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Supply Chain Efficiency Was Key Factor in Driving Profits for Manufacturers and Service Providers During Down Economy

Wed, 10/27/2010 - 10:36am
Material Handling Industry of America

Amid economic turmoil, businesses rely on the efficiency of supply chain operations to respond to consumer demand for lower prices and the ability to maintain profits, as indicated by the eighth annual "Global Survey of Supply Chain Progress." The 2010 survey was conducted by Supply Chain Management Review, The Eli Broad Graduate School of Management at Michigan State University and CSC, with assistance from The Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine.

The survey found that an efficient supply chain was essential to maintaining prices on goods and services over the past year and also was the means to generating new revenues. When asked what happened to the emphasis on supply chain management in the last 12 to 24 months, 78% reported it had increased.

The first conclusion from the survey is that without a strong supply chain capability, firms would be hard pressed to offset the demands made for and the concessions given for price reductions to key customers. The second is that supply chain management (SCM) is now perceived by the vast majority of respondents as a core competency. Third, there is also no question that during the recent economic downturn, companies turned to SCM for help. As might be expected, they did so while receiving a mixed bag of results with a fairly wide variation to impact on costs, revenues, market shares, internal adjustments and customer satisfaction.

Key findings include:

  • SCM has matured as a business discipline and sits front and center as the area in which to find cost reductions and revenue increases, especially in periods of economic downturn
  • In difficult times, companies turn to their supply chains for help
  • Supply chain leaders are more likely to react more quickly and gain market share in times of a depressed economy
  • Market share gains are reflected by increases in revenues
  • Sustainability remains an initiative and supply chain leaders are taking a more proactive role in green initiatives

Completed by supply chain executives from 20 different industries worldwide, the survey questioned respondents about business results during the economic downturn, focusing specifically on how supply chain initiatives -- and supply chains in general -- had played a role in reducing costs and sustaining revenues and customer satisfaction across the organization. The Survey attracted 164 complete respondents, split evenly between manufacturing and service organizations. There were an additional 35 partial responses.

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