SCDigest Editorial Staff

The News: A new survey from analyst firm IDC’s Manufacturing Insights is said to show a “disconnect” between corporate supply chain strategies most often driven by a focus on cost reduction, and a different set of overall business objectives of the company.

SC Digest Says:

“Reducing overall costs” was so close to being the number 1 current business objective cited, we’d say the survey results indicate almost no disconnect at all. What do you say? Send us your comments here

The Impact: While SCDigest has a lot of respect for IDC’s work, we’re not so sure the “disconnect” being widely reported is meaningful here. The Supply Chain for many companies represents 70% of their total company costs, and has always been a place for companies to look for continuous cost improvement. While Supply Chain can be critical and often an under appreciated lever supporting corporate growth strategies, the fact that a plurality of respondents cited reducing costs as their number 1 Supply Chain strategy is not at all surprising. While “quality and customer satisfaction” was cited as the top business objective cited by respondents, reducing overall cost was in fact the second highest priority. Doesn’t sound like much of a disconnect to us.

With any of these studies, reading past the headlines to the details often leads to different conclusions.

The Story: The Manufacturing Insights arm of IDC recently completed a survey of 800 manufacturing companies.

Almost half (48 percent) of respondents cited reducing material, manufacturing, and/or logistics costs as their top supply chain strategy. That was followed by (in order) creating more responsive and timely decision-making across the global supply chain, and being more responsive to changes and opportunities in the marketplace.

When it came to overall business objectives, the top pick by respondents was quality and customer satisfaction (71 percent of respondents saying this was a key goal). However, reducing overall cost and improving productivity, at 66 percent, was in second place, and cited by just 5% less than the top strategy. Increasing revenues and exploiting new markets came in third.

"Ideally, companies should map their business objectives with supply chain priorities to make the most effective IT investments," said Kimberly Knickle, program director on the survey for IDC. "The survey results indicate that many companies have a gap between their overall objectives and how they execute in the supply chain."

Really?

While SCDigest believes there is, in fact, often misalignment between Supply Chain and the business, we’re not sure these survey results demonstrate that issue. In fact, given that “reducing overall costs” was so close to being the number 1 current business objective cited, we’d say the survey results indicate almost no disconnect at all.

This is not to say Supply Chain Management is not often too focused on cost, and not enough on growing revenue and profits. We just don’t see anything in this survey, despite the reporting from other sources, that really supports the perspective that supply chain and the business are strongly disconnected.

What are your thoughts on these survey results? Despite any solid support from this survey, do you think the priorities of the supply chain organization and the business strategies are often disconnected? Let us know your thoughts at the Feedback button below.