APICS CEO Abe Eshkenazi, CSCP, CPA, CAE -
April 18, 2014
You know supply chain functionality is important to the whole business, but do you know to what extent? Does your executive team? A Deloitte survey released this week shows that 79 percent of businesses with superior supply chain capabilities indicate revenue growth that is considerably higher than the industry average. In addition, 69 percent of supply chain leaders report company earnings that are significantly more than the industry average.
By comparison, only 8 percent of organizations with lower supply chain performance relate significantly higher than average revenue growth. Only 9 percent of supply chain “followers” show earnings that are well above the industry average.
The researchers considered superior supply chain organizations, “leaders,” to be those with significantly higher-than-average inventory turnover and on-time and in-full deliveries. The factors that separate supply chain leaders and supply chain followers, according to the report, include
- recognizing innovation’s importance
- adopting disruptive technologies early
- using analytics extensively.
“While discussions of innovation often center on new products, those innovations also tend to be the easiest to imitate,” write Deloitte’s Kelly Marchese and Bill Lam. “Business model innovations can have much greater impacts for supply chains in areas such as reinventing networks, processes, services, and channels.”
Overall, the report stresses the value of supply chain functions integrated with overall company strategy. The survey showed 56 percent of supply chain leader companies have their supply chain activities led by an executive vice president or a senior vice president. On the other hand, only one-third of followers had senior-level supply chain heads.
“There is no one ‘right’ supply chain strategy, just as there is no one right business strategy,” Marchese and Lam write. “The imperative is for supply chain management decisions to reflect the overall strategy of the business—and within that, particular strategies for different customer segments.”
For this report, Deloitte surveyed 421 executives in 10 different countries.
Moving your company ahead
Consider the definition of “innovation risk” as it appears in the APICS Dictionary, 14th edition: “The risk of losing customers because another firm creates more innovative products.” Based on the Deloitte research, I can extrapolate the APICS Dictionary definition and apply it to all areas of the supply chain—from business models and networks to services and channels, supply chains need to innovate or else risk losing customers.
Now think about the following idea expressed in the APICS Supply Chain Strategy Folio: “Many organizations have good supply chain strategy, but their leaders can’t successfully implement that strategy. The ability to implement good supply chain strategy becomes an important competitive advantage.”
It takes skilled and knowledgeable supply chain and operations management professionals to act as innovators and leaders within organizations. As the leading professional association in the field, APICS provides research, education, and certification programs that elevate end-to-end supply chain excellence, innovation, and resilience. Not only can APICS help you succeed in your career, it can help your company improve its bottom line. Visit apics.org to find out how to become a supply chain leader.