Executive Briefings

Global Corporations Ill-Prepared to Meet Increasing Demand, According to PRTM Survey

Senior management executives are optimistic about economic recovery, but their global operations are ill-prepared to meet a significant upturn in demand, according to a new survey conducted by global management consultancy PRTM. The findings are part of PRTM's Global Supply Chain Trends 2010-2012 Survey-the largest annual survey of global supply chains ever conducted by the firm.

With nearly 350 participants from Europe, the Americas and Asia, the survey provides insight into management efforts to recover from the financial crisis and to position supply chains as an enabler of revenue and margin growth.

While optimism abounds-more than half of respondents expect average gross margins to surpass 10 percent over the next three years-three-quarters site demand and supply volatility, coupled with poor forecast accuracy, to be the biggest roadblocks they face in capturing profits from the economic upturn.

Driven by short-term exigencies, many participants did not strengthen critical capabilities during the recession. "Only a small percentage truly improved their supply chain flexibility to capture increased demand and to better manage volatility," says Reinhard Geissbauer, director, PRTM's Global Supply Chain Innovation practice.

Complexity also poses a concern. More than 85 percent of companies expect supply chain complexity to grow significantly by 2012, due to the challenges of serving new global customers-their primary source of revenue growth. Complexity will be driven by delivering products and services to new locations, and by the number of product variations required to meet the expectations of these new customers. Geissbauer says serving global customers extends the risk management challenge across the entire supply chain. To mitigate risk, more than 65 percent of survey participants list end-to-end supply chain practices at the top of their management agendas.

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Senior management executives are optimistic about economic recovery, but their global operations are ill-prepared to meet a significant upturn in demand, according to a new survey conducted by global management consultancy PRTM. The findings are part of PRTM's Global Supply Chain Trends 2010-2012 Survey-the largest annual survey of global supply chains ever conducted by the firm.

With nearly 350 participants from Europe, the Americas and Asia, the survey provides insight into management efforts to recover from the financial crisis and to position supply chains as an enabler of revenue and margin growth.

While optimism abounds-more than half of respondents expect average gross margins to surpass 10 percent over the next three years-three-quarters site demand and supply volatility, coupled with poor forecast accuracy, to be the biggest roadblocks they face in capturing profits from the economic upturn.

Driven by short-term exigencies, many participants did not strengthen critical capabilities during the recession. "Only a small percentage truly improved their supply chain flexibility to capture increased demand and to better manage volatility," says Reinhard Geissbauer, director, PRTM's Global Supply Chain Innovation practice.

Complexity also poses a concern. More than 85 percent of companies expect supply chain complexity to grow significantly by 2012, due to the challenges of serving new global customers-their primary source of revenue growth. Complexity will be driven by delivering products and services to new locations, and by the number of product variations required to meet the expectations of these new customers. Geissbauer says serving global customers extends the risk management challenge across the entire supply chain. To mitigate risk, more than 65 percent of survey participants list end-to-end supply chain practices at the top of their management agendas.

Read Full Article