Demand Volatility Is the Top Business Driver for Supply Chain Managers

The top two business drivers for supply chain executives in 2011 are operating a reliable supply chain in a volatile environment, while simultaneously dealing with rising material costs, according to a recent global supply chain study conducted by consulting firm Capgemini. Forty percent of respondents say that demand volatility is their number 1 business driver, while 35% named increased material/service costs as their main business driver.

Although the general economic outlook seems positive, a significant number of the respondents to the survey indicate they are uncertain about market demand in 2011 and that they are therefore determined to improve visibility in the supply chain. 300 leading companies participated in the survey from various sectors in Europe (59%), the US and Canada (25%), Asia-Pacific (10%) and Latin America (6%).

Meeting this twin challenge will mean improving control of both the internal and external supply chain. Consequently, when the respondents were asked to name their top supply chain projects in 2011, improving supply chain visibility ranks as top for 45% of them. Visibility was defined as knowing where products and inventories are, being able to monitor order progress and being able to anticipate unplanned events in the supply chain, like delayed transport or non-conformance quantities in the production process of subcontractors. Business process redesign (44%), business innovation (41%) and improving long term (demand) forecasting and planning (41%) follow closely on the list.

Other key conclusions from the study:

● Sustainability remains high on the list of business drivers (33%), making it still a top priority for supply chain executives.
● The economic downturn, while moving to the bottom of the list of business drivers, is still mentioned by 8% of the respondents