CSCMP's Supply Chain Quarterly
October 24, 2018
Forward Thinking

Cost reductions, product quality top of mind for supply chain executives

A survey by IDC Manufacturing Insights finds that product quality issues are vying with cost reductions for supply chain executives' attention.

Cost reductions and product quality are uppermost in the mind of business executives, according to the results of a survey by IDC Manufacturing Insights.

In February, the research firm canvassed 415 U.S. manufacturers about their top business and supply chain issues. Respondents performed various functions across their organizations, including procurement, supply chain management, manufacturing, and information technology.

When asked to name their top supply chain priorities over the next 12 months, 49 percent of respondents—not surprisingly—cited reducing costs for procurement, manufacturing, transportation, and logistics. One-third named improving forecasting capability and forecast accuracy as top priorities. Another 27 percent said becoming more responsive to demand changes in the marketplace was most important, while 25 percent said they would seek to establish deeper collaboration with suppliers, enhance supplier management, or focus on purchasing spend analytics. (Multiple responses were allowed.)

As for their top supply chain initiative in the coming year, respondents rated improving product quality number one. Report authors Simon Ellis and Kimberly Knickle attributed that response to the growing number of recalls in categories such as automotive, toys, and grocery as well as the increasing pressure on brands from retailers' private labels. "Product quality will continue to be an important initiative in the wake of significant recalls, to strengthen consumer trust and loyalty in the market," said Knickle. Respondents cited streamlining new product introductions, product development, and manufacturing as their next most important supply chain initiative for the coming year.

When asked about their plans for supply chain information technology (IT) investments in the next 12 months, respondents most often named sales and operations planning (S&OP), cited by 27 percent. The authors noted that a desire for better coordination with customer-facing departments was driving the interest in S&OP. The second priority for IT investment was strategic sourcing and procurement spend management applications, cited by 25 percent of survey takers. The reason for that emphasis, the authors said, is that many manufacturers plan to use this type of software as a means of controlling costs.

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