Companies to Use Supply Chain to Drive Growth and Control Costs

June 19, 2008
Looking to supply chains to improve customer satisfaction

Nearly three-quarters of the 265 manufacturing executives surveyed in Archstone Consulting's Manufacturing Executive Agenda for 2008 felt that the current market pressures, including sharply rising commodity prices, a sluggish economy, and foreign competition, may be triggering significant transformational changes within manufacturing organizations.

"Over 80% of manufacturers have responded to the current economic climate by devising aggressive agendas to boost sales and cut costs," commented Todd Lavieri, CEO of Archstone Consulting.

"An interesting pattern emerged, in that manufacturers across the board have high expectations for their supply chains to both boost revenues and reduce costs," explained John Ferreira, industrial manufacturing practice leader at Archstone Consulting. "In the past manufacturers simply used their supply chains as a means to control costs by improving efficiencies. Now, they are using their supply chains as a mechanism to boost revenue and improve customer satisfaction through capabilities like better management of highly customized products, quicker delivery times, and more integrated services."

The four executive agenda items shared by manufacturers in all industries include:

  • Increasing revenue growth by leveraging supply chain capabilities to add value to products and services.
  • Reducing costs with supply chain efficiency improvements.
  • Improving product innovation.
  • Controlling direct material costs.

Archstone also identified several major industry trends in its Manufacturing Executives Agenda for 2008 surveys, including:

•Aerospace & Defense: Nearly 70% plan to simultaneously increase revenues and reduce costs by 3% or more.
•Consumer Packaged Goods: Nearly 90% anticipate cost reductions of 3% or greater. CPG executives cited managing direct material and commodity costs as the most important to achieving cost targets.
•Electrical & Electronic Equipment: Over 90% consider the sluggish economy to be a major constraint, and less than half expect revenue growth of 3% or more.
•Pharmaceuticals: Nearly 70% expect to reduce costs by 3% or higher, and 72% anticipate revenue growth of 3% or more.

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