Rising demand major challenge for supply chain

3 October 2012

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3 October 2012 | Anna Reynolds

Supply chain management is fast becoming an integral part of how a business operates, but rising demand from consumers and changes to labour markets pose challenges for the year ahead, according to the Chief Supply Chain Officer Report 2012.

The annual survey carried out by SCMWorld was based on insights from almost 1,400 supply chain and procurement executives worldwide and revealed key trends in supply chain management.

The survey found companies are struggling with talent management and are finding it difficult to hire and retain a skilled workforce. China is no longer perceived to be a low-cost country for staff, which poses problems in terms of retention. The report addressed the need to diversify from Asia and suggests organisations move back toward high-wage countries to develop a diversity of staff.

Further, organisations are beginning to align their supply chain strategy with their business strategy. More than two-thirds of respondents said stronger supplier relationships can drive new product introduction and create business expansion in new markets.

Three-quarters of respondents expected to see changes to their distribution networks due to greater demand for products through digital channels such as mobile applications and the internet, that will affect pressures on the supply chain. Also, the same proportion of respondents expected changesto their manufacturing strategies, to keep up with the increased requirements.

In addition, 70 per cent of respondents said social and environmental responsibility was a method of strengthening their company’s customer relationships and enhancing their business value. But, only a quarter of respondents said they currently have good visibility of sustainability performance in their supply chain networks. While most companies are making progress in this area, the report urged businesses to invest and work with suppliers for long-term improvements to be made.

Risk management was another trend identified, with more than two-thirds of supply chain executives concerned about disruptions to shipping, incidents at supplier facilities and the failure of key vendors. The report suggested better and more frequent communication with suppliers to identify risks, with tools such as supply chain risk mapping becoming increasingly popular among businesses.

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