CSCMP’s recent Supply Chain Quarterly reported that a recent survey of supply chain executives, conducted by the Tomkins Supply Chain Consortium found that many executives have a high level of uncertainty about the future than they did in the past. Nearly 60 percent of executives polled expect business to be riskier, with those executives representing larger companies to be the most apprehensive. A majority of SMB executives also view high levels of uncertainty within their industry settings.
None of this should be a surprise to the Supply Chain Expert Community, since there has been a lot of sharing and exchange of information regarding the current uncertainties concerning many industry value-chain environments. Supply and value chains are far more extended and many are supported with very lean, just-in-time oriented resources.
We recently posted our own commentary regarding our view The Two Most Significant Supply Chain Management Challenges in 2011. Current social and political turmoil across the Middle East coupled with high volatility of oil prices, along with reports of thwarted terrorism attacks only add more uncertainty to global supply chains.
To add comfort, however, supply chain executives are not alone in their unease.
Accenture released the results of a recent survey representing more than 1000 CFO’s and senior finance executives across Asia, Europe and the Americas. This report cites 79 percent of senior finance executives seeking more flexibility in their operations. The authors also point out that three out of four of the respondents (78 percent) seek flexibility in planning and forecasting, rather than a traditional annual process. Also noted was that a majority (53 percent) of these same financial executives desire to expand their content and data (including analytics) in planning and forecasting, and 48 percent also indicating that they needed to modify their corresponding IT systems. Keep in mind that finance executives were also calling for reductions in overall supply chain costs these past two years.
This is, in our view, another endorsement of the need for many organizations to evaluate enhanced supply chain analytical, business intelligence and sales and operations planning (S&OP) process and IT support capabilities. Uncertainty is unfortunately going to continue throughout the coming year, and executive consensus on heightened risk is already a foregone conclusion.
The real challenge is coming together with a timely set of plans for where sense and operational response plans need to be enhanced for short and long-term effectiveness. Near term sensing and synchronization of activities is the most pressing capability today.
Supply Chain Matters recommends that overall cycle times of planning processes be examined and challenged, along with finding ways to conduct quicker, more scenario-based analysis of various options related to changing business conditions. As an example, what is our response if customer demand suddenly drops by 10 percent, or better, increases by 10 percent because of some unplanned factor in the market? How quickly can we change our supply chain resource plans?
The good news in the midst of lots of news reflecting on uncertainty is that the senior executive suite already concurs. The challenge is to position the organization for investing in the process capabilities that are needed now vs. sometime in the far distant future.