@Risk

In a report that echoes news from other sectors (see posts here and here, e.g.), Retail Systems Research (RSR) reveals that retailers with global supply chains are looking to reduce their exposure to supply chain risk in the coming year.

RSR, an analyst firm providing market intelligence on retail technology trends, developed the report, titled “Retail Supply Chain Visibility 2009: The Drive for Strategic Transparency,” in partnership with the Retail Industry Leaders Association. The 28-page document compiles results from a survey of 74 retailers and manufacturers conducted in the summer of 2009. It contains analysis of the business drivers, opportunities, and organizational constraints surrounding retail supply chain visibility, as well as recommendations for creating successful visibility-driven supply chains.

The research found that retailers with elongated, global supply chains are looking to reduce their exposure to risk by taking more control over supply chain activities. The report also finds that better performing retailers are focusing their efforts on a few strategic partnerships, rather than trying to tackle activities at all trading partners at once.

When asked about the top three business challenges associated with supply chain visibility, those in the survey chose:

• Consumer demand has become unpredictable, making speed and responsiveness in supply chain more important (81% winners; 83% laggards)

• Fluctuating commodity costs (fuel or raw materials) have exposed risks in the supply chain (58% winners; 67% laggards)

• Global expansion has extended lead times and reduced flexibility (45% winners; 42% laggards)

RSR also asked survey participants to identify the top three operational challenges associated with supply chain visibility. The top-ranking responses in this category were:

• Lack of internal coordination between merchandising and supply chain (64% winners; 75% laggards)

• Faster order-to-delivery cycle requirements (54% winners; 58% laggards)

• Need the flexibility to pick alternate routes, or transportation choices, depending on circumstances on the ground (43% winners; 25% laggards)

Interestingly, the report also found that 67% of those polled feel that their executive team needs an education about the challenges and opportunities associated with global supply chain management. Even supply chain executives suffered in this critique –26% of survey respondents said that the supply chain executive at their company relies too heavily on traffic/logistics and DC/warehouse management, and therefore is not an active participant in managing the “buy” side.

“The landscape of supply chain visibility really is a tale of two cities,” said Brian Kilcourse, Managing Partner at RSR Research and co-author of the report. “On the one hand are winning retailers with global supply chains. They have reaped the benefits of a lower cost supply chain but found themselves exposed to risks they didn’t have to worry about before – like price shocks in oil and commodities. On the other hand are their retailing peers, who did not extend their supply chains, but also stayed away from any of the efficiency and cost benefits.”

The full report can be downloaded here (registration required).