Supply chain touches almost every aspect of operations within a company: from forecasting customer demand, to sourcing raw materials, to manufacturing, distribution and returns.
As a result, it can account for anywhere from 30 to 70 percent of a business’ overall cost base. “It has to be on your radar screen from a cost perspective,” says Lino Casalino, national leader, supply chain and procurement, PwC. “And it is for many private company leaders, but supply chain also represents an opportunity to propel top-line growth—and that’s a perspective not widely shared. For example, if you are a retailer and don’t have products on the shelf, you’re out of stock and have missed a sale. A lot of companies think of supply chain as a cost centre. They don’t always see it as helping to funnel top-line growth.”
Part of the problem lies in the complexity of supply chain management. During a recent PwC webinar, Challenge meets opportunity: Maximizing cost effectiveness and minimizing risk in your supply chain, private company leaders shared their concerns. When asked what part of the supply chain carries the most risk and presents the most difficult challenges, almost a quarter (20 percent*) of participants said all of the five key components of the supply chain—plan, buy, make, deliver and return—gave them cause for concern. And 40 percent cited planning specifically, which includes demand forecasting, supply planning, sales and operations, as problematic.
“The responses were not surprising,” says Brian Habjan, director, supply chain and procurement, PwC. “The holy grail of supply chain is to align supply and demand. You want to get the right product at the right place at the right time, ideally at the best price. To do that you have to understand your customer demand patterns and you have to make sure you are planning, producing and distributing those products when your customers need them. It’s a cross-functional challenge with many moving parts, but if you get it right, an effective, integrated supply chain can be a significant competitive advantage.”
*35 individuals responded to this polling question
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