What did three surveys from Deloitte, Grant Thornton, and KPMG interviewing over 600 procurement and supply chain executives find? Discover what's going to make - or break - your supply chain in 2018.
By definition, procurement and supply chain management is all about connecting and optimizing networks.
Which is why, perhaps more than in other industries, understanding the state of procurement is so crucial. You need to understand how everyone from top procurement leaders to on-the-ground buyers and sellers are acting - and just as importantly, you need to understand how they're going to act in the future.
So here's a summary of three surveys from some of the world's biggest and most reputable accounting organizations on where procurement is at in 2018 - and what strategies, successes, and challenges are in store.
Deloitte surveys procurement executives
Finds low visibility and technology adoption - and also middling confidence in team capabilities
In their "Global Chief Procurement Officer Survey 2018," Deloitte surveyed over 500 procurement leaders across 39 countries representing organizations with a combined annual turnover of $5.5 trillion.
- Supply chain transparency is poor, with 65% of procurement leaders having limited or no visibility beyond their tier 1 suppliers
- 51% of procurement leaders believe their current teams do not have sufficient levels of skills and capabilities to deliver on their procurement strategy
- 33% of procurement leaders believe that their digital procurement strategy will enable them to deliver on their organizational objectives and value
- Only one-third of procurement leaders use modern technologies such as predictive analytics and collaboration networks
- Cost reduction (78%), new products/market development (58%) and managing risks (54%) remain the top business strategies for procurement leaders
- 61% of procurement leaders delivered better year-on-year savings performance than last year
- The most common leadership traits in procurement are acting a a role model, collaborating internally and externally to deliver value and delivering results. Conversely, strategic leadership traits such as positive disruption, leading digital transformation and innovation are not widely evident
Grant Thornton surveys small and midsized American manufacturers
Finds general optimism but vast self-acknowledged room for improvement - particularly in integrated strategy
In "Creating a framework for innovation," Grant Thornton surveyed 120 American manufacturers, mostly small and midsized, in the National Association of Manufacturers regarding the effectiveness of their supply chains and how they can innovate and improve the flow of goods from supplier to customer.
- Only 10% said they had a fully implemented strategy to optimize their supply chain performance. Meanwhile, 36% said they had only informal supply chain processes and little measurement of integrated tactical plans.
- Some 48% said customer demand drove their supply chain strategy, followed by 26% stating that it was competitive pressure, 16% shareholder value, 6% capital management and 4% liquidity.
- Almost 78% said they focused their supply chain improvement efforts on managing direct costs, such as labor, overhead, material costs and inventory. Only 17% said they focused their supply chain improvement efforts on managing indirect costs like waste, rework, warranty, on-time delivery or bad debt.
- Respondents said they focused most of their supply chain efforts, and received the most benefits from, building closer relationships with a few key suppliers; centralizing procurement for improved supplier terms and compliance; and nearshoring suppliers for lower transportation costs and other benefits. At the same time, these companies expended significantly less effort on integrating their data systems with suppliers and using automation or robotics to streamline operations.
- While acknowledging the importance of a strong supply chain, most survey respondents admitted they have plenty of room to improve their operations. Some 36% said they have an informal supply chain process with little measurement, while 12% have formulated a strategy but struggle with implementation. Only 10% have a fully implemented supply chain strategy, while 42% are working toward full implementation.
- Many manufacturers feel that customer demand drives their supply chain strategy. Some 48% of survey respondents ranked customer demand as their top choice, followed by competitive pressure at 26% and shareholder value at 16%.
KPMG looks at manufacturing supply chains
Finds resistance to change as the greatest inhibitor followed by complex decision making
Published just yesterday, "Digital Supply Chain in Retail & Manufacturing" collected responses from 60 supply chain executives in the retail and manufacturing industries - though we'll only be looking at the manufacturing data.
- For manufacturers, the leading drivers in supply chain investment are real-time product visibility (50 percent), the need to innovate faster (40 percent), and lowering cost to serve through improved planning (33 percent).
- Manufacturers view Blockchain and autonomous vehicles as the most disruptive innovative technologies, and 50 percent will conduct a pilot of those technologies in the next 24 months.
- It is the execution structure and change management capabilities that hold [manufacturers] back, as manufacturers cite inhibitors such as resistance to change (57 percent), complicated decision making (40 percent), and management commitment/data security (37 percent).
- 1 in 5 manufacturers rank incorporating new data streams as a top priority