Supply Chain Priorities Shifting, But Cost Is Still Key

While there's no doubt that new approaches to supply chain management are gaining a foothold at many companies, most businesses today still see cost as their main priority.

In fact, a recent KPMG survey polled nearly 200 senior-level executives from the aerospace, metals, engineering and conglomerates sectors across North America, Western Europe and Asia-Pacific, and it revealed that:

66 percent of respondents consider cost the leading consideration of their supply chain models.

However, 63 percent of respondents agreed that more attention should be paid to non-financial elements of the supply chain.

For instance, 26 percent of survey respondents see IP protection as one of their biggest supply chain risk concerns over the next two years.

In addition, more than half of the respondents plan to collaborate more closely with suppliers on product innovation and development, research and development (R&D), and cost reduction.

Interestingly, more than one-third (38 percent) admitted that an acute focus on cost has harmed relationships with suppliers.

"The fact that nearly 40 percent of respondents acknowledge that a focus on cost has done damage to relationships with suppliers is an alarming statistic," said Jeff Dobbs, Global Head of Diversified Industrials for KPMG. "Those businesses that continue to follow the traditional low cost or bust' models in supply chain management are at risk of losing a foothold in the market."

It's encouraging to see that many of the world's leading companies are beginning to apply strategic methods of supply chain management. A tactical, multi-pronged approach will prove optimal in an economic climate where various forms of risk have become the norm.

A copy of the survey is available here.

TAGS: Finance
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