For years, Supply Chain initiatives have paid the way for other strategic priorities aimed at top line growth and boosting margins. In research, Aberdeen* describe ‘best-in class’ performance as having a better than:
- 82% forecast accuracy three months out ;
- 96% completed delivery on time;
- 26 day cash to cycle time .
Yet, because most businesses don’t have the resources to devoted dedicated cost reductions, they get left behind or have to live with the constant frustration of fire fighting with work-arounds.
Ernst and Young and the Economist Intelligence Unit (EIU)* recently reported how global leaders in Distribution are having to adapt their supply chains to cope with the sheer complexity of dealing with overseas suppliers as they look for new and stronger revenue sources while trying to manage risk and cost. The challenge is finding where costs can be made that do not damage service levels or growth. The issue for non global players, the rest of us, is that risks and costs are.
The reality for most Distributors is that few hold absolute power in the negotiation – they are caught in the middle between a powerful and demanding Supplier on one hand, and an increasingly complex web of b2b Buyers with low switching costs, enabled by the internet, on the other.
Margins are already thin, and it simply isn’t affordable to upgrade entire systems left behind by technological advances. The real problem lies in the fact that growth brings new trading relationships from unfamiliar places, and that complexity is diametrically opposed to the stable visibility needed to reduce costs.
To say distributors live in stressful times, is an understatement, because The real problem lies in the fact that growth brings new trading relationships from unfamiliar places, and that complexity is diametrically opposed to the stable visibility needed to reduce costs.