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A UPS white paper developed in cooperationwith the Economist Intelligence Unit
Supply Chain Resilience: How are Global Businesses Doing?
Preface ................................................................3
Foreword .............................................................4
Executive Summary .............................................5
Research Report ..................................................7
Introduction ....................................................... 7
An issue in need of attention ............................ 7
Current resilience strategies ............................ 11
Sustainability ................................................... 14
Resilience in action ......................................... 15
Conclusion ....................................................... 17
Is the C-Suite whistling in the dark? ..................18
IDS Group provides a global
perspective from Asia ........................................19
Appendix A: Survey Results ...............................20
Appendix B: Advisory Board Participants ...........30
Appendix C: Qualitative Interviews ....................31
Table of Contents
PrefaceSupply Chain Resilience: How are Global Businesses
Doing? is a UPS report developed in cooperation with
the Economist Intelligence Unit (EIU). The findings and
views expressed in this report are drawn from three
research initiatives: an advisory board meeting, a global
online survey, and individual interviews.
On Tuesday, April 22nd, 2008, the EIU organized an
advisory board meeting in London consisting of senior
executives with supply chain expertise. The discussion
formed the basis for an online survey used to gauge
supply chain resilience among global businesses.
The quantitative findings presented in this report are
based on the global online survey of 344 senior execu-
tives – over half C-level and above – conducted by the
EIU in June, 2008. The survey asked respondents about
the key evolving risks in a global supply environment,
and the strategies for resilience in the face of them.
To supplement the quantitative survey results, the EIU
also conducted individual interviews with senior execu-
tives and experts in supply chain management.
The report was written in cooperation with the Econo-
mist Intelligence Unit: Kim Andreasson was the editor
and project manager and Dr. Paul Kielstra was the writer.
Our thanks are due to all advisory board participants,
survey respondents, and interviewees for their time
and insights.
3
4
Today’s complex global supply chains are at the heart
of business strategy, driving bottom-line and top-line
growth, and creating competitive differentiation for
companies. But they are also fraught with risks, in-
cluding product quality concerns, competitive issues,
supplier continuity, natural disasters and rising energy
costs, to name just a few. Across industries, businesses
are vulnerable to supply chain disruptions that can move
a company from leader to laggard in a relatively short
period of time. The companies that will succeed in the
global economy are those that develop successful risk
mitigation strategies, and who use resilience as a com-
petitive advantage.
To help understand how companies are managing
their global supply chains in this environment, UPS, in
cooperation with the Economist Intelligence Unit, has
completed a research program that culminates in the
following white paper, entitled “Supply Chain Resilience:
How are Global Businesses Doing?” As the research
indicates, companies differ in their assessment of supply
chain risks and management of resilience strategies.
Although many companies are taking sensible precau-
tions, there is still much work to be done to ensure that
risk is addressed and competitive advantage maintained.
I trust this document will provide compelling insight into
this important issue.
Dan Brutto
President, International
UPS
Foreword
5
Global supply chains are the norm for today’s
businesses, both large and small. They allow compa-
nies to source flexibly from a vast network of suppliers.
Their scope and complexity, though, often make them
brittle, increasing the odds that a glitch will cascade
through the network – with dire results for a company’s
finances, stock price, or brand equity. For example, it
took years for the market share of companies like Apple
and Adidas to recover from supply chain problems.
More striking, in the 1990s, such issues pushed US
drug distributor Foxmeyer, a company with $5 billion in
annual sales, into bankruptcy. Building a resilient supply
chain is critical to corporate success.
This UPS report, written in cooperation with the Econo-
mist Intelligence Unit, seeks to go beyond a collection
of anecdotes in assessing the progress of companies in
developing more resilient supply chains and examining
the state of best practices. It is based on the quantitative
findings from a global online survey of 344 senior execu-
tives – over half C-level and above – as well as in-depth
interviews with business leaders and other experts in the
field. Key findings include:
• Rising risks to supply chain resilience are too often
ignored in the rush of day to day business, and
companies know it. Professor Yossi Sheffi, Director of
the Massachusetts Institute of Technology Center for
Transportation and Logistics, says that today’s supply
chains “are more vulnerable. From a company point
of view, this is disconcerting.” In the survey, 47% of
companies say they need to pay more attention to
resilience – against 16% who disagree – and 42%
think that they have globalized their supply chains
faster than risk management can keep up.
• Insufficient monitoring, risk assessment, and
contingency planning are leaving companies
ill-prepared when crises hit. One in 10
companies do not monitor suppliers for
anything. About half of the rest look only at
immediate – so-called Tier 1 – suppliers. The
quality of such assessments varies, some-
times not rising above cursory box checking.
Among the 45% of companies where the
respondents knew the answer, formal risk
assessment takes place only annually or less
frequently. Just half of companies seek to learn from
their own supply chain breakdowns, while a minority
uses other means to improve resilience. Given that an
understanding of the dynamics of the supply chain is
absolutely critical for resilience, this leaves too many
firms open to unanticipated dangers.
• A significant minority of businesses are falling back
on increased inventory to address resilience prob-
lems, an expensive and ineffective approach. Four
in 10 respondents expect their firms to hold addi-
Executive Summary
“Having quick information, and understanding the dynamics of the supply chain is absolutely critical for resilience.”
6
tional safety stock, ie to increase resilience through
higher inventory levels. And 38% plan to raise in-
ventory even more in the coming years. Sometimes
such increases may be needed to address specific
issues. However, using excess inventory to address
bigger resilience issues is an “expensive and lazy”
approach, says Rolls-Royce EVP of Supply Chain
Development, Steve Churchhouse.
• Relationship building, multi-sourcing, and near-
sourcing to enhance resilience are likely to be-
come part of best practice in the future. Most firms
value good supplier relationships as a way of guar-
anteeing access to high-quality supplies. They are
not looking for exclusive ties but for solid links with
a variety of firms. Choosing partners from a range
of countries to mitigate geopolitical risk, as well as
to ensure that short lead times are available from
some suppliers, are sensible ways to maximize the
benefits of the current wisdom. “Don’t put all your
eggs in one basket, and definitely not in a basket on
the other side of the world,” says Mr. Churchhouse.
• Sustainability is not just a trendy PR requirement:
social and environmental risks to a resilient supply
chain are significant, but receive too little atten-
tion. Some 46% of firms admit they need to do more
to integrate sustainability into their supply chains,
and environmental and social issues are currently
the least-embraced area of supply chain monitoring.
Professor Sheffi warns that “there are all kinds of
ways to get burned by not paying attention and step-
ping on emerging social norms.” Addressing these
issues need not mean simply spending more defen-
sively. With creative thinking, according to
Dr. Gopal Iyengar, Director of the Kirloskar
Insititute of Advanced Management Studies,
near Bangalore, India, the “supply chain can
shift a risk into an opportunity.”
• Low-cost countries are not magic lands
of plenty: sourcing from them without at-
tention to supply chain resilience leads to
potentially expensive failure. Ten percent of those
surveyed intend to reduce sourcing from low-cost
countries (although far more intend to increase it).
In fact, roughly half of all survey respondents said
low-cost sourcing had posed significant problems,
such as the quality received from such suppliers and
even their ability to deliver goods as promised.
• The keys to successful sourcing from low-cost
countries are like those of supply chain resilience
in general: understand the issues, structure the
supply chain appropriately, monitor performance
and work with suppliers to improve operations.
As Doug Gurr, ASDA’s Executive Director, Strategy
and Logistics, advises, “some of the best manufac-
turing in the world is in low-cost countries at the
moment... The way to do it is to get on the airplane
and have people out there.”
“With creative thinking, the supply chain can shift a risk into an opportunity.”
7
Introduction
We live in a global marketplace. It is not news, but it
is critical for understanding how businesses are meet-
ing – or failing to meet – the challenges of supply chain
resilience. To give just one example, only about a third
of companies overall, and just a quarter of large ones
– those with annual revenues of $5 billion or more –
source primarily from domestic markets. If anything, this
trend is accelerating: 48% of survey respondents expect
to increase the level of least-cost country sourcing in
the next five years. Moreover, 35% expect to increase
purchasing from China alone, and 29% from India.
What was once a strategic choice is now a necessity.
“You’ve got to be over there [in Asia],” says Peter Con-
nelly, CPO of Leggett & Platt, a diversified manufacturer
and Fortune 500 company headquartered in Missouri,
referring to the company’s sourcing strategy. He adds that
in certain developing countries “it’s tough to do busi-
ness, but in some cases it is getting to be one of the only
games in town.” Indeed, a global supply chain is impos-
sible to avoid, even if a company wants to source do-
mestically. One interviewee noted that quality concerns
had made his colleagues reluctant to purchase from a
particular Chinese firm, only to find that their current
supplier was selling them goods manufactured by that
very company. “Whether or not we are doing developing
world sourcing, our suppliers are,” says the executive.
Companies compete fiercely in finding the best sourcing
solutions. Four in ten respondents list competition as a
leading supply chain risk they face, and 58% complained
that it is somewhat or very difficult to find high-quality
suppliers. To some extent this has always been the case;
the difference today is the scale of the competition. A
more complex issue – and one that many firms admit
they are not paying sufficient attention to – is resilience.
An issue in need of attention
Long lines of trucks at the Canada-US border after 9-11;
the specter of fuel shortages after Hurricane Katrina
destroyed a substantial portion of America’s refining
capacity; the triumph of Nokia over Ericsson when the
former responded with greater agility to a fire at
a mutual supplier’s New Mexico facility; pets and
livestock dying from melanin-tainted food across
North America in 2007: these are the oft-repeated
cautionary tales of how the unexpected can de-
bilitate a supply chain. Although only the biggest
stories make the news, such challenges are a part
of normal business. As Steve Churchhouse, EVP
Supply Chain Development at power systems provider
Rolls-Royce, explains “we’ve experienced a number of
significant challenges because of acts of God, fires, and
earthquakes. When you have several hundred suppliers
across the world, occasionally a facility burns down or is
flooded.” As the earlier examples also show, terrorism,
Research Report
“It is hard to compete when you don’t run lean, but you open yourself up to expensive risks in the long run.”
8
natural disaster, accident, and fraud can hit a nation like
the United States as much as low-cost countries with
notoriously creaky infrastructure.
In the face of such well-known dangers, however, many
businesses worry that they are not doing enough:
• 47%ofsurveyrespondentsbelievethattheyneed
to pay more attention to resilience (versus just 16%
who say they pay an adequate amount of attention);
•42%ofcompaniessaythattheyhaveglobalized
their supply chains faster than risk management can
keep up, against 27% who disagree; and,
• only38%considertheirsupplychainresilience
above average, the aspect of supply chain man-
agement which scored the second-lowest result to
the question.
Professor Yossi Sheffi, Director of the Massachusetts
Institute of Technology Center for Transportation and
Logistics, explains that companies “are getting more
vulnerable. Less inventory, tighter and leaner supply
chains, by nature are more vulnerable. From a com-
pany point of view, this is disconcerting. It is hard to
compete when you don’t run lean, but you open your-
self up to expensive risks in the long run.”
The challenges vary by company, but can be divided
into two types. First are the known risks, on which
many companies focus. When asked for their three
leading supply chain risks, respondents’ top replies
included traditional items such as energy costs (cited
by 53%), competition (40%) and supplier disruption
(36%). Second are the more difficult to quantify risks,
that arise from operating on a global level. The leading
concerns of over a quarter of companies include either
geopolitical instability or terrorism, and over one in eight
mentions natural disasters.
But companies appear to be spending too little time in
assessing what problems might arise. About one in ten
companies do no monitoring at all, and 42% look only
at their own immediate suppliers. A mere 20% try to
keep watch on their entire supply chain. Moreover, this
n 1 Strongly agree n 2 n 3 n 4 n 5 Strongly disagree n Don’t know
0 20 40 60 80 100
My company supply chain has globalized faster than our risk management structures have been able to adapt to the U.S. economic slowdown
My company needs to do more to integrate social and environmental considerations into our supply chain
One of my company’s big sustainability challenges is from activists and consumers who do not actually understand the sustainability impact of what they are demanding
My company is re-assessing its sourcing based on geographic location rather than what is cheapest
My company needs to pay more attention to supply chain resilience
13%
14%
9%
13%
6%
29%
32%
20%
34%
25%
26%
25%
25%
31%
27%
16%
20%
22%
12%
24%
11%
7%
19%
4%
14%
5%
1%
5%
5%
4%
Do you agree or disagree with the following statements as they relate to your company?
9
monitoring tends to focus on product quality – an
important issue – but not resilience: only 35%
of companies place the latter in the two leading
fields which they examine. Finally, monitoring
programs are most often governed at the national
or at best regional levels (37% and 29% of com-
panies respectively) rather than globally (32%),
which makes it more difficult for them to feed into
a comprehensive understanding of global resil-
ience issues.
Worse still, the limited activity that does occur can
be spotty. According to Professor Sheffi, the quality
“varies significantly. If there is something on the
checklist, somebody will check it and say we do
a once-a-year audit. This is the main difference between
companies: those that monitor to check off a box and
those where it is ingrained in the culture.” He adds that
cursory checks are not enough: “the trick is to interview
your suppliers.”
Mr. Connelly of Leggett & Platt agrees on the impor-
tance of going in person – his company visits its largest
suppliers – but there are limits: “if you send somebody
to every supplier, you can’t afford it.” Professor Sheffi
also notes that beyond second tier suppliers, “companies
have no leverage. It gets very dispersed and diffused.
In many cases there is no data; companies don’t know.”
Dr. Gopal Iyengar, Director of the Kirloskar Insititute of
Advanced Management Studies, adds that suppliers can
be stifled by excessive monitoring from too many com-
panies as well. To overcome the difficulties, and maxi-
mize the benefits of expending resources in this field,
he suggests that, rather than focusing mechanistically
on particular supply chain levels, “one needs to look
at which points add real value. It doesn’t matter which
tier.” Monitoring at these key points will give companies
in-depth knowledge in the most crucial areas of the sup-
ply chain.
The information gleaned from monitoring should be
fed into processes to promote a stronger supply chain.
This is not always the case. “A better understanding of
risk assessment strategies is a starting point in dealing
with resilience and globalization,” says Dr. Iyengar. But,
he continues, “quite often supply chains do not have a
strong framework for this.” The survey supports his view.
Of respondents who knew the answer, just under a third
n Monitor immediate (Tier 1) suppliers only (rely on them to monitor their suppliers)
n Monitor immediate (Tier 1) suppliers and their immediate suppliers
n Monitor the entire supply chain
n Do not monitor
n Don’t know
42%
20%
20%
9%
9%
How closely does your company monitor its suppliers?
10
engage in formal supply chain risk management exercis-
es only once a year and about 10% never bother at all.
The situation is unlikely to improve: just 9% list improve-
ment of risk mitigation practices as their leading supply
chain priority over the next five years, the least popular
choice to the question.
Even with the best intelligence, things will go wrong.
And again too few companies are actively preparing
for the worst. Only 51% benchmark their own supply
chain breakdowns for lessons learned and a mere 29%
seek to gain knowledge from the mistakes of others,
both obvious things to do and relatively inexpensive as
the costly mistakes being studied have already oc-
curred. Going further, just 20% do crisis simulations.
The interviews suggest that these tend to occur in
industries with a tradition of holding such exercises
for other reasons, such as safety. And executives differ
on their utility. On the one hand, Mr. Churchhouse
at Rolls-Royce, which uses them extensively, says
“How do you value business continuity? If you want
the highest level, you need to run live exercises.” He
acknowledges that “they are very difficult and time
consuming. It costs real money,” but adds that it is “all
very well to have a plan written down, but you need
to do a drill [to know if it will work].”
On the other hand, Doug Gurr, Executive Director,
Strategy and Logistics at the retailer ASDA, says that his
company’s sophisticated crisis management structure
does extensive planning but few simulations because
“there seems a world of difference between what you
can simulate and what goes wrong.” For him, the key
is having in place “people who’ve been there and done
that. Planning is great, but when you do have a problem,
your ability to manage your way out is 90% down to the
ability of the people on the ground to deal with it.”
In either case, although disagreeing on the means, the
goal is to have tested people and processes available in
a crisis. This takes conscious effort. Only a minority of
companies are working toward this goal.
Internal benchmarking of supply chain breakdowns and lessons learned
Hold additional safety stock
Do joint planning with channel partners on such a situation
External benchmarking of supply chain breakdowns and lessons learned
Conduct crisis simulation exercises
Collaborate with local governments on contingency planning
Collaborate with competitor firms
Other
0 10 20 30 40 50 60
51%
40%
31%
29%
20%
16%
4%
16%
Which of the following steps is your company taking to improve its supply chain resilience to potential crisis? Select all that apply.
11
Current resilience strategies
Companies know that they are not doing enough on sup-
ply chain resilience. They are not, however, ignoring the
issue completely, but some of the techniques they are
using are problematic.
Inventory: In the future, 40% of companies expect
to hold additional inventory – so-called safety
stock – to increase their supply chain resilience.
And 38% intend to increase inventory levels more
broadly. In very specific circumstances, this may
be important to resilience. “If it is a critical item
that only one supplier makes, the only solution
is to have plenty of inventory around,” notes Mr.
Connelly. According to Mr. Churchhouse, holding an
appropriate level of extra supplies at the right level
in the supply chain to mitigate against a “likely
disturbance” is sound strategy.
In general, however, the effectiveness of increasing
supplies is limited. The economics driving inven-
tory reductions have not changed. Professor Sheffi says
that “holding more inventory is good for small disrup-
tions. When you talk about resilience, it is not these
fluctuations: it is ‘how am I going to bounce back from
the things that can endanger my company’s survival?’
A little more inventory doesn’t cover this.” Mr. Gurr
agrees: inventory is expensive, and although “it feels
comfortable, it just doesn’t work” in enhancing reliabil-
ity. Mr. Churchhouse goes even further: using excess
inventory to address bigger resilience issues is simply
“an expensive and lazy approach.”
Relationship building: About 56% of respondents place
a high importance on building lasting, solid relationships
as the best way to maintain the quality of their supply
chains, and a further 38% think it is moderately impor-
tant. In the Asia-Pacific region, where a larger number
of developing economies have sometimes unpredictable
legal environments, the equivalent figures are 66%
and 34%.
This may seem at odds with the image of companies
constantly seeking the best deals worldwide, but it
makes sound business sense. Indeed, in some cases,
trustworthy relationships are not just desirable but
critical. In Mr. Connelly’s experience, for certain com-
modities, if a company “shops price, you can’t get the
n Increase greatly
n Increase slightly
n Stay roughly the same
n Decrease
n Don’t know
27%
40%
18%
11%5%
Over the next five years, how do you expect your company’s inventory levels to change?
12
product. We’ve had barges in the port with our name on
them and never got the steel.”
This emphasis should not be misconstrued. Companies
do not want to get married so much as to have a lot of
very good friends. Six in ten firms expect their pool of
high-quality suppliers to grow in the next five years: only
12% foresee a decrease. Mr. Connelly says
that Leggett & Platt, although reducing the
total number of suppliers overall for other
strategic reasons, still aims to have three for
each important input, rewarding the best
value producer with the lion’s share of pur-
chases. For him, the key to making this work
well is transparency with all involved, which
fosters competition.
Professor Sheffi goes further. He notes that,
while analysts tend now to “exalt” the just-
in-time, lean supply chains often associated
with Toyota, they forget that these require a
very specific cultural environment to work.
“Having a single supplier without mutual
respect and trust is dangerous.”
Relationships do have costs, but companies believe that
the benefits outweigh them. Mr. Churchhouse notes that
Rolls-Royce has “moved quite determinedly in the direc-
tion of dual sourcing for critical components” in order
to increase resilience, sacrificing some of the potential
leverage of having a single source. Mr. Gurr points to
ASDA’s Lamb Link program. It pays farmers extra to raise
animals to the company’s specifications which “makes a
massive difference to production costs and quality. It is
worth our while to pay a premium.” For reliability and
resilience in this type of sourcing, “the thing we have
found key is getting people tied into a long term rela-
tionship,” Mr. Gurr says.
Multi-sourcing, near-sourcing and supply chain
structure: In enhancing resilience it is not only the
number of suppliers that matters, but also their locations.
Half of survey respondents expect to engage more in
multi-sourcing – consciously purchasing from suppliers
in multiple geographies. Although slightly less popu-
lar, near-sourcing (purchasing inputs from companies
closer to the final consumer) will also grow: 35% plan
to deploy it more, against just 16% who will do it less.
Over the next five years, how do you expect your potential pool of high-quality manufacturing suppliers to change?
n Increase greatly
n Increase somewhat
n Neither increase nor decrease
n Decrease somewhat
Decrease greatly 0%
51%
10%
26%
12%
13
More broadly, 31% of companies are reas-
sessing their sourcing based on geography
rather than pure cost, a figure which rises
to 45% in North America.
Although conceptually different, both
strategies can help answer the same
question: how to maximize the benefits
of having a good relationship with several
suppliers. If dual sourcing makes sound
business sense, then having suppliers from
different parts of the world to reduce geo-
political or environmental risk makes even
more sense. Mr. Connelly, for example,
says that although Leggett & Platt is
increasing its presence in China – for both
sourcing and sales considerations – it is also looking to
Vietnam and Indonesia “as a backup to China, partly to
balance risk.” Similarly, Mr. Churchhouse advises, “don’t
put all your eggs in one basket, and definitely not in a
basket on the other side of the world.” Mr. Gurr, mean-
while, sees near-sourcing as a way to overcome the
problem of lead time with global sourcing. For example,
while a European firm could get its supplies of certain
goods from India or China, it could also be useful to have
a secondary supplier in Eastern Europe in order to be
able to respond quickly to consumer demand, such as
for fashion or Christmas season toys.
Such thinking can be part of a broader approach to sup-
ply chain resilience which turns it into an asset rather
than a partial liability. According to Mr. Churchhouse,
Rolls-Royce’s efforts in this area have involved “looking
across all of our processes, internal and external, in order
to make them more capable.” ASDA has built the major-
ity of its warehousing as identical, cookie cutter mirror
sites that can take over for other locations that go down.
Mr. Gurr says it is difficult to afford “redundant infrastruc-
ture, but you can build the supply chain in a way that
you can use other parts if some fail, and so that there are
people to call on if you have to scramble.”
Over the next five years, how will your company’s supply chain strategy change in the following areas?
n 1 Increase greatly
n 2
n 3
n 4
n 5 Decrease greatly
n Don’t know
0 20 40 60 80 100 120
Least-cost country sourcing
Near sourcing
Multi-sourcing strategy
In-house manufacturing
13%
5%
7%
12%
35%
14%
28%
38%
34%
30%
42%
32%
9%
23%
1%
16%
8%
8%
7%
3%
13%
7%
1%
11%
14
Sustainability
Although building a range of strong relationships and
purchasing from a variety of sources bolsters continuity,
it does not fully address the underlying (and often poorly
monitored) risks of global sourcing. A case in point is
how firms are dealing with the issue of sustainability in
their supply chains.
Regulators, consumers, and investors are increasingly
demanding that corporate activity yield positive environ-
mental and social outcomes as well as
financial profits. Firms are only begin-
ning to address supply chains in this
context. Environmental impact and em-
ployment conditions, for example, are
the two least closely monitored areas,
cited as leading concerns by only 9%
and 6% of survey respondents respec-
tively. And businesses realize that they
are not doing enough in this regard:
46% believe they must do more to
integrate sustainability into the supply
chain, against just 27% who disagree.
Moreover, long-term sustainability is,
after cost, the area where most compa-
nies expect their chains to focus in the
next five years (cited by 19% of respondents). Asia-
Pacific and North America firms are even more likely to
do so (23% and 22%) than European ones (16%). The
latter have the reputation of being more advanced on
sustainability, so the others may be playing catch-up.
Enhancing sustainability, however, will require the kind
of attention to and monitoring of both suppliers and
global conditions that many companies are failing to do.
Inattention can damage reputations. ASDA’s Mr. Gurr
considers the need to engage in ethical sourcing one
of key new global supply chain challenges. If you do
not know what is happening among suppliers, “you can
get caught out.” Similarly, Professor Sheffi notes that
“there are all kinds of ways to get burned by not paying
attention and stepping on emerging social norms. For
example, you don’t want your suppliers’ supplier to use
sweat shops.” Globalization creates a double-edged
problem: the growth in the number of businesses world-
wide makes it harder to monitor the entire supply chain,
but modern communication technology also makes any
Over the next five years, which will be the key focus for your company’s supply chain?
n Cost containment/reduction
n Long-term sustainability (economic, social, environmental)
n Process innovation
n Technology innovation
n Inventory optimization
n Improving risk mitigation practices
28%
19%
9%
18%
10%
16%
15
environmental or social derogations by suppliers likely to
be broadcast widely.
Sustainability goes beyond reputational damage: an en-
vironmental or social disaster can wreak havoc with how
a company operates. When the Grand Banks fisheries off
North America collapsed, for example, Highliner Foods,
the Canadian fish processor and marketer, had to sell its
own fleet and buy catches from other sources.
Sustainability represents an opportunity for supply
chains, not just another complication. Dr. Iyengar notes
that it will not help if you apply environmental and so-
cial criteria in a way that is merely “legalistic.” He cites
Wal-Mart as an example of a company that is strength-
ening its resilience by insisting that its suppliers use
recyclable materials. In this way the company’s “sup-
ply chain can shift a risk into an opportunity” to attract
environmentally conscious consumers. Reaping these
benefits once again requires thinking through the issues.
Resilience in action: low-cost country sourcing
Supply chains are not only globalizing but they have
also been heading for suppliers in least-cost countries.
Although this trend will continue, a small but significant
percentage of companies are turning away from the
strategy. Some 10% of the entire survey group are set
to decrease their use of least-cost country sourcing – a
number which would increase if those who have not yet
adopted the practice are taken from the total.
For China in particular, 11% of all respondents, or 15%
of those who currently source there, expect to decrease
purchasing from the country, or even stop altogether. This
is on top of 8% of all respondents indicating that they
already had done so. China is not alone: 6% have signifi-
cantly reduced sourcing from India. Yet, far more plan to
increase buying in these markets – 30% expect China to
be among the top three countries seeing the biggest in-
crease in sourcing for their company, and 29% think the
same of India – but they do indicate that supply chain
success has not been universal in low-cost countries.
The reason is the perennial tension between cost and
quality which has always dictated much of supply chain
strategy, and which led to least-cost country sourcing in
the first place. On the one hand, when selecting a new
If your company sources products from China, what are your plans for the next five years?
n Increase sourcing from China
n Keep sourcing levels from China about the same
n Decrease sourcing from China
n Stop sourcing from China altogether
n My company does not source from China
33%
26%
10%
29%
1%
16
supplier, 61% of survey respondents consider quality a
leading factor, and 31% call it significant. The equivalent
figures for cost, 42% and 38% respectively, indicate less
emphasis. On the other hand, when asked about the
primary supply chain focus for the next five years, cost
reduction was the leading answer (given by 28%), and
inventory optimization – often a specific way to reduce
spending – was cited by a further 10%.
The draw of low-cost country sourcing is that it can
square this circle. Mr. Gurr says that “some of the best
manufacturing in the world is in low-cost countries at
the moment. If you put in the effort, you can find higher
quality for some products than nearer to home.”
But some firms have had mixed success in finding these
high-quality producers. According to the survey, qual-
ity issues have been a significant challenge for 52% of
companies in low-cost countries, making it the lead-
ing challenge. Dr. Iyengar notes that, for these places,
“one of the reasons for companies withdrawing is that a
resilient supply chain needs to be able to respond with
consistent output. If you look exclusively to low-cost
country sourcing, consistency of quality is a problem.”
Not far behind in the survey was another crucial ele-
ment of resilience: the ability of suppliers even to deliver
what they promise (cited by 47%). Length of travel time
(34%) is an almost inevitable issue for global sourc-
ing, but rule of law considerations such as difficulties
with contract enforcement and intellectual property
rights (IPR) protection also affect more than three in ten
respondents. For firms that said they were reducing ac-
tivities in China, IPR concerns were an issue, along with
corruption. The challenges of low-cost country sourcing
are clearly significant.
According to those interviewed for this report, the envi-
ronment may be complex, but the key to success is not:
build in resilience, understand the issues, monitor and
structure the supply chain to avoid problems, and work
with suppliers to improve output.
Mr. Connelly, for example, says that Leggett &
Platt builds up trust over an extended period.
It first orders small quantities which it inspects
closely. It takes about a year to a year and a half
before the company feels secure enough “to
make a decent order.” The firm also sends executives to,
or even establishes local offices in, low-cost countries.
As a result, Mr. Connelly has great confidence in his
company’s ability to operate in China, “because we have
been there awhile,” and have been working closely with
their suppliers from a supply chain hub in Shanghai.
Mr. Gurr agrees that it is a matter of doing the work.
“You need to invest in finding the right companies,
and need to be incredibly vigilant about from whom
they purchase. You can get fantastic quality at decent
price, but you have to put the effort in. As the econom-
ics swing around, you also have to be aware about the
next country coming around and have people on the
ground who know how to do business there.” Once
found, Dr. Iyengar adds, educating and working with
“A resilient supply chain needs to be able to respond with consistent output.”
17
suppliers is key: companies need “to introduce powerful
performance management systems, make clear what is
required, and make sure that it takes place.”
Resilience is also about structuring the supply chain
intelligently. In a low-cost country context, for example,
if IPR issues are a problem, Mr. Churchhouse says that
“the answer is that we might put finished machining
processes there, but not complex special processes,
which is where the higher technology is. We just have to
be careful in our make/buy analysis.”
Building a resilient supply chain in low-cost countries is
not rocket science or anything particularly new. As Mr.
Connelly points out, “we’ve been through this before
over the last twenty years. China is just like Korea was,
and before that Japan was. The suppliers learn, and they
get better.” Doing the legwork is, however, essential if
a company wants to realize the same savings that its
competitors are. Notes Mr. Gurr, “if you switch supplier
without actually getting out there, without putting in the
effort to visit the factory, you come unstuck. The way to
do it is to get on the airplane and have people out there.”
Conclusion
In seeking the benefits of global supply chains, few com-
panies are paying sufficient attention to the resilience
of these networks. Business is vulnerable, and although
many firms are taking sensible precautions, such as
increasing the number of suppliers, much more needs to
be done in areas like monitoring and using the resultant
understanding to build structures that coherently address
the risks which firms face. Current challenges, such as
integrating sustainability into supply chains or getting
the greatest advantage out of sourcing from low-cost,
less developed countries, demand such an approach.
The dangers of not doing so are stark. As Professor Sheffi
points out, although companies are at much higher risk
because of complex, global supply chains, “it doesn’t
mean that consumers or countries are more vulnerable.
There are many more companies now. It may mean dev-
astation for one if a plant goes down, but there are lots
of suppliers.” Other suppliers may be more resilient, and
are sure to be ready to service the market instead.
Educating and working with suppliers is key: companies need “to introduce powerful performance management systems, make clear what is required, and make sure that it takes place.”
18
Professor Yossi Sheffi says of working with companies:
“when we have public events, they usually make coura-
geous statements. When you start drilling down, when
you start asking more penetrating questions – how do
you know you are better? – at the end of the day they
say, ‘we have to take another look’. They often don’t ask
themselves the tough questions.”
The split in perceptions between supply chain profession-
als and corporate executives suggests the latter should
start asking such tough questions. In fact, those who
actually work in the field are far more concerned about
the problems discussed in this report than their bosses.
Looking at the situation overall:
• 63%ofsupplychainprofessionalsthinkthattheir
company needs to pay more attention to resilience.
Among corporate executives, this is a concern to
only 46%.
• 65%ofthoseworkingwithinthesupplychainbe-
lieve it has globalized faster than risk management
has kept up, a worry for only 41% in the C-suite.
• 29%ofsupplychainprofessionalsconsidertheir
resilience above average, while this is the case for
38% of corporate leaders.
• Nearlytwiceasmanysupplychainprofessionalsas
corporate executives (20% to 11%) think it very
difficult to obtain high-quality suppliers.
Many of these questions are at the level of percep-
tion, and individuals often believe that their own jobs
are more fraught than they may actually be. A deeper
analysis reveals that those with the best knowledge of
their supply chains are seeing a lot more problems in,
for example, least-cost country sourcing than corporate
executives seem to realize. This is especially the case for
some key elements of resilience, such as product quality
and the ability of suppliers to deliver what they promise
(see chart).
Finally, if corporate executives are not hearing about
the risks from their supply chain professionals, the latter
may not be fully taking on board strategic
priorities. For example, in assessing a new
supplier, 63% of supply chain profession-
als believe cost is a leading consideration,
a higher figure than for quality. Corporate
executives instead focus on quality, with
only 35% giving a primary place to cost.
Looking forward, about half of supply chain
professionals think the coming focus in
the next five years will be cost, or inven-
tory optimization – which has significant
cost implications. The equivalent figure for
corporate leaders is 36%. Meanwhile, only
14% of supply chain professionals expect to
focus on sustainability, a concern for 20%
of corporate leaders. The split in percep-
tions indicates that it may be time for the
two groups to talk.
Is the C-Suite whistling in the dark?
Quality of goods 53% 61% 8%
Ability of suppliers to deliver what they promise 46% 61% 15%
Length of time for goods to arrive from suppliers 31% 45% 14%
Total landed cost 22% 37% 15%
Ability to enforce contracts 32% 37% 5%
Difficulty communicating expectations across cultural differences 29% 35% 6%
Unpredictability of travel time for goods to arrive 24% 33% 9%
Border security/customs issues 23% 31% 8%
Ability to maintain supply chain visibility 27% 31% 4%
Energy/transportation expense 21% 29% 8%
Top ten problems with LCCS (percentage of companies in each category which have experienced significant challenges with issue) C-Suite Supplychain Difference professionals
19
Low-cost Asian economies have become the world’s
manufacturing powerhouse. But the region’s business
executives make clear that the basics of supply chain
best practice are universal. Indeed, one of the most strik-
ing findings from the survey results is how little answers
varied by region.
Joseph Phi is President and Executive Director of IDS
Group, a member of the Hong Kong-based Li & Fung
Group of companies, one of the world’s biggest export-
ers. IDS provides integrated distribution and logistics
services, or in Mr. Phi’s words, “supply chain manage-
ment, from factory to delivery” for leading multinational
and local companies, including Li & Fung.
Mr. Phi notes that the biggest challenge for supply
chain management anywhere is “how do you cope with
changes, unpredictability, and volatility? One of the key
determinants of a good supply chain is how flexible and
agile you are, because volatility does not go away.” Just
as the problems are common around the globe, so are
the requirements for success. They include good people,
well-designed facilities, as well as various technology
systems that create an overview of the entire supply
chain, so called end-to-end visibility.
But according to Mr. Phi, companies also have to “look
at the total cost of doing business. People neglect the
hidden costs,” especially in low-cost countries. This has
implications in a number of areas. The first is contin-
gency planning. Says Mr. Phi: “crisis and contingency
planning is not even a ‘nice to have’, it is a ticket to the
game. In the supply chain business, if something can
go wrong, it already did. While there is a temptation to
do business based on expense alone, the risk is humon-
gous.”
Another area where true and apparent costs may differ
is in dealing with partners. “You can’t be in every part of
the chain,” notes Mr. Phi. “There is always a temptation
to say, for an x% cost reduction I’ll shift from provider A
to provider B, but it is very important for us to consider
the holistic picture. You can’t squeeze on every transac-
tion. If your partners are not profitable, it is hard to have
a resilient supply chain,” he adds. Two other essential
elements of resilience are predictability and repeatabil-
ity. For the latter, Mr. Phi points out that “you can’t work
with new partners all the time. You have to work with
people who understand your process.”
There is also a need for proper investment in any country
where one does business. Just as other firms interviewed
for this report are finding it valuable to have people on
the ground in their Chinese operations – where Mr. Phi
says IDS Group enjoys “home court advantage” – he
notes that “in the Philippines, for example, you need
Filipinos, who understand the local market and will be
able to make swift changes. As you go global you need
to put more emphasis on the local.”
Although supply chain investments may seem to in-
crease costs, in the long run they save money. Mr. Phi
notes, for example, that the presence of a robust contin-
gency plan does not simply help in a crisis, but it also
reduces insurance premiums. “A resilient supply chain
does not only generate value, but also reduces cost in
the long run.”
IDS Group provides a global perspective from Asia
20
Where are most of your company’s key suppliers located?
What impact have the following events had on your company?
How difficult is it to obtain high-quality suppliers for your company’s most important products?
At which level does your company set the governance of the following elements of your supply chain?
Appendix A: Survey Results
n Domestically
n Abroad
n Both equally
36%
29%
35%
n 1 Strong Impact n 2 n 3 n 4 n 5 No impact n Don’t know n 1 Global n 2 Regional n 3 National n Don’t know
Overall strategy
Purchasing decisions
Monitoring/compliance
0 20 40 60 80 100 120
59%
30%
32%
21%
37%
29%
19%
33%
37%
1%
1%
2%
n Very difficult
n Somewhat difficult
n Neither difficult nor easy
n Somewhat easy
n Very easy
49%
33%
7% 9%
1%
0 20 40 60 80 100 120
25%
29%
12%
14%
31%
31%
28%
39%
21%
22%
27%
24%
12%
12%
19%
15%
10%
5%
14%
6%
1%
1%
1%
1%
A weaker U.S. dollar
The U.S. economic slowdown
A slowing global economy
Rising energy costs
21
Do you agree or disagree with the following statements as they relate to your company?
In your opinion, how does your company compare to its closest competitors in the following areas?
What level of importance does your company place on building lasting, solid, long-term relationships as the best way to maintain the quality and value of the goods it gets from its supply chain?
When evaluating a potential supplier, how important are the following factors to your company?
n 1 Strongly agree n 2 n 3 n 4 n 5 Strongly disagree n Don’t know
0 20 40 60 80 100
My company supply chain has globalized faster than our risk management structures have been able to adapt to the U.S. economic slowdown
My company needs to do more to integrate social and environmental considerations into our supply chain
One of my company’s big sustainability challenges is from activists and consumers who do not actually understand the sustainability impact of what they are demanding
My company is re-assessing its sourcing based on geographic location rather than what is cheapest
My company needs to pay more attention to supply chain resilience
13%
14%
9%
13%
6%
29%
32%
20%
34%
25%
26%
25%
25%
31%
27%
16%
20%
22%
12%
24%
11%
7%
19%
4%
14%
5%
1%
5%
5%
4%
0 20 40 60 80 100
Supply chain management
Quality of suppliers
Resilience
Risk awareness and management
Ability to find and exploit new opportunities
Awareness of corporate social responsibility issues
End to end visibility
Profitability
10%
11%
9%
11%
15%
8%
13%
13%
38%
42%
29%
35%
30%
24%
34%
36%
38%
40%
48%
36%
35%
47%
36%
32%
10%
6%
12%
16%
17%
17%
14%
18%
3%
1%
2%
2%
3%
3%
2%
1%
n 1 We are much stronger
n 2
n 3
n 4
n 5 We are much weaker
n High importance
n Moderate importance
n Low importance
n No importance
56%38%
4%
2%
n 1 Most important n 2 n 3 n 4 n 5 Not at all important
0 20 40 60 80 100 120
Speed
Quality
Cost
Reputation
19%
22%
61%
42%
52%
43%
31%
38%
23%
24%
6%
19%
5%
9%
1%
3%
2%
1%
22
In your experience with global supply chains in low-cost countries, which of the following issues have presented significant challenges for your company? Select all that apply.
At your company, how frequently does the supply chain function engage in formal risk management to assess the possibility of and consider strategies to reduce risk?
How closely does your company monitor its suppliers?
0 10 20 30 40 50 60
Quality of goods
Ability of suppliers to deliver what they promise
Length of time for goods to arrive from suppliers
Ability to enforce contracts
Intellectual property protection
Difficulty communicating expectations across cultural differences
Unpredictability of travel time for goods to arrive
Ability to maintain supply chain visibility
Border security/customs issues
Total landed cost
Energy/transportation expense
Ability to return goods
Other rule of law issues
Finding secure transport for goods/loss of goods in transit
Adverse reaction in home markets
No experience
52%
47%
34%
32%
31%
29%
26%
25%
25%
24%
22%
20%
20%
15%
11%
12%
n Annually
n Quarterly
n Monthly
n Weekly
n Never
n Don’t know
29%
28%
18%
13%
8%
4%
n Monitor immediate (Tier 1) suppliers only (rely on them to monitor their suppliers)
n Monitor immediate (Tier 1) suppliers and their immediate suppliers
n Monitor the entire supply chain
n Do not monitor
n Don’t know
42%
20%
20%
9%
9%
23
In its supply chain, which of the following reputational aspects does your company monitor most closely? Select up to two.
Where are your company’s technology investments primarily directed?
Which of the following steps is your company taking to improve its supply chain resilience to potential crisis? Select all that apply.
Over the next five years, how do you expect your company’s inventory levels to change?
Product quality
Resilience/ability to deliver what is promised
Compliance with legal standards (anti-corruption, anti-money laundering, etc)
Product safety
Respect for your own intellectual property
Respect for intellectual property of other companies to prevent potential litigation for abuse
Environmental impact
Employment conditions
0 10 20 30 40 50 60 70 80
64%
35%
27%
20%
16%
13%
6%
9%
Internal benchmarking of supply chain breakdowns and lessons learned
Hold additional safety stock
Do joint planning with channel partners on such a situation
External benchmarking of supply chain breakdowns and lessons learned
Conduct crisis simulation exercises
Collaborate with local governments on contingency planning
Collaborate with competitor firms
Other
0 10 20 30 40 50 60
51%
40%
31%
29%
20%
16%
4%
16%
n Managing internal processes
n Combination of internal and external process management
n Managing processes of suppliers and other supply chain partners
n We do not invest in technology
43%
40%
12%
5% n Increase greatly
n Increase slightly
n Stay roughly the same
n Decrease
n Don’t know
27%
40%
18%
11%5%
24
Over the next five years, which will be the key focus for your company’s supply chain?
Over the next five years, how will your company’s supply chain strategy change in the following areas?
Over the next five years, which factors are most likely to pose the greatest risk to your company’s global supply chain? Select up to three.
Over the next five years, how do you expect your potential pool of high- quality manufacturing suppliers to change?
n Cost containment/reduction
n Long-term sustainability (economic, social, environmental)
n Process innovation
n Technology innovation
n Inventory optimization
n Improving risk mitigation practices
28%
19%
9%
18%
10%
16%
n Increase greatly
n Increase somewhat
n Neither increase nor decrease
n Decrease somewhat
Decrease greatly 0%
51%
10%
26%
12%
n 1 Increase greatly
n 2
n 3
n 4
n 5 Decrease greatly
n Don’t know
0 20 40 60 80 100 120
Least-cost country sourcing
Near sourcing
Multi-sourcing strategy
In-house manufacturing
13%
5%
7%
12%
35%
14%
28%
38%
34%
30%
42%
32%
9%
23%
1%
16%
8%
8%
7%
3%
13%
7%
1%
11%
0 10 20 30 40 50 60
Energy costs
Competition
Supplier disruption
Logistics failure (port strike, etc.)
Strategic failure (incorrect shipments, defective products)
Geopolitical instability
Corruption
Natural disaster
Export restrictions
Nationalization
Terrorism
53%
40%
36%
26%
25%
21%
13%
13%
9%
8%
6%
Preface
25
Are there any countries where your company has ceased/significantly reduced your sourcing because of risk? Select up to three.
Afghanistan 9% 0% 0% Aland Islands 1% 0% 0% Albania 1% 0% 0% Angola 1% 1% 0% Argentina 0% 1% 5% Armenia 1% 0% 0% Australia 1% 0% 2% Azerbaijan 0% 3% 0% Bahrain 0% 0% 2% Bangladesh 2% 1% 2% Belarus 0% 0% 4% Belgium 0% 0% 2% Bermuda 1% 0% 0% Bhutan 0% 1% 0% Bolivia 1% 3% 0% Bosnia and
Herzegovina 0% 3% 2% Brazil 1% 3% 4% Bulgaria 0% 3% 2% Burkina Faso 0% 1% 0% Cambodia 0% 1% 2% Cameroon 0% 0% 2% Canada 1% 1% 0% China 16% 7% 0% Colombia 0% 3% 0% Congo 1% 0% 0% Cuba 1% 0% 0% Ecuador 1% 0% 0% Egypt 0% 0% 2% Eritrea 0% 0% 2% Ethiopia 0% 1% 0% France 1% 0% 2% Germany 3% 1% 0% Ghana 1% 0% 0% Greece 1% 0% 0%
Countries 1 2 3 Countries 1 2 3 Countries 1 2 3
Guinea 0% 1% 0% Honduras 1% 0% 0% Hungary 1% 0% 0% Iceland 0% 1% 0% India 10% 4% 5% Indonesia 5% 1% 5% Iran 4% 1% 4% Iraq 1% 8% 0% Israel 1% 1% 2% Italy 1% 0% 0% Japan 0% 0% 2% Kenya 1% 0% 0% Kuwait 1% 0% 0% Kyrgyzstan 0% 0% 2% Latvia 0% 0% 2% Libya 1% 0% 2% Lithuania 1% 0% 0% Madagascar 0% 1% 0% Malaysia 1% 1% 0% Malta 0% 0% 2% Mexico 0% 1% 0% Moldova 0% 1% 0% Morocco 0% 1% 0% Myanmar 1% 3% 0% New Zealand 0% 0% 2% Nicaragua 1% 0% 0% Niger 1% 0% 0% Nigeria 1% 3% 2% Norway 1% 0% 0% Pakistan 4% 1% 4% Papua New Guinea 1% 0% 0% Philippines 1% 1% 2% Poland 1% 0% 5% Romania 2% 1% 0% Russia 5% 7% 4%
Serbia 1% 1% 2% Slovakia 0% 1% 0% Somalia 0% 0% 2% South Africa 1% 3% 0% South Korea 0% 1% 0% Spain 0% 0% 2% Sri Lanka 1% 0% 0% Sudan 1% 0% 2% Taiwan 0% 3% 0% Tajikistan 1% 0% 0% Thailand 0% 1% 5% Tunisia 1% 0% 0% Turkmenistan 0% 1% 2% Ukraine 1% 1% 2% United Kingdom 0% 3% 0% United States
of America 4% 1% 0% Uzbekistan 0% 1% 0% Venezuela 1% 0% 4% Vietnam 0% 1% 2% Zimbabwe 0% 3% 4% Total 100% 100% 100%
Preface
26
If your company sources products from China, what are your plans for the next five years?
If you plan to reduce or stop sourcing from China, what is your primary reason why?
When your company is looking for suppliers in new markets, which factors are considered most important? Select up to three.
0 5 10 15 20 25 30 35 40
Nationalism, corruption or intellectual property concerns
Inflation
Labor costs
Transportation expense
Infrastructure issues
Other
No plan to reduce or stop sourcing from China
My company does not source from China
7%
7%
5%
4%
2%
3%
32%
40%
n Increase sourcing from China
n Keep sourcing levels from China about the same
n Decrease sourcing from China
n Stop sourcing from China altogether
n My company does not source from China
33%
26%
10%
29%
1%
0 5 10 15 20 25 30 35 40
Product safety
Intellectual property protection
Shipping cost
Rule of law issues
Labor cost
Shipping time
Visibility
Shipping security
Cultural differences
Corruption
Other
38%
31%
31%
30%
29%
26%
14%
18%
13%
12%
9%
Preface
27
Five years from now, from which country does your company expect to increase its sourcing the most? Select up to three.
Afghanistan 0% 1% 0% Algeria 0% 1% 0% Anguilla 0% 0% 1% Argentina 0% 1% 0% Armenia 0% 0% 0% Australia 3% 1% 1% Austria 0% 1% 1% Azerbaijan 0% 0% 1% Bahamas 0% 0% 1% Bahrain 0% 1% 0% Bangladesh 0% 0% 1% Belarus 0% 1% 1% Belgium 0% 1% 0% Bhutan 0% 0% 0% Bolivia 0% 1% 0% Bosnia and
Herzegovina 0% 0% 2% Botswana 0% 0% 0% Brazil 2% 4% 4% Bulgaria 0% 0% 0% Cambodia 0% 1% 1% Canada 2% 1% 1% Cape Verde 0% 1% 0% Chile 0% 1% 0% China 29% 12% 4% Colombia 0% 1% 1% Comoros 0% 0% 1% Czech Republic 1% 1% 0% Denmark 0% 0% 0% Ecuador 0% 1% 0% Egypt 0% 0% 1% Ethiopia 0% 0% 1% Fiji 0% 1% 0% France 0% 1% 2% Germany 2% 2% 3%
Countries 1 2 3 Countries 1 2 3 Countries 1 2 3
Greece 0% 0% 1% Guinea-Bissau 0% 1% 0% Hong Kong 0% 0% 1% Hungary 0% 2% 1% Iceland 0% 1% 0% India 21% 18% 8% Indonesia 2% 3% 4% Iran 0% 1% 0% Iraq 0% 0% 0% Ireland 1% 1% 1% Israel 0% 1% 0% Italy 0% 1% 1% Japan 0% 1% 1% Kazakhstan 0% 0% 0% Kenya 0% 1% 1% Lithuania 0% 0% 1% Luxembourg 0% 1% 0% Macedonia 0% 0% 0% Madagascar 0% 1% 0% Malaysia 2% 3% 0% Mauritania 0% 0% 0% Mexico 1% 1% 2% Montenegro 0% 1% 0% Netherlands 0% 1% 1% New Zealand 0% 0% 0% Nigeria 0% 1% 0% Pakistan 0% 1% 0% Peru 0% 1% 3% Philippines 1% 1% 2% Poland 0% 1% 2% Portugal 0% 1% 0% Romania 2% 1% 2% Russia 3% 5% 10% Saudi Arabia 0% 0% 0% Serbia 0% 2% 0%
Singapore 2% 2% 2% Slovakia 0% 1% 0% Somalia 0% 0% 1% South Africa 1% 1% 1% South Korea 1% 2% 2% Spain 0% 1% 2% Sri Lanka 0% 1% 0% Sweden 0% 0% 1% Switzerland 0% 1% 1% Taiwan 0% 0% 2% Thailand 1% 1% 7% Tunisia 0% 0% 0% Turkey 1% 1% 3% Ukraine 2% 1% 3% United Arab Emirates 1% 2% 1% United Kingdom 2% 3% 1% United States
of America 7% 6% 7% Venezuela 0% 0% 1% Vietnam 2% 6% 2% Zambia 0% 0% 1% Total 100% 100% 100%
Preface
28
In which country are you personally located? In which region are you personally based??
What is your primary industry?
n Western Europe
n Asia-Pacific
n North America
n Eastern Europe
n Latin America
n Middle East and Africa
46%
26%
20%
7%
1% 1%
Financial services 19%
Manufacturing 10%
Professional services 9%
IT and technology 9%
Consumer goods 6%
Energy and natural resources 6%
Healthcare, pharmaceuticals and biotechnology 6%
Telecoms 4%
Chemicals 3%
Construction and real estate 3%
Transportation, travel and tourism 3%
Automotive 3%
Retailing 3%
Aerospace and defence 2%
Education 2%
Entertainment, media and publishing 2%
Logistics and distribution 2%
Agriculture and agribusiness 2%
Other, please specify 4%
Total 100%
United States of America 16%
United Kingdom 12% India 8% Italy 5% Spain 4% Canada 4% Germany 4% Australia 3% Netherlands 3% Singapore 3% Belgium 3% Russia 3% France 2% Switzerland 2% China 2% Malaysia 2% New Zealand 2% Poland 2% Japan 2% Austria 1% Ireland 1% Philippines 1% Finland 1% Hong Kong 1% Indonesia 1% Norway 1% Romania 1% Sweden 1% Crotia 1% Cyprus 1% Czech Republic 1% Denmark 1% Greece 1% Lithuania 1%
Taiwan 1% United Arab Emirates 1% Albania 0% Bosnia and
Herzegovina 0% Georgia 0% Gibraltar 0% Grenada 0% Hungary 0% Kazakhstan 0% Luxembourg 0% Macedonia 0% Malta 0% Moldova 0% Monaco 0% Portugal 0% Slovenia 0% Sri Lanka 0% Thailand 0% Turkey 0% Uzbekistan 0% Venezuela 0% Total 100%
Preface
29
What are your organization’s global annual revenues in US dollars?
Which of the following best describes your title?
What are your main functional roles? Please choose no more than three functions.
n $500m or less
n $500m to $1bn
n $1bn to $5bn
n $5bn to $10bn
n $10bn or more
44%
14%
16%
6%
20%
0 5 10 15 20 25
Board member
CEO/President/Managing director
CFO/Treasurer/Comptroller
CIO/Technology director
Other C-level executive
SVP/VP/Director
Head of Business Unit
Head of Department
Manager
Other
4%
25%
8%
5%
9%
13%
9%
6%
15%
7%
Strategy and business development 36%
General management 34%
Finance 25%
Marketing and sales 18%
IT 16%
Operations and production 15%
Supply chain management 15%
Risk 10%
Procurement 10%
Customer service 8%
Information and research 8%
R&D 7%
Human resources 4%
Legal 3%
Other 2%
30
Airbus Thierry Caillard Senior Vice President, Supply Chain and Quality Procurement
ASDA Doug Gurr Executive Director, Strategy and Logistics
Boots Keith Younger Director of Retail Supply
BP Tim Bass Director of Procurement and Supply Chain Management, Projects & Engineering, E&P
BT Group Neil Rogers Chief Procurement Officer
Centrica Heather Rodgers Head of Group Procurement and Supply Management
Economist Intelligence Unit Robin Bew Editorial Director and Chief Economist
Electrolux Paul Dunne Supply Chain Director
GE Seaco Services John Hatton Vice President, Operations
McDonald’s Kate Allum Head of Supply Chain, Europe
Rolls-Royce Steve Churchhouse Executive Vice President, Supply Chain Development
Sony Ericsson Justin Bushby Head of Supply Chain Development
United Biscuits Jeff van der Eems Chief Operating Officer and Chief Financial Officer
UPS Dan Brutto President, International
Appendix B: Advisory Board Participants
31
Steve Churchhouse Executive Vice President, Supply Chain Development Rolls-Royce
Peter Connelly CPO Leggett & Platt
Doug Gurr Executive Director, Strategy and Logistics ASDA
Dr. Gopal Iyengar Director Kirloskar Insititute of Advanced Management Studies Bangalore
Joseph Phi President and Executive Director IDS Group
Professor Yossi Sheffi Director Massachusetts Institute of Technology Center for Transportation and Logistics
Appendix C: Qualitative Interviews
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