2. 2
INTRODUCTION
GT Nexus set out to discover the top supply chain issues facing manufacturers for 2016 and beyond. We did so
by partnering with researcher, YouGov, a global online community of 1.2 million individuals, to see where senior
manufacturing executives stand on things like:
• The technologies and industry issues that have the most notable impact on the supply chain
• Their primary supply chain challenges and goals for improvement
• Whether or not they have a Chief Supply Chain Offer in place to help manage the above
The results indicate that manufacturers expect to face major supply chain challenges and risks in 2016 stemming
from external factors, often beyond their control. While meeting ever-changing customer demand is deemed a
priority, the data suggests their execution roadmap is misguided, being focused more on cost cutting than other
things like having a senior supply chain leader in place. This starts at the top level, where 76% of manufacturers
operate without a Chief Supply Chain Officer. With almost half of manufacturers reporting a disruption that
impacted business in the past 12 months, this gap in strategic direction to address broader supply chain agility
appears to be a major concern.
The sample size for our study was 250 US-based senior manufacturing executives, and fieldwork was undertaken
in December 2015 via an online survey.
Read on to see what manufacturing executives had to say, and let us know if you agree based on happenings in
your own business. We look forward to your thoughts.
GT Nexus
ManufacturingInsights@gtnexus.com
3. 3
SECTIONS
ONE: Challenges PAGE 4
• Supply Chain Disruptions Over the Past 12 Months PAGE 5
• Top Supply Chain Issues PAGE 6
• Issues Projected to Have the Most Notable Impact on the Supply Chain PAGE 7
TWO: Technology PAGE 8
• Technology that Will Most Heavily Impact Supply Chains in 2016 PAGE 9
• Tools and Technology Currently Used to Manage the Supply Chain PAGE 10
THREE: Operations PAGE 11
• Commonality of the Chief Supply Chain Offer Role PAGE 12
• Top Supply Chain Goals for the Near Future PAGE 13
4. 4
CHALLENGES
What you’re about to see:
It seems there’s news almost daily about supply chain disruptions,
and they come at an immense cost. From the deadly Tianjin explosion
last September that snarled Chinese – and global – supply chains,
to the west coast port strike that, for months, brought one of the
world’s largest ports to a crawl and cost retailers an estimated $7
billion (Management consulting firm Kurt Salmon), there’s no way of
predicting these disruptions. But organizations can be proactively
prepared to minimize the impact.
Here, we’ll dig into what supply chain leaders dealt with in terms of
disruption throughout 2015 and what they deem will be the most
notable supply chain challenges both now and in the future.
5. 5
Supply Chain Disruptions Over the Past 12 Months
Key Findings
Forty three percent of manufacturers reported a disruption
that impacted business in the past 12 months. These were a
combination of both external issues, like disruptions caused by
weather and labor strikes, and internal issues, such as technology
challenges, the well-documented gap in supply chain talent and
so forth.
This number is lower than other studies, such as the Supply Chain
Resilience Report 2015, which found that 74% of respondents
experienced at least one instance of supply chain disruption.
The study, conducted by Zurich and the Business Continuity
Institute, also found that 70% of those polled lack visibility over
their whole supply chain, which makes businesses susceptible to
disasters. Another study, the Allianz Risk Barometer 2016, also
indicated a higher number of organizations who said they’ve
experienced supply chain disruption. It noted that business
interruption, including supply chain disruption, was the top risk
identified by respondents for the fourth year in succession.
Implications
Virtually no business involved in producing or selling products
is immune to supply chain disruption. Events such as natural
disasters that impact supply chains are unavoidable, and a host
of other disruptions – everything from supplier shortfalls to
product transport challenges to labor strikes, terrorism and social
unrest – occur with surprising frequency. Yet, as referenced in the
introduction, and as you’ll see in more detail in the Operations
section, the majority of respondents noted they don’t have a Chief
Supply Chain Officer to manage these disruptions.
As supply chains become increasingly complex and susceptible
to disruption, an agile supply chain that enables seamless
adjustments to be made on the fly is critical. Having visibility
across the supply chain is the single most important way to
mitigate the impact of disruptions. You can only control what you
can see. Organizations must position themselves to be able to
respond quickly and effectively when disruption occurs.
6. 6
Implications
The most commonly cited supply chain challenge is keeping up
with changing customer demands. Manufacturers face pressure
to manage and meet expectations for things like quality, delivery
and pricing. Research conducted by our parent company, Infor,
published by Manufacturing.net found that 50% of manufacturers
indicated their customers expect better quality at the same price.
Demands like this have ramifications up and down the entire
supply chain. Agility is critical for ensuring constantly changing
demands are met.
Respondents to the current survey also cited the high level of risk
in global markets and having globally dispersed supply networks
as top challenges. Supply chains today are more lengthy – and
fragile – than ever, and that’s unlikely to change in the near
future. As organizations continue to deal with global suppliers,
and taking on the challenges of doing so (such as import and
export tariffs, weather-related challenges, geo-political risk, and
lack of visibility associated with a complex supply chain),
keeping that risk in-check becomes paramount. The companies
succeeding the most in doing so are the ones investing in
technology that improves visibility and empowers them to best
address market challenges.
Key Findings
When asked what their company’s biggest supply chain challenge
is currently, more than a quarter (27%) of respondents said
the top challenge is keeping up with ever-changing customer
demands. This was followed by 12% of respondents who said their
primary challenge is dealing with the high level of risk in global
markets. The third most common answer, which coincides with
the previous one, is the challenge of having a globally dispersed
network of partners.
Top Supply Chain Issues
7. 7
Implications
TIME Magazine recently listed the top five geopolitical risks
of 2015 as:
1. The politics of Europe
2. Russia
3. The effects of China slowdown
4. The weaponization of finance
5. ISIS, beyond Iraq and Syria
What this list might look like for 2016 remains to be seen, but
chances are, we’ll see at least some of these as repeats when the
list recaps the top risks in 2016 early next year.
All of these issues can relate back to the supply chain mainly
in that some of these regions, which are impacted by political,
economic and other issues, play a major role in global production
and commerce. Geo-political risk drives market volatility and
currency fluctuations, posing challenges for global trade. Having
access to technology that can provide a high-definition picture
of the supply chain, change suppliers and sourcing regions on
the fly, and navigate natural disasters and other disruptions
fluidly is critical.
Key Findings
In addition to asking respondents what their most prevalent
supply chain challenge is currently, we also sought to know what
they predict will be their top challenge in the future. Nearly one
third (29%) predict currency fluctuations and geo-political risk
will be their biggest challenge. This is followed by 14% who said
labor strikes would be their main challenge, and 9% who marked
the Transpacific Partnership as being a the most notable
issue for their supply chain.
Issues Projected to Have the Most Notable Impact on the
Supply Chain
Nearly one third (29%) predict currency
fluctuations and geo-political risk will be
their biggest challenge.
8. 8
TECHNOLOGY
What you’re about to see:
While some may not see or be ready to accept that technology will
forever change what the supply chain is and what it does, delaying
adoption can be harmful. Technology provides the opportunity for
deeper visibility and greater collaboration, two factors that help to
significantly mitigate supply chain issues. Technology also fosters
innovation, leading to new found efficiencies and cost savings in the
global supply chain.
The August 2015 article titled “Technology’s Role in Improving the
Supply Chain” in industry publication SupplyChain 24/7 said, “The
true value of technology in the supply chain is the benefit it brings to
supply chain experts. Without cutting-edge technology, Supply Chain
Execution experts would not be able to innovate nearly as much or
provide end-users with fast, on-demand service.” Breakthroughs in
technology have already revolutionized supply chains, and in today’s
digital age, the importance of implementing these technologies is
critical for a forward push and continued growth.
9. 9
Implications
There remains a need for education around supply chain
technology. If supply chain managers aren’t aware of the latest
innovations within the industry and the benefits they provide,
they risk falling behind.
Data provides the visibility needed to make better decisions. As we
saw, 11% named “Having a globally dispersed network of partners”
as the company’s biggest supply chain issue, making the task of
achieving end-to-end visibility even more difficult as everyone
may run on different systems. If businesses can collect data
about where their shipment is at any moment, lost and delayed
shipments have a better chance of being avoided, for example.
According to the April 2015 blog post titled “Five Ways the
Internet of Things Will Benefit the Supply Chain” by Gartner,
“as well as being a driver for business and supply chain
transformation, IoT can also drive incremental benefits to existing
supply chain processes spanning asset utilization, warehouse
space optimization or production planning.” IoT is already
impacting the supply chain and will continue to help the industry
reinvent itself by facilitating better visibility and reducing blinds
spots. This is done by providing intricate data on everything from
weather and climate, to location information of transportation
vehicles to delivery timing estimates and more.
Data and IoT may not be the sole answers to solving supply chain
issues, but they can make problem resolution more efficient.
Key Findings
When asked which technology they believed would most heavily
impact their supply chain in 2016, advanced analytics came out
on top (13%), followed by the Internet of Things (11%), and
3D printing (9%).
Seven percent of respondents chose “Other,” showing the abundant
technologies that can impact the supply chain. Radio Frequency
Identification – or RFID – (3%) and drones (2%) don’t appear to
be top of mind for manufacturers, but it will be interesting to see
if that increases over time. What, unfortunately, isn’t surprising is
17% said they don’t know what technology will impact their supply
chain and over one third (38%) of respondents believe their supply
chain will not be impacted by technology.
Technology that Will Most Heavily Impact Supply
Chains in 2016
10. 10
Tools and Technology Currently Used to Manage the
Supply Chain
Implications
It is no surprise manufacturers still direct their resources to
Inventory, Factory and Transportation Management solutions as
these technologies help align efforts of all parties involved, give
employees enhanced visibility into their specific departments,
and help companies break down the walls to operate more
effectively and efficiently. At first glance, these tools may seem
like a quick enhancement for any supply chain, but there are
other considerations to keep in mind as your company continues
to innovate, like the impact technology can have on supply chain
finance and supplier collaboration.
When it comes to future use of technology, the adoption of
solutions like inventory and network optimization tools is expected
to rise. The 2015 Material Handling Institute annual industry
report titled “Supply Chain Innovation—Making the impossible
possible” notes 80-90% of respondents plan to have these tools
in place by 2019. The adoption rate for growth technologies such
as predictive analytics, wearables and mobile technologies is also
expected to rise, reaching 70% in the next three-to-five years.
Further, emerging technologies like driverless vehicles, drones, and
3D printing are also expected to become more prevalent in supply
chain. The MHI survey states that 20% of logistics organizations
are likely to exploit drones as part of their monitoring, searching
and event management activities by 2017.
The success of a supply chain – and a company’s competitive
edge – relies heavily on the ability to be more efficient and more
informed. By injecting technology into the supply chain and
by operating as a network with a similar information model to
Facebook or LinkedIn, all parties are on the same informational
page, providing deeper visibility into the whole picture.
Key Findings
The technologies and tools currently being used to manage supply
chains vary from company to company, depending on their needs
and resources. Most notably, the tools currently being used are
for inventory management (64%), factory management (35%) and
transportation management (34%).
11. 11
OPERATIONS
What you’re about to see:
Running a global supply chain operation requires intricate planning,
sourcing, delivery, measurement and a broad, seasoned, well-informed
viewpoint. As David Morris of Fortune references in his article, Why
Your Company Needs a Chief Supply Chain Officer, the continuation
of globalization, complexity of products and increase in competition
makes supply chain a subject that executives at the highest level must
be tuned into it.
As you’ll see in this section, there are still a lot of companies
operating without Chief Supply Chain Officers. While 32% of companies
do have a similar role in place, it’s important to point out that it isn’t
CSCO, hence, not C-level. Non-C-level titles tend not to report to the
CEO, which is necessary since supply chains are so critical to corporate
performance, especially in a globalized economy.
12. 12
Commonality of the Chief Supply Chain Offer Role
Implications
To again reference the Fortune article, Why Your Company
Needs a Chief Supply Chain Officer, Morris writes, “The success
of behemoths like Apple has as much to do with their savvy
management of far-flung factories as with design or marketing,
and some companies are thriving thanks primarily to behind-the-
scenes finesse.” This very behind-the-scenes finesse is what makes
a company win or lose when it comes to supply chain, and this is
driven by a) having someone in place to oversee it, and b) having
a networked approach.
If you’re still not convinced supply chain is a critical and strategic
domain that’s churning out new heads of companies, take a look
at who runs Apple and Wal-Mart. Hint: They got their start in
supply chain.
Key Findings
Less than a quarter (24%) of survey respondents said they
currently have a Chief Supply Chain Officer in place. Thirty-two
percent said they have something similar, but we presume it’s
not at the C-level.
13. 13
Implications
Supply chain costs can easily spiral out of control given today’s
complex business landscape. Supply chains are more expansive –
and expensive – than they’ve been in year’s past, but complexity
can be kept in-check by having a supply chain strategy, and
C-level leader, in place. At the core of this strategy should be a
networked approach. This means:
• Having connected to partners end-to-end
• Driving decisions based on operational information
• Establishing deep executional visibility and control
Taking this approach will help manufacturers achieve all of the
goals they cited in this question, including what was identified as
the top goal – reducing costs. Operating as a network does away
with a reactiveness, breaks down the silos of information and
facilitates a transparent, efficient environment.
Key Findings
An overwhelming 41% of survey respondents stated their most
important supply chain goal for the near future is to reduce costs.
While this is of course important, it goes back to the issue we
raised in the introduction that being more focused on cost cutting
than efforts that support a strategic supply chain vision indicates
what could be considered misguided priorities.
Top Supply Chain Goals for the Near Future
