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Guess What? Advanced Supply Chain Capabilities Improve Company Financials

Supply chain professionals and chief financial officers already knew this, but the idea of linking supply chain capabilities to financial growth has finally caught on.

Deloitte's recent survey found that 79 percent of organizations with “superior supply chain capabilities report revenue growth that is considerably above the industry average.” On the flip side, only 8 percent of the organizations with “lower supply chain performance” had significant, above-average revenue growth.

Source: Deloitte LLC

Source: Deloitte LLC

Data like this continues to feed the notion that supply chains compete against supply chains.

    “At a fundamental level, manufacturing organizations compete on their supply chain capabilities,” said Kelly Marchese, principal, Deloitte Consulting LLP and a leader in Deloitte's supply chain practice. “At the same time, supply chains are increasingly complex, as linear trade flows evolve into intricate webs of global operations and third-party collaboration. It's an incredibly challenging time to be a supply chain executive and in this demanding environment it's useful to learn from the organizations that are excelling.”

But, really, if most people know advanced supply chain capabilities have a direct link to financial growth, how do you use that knowledge to create more competitive advantages? Some answers rest in Marchese's advice: Take a page from the supply chain leaders' playbook.

One of the key ways leaders stay financially strong and on the cutting edge is by embracing innovation, Deloitte found. While that includes being open to things like optimization and visualization software and RFID tags, there's more to it that. Innovation is also about learning how to use emerging and disruptive technologies, such as 3D printing, to advance supply chain practices and product design and development along with innovating the business model and existing processes.

Another way to leverage advance supply chain capabilities and turn them into competitive advantage is to complement the supply chain strategy with an effective leadership-building and talent-finding strategy, Deloitte said.

The obvious way to do that is by empowering your executive supply chain leadership and giving them not just a seat at the table but a voice in how the business and supply chain strategies can be aligned.

Other ideas include better linking the six departments most commonly associated with supply chain management: product development, demand planning, supply planning, sourcing and procurement, manufacturing, and logistics and distribution. And let's not forget about the new era of supply chain professionals coming up and the skills and experiences they'll need to deliver better supply chain performance. Deloitte found that supply chain leaders tend to actively recruit supply chain professionals with analytics expertise, cross-functional experience, and global experience.

How does your company use its supply chain capabilities to enhance revenue and profitability?

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2 comments on “Guess What? Advanced Supply Chain Capabilities Improve Company Financials

  1. Daniel
    May 16, 2014

    “And let's not forget about the new era of supply chain professionals coming up and the skills and experiences they'll need to deliver better supply chain performance. Deloitte found that supply chain leaders tend to actively recruit supply chain professionals with analytics expertise, cross-functional experience, and global experience.”

    Jeniffer, you are right about new generation supply chain professionals. They have the courage to undergo experiments and high risk bearing capability.

  2. ITempire
    May 19, 2014

    I agree, to survive in the long-run organizations have to somewhat depend on their supply chain operations for revenue growth. Capable professionals therefore are needed to compete with day to day fluctuations in the market. The challenge is not to innovate a product only but how to differ your product from that of the competitors is the task of supply chain department.

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