Almost 50% of CEOs recognise that their supply chain can be a strategic differentiator, said a global CEO survey of over 400 retail industry CEOs conducted by PwC for JDA Software titled: CEO Viewpoint: The Strategic Role of Supply Chain in an All-Channel World. However, 83% of worldwide CEOs believe that their retail supply chains are currently "not optimal" for today's changing retail environment.
"The rise of omni-channel is one of the most transformational shifts that has occurred in retail in recent times," said Baljit Dail, chairman of the board and interim CEO, JDA Software. "Retailers who don't understand the strategic alignment of their supply chain with consumer expectations are in danger of becoming non-competitive. This isn't about making a tweak to the operating model, it requires a massive change"
The survey findings also said that as mobile commerce comes of age, one of the biggest challenges facing CEOs is managing the transformation to omni-channel retail. However, only 34% of CEOs consider the rise of omni-channel shopping to be an external threat, while only 22% said it will have a direct impact on their organization.
CEOs think three fundamental risks will have the most impact on their organisation over the next three years: increasing competitive threats (41%), margin erosion and cost reduction (39%), and attracting and retaining customers (24 per cent).
"Our Foot Locker supply chain is changing in the face of multi-channel shopping. We're making it more responsive and faster," said Ken Hicks, president and CEO, Foot Locker. "We are looking at new ideas and new ways to distribute goods, not just to get them to the store, but also to the customer."
The survey also revealed that CEOs who focus on optimising their supply chains have 15% lower supply chain costs, less than half the inventory levels and more than three times shorter cash-to-cash cycles.
Only 15% of CEOs believe that their supply chain today is resilient enough to address the threat of external disruptions. While CEOs who have focused on supply chain have seen results, there is an opportunity for additional investment in the space versus other categories of IT spending.
"Taking a cautious, incremental approach to this kind of market disruption can be a deadly course of action," said Dail. "There seems to be a clear disconnect between the actions required to make the transformation to today's retail environment with what is being currently done by many of these companies. With speed as the new currency, accelerating time to market and responsiveness through an agile, connected supply chain must be closely aligned with growth priorities to successfully compete and defend profit margins."
The survey was conducted online and saw participation of 409 retail chief executives. Of the companies, 76 had revenues of $1 billion or more, 139 companies were between $250 million and $1 billion, and the remaining companies had revenues between $5 million and $250 million. The survey targeted the following countries: Australia, Canada, China, Germany, Russia, South Africa, the United Kingdom and the United States.
