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Supply chain visibility linked to profitability

As trade becomes more complex and global, visibility over the supply chain is a huge problem for corporates, with a minority of firms claiming to have full visibility of their global supply networks.

This is one of the key findings from the Supply Chain Worldwide Survey 2017, by Geodis, which found that only 6 per cent of companies in the Americas, Europe and Asia-Pacific have full visibility over their supply chain, including suppliers of suppliers and clients of clients.

Strategic supply chain management

The research shows that supply chain management is becoming a strategic issue as the volume and scope of services within supply chains reaches “unprecedented levels”. A growing diversity of suppliers, sourcing channels, transportation modes and geographical areas are all contributing to the complexity of today's business supply chains. The survey report states: “At the crossroads of strategy, marketing, sourcing, manufacturing, business development and customer services, supply chain has become the key strategic 'hub' of companies’ activities.”

Visibility still blurred

This leaves the problem of visibility, which Geodis says is still blurred and incomplete, with too many companies focusing only on direct partner relationships, with too few companies measuring their internal performance.

But despite this lack of visibility and internal measurement, companies are aware of the importantce of looking after their supply chains. The survey also found that 57 per cent of firms consider their supply chain as a competitive advantage, enabling the development of their company, while 66 per cent of firms dedicate between 5 and 15 per cent of their turnover to supply chain spend. If found that all of the top five technology priorities for supply chain are related to data management: data analysis, Internet of Things, Cloud computing, info security and predictive analytics.

The survey also found that:

  • the majority – 70 per cent – of firms said their supply chain is very or extremely complex;
  • 74 per cent of companies use four or five different transportation modes in their supply chain, the top two being road full truckload and air freight;
  • the supply chain is mostly organised at a regional (46 per cent) level or decentralised to business units (27 per cent), multiplying the number of stakeholders and intermediaries;
  • 81 per cent of companies use one to three key performance indicators (KPIs) to assess their supply chain performance.

Visibility linked to profit

One of the important data points in the survey showed that increasing end-to-end visibility in the supply chain can be linked to profitability. The survey found that companies that with more visibility over their supply chains tend to have:

  • a closer collaboration with partners;
  • a reduction in disputes;
  • better risk anticipation;
  • enhanced flexibility;
  • an extended degree of control over processes;
  • elevated customer satisfaction; and
  • higher profitability.

Geodis's graph, below, shows that 25 per cent of companies with full visibility of their supply chain have an EBIT over 25 per cent of turnover, compared with just 4 per cent of companies with no or restricted visibility.

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