Four years after the recession imposed corporate belt-tightening around the world, we see U.S. companies operating at near-record peaks of efficiency. The downside? These cost efficiencies have in many cases eroded supply chain flexibility. As demand dropped during the recession, many businesses trimmed inventory levels and cut costs in supply chain operations. Today, these businesses are finding their weakened supply chains can’t keep pace with economic recovery.

As a result, organizations are rethinking their supply chains to craft a strategy that can deftly accommodate broad swings in demand and supply. In fact, 64% of respondents to PwC’s recent Global Supply Chain Survey said they plan to implement greater flexibility to better respond to shifts in volume. That makes flexibility a top supply chain priority this year (see chart below), just behind maximizing delivery performance and minimizing supply chain costs.

flexibility top priority

A number of factors have converged to advance supply chain flexibility to the top of the agenda. Emerging economies, for instance, are expanding at double-digit rates, and with that growth comes a global shift in demand patterns. These swings include changes in physical footprints and material flows, as well as demand for more tailored products with a faster order-to-delivery time.

At the same time, competitive factors related to cost, speed-to-delivery and customer experience are increasing the complexity of supply chain management. Supply chains also are vulnerable to disruptions caused by natural disasters, political unrest and port strikes in the United States.

Companiesare under increasing scrutiny by watchdog groups, the media and social media-savvy consumers to uphold labor conditions and sustainability practices across supply chains that are becoming much more complex due to geographic dispersion.

For all these reasons, a flexible and visible supply chain has become an imperative in today’s business environment. Getting there will require that companies prioritize supply chain operations and tightly align them with other business functions.

To underscore the strategic significance, some companies have elevated their supply chain leaders to C-suite status. These new strategic leaders, with titles like Chief Supply Chain Officer and Chief Procurement Officer, represent the supply chain among business groups and suppliers. As such, they require skills in finance, human capital management, conflict resolution and relationship building, as well as technical knowledge and operations experience.

A flexible supply chain organization requires not only a strategic leader, but also input from managers who represent the traditional supply chain functions of planning, sourcing, manufacturing, logistics, and also sales and marketing, among others. This enables the supply chain organization to work closely with these potentially disparate business groups to better understand their individual operations, goals and deadlines.