Do Investors Look To Supply Chains For Company Growth?

Oct. 20, 2006
Pressured to tighten up supply chains, execs are missing the big picture.

Supply chain executives are increasingly being held accountable for a company's growth according to a report by the Supply Chain Executive Board, a program of the Corporate Executive Board. In the last two years of investor conference calls, the link between supply chain and growth has risen 74%.

However the report reveals that supply chain performance does not necessarily drive business performance. Despite multi-million dollar investments, it turns out that increased supply chain responsiveness is important, but not enough, to drive business performance. The reason is that supply chain executives have been so focused on making their supply chains efficient that they have not been concentrating on the business as a whole.

Some companies are addressing this by turning their attention to increasing total profitability from the beginning of the cycle of new production introductions. They are improving total profitability of SKU portfolios and "bullet-proofing strategic plans at inception," according to the Corporate Executive Board.

Calling these "Activists" supply chain leaders, the Board reports that this brand of supply chain executive has been able to grow margins by 4.9 percentage points from 2003 to 2005. This compares to non-Activists who have seem margins decline.

To help companies create Activists, the Corporate Executive Board, based in London and Washington D.C., is holding an Annual Executive Retreat on "Engine for Growth: Targeting Supply Chain for Maximum Business Impact" on Nov. 15 in London and on Nov. 30 in Philadelphia.,1445,,00.html

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