When manufacturers and retailers were asked about their top three supply chain initiatives over the next 12 months, product quality was identified as the most important, a reflection of the growing number of recalls in categories such as automotive, toys and grocery, and increasing pressure on brands from retail private label. Reducing costs and improving forecasting capability and accuracy also were top priorities.

These findings are among the results of a new survey from IDC Manufacturing Insights and IDC Retail Insights, titled Business Strategy and Supply Chain Innovation. The survey was designed to identify top business and supply chain issues, as well as how manufacturers and retailers expect to leverage IT resources to address those objectives and challenges. The survey included 415 manufacturers and 179 retailers in the United States, with respondents from various roles across the organization, including procurement, supply chain, manufacturing/operations, merchandising and IT.

When asked about the top three supply chain IT application investments planned for the next 12 months, Sales & Operations Planning (S&OP) topped the list for both retailers and manufacturers. This acknowledges the supply chain's need for better coordination with customer-facing departments. For manufacturers, investment in strategic sourcing was the second most frequently selected application investment, as many manufacturers plan to use this application as a means of controlling costs. Retailers selected advanced inventory management or inventory optimization as second most important. Of note, among manufacturing companies with more than 10,000 employees, manufacturing execution systems  was the second most common response after strategic sourcing, which reflects the renewed interest among large manufacturers in standardizing how they run their factories.

The survey also revealed that there is an "IT satisfaction gap" among manufacturers and retailers, particularly in their expectations of how IT can enable them to respond to unanticipated change. The results do not reflect dissatisfaction with IT departments, but rather underscore the need for IT vendors to do a better job delivering on their value propositions.

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