According to new research from Aberdeen, most companies (56%) regard SCM as a market strategy differentiator, a customer service differentiator or a profit center, rather than simply a cost of doing business. Nearly half (49%) indicate that escalating customer service demands are driving their supply chain transformations.

This is certainly a positive trend.  For too long supply chain management (SCM) has been viewed strictly for it’s cost reduction capabilities – a necessary evil where you try to squeeze every last drop of margin out that you can.  While cost pressures continue to be front and center, I do see an increasingly “top line” mentality reflecting the increasing strategic impact solid supply chain management can have.

Aberdeen goes on to identify four key actions companies should take:

I’m seeing strong activity in all of these areas.  In particular, sales and operations planning (S&OP) is getting a lot of attention – but maybe not in the way you would first think about it.  The word planning implies that everyone is strictly focused on building a better plan.  That certainly is a key part of it, but increasingly we’re finding that market leaders are really focused on how they deliver to the plan – how do they meet the objectives defined in the S&OP process.  This is an even more strategic way of looking at the process and factors in today’s reality that volatility is on the rise, making the perfect plan even less likely.

Given this reality, companies are trying to figure out how to respond when the assumptions that went into the plan are no longer valid, which is increasingly the case.  Interestingly, the other actions that Aberdeen identifies support this.  In order to respond effectively to unexpected events that threaten the ability to execute to the plan, you need supply chain visibility and you must have processes to excel at order fulfillment when the orders aren’t coming in consistent with the forecast.

If your busines is static and predictable, focusing on supply chain planning and supply chain execution are the right things to do.  But, if your business is dynamic and increasingly unpredictable, you need to complement these initiatives with capabilities to respond to unexpected events quickly and profitably.

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