—we're here to help. Whether you're exploring how to start a startup company or wondering how to start up a small business, this guide will walk you through the process, step by step.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
Navigating the world of forex trading can be challenging, especially for beginners. To help you make an informed decision, we have comprehensively compared the best forex brokers in India for 2024. This article, reviewed by Top Forex Brokers Review, will cover featured award winners, the best forex brokers, featured offers, the best copy trading platforms, the best forex brokers for beginners, the best MetaTrader brokers, and recently updated reviews. We will focus on FP Markets, Black Bull, EightCap, IC Markets, and Octa.
Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
Storytelling is an incredibly valuable tool to share data and information. To get the most impact from stories there are a number of key ingredients. These are based on science and human nature. Using these elements in a story you can deliver information impactfully, ensure action and drive change.
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...my Pandit
Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
How are Lilac French Bulldogs Beauty Charming the World and Capturing Hearts....Lacey Max
“After being the most listed dog breed in the United States for 31
years in a row, the Labrador Retriever has dropped to second place
in the American Kennel Club's annual survey of the country's most
popular canines. The French Bulldog is the new top dog in the
United States as of 2022. The stylish puppy has ascended the
rankings in rapid time despite having health concerns and limited
color choices.”
Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...my Pandit
Explore the fascinating world of the Gemini Zodiac Sign. Discover the unique personality traits, key dates, and horoscope insights of Gemini individuals. Learn how their sociable, communicative nature and boundless curiosity make them the dynamic explorers of the zodiac. Dive into the duality of the Gemini sign and understand their intellectual and adventurous spirit.
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
How to Implement a Real Estate CRM SoftwareSalesTown
To implement a CRM for real estate, set clear goals, choose a CRM with key real estate features, and customize it to your needs. Migrate your data, train your team, and use automation to save time. Monitor performance, ensure data security, and use the CRM to enhance marketing. Regularly check its effectiveness to improve your business.
Company Valuation webinar series - Tuesday, 4 June 2024FelixPerez547899
This session provided an update as to the latest valuation data in the UK and then delved into a discussion on the upcoming election and the impacts on valuation. We finished, as always with a Q&A
SATTA MATKA SATTA FAST RESULT KALYAN TOP MATKA RESULT KALYAN SATTA MATKA FAST RESULT MILAN RATAN RAJDHANI MAIN BAZAR MATKA FAST TIPS RESULT MATKA CHART JODI CHART PANEL CHART FREE FIX GAME SATTAMATKA ! MATKA MOBI SATTA 143 spboss.in TOP NO1 RESULT FULL RATE MATKA ONLINE GAME PLAY BY APP SPBOSS
How MJ Global Leads the Packaging Industry.pdfMJ Global
MJ Global's success in staying ahead of the curve in the packaging industry is a testament to its dedication to innovation, sustainability, and customer-centricity. By embracing technological advancements, leading in eco-friendly solutions, collaborating with industry leaders, and adapting to evolving consumer preferences, MJ Global continues to set new standards in the packaging sector.
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...Neil Horowitz
On episode 272 of the Digital and Social Media Sports Podcast, Neil chatted with Brian Fitzsimmons, Director of Licensing and Business Development for Barstool Sports.
What follows is a collection of snippets from the podcast. To hear the full interview and more, check out the podcast on all podcast platforms and at www.dsmsports.net
Brian Fitzsimmons on the Business Strategy and Content Flywheel of Barstool S...
Supplychainresilience Ups 123666078292 Phpapp01
1. Supply Chain Resilience:
How are Global Businesses Doing?
A UPS white paper developed in cooperation
with the Economist Intelligence Unit
2. Table of Contents
Preface ................................................................3
Foreword .............................................................4
Executive Summary .............................................5
Research Report ..................................................7
Introduction ....................................................... 7
An issue in need of attention ............................ 7
Current resilience strategies ............................ 11
Sustainability ................................................... 14
Resilience in action ......................................... 15
Conclusion ....................................................... 17
Is the C-Suite whistling in the dark? ..................18
IDS Group provides a global
perspective from Asia ........................................19
Appendix A: Survey Results ...............................20
Appendix B: Advisory Board Participants ...........30
Appendix C: Qualitative Interviews ....................31
3. Preface
Supply Chain Resilience: How are Global Businesses
Doing? is a UPS report developed in cooperation with
the Economist Intelligence Unit (EIU). The findings and
views expressed in this report are drawn from three
research initiatives: an advisory board meeting, a global
online survey, and individual interviews.
On Tuesday, April 22nd, 2008, the EIU organized an
advisory board meeting in London consisting of senior
executives with supply chain expertise. The discussion
formed the basis for an online survey used to gauge
supply chain resilience among global businesses.
The quantitative findings presented in this report are
based on the global online survey of 344 senior execu-
tives – over half C-level and above – conducted by the
EIU in June, 2008. The survey asked respondents about
the key evolving risks in a global supply environment,
and the strategies for resilience in the face of them.
To supplement the quantitative survey results, the EIU
also conducted individual interviews with senior execu-
tives and experts in supply chain management.
The report was written in cooperation with the Econo-
mist Intelligence Unit: Kim Andreasson was the editor
and project manager and Dr. Paul Kielstra was the writer.
Our thanks are due to all advisory board participants,
survey respondents, and interviewees for their time
and insights.
3
4. Foreword
Today’s complex global supply chains are at the heart
of business strategy, driving bottom-line and top-line
growth, and creating competitive differentiation for
companies. But they are also fraught with risks, in-
cluding product quality concerns, competitive issues,
supplier continuity, natural disasters and rising energy
costs, to name just a few. Across industries, businesses
are vulnerable to supply chain disruptions that can move
a company from leader to laggard in a relatively short
period of time. The companies that will succeed in the
global economy are those that develop successful risk
mitigation strategies, and who use resilience as a com-
petitive advantage.
To help understand how companies are managing
their global supply chains in this environment, UPS, in
cooperation with the Economist Intelligence Unit, has
completed a research program that culminates in the
following white paper, entitled “Supply Chain Resilience:
How are Global Businesses Doing?” As the research
indicates, companies differ in their assessment of supply
chain risks and management of resilience strategies.
Although many companies are taking sensible precau-
tions, there is still much work to be done to ensure that
risk is addressed and competitive advantage maintained. Dan Brutto
I trust this document will provide compelling insight into President, International
this important issue. UPS
4
5. Executive Summary
Global supply chains are the norm for today’s chains “are more vulnerable. From a company point
businesses, both large and small. They allow compa- of view, this is disconcerting.” In the survey, 47% of
nies to source flexibly from a vast network of suppliers. companies say they need to pay more attention to
Their scope and complexity, though, often make them resilience – against 16% who disagree – and 42%
brittle, increasing the odds that a glitch will cascade think that they have globalized their supply chains
through the network – with dire results for a company’s faster than risk management can keep up.
finances, stock price, or brand equity. For example, it • Insufficient monitoring, risk assessment, and
took years for the market share of companies like Apple contingency planning are leaving companies
and Adidas to recover from supply chain problems. ill-prepared when crises hit. One in 10
More striking, in the 1990s, such issues pushed US companies do not monitor suppliers for
drug distributor Foxmeyer, a company with $5 billion in anything. About half of the rest look only at “Having quick information, and
annual sales, into bankruptcy. Building a resilient supply immediate – so-called Tier 1 – suppliers. The
chain is critical to corporate success. quality of such assessments varies, some-
understanding the dynamics of
This UPS report, written in cooperation with the Econo- times not rising above cursory box checking. the supply chain is absolutely
mist Intelligence Unit, seeks to go beyond a collection Among the 45% of companies where the
of anecdotes in assessing the progress of companies in respondents knew the answer, formal risk critical for resilience.”
developing more resilient supply chains and examining assessment takes place only annually or less
the state of best practices. It is based on the quantitative frequently. Just half of companies seek to learn from
findings from a global online survey of 344 senior execu- their own supply chain breakdowns, while a minority
tives – over half C-level and above – as well as in-depth uses other means to improve resilience. Given that an
interviews with business leaders and other experts in the understanding of the dynamics of the supply chain is
field. Key findings include: absolutely critical for resilience, this leaves too many
• Rising risks to supply chain resilience are too often firms open to unanticipated dangers.
ignored in the rush of day to day business, and • A significant minority of businesses are falling back
companies know it. Professor Yossi Sheffi, Director of on increased inventory to address resilience prob-
the Massachusetts Institute of Technology Center for lems, an expensive and ineffective approach. Four
Transportation and Logistics, says that today’s supply in 10 respondents expect their firms to hold addi-
5
6. tional safety stock, ie to increase resilience through ways to get burned by not paying attention and step-
higher inventory levels. And 38% plan to raise in- ping on emerging social norms.” Addressing these
ventory even more in the coming years. Sometimes issues need not mean simply spending more defen-
such increases may be needed to address specific sively. With creative thinking, according to
issues. However, using excess inventory to address
bigger resilience issues is an “expensive and lazy”
Dr. Gopal Iyengar, Director of the Kirloskar
Insititute of Advanced Management Studies,
“With creative thinking, the
approach, says Rolls-Royce EVP of Supply Chain near Bangalore, India, the “supply chain can supply chain can shift a risk
Development, Steve Churchhouse. shift a risk into an opportunity.”
• Relationship building, multi-sourcing, and near- • Low-cost countries are not magic lands into an opportunity.”
sourcing to enhance resilience are likely to be- of plenty: sourcing from them without at-
come part of best practice in the future. Most firms tention to supply chain resilience leads to
value good supplier relationships as a way of guar- potentially expensive failure. Ten percent of those
anteeing access to high-quality supplies. They are surveyed intend to reduce sourcing from low-cost
not looking for exclusive ties but for solid links with countries (although far more intend to increase it).
a variety of firms. Choosing partners from a range In fact, roughly half of all survey respondents said
of countries to mitigate geopolitical risk, as well as low-cost sourcing had posed significant problems,
to ensure that short lead times are available from such as the quality received from such suppliers and
some suppliers, are sensible ways to maximize the even their ability to deliver goods as promised.
benefits of the current wisdom. “Don’t put all your • The keys to successful sourcing from low-cost
eggs in one basket, and definitely not in a basket on countries are like those of supply chain resilience
the other side of the world,” says Mr. Churchhouse. in general: understand the issues, structure the
• Sustainability is not just a trendy PR requirement: supply chain appropriately, monitor performance
social and environmental risks to a resilient supply and work with suppliers to improve operations.
chain are significant, but receive too little atten- As Doug Gurr, ASDA’s Executive Director, Strategy
tion. Some 46% of firms admit they need to do more and Logistics, advises, “some of the best manufac-
to integrate sustainability into their supply chains, turing in the world is in low-cost countries at the
and environmental and social issues are currently moment... The way to do it is to get on the airplane
the least-embraced area of supply chain monitoring. and have people out there.”
Professor Sheffi warns that “there are all kinds of
6
7. Research Report
Introduction Companies compete fiercely in finding the best sourcing
We live in a global marketplace. It is not news, but it solutions. Four in ten respondents list competition as a
is critical for understanding how businesses are meet- leading supply chain risk they face, and 58% complained
ing – or failing to meet – the challenges of supply chain that it is somewhat or very difficult to find high-quality
resilience. To give just one example, only about a third suppliers. To some extent this has always been the case;
of companies overall, and just a quarter of large ones the difference today is the scale of the competition. A
– those with annual revenues of $5 billion or more – more complex issue – and one that many firms admit
source primarily from domestic markets. If anything, this they are not paying sufficient attention to – is resilience.
trend is accelerating: 48% of survey respondents expect
to increase the level of least-cost country sourcing in
An issue in need of attention
the next five years. Moreover, 35% expect to increase Long lines of trucks at the Canada-US border after 9-11;
purchasing from China alone, and 29% from India. the specter of fuel shortages after Hurricane Katrina
destroyed a substantial portion of America’s refining
What was once a strategic choice is now a necessity.
capacity; the triumph of Nokia over Ericsson when the
“You’ve got to be over there [in Asia],” says Peter Con-
former responded with greater agility to a fire at
nelly, CPO of Leggett & Platt, a diversified manufacturer
a mutual supplier’s New Mexico facility; pets and
and Fortune 500 company headquartered in Missouri,
livestock dying from melanin-tainted food across
“It is hard to compete when you
referring to the company’s sourcing strategy. He adds that
in certain developing countries “it’s tough to do busi-
North America in 2007: these are the oft-repeated don’t run lean, but you open
cautionary tales of how the unexpected can de-
ness, but in some cases it is getting to be one of the only
bilitate a supply chain. Although only the biggest
yourself up to expensive risks in
games in town.” Indeed, a global supply chain is impos-
sible to avoid, even if a company wants to source do-
stories make the news, such challenges are a part the long run.”
of normal business. As Steve Churchhouse, EVP
mestically. One interviewee noted that quality concerns
Supply Chain Development at power systems provider
had made his colleagues reluctant to purchase from a
Rolls-Royce, explains “we’ve experienced a number of
particular Chinese firm, only to find that their current
significant challenges because of acts of God, fires, and
supplier was selling them goods manufactured by that
earthquakes. When you have several hundred suppliers
very company. “Whether or not we are doing developing
across the world, occasionally a facility burns down or is
world sourcing, our suppliers are,” says the executive.
flooded.” As the earlier examples also show, terrorism,
7
8. natural disaster, accident, and fraud can hit a nation like by 53%), competition (40%) and supplier disruption
the United States as much as low-cost countries with (36%). Second are the more difficult to quantify risks,
notoriously creaky infrastructure. that arise from operating on a global level. The leading
In the face of such well-known dangers, however, many concerns of over a quarter of companies include either
businesses worry that they are not doing enough: geopolitical instability or terrorism, and over one in eight
mentions natural disasters.
• 47% of survey respondents believe that they need
to pay more attention to resilience (versus just 16% But companies appear to be spending too little time in
who say they pay an adequate amount of attention); assessing what problems might arise. About one in ten
companies do no monitoring at all, and 42% look only
• 42% of companies say that they have globalized
at their own immediate suppliers. A mere 20% try to
their supply chains faster than risk management can
keep watch on their entire supply chain. Moreover, this
keep up, against 27% who disagree; and,
• only 38% consider their supply chain resilience
above average, the aspect of supply chain man- Do you agree or disagree with the following statements as they relate to
your company?
agement which scored the second-lowest result to
My company supply chain has globalized faster than our risk management structures
the question.
have been able to adapt to the U.S. economic slowdown
Professor Yossi Sheffi, Director of the Massachusetts 13% 29% 26% 16% 11% 5%
Institute of Technology Center for Transportation and My company needs to do more to integrate social and environmental considerations
Logistics, explains that companies “are getting more into our supply chain
vulnerable. Less inventory, tighter and leaner supply 14% 32% 25% 20% 7% 1%
chains, by nature are more vulnerable. From a com- One of my company’s big sustainability challenges is from activists and consumers
who do not actually understand the sustainability impact of what they are demanding
pany point of view, this is disconcerting. It is hard to
9% 20% 25% 22% 19% 5%
compete when you don’t run lean, but you open your-
My company is re-assessing its sourcing based on geographic location rather than what
self up to expensive risks in the long run.” is cheapest
6% 25% 27% 24% 14% 4%
The challenges vary by company, but can be divided
into two types. First are the known risks, on which My company needs to pay more attention to supply chain resilience
many companies focus. When asked for their three 13% 34% 31% 12% 4% 5%
leading supply chain risks, respondents’ top replies
included traditional items such as energy costs (cited n 1 Strongly agree n2 n3 n4 n 5 Strongly disagree n Don’t know
8
0 20 40 60 80 100
9. monitoring tends to focus on product quality – an How closely does your company monitor its suppliers?
important issue – but not resilience: only 35%
of companies place the latter in the two leading
fields which they examine. Finally, monitoring n Monitor immediate (Tier 1)
9% suppliers only (rely on them to
programs are most often governed at the national
9% monitor their suppliers)
or at best regional levels (37% and 29% of com-
n Monitor immediate (Tier 1) suppliers
panies respectively) rather than globally (32%), 42%
and their immediate suppliers
which makes it more difficult for them to feed into
20% n Monitor the entire supply chain
a comprehensive understanding of global resil-
ience issues. n Do not monitor
Worse still, the limited activity that does occur can n Don’t know
20%
be spotty. According to Professor Sheffi, the quality
“varies significantly. If there is something on the
checklist, somebody will check it and say we do
panies as well. To overcome the difficulties, and maxi-
a once-a-year audit. This is the main difference between
mize the benefits of expending resources in this field,
companies: those that monitor to check off a box and
he suggests that, rather than focusing mechanistically
those where it is ingrained in the culture.” He adds that
on particular supply chain levels, “one needs to look
cursory checks are not enough: “the trick is to interview
at which points add real value. It doesn’t matter which
your suppliers.”
tier.” Monitoring at these key points will give companies
Mr. Connelly of Leggett & Platt agrees on the impor- in-depth knowledge in the most crucial areas of the sup-
tance of going in person – his company visits its largest ply chain.
suppliers – but there are limits: “if you send somebody
The information gleaned from monitoring should be
to every supplier, you can’t afford it.” Professor Sheffi
fed into processes to promote a stronger supply chain.
also notes that beyond second tier suppliers, “companies
This is not always the case. “A better understanding of
have no leverage. It gets very dispersed and diffused.
risk assessment strategies is a starting point in dealing
In many cases there is no data; companies don’t know.”
with resilience and globalization,” says Dr. Iyengar. But,
Dr. Gopal Iyengar, Director of the Kirloskar Insititute of
he continues, “quite often supply chains do not have a
Advanced Management Studies, adds that suppliers can
strong framework for this.” The survey supports his view.
be stifled by excessive monitoring from too many com-
Of respondents who knew the answer, just under a third
9
10. engage in formal supply chain risk management exercis- “there seems a world of difference between what you
es only once a year and about 10% never bother at all. can simulate and what goes wrong.” For him, the key
The situation is unlikely to improve: just 9% list improve- is having in place “people who’ve been there and done
ment of risk mitigation practices as their leading supply that. Planning is great, but when you do have a problem,
chain priority over the next five years, the least popular your ability to manage your way out is 90% down to the
choice to the question. ability of the people on the ground to deal with it.”
Even with the best intelligence, things will go wrong.
And again too few companies are actively preparing Which of the following steps is your company taking to improve its supply
for the worst. Only 51% benchmark their own supply chain resilience to potential crisis? Select all that apply.
chain breakdowns for lessons learned and a mere 29%
Internal benchmarking of supply chain 51%
seek to gain knowledge from the mistakes of others, breakdowns and lessons learned
both obvious things to do and relatively inexpensive as Hold additional safety stock
40%
the costly mistakes being studied have already oc-
curred. Going further, just 20% do crisis simulations. Do joint planning with channel
partners on such a situation
31%
The interviews suggest that these tend to occur in
industries with a tradition of holding such exercises External benchmarking of supply chain
29%
breakdowns and lessons learned
for other reasons, such as safety. And executives differ
on their utility. On the one hand, Mr. Churchhouse Conduct crisis simulation exercises
20%
at Rolls-Royce, which uses them extensively, says
“How do you value business continuity? If you want Collaborate with local governments
on contingency planning 16%
the highest level, you need to run live exercises.” He
acknowledges that “they are very difficult and time Collaborate with competitor firms
16%
consuming. It costs real money,” but adds that it is “all
very well to have a plan written down, but you need Other
4%
to do a drill [to know if it will work].”
0 10 20 30 40 50 60
On the other hand, Doug Gurr, Executive Director,
In either case, although disagreeing on the means, the
Strategy and Logistics at the retailer ASDA, says that his
goal is to have tested people and processes available in
company’s sophisticated crisis management structure
a crisis. This takes conscious effort. Only a minority of
does extensive planning but few simulations because
companies are working toward this goal.
10
11. Current resilience strategies Relationship building: About 56% of respondents place
Companies know that they are not doing enough on sup- a high importance on building lasting, solid relationships
ply chain resilience. They are not, however, ignoring the as the best way to maintain the quality of their supply
issue completely, but some of the techniques they are chains, and a further 38% think it is moderately impor-
using are problematic.
Inventory: In the future, 40% of companies expect Over the next five years, how do you expect your
to hold additional inventory – so-called safety company’s inventory levels to change?
stock – to increase their supply chain resilience.
And 38% intend to increase inventory levels more n Increase greatly
5% 11%
broadly. In very specific circumstances, this may n Increase slightly
18%
be important to resilience. “If it is a critical item n Stay roughly the same
that only one supplier makes, the only solution 27% n Decrease
is to have plenty of inventory around,” notes Mr.
n Don’t know
Connelly. According to Mr. Churchhouse, holding an
appropriate level of extra supplies at the right level
in the supply chain to mitigate against a “likely 40%
disturbance” is sound strategy.
In general, however, the effectiveness of increasing
supplies is limited. The economics driving inven-
tory reductions have not changed. Professor Sheffi says tant. In the Asia-Pacific region, where a larger number
that “holding more inventory is good for small disrup- of developing economies have sometimes unpredictable
tions. When you talk about resilience, it is not these legal environments, the equivalent figures are 66%
fluctuations: it is ‘how am I going to bounce back from and 34%.
the things that can endanger my company’s survival?’
This may seem at odds with the image of companies
A little more inventory doesn’t cover this.” Mr. Gurr
constantly seeking the best deals worldwide, but it
agrees: inventory is expensive, and although “it feels
makes sound business sense. Indeed, in some cases,
comfortable, it just doesn’t work” in enhancing reliabil-
trustworthy relationships are not just desirable but
ity. Mr. Churchhouse goes even further: using excess
critical. In Mr. Connelly’s experience, for certain com-
inventory to address bigger resilience issues is simply
modities, if a company “shops price, you can’t get the
“an expensive and lazy approach.”
11
12. product. We’ve had barges in the port with our name on animals to the company’s specifications which “makes a
them and never got the steel.” massive difference to production costs and quality. It is
This emphasis should not be misconstrued. Companies worth our while to pay a premium.” For reliability and
do not want to get married so much as to have a lot of resilience in this type of sourcing, “the thing we have
very good friends. Six in ten firms expect their pool of found key is getting people tied into a long term rela-
high-quality suppliers to grow in the next five years: only tionship,” Mr. Gurr says.
12% foresee a decrease. Mr. Connelly says
that Leggett & Platt, although reducing the Over the next five years, how do you expect your potential
total number of suppliers overall for other pool of high-quality manufacturing suppliers to change?
strategic reasons, still aims to have three for
each important input, rewarding the best n Increase greatly
12% 10%
value producer with the lion’s share of pur- n Increase somewhat
chases. For him, the key to making this work n Neither increase nor decrease
well is transparency with all involved, which n Decrease somewhat
fosters competition. 26%
51% Decrease greatly 0%
Professor Sheffi goes further. He notes that,
while analysts tend now to “exalt” the just-
in-time, lean supply chains often associated
with Toyota, they forget that these require a
very specific cultural environment to work.
“Having a single supplier without mutual
respect and trust is dangerous.” Multi-sourcing, near-sourcing and supply chain
structure: In enhancing resilience it is not only the
Relationships do have costs, but companies believe that
number of suppliers that matters, but also their locations.
the benefits outweigh them. Mr. Churchhouse notes that
Half of survey respondents expect to engage more in
Rolls-Royce has “moved quite determinedly in the direc-
multi-sourcing – consciously purchasing from suppliers
tion of dual sourcing for critical components” in order
in multiple geographies. Although slightly less popu-
to increase resilience, sacrificing some of the potential
lar, near-sourcing (purchasing inputs from companies
leverage of having a single source. Mr. Gurr points to
closer to the final consumer) will also grow: 35% plan
ASDA’s Lamb Link program. It pays farmers extra to raise
to deploy it more, against just 16% who will do it less.
12
13. More broadly, 31% of companies are reas-
Over the next five years, how will your company’s supply chain
sessing their sourcing based on geography strategy change in the following areas?
rather than pure cost, a figure which rises
to 45% in North America. 1%
Least-cost country sourcing
n 1 Increase greatly
Although conceptually different, both 13% 35% 34% 9% 7%
n2
strategies can help answer the same 3%
Near sourcing n3
question: how to maximize the benefits 7% 28% 42% 13% 8% n4
of having a good relationship with several
Multi-sourcing strategy 1% n 5 Decrease greatly
suppliers. If dual sourcing makes sound
12% 38% 32% 7% 8% n Don’t know
business sense, then having suppliers from
different parts of the world to reduce geo- In-house manufacturing
political or environmental risk makes even 5% 14% 30% 23% 16% 11%
more sense. Mr. Connelly, for example,
says that although Leggett & Platt is
increasing its presence in China – for both than a partial liability. According to Mr. Churchhouse,
sourcing and sales considerations – it is also looking to Rolls-Royce’s efforts in this area have involved “looking
40 60 80 100 120
Vietnam and Indonesia “as a backup to China, partly to across all of our processes, internal and external, in order
balance risk.” Similarly, Mr. Churchhouse advises, “don’t to make them more capable.” ASDA has built the major-
put all your eggs in one basket, and definitely not in a ity of its warehousing as identical, cookie cutter mirror
basket on the other side of the world.” Mr. Gurr, mean- sites that can take over for other locations that go down.
while, sees near-sourcing as a way to overcome the Mr. Gurr says it is difficult to afford “redundant infrastruc-
problem of lead time with global sourcing. For example, ture, but you can build the supply chain in a way that
while a European firm could get its supplies of certain you can use other parts if some fail, and so that there are
goods from India or China, it could also be useful to have people to call on if you have to scramble.”
a secondary supplier in Eastern Europe in order to be
able to respond quickly to consumer demand, such as
for fashion or Christmas season toys.
Such thinking can be part of a broader approach to sup-
ply chain resilience which turns it into an asset rather
13
14. Sustainability Enhancing sustainability, however, will require the kind
Although building a range of strong relationships and of attention to and monitoring of both suppliers and
purchasing from a variety of sources bolsters continuity, global conditions that many companies are failing to do.
it does not fully address the underlying (and often poorly Inattention can damage reputations. ASDA’s Mr. Gurr
monitored) risks of global sourcing. A case in point is considers the need to engage in ethical sourcing one
how firms are dealing with the issue of sustainability in of key new global supply chain challenges. If you do
their supply chains. not know what is happening among suppliers, “you can
get caught out.” Similarly, Professor Sheffi notes that
Regulators, consumers, and investors are increasingly
“there are all kinds of ways to get burned by not paying
demanding that corporate activity yield positive environ-
attention and stepping on emerging social norms. For
mental and social outcomes as well as
financial profits. Firms are only begin-
Over the next five years, which will be the key focus for your
ning to address supply chains in this
company’s supply chain?
context. Environmental impact and em-
ployment conditions, for example, are n Cost containment/reduction
9%
the two least closely monitored areas, n Long-term sustainability
cited as leading concerns by only 9% 10% 28% (economic, social, environmental)
and 6% of survey respondents respec- n Process innovation
tively. And businesses realize that they
16% n Technology innovation
are not doing enough in this regard:
n Inventory optimization
46% believe they must do more to
19%
integrate sustainability into the supply n Improving risk mitigation practices
18%
chain, against just 27% who disagree.
Moreover, long-term sustainability is,
after cost, the area where most compa-
nies expect their chains to focus in the
example, you don’t want your suppliers’ supplier to use
next five years (cited by 19% of respondents). Asia-
sweat shops.” Globalization creates a double-edged
Pacific and North America firms are even more likely to
problem: the growth in the number of businesses world-
do so (23% and 22%) than European ones (16%). The
wide makes it harder to monitor the entire supply chain,
latter have the reputation of being more advanced on
but modern communication technology also makes any
sustainability, so the others may be playing catch-up.
14
15. environmental or social derogations by suppliers likely to of those who currently source there, expect to decrease
be broadcast widely. purchasing from the country, or even stop altogether. This
Sustainability goes beyond reputational damage: an en- is on top of 8% of all respondents indicating that they
vironmental or social disaster can wreak havoc with how already had done so. China is not alone: 6% have signifi-
a company operates. When the Grand Banks fisheries off cantly reduced sourcing from India. Yet, far more plan to
North America collapsed, for example, Highliner Foods, increase buying in these markets – 30% expect China to
the Canadian fish processor and marketer, had to sell its be among the top three countries seeing the biggest in-
own fleet and buy catches from other sources. crease in sourcing for their company, and 29% think the
Sustainability represents an opportunity for supply
chains, not just another complication. Dr. Iyengar notes If your company sources products from China, what are your plans for the next five years?
that it will not help if you apply environmental and so-
cial criteria in a way that is merely “legalistic.” He cites
n Increase sourcing from China
Wal-Mart as an example of a company that is strength-
n Keep sourcing levels from China about the same
ening its resilience by insisting that its suppliers use 29%
recyclable materials. In this way the company’s “sup- n Decrease sourcing from China
33%
ply chain can shift a risk into an opportunity” to attract n Stop sourcing from China altogether
environmentally conscious consumers. Reaping these n My company does not source from China
benefits once again requires thinking through the issues. 1%
10%
Resilience in action: low-cost country sourcing 26%
Supply chains are not only globalizing but they have
also been heading for suppliers in least-cost countries.
Although this trend will continue, a small but significant
percentage of companies are turning away from the same of India – but they do indicate that supply chain
strategy. Some 10% of the entire survey group are set success has not been universal in low-cost countries.
to decrease their use of least-cost country sourcing – a
The reason is the perennial tension between cost and
number which would increase if those who have not yet
quality which has always dictated much of supply chain
adopted the practice are taken from the total.
strategy, and which led to least-cost country sourcing in
For China in particular, 11% of all respondents, or 15% the first place. On the one hand, when selecting a new
15
16. supplier, 61% of survey respondents consider quality a respondents. For firms that said they were reducing ac-
leading factor, and 31% call it significant. The equivalent tivities in China, IPR concerns were an issue, along with
figures for cost, 42% and 38% respectively, indicate less corruption. The challenges of low-cost country sourcing
emphasis. On the other hand, when asked about the are clearly significant.
primary supply chain focus for the next five years, cost According to those interviewed for this report, the envi-
reduction was the leading answer (given by 28%), and ronment may be complex, but the key to success is not:
inventory optimization – often a specific way to reduce build in resilience, understand the issues, monitor and
spending – was cited by a further 10%. structure the supply chain to avoid problems, and work
The draw of low-cost country sourcing is that it can with suppliers to improve output.
square this circle. Mr. Gurr says that “some of the best Mr. Connelly, for example, says that Leggett & “A resilient supply chain
manufacturing in the world is in low-cost countries at
the moment. If you put in the effort, you can find higher
Platt builds up trust over an extended period.
needs to be able to respond
It first orders small quantities which it inspects
quality for some products than nearer to home.” closely. It takes about a year to a year and a half with consistent output.”
But some firms have had mixed success in finding these before the company feels secure enough “to
high-quality producers. According to the survey, qual- make a decent order.” The firm also sends executives to,
ity issues have been a significant challenge for 52% of or even establishes local offices in, low-cost countries.
companies in low-cost countries, making it the lead- As a result, Mr. Connelly has great confidence in his
ing challenge. Dr. Iyengar notes that, for these places, company’s ability to operate in China, “because we have
“one of the reasons for companies withdrawing is that a been there awhile,” and have been working closely with
resilient supply chain needs to be able to respond with their suppliers from a supply chain hub in Shanghai.
consistent output. If you look exclusively to low-cost Mr. Gurr agrees that it is a matter of doing the work.
country sourcing, consistency of quality is a problem.” “You need to invest in finding the right companies,
Not far behind in the survey was another crucial ele- and need to be incredibly vigilant about from whom
ment of resilience: the ability of suppliers even to deliver they purchase. You can get fantastic quality at decent
what they promise (cited by 47%). Length of travel time price, but you have to put the effort in. As the econom-
(34%) is an almost inevitable issue for global sourc- ics swing around, you also have to be aware about the
ing, but rule of law considerations such as difficulties next country coming around and have people on the
with contract enforcement and intellectual property ground who know how to do business there.” Once
rights (IPR) protection also affect more than three in ten found, Dr. Iyengar adds, educating and working with
16
17. suppliers is key: companies need “to introduce powerful understanding to build structures that coherently address
performance management systems, make clear what is the risks which firms face. Current challenges, such as
required, and make sure that it takes place.” integrating sustainability into supply chains or getting
Resilience is also about structuring the supply chain the greatest advantage out of sourcing from low-cost,
intelligently. In a low-cost country context, for example, less developed countries, demand such an approach.
if IPR issues are a problem, Mr. Churchhouse says that The dangers of not doing so are stark. As Professor Sheffi
“the answer is that we might put finished machining points out, although companies are at much higher risk
processes there, but not complex special processes, because of complex, global supply chains, “it doesn’t
which is where the higher technology is. We just have to mean that consumers or countries are more vulnerable.
be careful in our make/buy analysis.” There are many more companies now. It may mean dev-
Building a resilient supply chain in low-cost countries is astation for one if a plant goes down, but there are lots
not rocket science or anything particularly new. As Mr. of suppliers.” Other suppliers may be more resilient, and
Connelly points out, “we’ve been through this before are sure to be ready to service the market instead.
over the last twenty years. China is just like Korea was,
and before that Japan was. The suppliers learn, and they
get better.” Doing the legwork is, however, essential if
a company wants to realize the same savings that its
competitors are. Notes Mr. Gurr, “if you switch supplier
Educating and working with
without actually getting out there, without putting in the suppliers is key: companies
effort to visit the factory, you come unstuck. The way to
do it is to get on the airplane and have people out there.” need “to introduce powerful
Conclusion
performance management
In seeking the benefits of global supply chains, few com- systems, make clear what is
panies are paying sufficient attention to the resilience
required, and make sure that
of these networks. Business is vulnerable, and although
many firms are taking sensible precautions, such as it takes place.”
increasing the number of suppliers, much more needs to
be done in areas like monitoring and using the resultant
17
18. Is the C-Suite whistling in the dark?
Professor Yossi Sheffi says of working with companies: their supply chains are seeing a lot more problems in,
“when we have public events, they usually make coura- for example, least-cost country sourcing than corporate
geous statements. When you start drilling down, when executives seem to realize. This is especially the case for
you start asking more penetrating questions – how do some key elements of resilience, such as product quality
you know you are better? – at the end of the day they and the ability of suppliers to deliver what they promise
say, ‘we have to take another look’. They often don’t ask (see chart).
themselves the tough questions.” Finally, if corporate executives are not hearing about
The split in perceptions between supply chain profession- the risks from their supply chain professionals, the latter
als and corporate executives suggests the latter should may not be fully taking on board strategic
start asking such tough questions. In fact, those who priorities. For example, in assessing a new Top ten problems with LCCS (percentage of companies
actually work in the field are far more concerned about supplier, 63% of supply chain profession- in each category which have experienced significant
the problems discussed in this report than their bosses. als believe cost is a leading consideration, challenges with issue) C-Suite Supply chain Difference
professionals
Looking at the situation overall: a higher figure than for quality. Corporate
executives instead focus on quality, with Quality of goods 53% 61% 8%
• 63% of supply chain professionals think that their
only 35% giving a primary place to cost. Ability of suppliers to
company needs to pay more attention to resilience. deliver what they promise 46% 61% 15%
Looking forward, about half of supply chain
Among corporate executives, this is a concern to
professionals think the coming focus in Length of time for goods to
only 46%. arrive from suppliers 31% 45% 14%
the next five years will be cost, or inven-
• 65% of those working within the supply chain be- tory optimization – which has significant Total landed cost 22% 37% 15%
lieve it has globalized faster than risk management cost implications. The equivalent figure for Ability to enforce contracts 32% 37% 5%
has kept up, a worry for only 41% in the C-suite. corporate leaders is 36%. Meanwhile, only
Difficulty communicating
• 29% of supply chain professionals consider their 14% of supply chain professionals expect to expectations across
resilience above average, while this is the case for focus on sustainability, a concern for 20% cultural differences 29% 35% 6%
38% of corporate leaders. of corporate leaders. The split in percep- Unpredictability of travel time
tions indicates that it may be time for the for goods to arrive 24% 33% 9%
• Nearly twice as many supply chain professionals as
two groups to talk.
corporate executives (20% to 11%) think it very Border security/customs issues 23% 31% 8%
difficult to obtain high-quality suppliers. Ability to maintain
supply chain visibility 27% 31% 4%
Many of these questions are at the level of percep-
tion, and individuals often believe that their own jobs Energy/transportation expense 21% 29% 8%
are more fraught than they may actually be. A deeper
analysis reveals that those with the best knowledge of
18
19. IDS Group provides a global perspective from Asia
Low-cost Asian economies have become the world’s do business based on expense alone, the risk is humon-
manufacturing powerhouse. But the region’s business gous.”
executives make clear that the basics of supply chain Another area where true and apparent costs may differ
best practice are universal. Indeed, one of the most strik- is in dealing with partners. “You can’t be in every part of
ing findings from the survey results is how little answers the chain,” notes Mr. Phi. “There is always a temptation
varied by region. to say, for an x% cost reduction I’ll shift from provider A
Joseph Phi is President and Executive Director of IDS to provider B, but it is very important for us to consider
Group, a member of the Hong Kong-based Li & Fung the holistic picture. You can’t squeeze on every transac-
Group of companies, one of the world’s biggest export- tion. If your partners are not profitable, it is hard to have
ers. IDS provides integrated distribution and logistics a resilient supply chain,” he adds. Two other essential
services, or in Mr. Phi’s words, “supply chain manage- elements of resilience are predictability and repeatabil-
ment, from factory to delivery” for leading multinational ity. For the latter, Mr. Phi points out that “you can’t work
and local companies, including Li & Fung. with new partners all the time. You have to work with
Mr. Phi notes that the biggest challenge for supply people who understand your process.”
chain management anywhere is “how do you cope with There is also a need for proper investment in any country
changes, unpredictability, and volatility? One of the key where one does business. Just as other firms interviewed
determinants of a good supply chain is how flexible and for this report are finding it valuable to have people on
agile you are, because volatility does not go away.” Just the ground in their Chinese operations – where Mr. Phi
as the problems are common around the globe, so are says IDS Group enjoys “home court advantage” – he
the requirements for success. They include good people, notes that “in the Philippines, for example, you need
well-designed facilities, as well as various technology Filipinos, who understand the local market and will be
systems that create an overview of the entire supply able to make swift changes. As you go global you need
chain, so called end-to-end visibility. to put more emphasis on the local.”
But according to Mr. Phi, companies also have to “look Although supply chain investments may seem to in-
at the total cost of doing business. People neglect the crease costs, in the long run they save money. Mr. Phi
hidden costs,” especially in low-cost countries. This has notes, for example, that the presence of a robust contin-
implications in a number of areas. The first is contin- gency plan does not simply help in a crisis, but it also
gency planning. Says Mr. Phi: “crisis and contingency reduces insurance premiums. “A resilient supply chain
planning is not even a ‘nice to have’, it is a ticket to the does not only generate value, but also reduces cost in
game. In the supply chain business, if something can the long run.”
go wrong, it already did. While there is a temptation to
19
20. Appendix A: Survey Results
Where are most of your company’s key suppliers located? How difficult is it to obtain high-quality suppliers for your company’s most
important products?
1%
n Domestically n Very difficult
7% 9%
n Abroad n Somewhat difficult
n Both equally n Neither difficult nor easy
35% n Somewhat easy
36% n Very easy
33%
49%
29%
What impact have the following events had on your company? At which level does your company set the governance of the following
elements of your supply chain?
A weaker U.S. dollar
25% 31% 21% 12% 10% 1% Overall strategy
The U.S. economic slowdown 59% 21% 19% 1%
12% 28% 27% 19% 14% 1%
Purchasing decisions
A slowing global economy
30% 37% 33% 1%
14% 39% 24% 15% 6% 1%
Rising energy costs Monitoring/compliance
29% 31% 22% 12% 5% 1% 32% 29% 37% 2%
n 1 Strong Impact n2 n3 n4 n 5 No impact n Don’t know n 1 Global n 2 Regional n 3 National n Don’t know
0 20 40 60 80 100 120
20
21. Do you agree or disagree with the following statements as they relate to What level of importance does your company place on building lasting, solid,
your company? long-term relationships as the best way to maintain the quality and value of
the goods it gets from its supply chain?
My company supply chain has globalized faster than our risk management structures
have been able to adapt to the U.S. economic slowdown
13% 29% 26% 16% 11% 5% 2%
My company needs to do more to integrate social and environmental considerations n High importance
into our supply chain
4%
n Moderate importance
14% 32% 25% 20% 7% 1% n Low importance
One of my company’s big sustainability challenges is from activists and consumers n No importance
who do not actually understand the sustainability impact of what they are demanding
9% 20% 25% 22% 19% 5% 38% 56%
My company is re-assessing its sourcing based on geographic location rather than what
is cheapest
6% 25% 27% 24% 14% 4%
My company needs to pay more attention to supply chain resilience
13% 34% 31% 12% 4% 5%
n 1 Strongly agree n2 n3 n4 n 5 Strongly disagree n Don’t know
In your opinion, how does your company compare to its closest competitors in When evaluating a potential supplier, how important are the following factors
the following areas? to your company?
Supply chain management Speed
10% 38% 38% 10% 3% n 1 We are much stronger
19% 52% 23% 5% 1%
Quality of suppliers n 2
11% 42% 40% 6% 1% n 3 Quality
Resilience n 4 61% 31% 6% 2%
9% 29% 48% 12% 2% n 5 We are much weaker
Risk awareness and management Cost
11% 35% 36% 16% 2% 42% 38% 19% 1%
Ability to find and exploit new opportunities
Reputation
13% 36% 32% 18% 1%
22% 43% 24% 9% 3%
Awareness of corporate social responsibility issues
15% 30% 35% 17% 3%
End to end visibility
n 1 Most important n2 n3 n4 n 5 Not at all important
8% 24% 47% 17% 3%
Profitability
13% 34% 0 20 36%40 14%
60 2%
80 100 120
21
22. In your experience with global supply chains in low-cost countries, which of At your company, how frequently does the supply chain function engage in
the following issues have presented significant challenges for your company? formal risk management to assess the possibility of and consider strategies to
Select all that apply. reduce risk?
Quality of goods 52%
n Annually
Ability of suppliers to deliver what 47% 18% n Quarterly
they promise
29% n Monthly
Length of time for goods to arrive
34% n Weekly
from suppliers
8%
Ability to enforce contracts n Never
32%
4% n Don’t know
Intellectual property protection
31%
Difficulty communicating expectations
13%
29% 28%
across cultural differences
Unpredictability of travel time for
26%
goods to arrive
Ability to maintain supply
chain visibility
25%
Border security/customs issues 25%
Total landed cost 24%
Energy/transportation expense 22% How closely does your company monitor its suppliers?
Ability to return goods 20%
n Monitor immediate (Tier 1)
Other rule of law issues 20% 9% suppliers only (rely on them to
Finding secure transport for goods/loss 9% monitor their suppliers)
of goods in transit
15%
n Monitor immediate (Tier 1) suppliers
Adverse reaction in home markets 42%
11% and their immediate suppliers
No experience 20% n Monitor the entire supply chain
12%
n Do not monitor
30 40 50 60 n Don’t know
20%
22
23. In its supply chain, which of the following reputational aspects does your Which of the following steps is your company taking to improve its supply
company monitor most closely? Select up to two. chain resilience to potential crisis? Select all that apply.
Product quality 64% Internal benchmarking of supply chain 51%
breakdowns and lessons learned
Resilience/ability to deliver what is promised Hold additional safety stock
35% 40%
Compliance with legal standards Do joint planning with channel
27% 31%
(anti-corruption, anti-money laundering, etc) partners on such a situation
Product safety External benchmarking of supply chain
20% 29%
breakdowns and lessons learned
Respect for your own intellectual property Conduct crisis simulation exercises
16% 20%
Respect for intellectual property of other Collaborate with local governments
13% on contingency planning 16%
companies to prevent potential litigation for abuse
Environmental impact Collaborate with competitor firms
9% 16%
Employment conditions Other
6% 4%
10 20 30 40 50 60 70 80 0 10 20 30 40 50 60
Where are your company’s technology investments primarily directed? Over the next five years, how do you expect your company’s inventory levels
to change?
n Managing internal processes n Increase greatly
5% 5% 11%
12% n Combination of internal and n Increase slightly
external process management 18%
n Stay roughly the same
n Managing processes of suppliers 27% n Decrease
43% and other supply chain partners
n Don’t know
n We do not invest in technology
40%
40%
23
24. Over the next five years, which will be the key focus for your company’s Over the next five years, which factors are most likely to pose the greatest risk
supply chain? to your company’s global supply chain? Select up to three.
Energy costs 53%
n Cost containment/reduction
9%
n Long-term sustainability Competition
40%
10% 28% (economic, social, environmental)
Supplier disruption
n Process innovation 36%
16% n Technology innovation Logistics failure (port strike, etc.)
26%
n Inventory optimization
19% Strategic failure (incorrect shipments,
n Improving risk mitigation practices defective products) 25%
18%
Geopolitical instability
21%
Corruption
13%
Natural disaster 13%
Over the next five years, how will your company’s supply chain strategy Export restrictions 9%
change in the following areas?
Nationalization 8%
Least-cost country sourcing 1% Terrorism
6%
n 1 Increase greatly
13% 35% 34% 9% 7%
0n2 10 20 30 40 50 60
Near sourcing 3% n3
Over the next five years, how do you expect your potential pool of high-
7% 28% 42% 13% 8% n4 quality manufacturing suppliers to change?
Multi-sourcing strategy 1% n 5 Decrease greatly
12% 38% 32% 7% 8% n Don’t know
n Increase greatly
In-house manufacturing 12% 10%
n Increase somewhat
5% 14% 30% 23% 16% 11%
n Neither increase nor decrease
n Decrease somewhat
26%
51% Decrease greatly 0%
24
25. Are there any countries where your company has ceased/significantly reduced your sourcing because of risk? Select up to three.
Countries 1 2 3 Countries 1 2 3 Countries 1 2 3
Afghanistan 9% 0% 0% Guinea 0% 1% 0% Serbia 1% 1% 2%
Aland Islands 1% 0% 0% Honduras 1% 0% 0% Slovakia 0% 1% 0%
Preface
Albania 1% 0% 0% Hungary 1% 0% 0% Somalia 0% 0% 2%
Angola 1% 1% 0% Iceland 0% 1% 0% South Africa 1% 3% 0%
Argentina 0% 1% 5% India 10% 4% 5% South Korea 0% 1% 0%
Armenia 1% 0% 0% Indonesia 5% 1% 5% Spain 0% 0% 2%
Australia 1% 0% 2% Iran 4% 1% 4% Sri Lanka 1% 0% 0%
Azerbaijan 0% 3% 0% Iraq 1% 8% 0% Sudan 1% 0% 2%
Bahrain 0% 0% 2% Israel 1% 1% 2% Taiwan 0% 3% 0%
Bangladesh 2% 1% 2% Italy 1% 0% 0% Tajikistan 1% 0% 0%
Belarus 0% 0% 4% Japan 0% 0% 2% Thailand 0% 1% 5%
Belgium 0% 0% 2% Kenya 1% 0% 0% Tunisia 1% 0% 0%
Bermuda 1% 0% 0% Kuwait 1% 0% 0% Turkmenistan 0% 1% 2%
Bhutan 0% 1% 0% Kyrgyzstan 0% 0% 2% Ukraine 1% 1% 2%
Bolivia 1% 3% 0% Latvia 0% 0% 2% United Kingdom 0% 3% 0%
Bosnia and Libya 1% 0% 2% United States
Herzegovina 0% 3% 2% Lithuania 1% 0% 0% of America 4% 1% 0%
Brazil 1% 3% 4% Madagascar 0% 1% 0% Uzbekistan 0% 1% 0%
Bulgaria 0% 3% 2% Malaysia 1% 1% 0% Venezuela 1% 0% 4%
Burkina Faso 0% 1% 0% Malta 0% 0% 2% Vietnam 0% 1% 2%
Cambodia 0% 1% 2% Mexico 0% 1% 0% Zimbabwe 0% 3% 4%
Cameroon 0% 0% 2% Moldova 0% 1% 0% Total 100% 100% 100%
Canada 1% 1% 0% Morocco 0% 1% 0%
China 16% 7% 0% Myanmar 1% 3% 0%
Colombia 0% 3% 0% New Zealand 0% 0% 2%
Congo 1% 0% 0% Nicaragua 1% 0% 0%
Cuba 1% 0% 0% Niger 1% 0% 0%
Ecuador 1% 0% 0% Nigeria 1% 3% 2%
Egypt 0% 0% 2% Norway 1% 0% 0%
Eritrea 0% 0% 2% Pakistan 4% 1% 4%
Ethiopia 0% 1% 0% Papua New Guinea 1% 0% 0%
France 1% 0% 2% Philippines 1% 1% 2%
Germany 3% 1% 0% Poland 1% 0% 5%
Ghana 1% 0% 0% Romania 2% 1% 0%
Greece 1% 0% 0% Russia 5% 7% 4% 25
26. If your company sources products from China, what are your plans for the When your company is looking for suppliers in new markets, which factors are
next five years? considered most important? Select up to three.
n Increase sourcing from China Product safety 38%
n Keep sourcing levels from China about the same
Preface
29%
n Decrease sourcing from China
Intellectual property protection 31%
33%
Shipping cost
n Stop sourcing from China altogether 31%
n My company does not source from China Rule of law issues
30%
1%
10%
Labor cost
29%
26%
Shipping time
26%
Visibility
18%
Shipping security 14%
If you plan to reduce or stop sourcing from China, what is your primary Cultural differences
13%
reason why?
Corruption
12%
Nationalism, corruption or Other
7% 9%
intellectual property concerns
Inflation 7% 0 5 10 15 20 25 30 35 40
Labor costs
5%
Transportation expense
4%
Infrastructure issues
2%
Other
3%
No plan to reduce or
stop sourcing from China 40%
My company does not
source from China
32%
25 30 35 40
26