Supply chain chiefs wary about the future

If you're anxious about the future of your supply chain, you're not alone. A new study by the Tompkins Supply Chain Consortium found that supply chain executives have a higher level of uncertainty about the future than they did in the past. Researchers examined the relationship between supply chain uncertainty and company size, job scope, and supply chain functional areas as well as how respondents are dealing with and attempting to minimize uncertainty.

The respondents were a pessimistic lot, and most did not appear to think that the worst is behind us. Thirty-one percent said that they expect the future will be riskier than the conditions of a year ago, and another 29 percent anticipate more risk than two years ago, when the recession was at its lowest point.

Interestingly, the study found that supply chain executives at large companies were the most apprehensive. Some 78 percent of respondents from big organizations were uncertain about the future, compared to 54 percent at small companies and 55 percent at medium-sized companies. The larger the company, the more complex the supply chain—and, therefore, the more areas where uncertainty may be a concern, the report's authors suggested. The study also noted that individuals with a broader scope of responsibilities (global or regional, rather than site-specific) felt more uncertain.

The area of the greatest concern for executives was planning, which is highly dependent on both historical data and forecasts. "With the last two years being uniquely difficult, it is not surprising that planning is on the list [of worries]," the study's authors commented. The next-greatest area of concern was sourcing, followed by customer service and transportation.

What steps are executives taking to reduce uncertainty? The great majority—78 percent—said they were trying to minimize the impact of government regulations on their operations. In addition, 74 percent said they were working on improving forecasting, and 71 percent were involved in inventory optimization efforts, both in an effort to address uncertainty in planning. A similar number (72 percent) said they were installing enterprise resource planning, warehousing management, or transportation management software applications.

The supply chain executives who participated in the survey noted that uncertainty impacts the supply chain in seven ways. First and foremost, uncertainty increases costs. Respondents also said it can increase inventory levels, lead times, and capital spending while reducing customer satisfaction levels, products' "speed to market," and growth in new markets.

Source: "Tompkins Supply Chain Study: Uncertainty is Certain: Perceptions of Future Risk on the Rise"