As we have stated in previous commentaries, Supply Chain Matters does not tend to comment on the huge plethora of opinion research studies concerning the discipline and state of global supply chain management unless we feel the research is meaningful and based on sound research practices.  By our view, there are too many outlets, beyond experienced analyst anchored firms, producing so called research vs. opinion of the day among a limited set of respondents.

In an October 2013 Supply Chain Matters commentary we highlighted some important findings from the Chief Supply Chain Officer Report conducted and compiled by SCM World. We were impressed with the research approach as well as the key findings. This year, we were able to obtain a copy of The Chief Supply Chain Officer Report 2014, Pulse of the Profession. Our thanks to Supply Chain Matters Sustaining Sponsor E2open for providing us with a copy of the 2014 report.  We further had the opportunity to speak with Matt Davis, former Gartner analyst who recently joined SCM World in the role of Senior Vice President of Research.

This year’s report has a reported level of over 1000 cross-industry survey participants responding to over a hundred questions and sub-questions. As was the case last year, the goal of our commentary is not to re-produce the findings but rather to add some of our impressions and takeaways to the findings. SCM World, the authors of the report have done a great job of articulating individual findings.

In the 2013 report supply chain leaders had indicated that they were caught in the middle of rising customer demands and expectations and the global growth ambitions of their firm’s management teams. The conundrum of objectives was directed at continued reductions in costs while helping to grow the business. This year’s report describes 2014 attitudes as increasingly “schizophrenic, with operating cost reduction dominant as ever but closely followed by agility in meeting customer needs.” The authors summarize that supply chains are trying to be all things to all people including areas of enhanced customer service, accelerated NPI and stronger supply relationships.  That pretty much tracks with the various supply chain developments Supply Chain Matters has highlighted this year, particularly in the consumer products sector.  External pressures for increased, very short-term stockholder value, accelerating structural changes in market and customer behavior, conflict we needs for the supply chain to become more responsive or agile to the rapid industry changes that are occurring.  It is a rather difficult challenge that has increasingly manifested itself for many years, challenges that cannot be addressed solely from a focus on financial-based performance outcomes.

A very significant 2014 finding indicates that senior supply chain leaders are intending to move away from the outsourced core competence model of prior years and moved toward more highly vertically integrated strategies in manufacturing and distribution in support of direct-to-customer delivery needs. The forces of Omni-channel commerce are definitely real.  What should be of upmost interest to our community is the SCM World conclusion that today, a return to more emphasis on vertical integration and in-house production strategies are clearly underway.  A quarter of the SCM World respondents further indicate pursuit of modular push-pull platform strategies managed internally, where final customer demand will be accommodated by a fulfillment network of third-party factories, retailers or partners located closest to customers. There is also a corresponding bombshell statement indicating that supply chain strategies going forward are less likely to depend on contract manufacturing, especially for critical elements of the production process. While we were not surprised by that conclusion, given the many examples that have unfolded this year, some of readers will be.

Other important SCM World findings relate to sourcing procurement strategies.  Once again, the findings point to a consolidation of the supply base along with a need for deeper collaborative relationships with suppliers, more sharing of demand plans and deeper levels of collaboration on intellectual property innovation as well as cost savings opportunities.  This is obviously another method to try to balance continued needs for cost savings while supporting broader business needs for customer responsiveness and managing important tenets of supply chain risk mitigation. The most attractive markets for growth again point to China, but at the same time, respondents indicate that China is the fifth most likely to be considered “too risky” to operate within.

Finally, no supply chain executive survey these days neglects to manifest the crrent challenges related to supply chain talent management. The 2014 SCM World CSCO respondents pointed to ever more challenges in building and managing supply chain teams over the past two years, nearly double the frustration expressed in 2011. SCM World points to raw recruitment as the most cited problem despite rising interest in supply chain among universities and significant investment in supply chain focused professional organizations. The need for well-rounded generalists possessing broader supply chain functional, business and team collaboration skills seems to remain an important need, with implications for significant job rotation across business areas.   This obviously remains a key area of concern among senior industry supply chain leaders and consistent with predictions and findings from other industry analyst firms including the Ferrari Consulting and Research Group. It a challenge requiring far more concerted actions and supporting efforts involving academia, industry, professional organizations and supply chain professionals themselves.

Readers can download a summarized version of SCM World’s Chief Supply Chain Officer 2014 at this web link or view an SCM World blog posting by Kevin O’Marah which highlights the top 10 supply chain facts brought forward from the 2014 report. Alternatively, E2open is providing a download link on its web site Resource Center.

Bob Ferrari