Reducing costs remains the top priority for hi-tech supply chain executives in 2014, according to a new report from eyefortransport (eft), in collaboration with Jabil. This is followed closely by managing supply chain complexity as globalization creates bigger challenges for their supply chains, along with more suppliers and logistics partners they have to deal with.
The report, "Hi-Tech and Electronics Supply Chain State of the Industry Report 2014," looks at the top priorities and transformational developments for supply chain executives over the next 12 months, as well as key markets they are looking to expand into and their outsourcing decision making processes. The report reveals the key market that hi-tech companies are expecting to expand into is Africa due to strong growth rates and a pool of natural resources.
The survey also reveals that supply chain executives "are encouraging more cross-collaboration between different functional areas and overcoming complexity generated by increased customer demands," despite challenges from supply chain globalization and increased sales channels.
More businesses also are looking much more closely at where they manufacture to deal with high transportation costs and high duties. Thirty-one percent of respondents said they relocated their manufacturing capacity closer to their customers and 10 percent were considering relocation. Where are they going? Businesses are moving to Eastern Europe, Mexico, North America and South East Asia.
Eft surveyed nearly 300 senior supply chain executives from hi-tech retailers, manufacturers, and solution providers in Europe (47%), North America (22%), Asia (22%), the Middle East and Africa (2%) and South America (3%). Here's a snapshot of key survey results.
Top Priority in 2014
Cost reduction is the top priority of hi-tech manufacturers, according to 38 percent of respondents, followed by managing supply complexity (35%). (Click on image to enlarge.)
Cutting Supply Chain Costs
The most effective measure for cutting supply chain costs in the last year was improving internal efficiencies, according to 76 percent of respondents. (Click on image to enlarge.)
Feeling the Pressure
Nearly 80 percent of supply chain executives said they felt ‘much more’ or ‘more’ pressure compared to this time last year. This is down from 84 percent in 2013. (Click on image to enlarge.)
Outsourcing the Supply Chain
Seventy percent of respondents said their companies outsource all of their transport and distribution, and 40 percent outsource all of their warehousing needs. (Click on image to enlarge.)
Outsourcing the Supply Chain in Two Years
In two years, 67 percent of respondents expect to outsource 100 percent of their transport and distribution. (Click on image to enlarge.)
Nearly 70 percent of respondents said they were in Eastern Europe, indicating the region as an "attractive option for investors." China followed with 68 percent respondents located in the country. (Click on image to enlarge.)
Nearly 30 percent of respondents said they were looking to expand into Africa. Key reason: the growth of urbanization in Africa is extremely high. Key challenges: corruption, security and customs complexity. Rounding out the top choices are China, India, and the Middle East. (Click on image to enlarge.)
Relocation of Manufacturing Capacity
Thirty-one percent of respondents said they relocated their manufacturing capacity closer to their customers and 10 percent were considering a move. Places of relocation include Eastern Europe, Mexico, North America and South East Asia. (Click on image to enlarge.)
According to 34 percent of hi-tech manufacturers and retailer respondents, their supply chain contingency planning for unforeseen interruptions (e.g. ash clouds, flooding, strikes etc.) are rated as above average or excellent. However, this is down from 51 percent last year. (Click on image to enlarge.)
Thirty-one percent of hi-tech retailers and manufacturers said they are currently implementing big data analytics to enhance their supply chain and 28 percent are looking into it. (Click on image to enlarge.)
Big Data ROI
Fifty-five percent of respondents said that they were thinking about/currently using supply chain big data to increase visibility followed by enhancing demand planning (49%). They are also using it to enhance their S&OP processes. (Click on image to enlarge.)
Asia-Europe Train Service
Nearly one-third of respondents said that they were investigating the possibility of using the train service between Asia and Europe. Advantages include cost, reliability, and quicker end-to-end-cycle compared to ocean freight. Drawbacks: Seasonality (reduced service due to weather conditions) and security. (Click on image to enlarge.)