PRTM Management Consultants' Global Supply Chain Trends 2008-2010 study, tapped the mind share of 300 international participants, across numerous industries, in an effort to better understand how they are maintaining and updating their supply chain configurations to remain competitive.

The sixth annual survey hits upon real-world supply chain strategies that participants are deploying, uncovering, among others, the following key trends:

• Globalization is accelerating, leading to large structural shifts for global supply chain organizations and new challenges to successfully manage supply chain performance; and

• Despite average cost reductions of 17 percent per globalization initiative, many companies have difficulty realizing savings in management costs.

These findings were echoed in Archstone Consulting's recent Manufacturing Executive Agenda for 2008. Based on responses from 265 manufacturing executives, two of the four most common ways that executives plan to bolster performance in 2008 depended upon the capabilities of supply chain. Among the executive agenda items shared by manufacturers in all industries:

• Reducing costs with supply chain efficiency improvements; and

• Increasing revenue growth by leveraging supply chain capabilities to add value to products and services.

Moreover, PRTM Management Consultants determined that major barriers to globalization include limited supply chain flexibility and the lack of internal competency to manage partners. This is arguably the greatest hurdle for companies to overcome, particularly from an IT perspective. How can companies sense and respond more quickly to customer needs if their IT backbone is outmoded? What if there isn't a budget to upgrade to a top-shelf "end-to-end" solution?

Fortunately, one of the findings provides this potential solution:

The COO agenda across industries and geographic regions is converging on improving supply chain flexibility and performance. Companies around the globe face similar challenges in building effective international operations and supply chain networks.

Unfortunately, even if teamwork/collaboration holds true and increasingly more companies begin to successfully build out their supply chains to better meet global needs, there is still a huge cost involved. And this cost doesn't necessarily mean dollars, per se, but more along the lines of product quality and safety.

Let's face it, outsourcing is still very much a viable means to expand operations quickly and cheaply. However, according to the PRTM study, companies are becoming extremely concerned about the negative impact that outsourcing has on these two critical areas.

PRTM survey respondents have developed numerous ways to minimize disruption related to quality and delivery issues, including increasing the frequency of on-site audits, physical deployment of company resources within the supplier's location, increased inspection, and increased supplier training. Moreover, industry leaders are more likely to focus on deployment of their own resources within supplier locations while followers rely more on supplier audits.

In the years to come, PRTM suggests that a clear and consistent approach to partner management will become a prerequisite to be successful, as the globalization of innovation and R&D functions continues to accelerate. This, too, is reflected in Archstone's study, in which "Improving product innovation" was found to be among the primary executive agenda items shared by manufacturers in all industries.

In light of the market's changing demands due to higher fuel costs, as well as more vocal calls for lower emissions, the automotive industry is perhaps the most obvious area in which this insight is less understood.

In terms of innovation, for example, General Motors announced earlier this month that it was considering a new Chevrolet mini-car — front-wheel-drive, three-door hatchback powered by a 1.2-liter turbocharged gasoline engine — for the U.S. that was speculated to be the automobile that would turn things around for the automaker. U.S. mini-car sales are up nearly 31 percent for the first half of the year, even though the total U.S. auto market is down more than 18 percent, according to Autodata Corp.

It took approximately 10 days for GM to cancel the idea of offering the vehicle in the U.S.

Meanwhile, when it comes to collaboration, Daimler's Mercedes-Benz unit is looking for co-operational partners for single components with the aim of mutual standards that would benefit all partners. Executive board member Thomas Weber said his company could handle the brunt of these R&D efforts on its own, but added that with a partner, Mercedes-Benz would be able to use its resources better, according to a Dow Jones.

This type of collaboration and flexibility will permeate future supply chain trends, according to PRTM. In fact, as top supply chain drivers go, flexibility looks to out-pace even product quality and customer service by 2010. Here's why:

As companies expand the footprint of their supply chains, they are necessarily concerned about the added complexity associated with this expansion and the need to maintain flexibility with multiple partners across continents. In order to improve supply chain flexibility across continents, almost 90 percent of the surveyed companies plan to increase their focus on delivery performance, including renewed focus on demand and supply forecasting.

What are your top supply chain concerns? How is your company addressing them?

Related

A Modest Proposal: 6 Supply Chain Improvements

Where Are We Going, Where Have We Been?

Resources

Global Supply Chain Trends 2008 - 2010
PRTM Management Consultants, June 12, 2008

Manufacturing Executives Agenda for 2008
Archstone Consulting, June 18, 2008

GM May Bring New Mini Car to U.S.
The Associated Press, July 3, 2008

Lutz Chimes in on the Chevy Beat
by Alex Nunez
Autoblog, July 6, 2008

Lutz: No Beat for the U.S., Smaller CUVs on the Way, Insignia Stalled
by Damon Lavrinc
Autoblog, July 15, 2008

Daimler Still Looking For R&D Partners For Mercedes-Benz Cars
by Christoph Baeuchle
Dow Jones, July 18, 2008