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Community readers may recall a certain TV commercial that features a group of suited professionals that are discussing a rather complex or difficult problem, with one of the actors always noting that its time to call-in an expert, it is time to call BDO. If you do not recall these commercials, you might recall BDO’s familiar marketing tag line: ‘People Who Know, Know BDO.’
With this backdrop, I took notice to a BDO press release this week (tip of the hat to Lauren Bossers, Community Facilitator) which notes that supply chain issues represent one of the most prominent risks to U.S. technology companies.
Of the100 of the largest publically traded technology companies analyzed, 86 percent stress supply chain concerns, noted as supplier relations, distribution and material costs, as a top risk factor. This number represents a 15 percent increase in this sentiment from a year ago.
Keep in mind that the targets of this survey were senior financial and corporate executives, executives who have generally called for continual cost reduction across supply chain functional areas these past few years.
Glancing at the table outlining the top 20 risk factors, it is rather stark as to how many of these risk factors have a direct impact on the supply chain. Also take note of the risk factors that had the highest percentage increase for concern in just one year: (2010 to 2011)
- Natural disasters, war, conflicts and terrorist attacks- 26 percentage point increase
- Inability to maintain operational infrastructure and systems- 26 percentage point increase
- Predicting customer demand and interest- 22 percentage point increase
- Cyclical revenue and stock fluctuation- 13 percentage point increase
Translating these concerns to supply chain business process support needs, one has to target supply chain risk mitigation, business continuity, sales and operations planning (S&OP) and more responsive planning as the key looking glass areas for 2011.
Earlier this year, an Accenture study uncovered a trend indicating that business responsibilities for CFO’s was expanding into other broad business areas, including risk, customer service and yes, supply chain management. That study also characterized CFO’s as seeking more flexibility in planning and forecasting, as well as a need to update process, data and IT systems. Also mentioned was workforce centralization.
We noted in our recent Supply Chain Matters Quarterly Newsletter that now, more than ever, is the time for supply chain teams to seek more alignment and influence with the CFO and CEO. There is both good, and not so good aspects to this advice. On the good side, senior executives seem to now have a far deeper understanding on the relationship of certain supply chain capabilities to business strategy and outcomes. If your team was holding back on pitching investment plans on the key processes noted above, now may be the best time to communicate these plans.
On the flip side, the notion of supply chain functional stovepiping, where areas such as planning, procurement, operations and product management focus on different goals and metrics will no longer be tolerated. We may be fast approaching an era of single accountability for supply chain initiatives and activities that directly impact required business outcomes. That may include risk mitigation, integrated business planning and operations management.
Supply chain developments in the high tech sector are often the early indicator of broader industry initiatives, and both of these studies reflect rapidly changing perspectives at the top of the house.
What about your organization? Are your senior executives voicing these same concerns and perspectives?