Companies Increasing Focus on Supply Chain Visibility

Supply chain visibility is growing increasingly important as companies struggle to rebound from the recession and better manage global supplier networks that are becoming progressively more unwieldy. In fact, the Aberdeen Group recently surveyed 183 companies and found that supply chain visibility is now a top concern for firms looking to cut costs and improve response times to changing customer demands.

The survey results, compiled in Supply Chain Visibility Excellence: Fostering Security, Resiliency, and Efficiency, revealed that:

Companies are focused on two main supply chain priorities: pressures of growing global operations and complexity (44 percent) and the need to improve speed and accuracy (37 percent).

The increased complexity of global supply chains has led to longer lead times, more pipeline inventory, and the need to control downstream and upstream logistics. This, in turn, has contributed to increased supply chain management costs. Accordingly, supply chain execution cost is ranked at 29 percent, the third highest priority following complexity and accuracy.

In addition, the report shows improving supply chain visibility can lead to significant business benefits. Based on the survey results, Best-in-Class companies:

Experienced a 3 percent decrease in supply chain execution cost as a percent of revenue (inbound /outbound transportation, pipeline and staged inventory and SC management costs)

Showed a 3 percent decrease in total landed costs per unit handled

Are between 19 percent and 42 percent more likely to respond to non-catastrophic supply chain disruptions within hours.

"It is not surprising that in the situation of the global economic turmoil, many companies have turned to their supply chain organizations in search of ways to cut costs, while enabling faster and more efficient responses to changing customer demands," explained Bob Heaney, Senior Research Analyst of Supply Chain Management at Aberdeen. "Reducing costs by driving down excessive inventory and avoiding or quickly responding to disruptions has become critical for companies in today's economy. But before a company can collaborate or partner with others to reduce pipeline inventory or landed cost or improve lead-times, it needs to have visibility into them."

TAGS: Finance
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