IDC Manufacturing Insights recently completed its 2012 survey regarding the state of the supply chain today. The survey consisted of 350 U.S.-based manufacturers across all value chains to understand how they are adapting and improving their supply chains, and how technology plays a role in enabling manufacturers to be more successful.
We already know that manufacturers in North America face increasing complexity as customer demand diversifies and supply globalizes. Supply chain organizations are adapting to respond to requirements such as:
- Complex and extended global supply networks reflecting globalization and the chase for "low cost" manufacturing - often characterized by significantly longer product lead times
- Volatile demand as the new norm, caused by the health of micro markets and the economic news of the day, as well as challenging forecast accuracy and predictability of input costs
- Growing regulation, particularly in the area of traceability, but re-invigorating efforts to improve visibility, supply chain responsiveness, and product quality
- The accelerated pace of business pressuring manufacturers to be more agile and increase the clock speed of their supply chains
- The "rise" of the consumer, with consumers and customers having greater access to information that allows them to make more informed decisions and purchases
Indeed, IDC Manufacturing Insights has articulated the key supply chain challenge as the juxtaposing of complex and extended supply networks with increasingly fast and volatile demand networks - and the increasingly ineffective role for inventory as a way to buffer cadence mismatches. Although it can be 'fashionable' to proclaim that 'today is the most challenging time in the history of the manufacturing supply chain' there is anecdotal evidence to suggest that 2012 may indeed represent such a point in time. Yet, there are two sides to every story and therefore challenge exists in close proximity to opportunity in terms of the supply chain in 2012. At IDC Manufacturing Insights we have written extensively about the opportunities inherent in new approaches and new technologies. The opportunity, for example, for consumer-facing manufacturers to redefine their core relationship with the consumer through mobile and social media tools; or the ability to apply next-generation analytics to massive new sources of data (both structured and unstructured).
So, how do manufacturers expect to address these challenges - and turn them into opportunities? Our early analysis of the survey results reveals a few key insights as to how manufacturers are changing and how they plan to adapt their supply chains:
- Manufacturers continue to increase the amount of low-cost country sourcing, but we're concerned that they aren't always considering the full implications of those decisions from a cost, service, and quality perspective. We'd like them to revisit the profitable proximity sourcing approach and how that concept, supported by IT, can ensure sourcing decisions to create a competitive edge for manufacturers.
- Most manufacturers view their supply chains as focused primarily on product quality, yet their supply chain priorities usually start with reducing costs, followed by responding to supply or demand changes, ahead of product quality and customer service.
- With IT-based solutions for demand planning and forecasting and production scheduling viewed as key to manufacturers' business performance over the next year, this could signal a genuine shift to a more holistic approach to truly integrated business planning, inclusive of fulfillment excellence.
- Big data and mobility are the most important new technologies for manufacturers' supply chains, and we see substantial value to how manufacturers can use these to improve their agility and customer service.
We will be writing extensively on these topics throughout the summer, with much more detail and insights from the 2012 supply chain survey. We also hope you'll join our Supply Chain team - IDC Manufacturing Insights analysts Simon Ellis, Kimberly Knickle, and Catherine White - when we present more details on our survey in a complimentary one-hour web conference on June 28th at 12 noon EDT.