Diversified products manufacturer 3M recently conducted a survey among supply chain suppliers to hone in on current challenges related to the notions of supplier collaboration. While the survey population was small, the results caught our attention because they uncover important challenges that remain for procurement and supply chain teams.
The purpose of the survey- Driving growth and innovation through supplier partnerships, was designed to uncover insights (not specific to 3M) on the most urgent trends, opportunities and challenges facing suppliers today. Upon review, Supply Chain Matters noted a number of noteworthy findings.
Technology’s Impact Becoming More Important
On a positive note, and further validation of our Ferrari Research and Consulting Group’s 2017 prediction of increased investments in supply chain focused technology, 60 percent of the suppliers surveyed by 3M indicated they are in the process of making major changes and upgrades to their systems and technology to become more digitally connected. That from our lens is encouraging news.
Nearly all suppliers surveyed, ninety-five percent, reported being at least somewhat empowered and encouraged to innovate and make suggestions for improvement for the customers they supply. Yet only 43 percent of suppliers’ report feeling fully empowered to collaborate with their key customers. The survey evaluators indicate that the challenge of collaboration and joint innovation may not lie in lack of incentive and customer openness, but because the organizations they supply lack systems and technology that make collaboration more efficient. Seventy percent of suppliers indicated at least half of the customers they supply do not have a strong system and process in place for buyer and supplier collaboration. A similar theme of discussion emanated from our attendance at this year’s annual conference of the Institute for Supply Management (ISM).
Again, from our lens, that finding may reflect differences fostered in ongoing supply chain segmentation strategies that place major emphasis on key customers and suppliers vs. all trading partners. Regardless, the finding reinforces that procurement teams need to step-up their technology deployment strategies as well as to re-double efforts to foster various forms of process and product innovation. We suspect that hidden in the numbers are supplier needs to have incentives to want to broaden collaboration. That trend was brought out by the survey authors who indicated that nearly half of the suppliers surveyed have held back from making a strategic recommendation due to lack of incentive or customer openness.
The 3M survey validated that suppliers are facing an unpredictable risk landscape in 2017. The majority, 61 percent, identified volatile commodity and supply prices as their primary concern related to risk. Respondents listed their other concerns as the following:
Uncertain policies of the new U.S. administration- 8 percent
Regulatory compliance- 7 percent
The performance of tier two and tier three suppliers- 6 percent
Natural disasters and supply disruptions- 3 percent
Cybersecurity- 3 percent
Cost concerns remain by far the biggest risk
Here again, suppliers may need to broaden their perspectives of risk, especially since all the other rated categories have increased incidents across multi-industry supply chains.
The area of widespread consensus was reported to be that of sustainability and social responsibility, both of which the survey authors point to as core focus areas in 2017. Nearly 76 percent of suppliers identified the biggest motivator for operating in a more sustainable fashion are positive business outcomes. The next biggest drivers for sustainability is noted as suppliers’ desire to create a more socially responsible supply chain (69 percent), compliance (64 percent) and brand reputation (62 percent).
Supply Chain Matters thanks 3M and its associated supply chain and public relations team for bringing this survey to the attention of our blog readers.
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