Quality Magazine

Supply Chain Efficiency Was Key Factor in Driving Profits for Manufacturers During Down Economy

October 20, 2010

FALLS CHURCH, VA-Amid economic turmoil, businesses rely on the efficiency of supply chain operations to respond to consumer demand for lower prices and the ability to maintain profits, as indicated by the eighth annual "Global Survey of Supply Chain Progress.” The 2010 survey was conducted by CSC, Supply Chain Management Review, The Eli Broad Graduate School of Management at Michigan State University, with assistance from The Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine.

"The lessons on how businesses survived a serious economic downturn are becoming more evident," said Brad Barton, CSC's Supply Chain Practice Leader. "To reduce costs, business leaders went directly to their supply chains, working with key suppliers to reduce cycle times and increase revenues with their best customers."

Completed by supply chain executives from 20 different industries worldwide, the survey questioned respondents about business results during the economic downturn, focusing specifically on how supply chain initiatives -- and supply chains in general -- had played a role in reducing costs and sustaining revenues and customer satisfaction across the organization.

Key findings include:

The bottom line is clear: An efficient supply chain was essential to maintaining prices on goods and services over the past year and also was the means to generating new revenues. When asked what happened to the emphasis on supply chain management in the last 12 to 24 months, 78% reported it had increased. Savings achieved in 2010 were essentially flat or fell off slightly when compared to 2009. Combined with other responses, these results suggest that most firms are at the bottom of the economic trough and will use their supply chains to keep a lid on costs as they slowly rise out of the downturn. A similar observation was found in the reported revenue increases due to supply chain efforts. Firms reporting no increases or not able to find increases rose from 30% in 2009 to 47% in 2010. This indicates that a down economy took its toll on what had been consistent improvements in both areas -- costs and revenues. Results show that leaders took advantage of the times to build market share. When asked if the downturn had resulted in changes to market share, 37.5% said their shares had gone up, while 22.5% said they went down.

"If ever there was a call for action, it appeared in the 2010 supply chain survey results. Failure to have a supply chain in prime condition was a ticket to increased costs and lost market shares. Firms have only bottomed out in the global recession, and we expect continued emphasis will be placed on supply chain optimization for the next 12 months," added Barton.

For more information on the survey, please visit www.csc.com/2010SCSurvey.