Linking growth with supply chain

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A link between “superior” supply chain capabilities and revenue growth and profits has been highlighted in a new study by consultants Deloitte.

It surveyed more than 400 executives in manufacturing and retail around the world and found that 79 per cent of organisations with superior supply chain capabilities achieve revenue growth that is significantly above average.

And only eight per cent of organisations with lower performing supply chains  had above-average revenue growth.

At the same time 69 per cent of supply chain leaders had an EBIT margin  significantly above average compared to only nine per cent of supply chain followers.

These are significant numbers, but is there a causal link between these factors – or is it more the case that well run companies see the need for efficient supply chains?

Well, the survey found that 56 per cent of supply chain leaders had a senior executive heading their supply chain function, compared to just one–third of supply chain followers.

And 88 per cent were more likely to recruit supply chain professionals with analytics expertise and cross-functional experience and 83 per cent were more likely to recruit those with global experience.

The study entitled “Supply chain leadership, distinctive approaches to innovation, collaboration and talent alignment” also identified a number of other qualities that separate the leaders from the followers including recognising the importance of innovation, extensive use of analytics, optimisation software and mobile technologies. 

And it highlighted the importance of early adoption of disruptive technologies such as 3D printing.

It’s now more than 20 years since Professor Martin Christopher suggested that in a changing world companies would no longer be the competing units, it would be supply chains. Perhaps more than anything, Deloitte’s results reflect the fact that successful organisations have to put supply chain at the heart of their thinking.

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