Supply Chain Complexity Challenges Logistics Pros

November 22, 2016

An international survey of 500 global logistics professionals reveals agreement on the need to reduce supply chain complexities, fine tune key performance indicators (KPIs) and offer a consistent customer experience across all channels. Respondents from the UK, US, Australia, Benelux and Nordics participated in the research study, commissioned by Iptor Supply Chain Systems.

Distribution organizations of every size have achieved significant improvements in efficiency and agility by streamlining the supply chain over the past couple of decades. However, both consumer and business customers are becoming ever more demanding, creating more complex supply chains and fulfillment models for manufacturers, wholesalers and logistics companies alike, thereby putting those gains at risk.

And with 62% of those surveyed stating they now have a B2B2C fulfillment pattern, customer experience and visibility is more important than ever. To improve the customer experience, 61% of respondents said they are being more consistent in the experience across channels, and 56% of organizations are allowing people to access systems through more devices. Visibility and traceability of products were cited as among the top five greatest challenges for an organization’s supply chain.

Fine-tuning the KPI structure also appears high on the agenda for many organizations, with 41% of respondents believing there are too many KPIs to manage effectively. However, of the KPIs that are being managed effectively, 85% said that they have some correlation or a strong correlation to the overall business performance.

Other key findings include:

•71% of organizations say that their B2B2C fulfillment pattern is growing.

•The greatest challenges organizations have with their supply chain are its complexity (41%), the balance between being cost-efficient and sustainable (38%), and the traceability of products (36%).

•Almost half (45%) of organizations struggle to handle reverse logistics returns.

•All organizations identified gaps in the visibility when tracing products, the most common being what suppliers are delivering (28%), when suppliers are delivering (23%) and returns logistics (17%).

•The most popular KPIs used include customer on-time-in-full (OTIF) (63%), supplier OTIF (56%), and quality of inbound/outbound products (55%). These are also considered to be the most valuable KPIs (54%, 45%, 45%, respectively).

•More than half of respondents identified the top supply chain technology challenges as lack of system flexibility (65%), time/cost to train employees (60%), difficulty of integration with current systems (57%), and lack of scalability (57%).

•Organizations have experienced these issues over the last five years: poor supplier quality in the push for lowering costs (62%), a technology failure resulting in a disruption to the supply chain (61%), a natural disaster affecting the supply chain (47%).

Philip Carnelley, Research Director in IDC’s European Enterprise Software Practice, provided an independent view of the findings, stating, “The Iptor survey strongly supports IDC’s recent research findings.”

He adds, “We have found that over 60% of European organizations are in the throes of transforming their business to leverage new digital platforms and technologies, while most others are planning to do so. The number-one driver for digital transformation is to improve operational efficiencies. The second is in improving customer experience. Iptor’s survey data underscores that very clearly.”

Jayne Archbold, CEO, Iptor Supply Chain Systems, commented on the research, “This data helps us gain a deeper understanding of the pain points of the industry. We are dedicated to providing the technology and processes that can help remove some of the complexity facing the supply chain, as highlighted by the study. The research itself is a great reflection of our overall business strategy as we strive to help organizations address not only these supply chain issues, but also to manage the added headache of exceptions.”

She concludes, “This research will also play a part in our product roadmap, given the importance of enabling businesses to recognize, plan for and efficiently manage the complex supply chain and its exceptions in order to enjoy market growth – without compromising efficiencies and profit.”

Sapio Research conducted the independent research study in October, surveying management and C-level logistics professionals in eight countries representing companies in a range of industries, each with 200 to 1,000-plus employees.

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