Archstone Consulting, a fast growing management consulting firm, revealed in a recent survey that manufacturing executives plan to use supply chain as a key mechanism to improve both top- and bottom-line performance, despite challenges of the current economic environment.
Nearly three-quarters of the 265 manufacturing executives surveyed in Archstone’s Manufacturing Executive Agenda for 2008 felt that the current market pressures, including sharply rising commodity prices, a sluggish economy, and foreign competition, may be triggering significant transformational changes within manufacturing organizations. ‘Over 80% of manufacturers have responded to the current economic climate by devising aggressive agendas to boost sales and cut costs,’ commented Todd Lavieri, president and CEO of Archstone Consulting.
Two of the four most common ways that executives plan to bolster performance in 2008 depended upon the capabilities of supply chain.
‘An interesting pattern emerged, in that manufacturers across the board have high expectations for their supply chains to both boost revenues and reduce costs,’ explained John Ferreira, industrial manufacturing practice leader at Archstone Consulting. ‘In the past manufacturers simply used their supply chains as a means to control costs by improving efficiencies. Now, they are using their supply chains as a mechanism to boost revenue and improve customer satisfaction through capabilities like better management of highly customized products, quicker delivery times, and more integrated services.’
The four executive agenda items shared by manufacturers in all industries include:
- Increasing revenue growth by leveraging supply chain capabilities to add value to products and services.
- Reducing costs with supply chain efficiency improvements.
- Improving product innovation.
- Controlling direct material costs.
Archstone also identified several major industry trends in its Manufacturing Executives Agenda for 2008 surveys, including:
Aerospace & Defense: Nearly 70% plan to simultaneously increase revenues and reduce costs by three percent or more.
Consumer Packaged Goods: Nearly 90% anticipate cost reductions of three percent or greater. CPG executives cited managing direct material and commodity costs as the most important to achieving cost targets.
Electrical & Electronic Equipment: Over 90% consider the sluggish economy to be a major constraint, and less than half expect revenue growth of three percent or more.
Pharmaceuticals: Nearly 70% expect to reduce costs by three percent or higher, and 72% anticipate revenue growth of three percent or more.
In April 2008, Archstone Consulting launched the Manufacturing Executive Agenda for 2008 survey to examine what macroeconomic constraints are most significantly impacting manufacturing executives, what cost and revenue targets have been established, and what strategies or areas of focus executives are evaluating to achieve those targets. Over 265 respondents participated in this survey.
Respondents included the following:
Role in Organization: The research sample included respondents with the following roles: Senior management (CEO, COO, President) (17%); Vice President, General Manager (36%); Director (27%); Manager and Other (20%)
Industry: The research sample included respondents from the following different industry segments: Aerospace & Defense (11%); Automotive & Transportation Equipment (15%); Chemical & Process (13%); Consumer Packaged Goods (17%); Electrical & Electronic Equipment (10%); Industrial Products (22%); Pharmaceutical (9%); Other (3%)
Size: The research sample included organizations of the following sizes: More than $5B (20%); Between $5B and $1B in annual revenues (15%); Between $1B and $500MM in annual revenues (40%); Less than $500MM in annual revenues (25%)
Type of Company: 52% of the research sample were privately held companies; 48% of the research we