Supply Chain Report: Why Suppliers Hold Back
Supplier collaboration and sustainability can drive innovation and growth in top supply chains, but only 43 percent of suppliers feel fully empowered to collaborate with their partners, says new research from 3M. Surveying 237 suppliers in the United States, the report uncovers insight on the most urgent trends, opportunities, and challenges facing suppliers today.
Half of all suppliers surveyed have held back from making strategic recommendations due to lack of incentive or customer openness. This is not surprising considering that 57 percent of suppliers don’t feel encouraged or empowered to innovate and make suggestions for improvement for the customers they supply.
Adding to the disconnect is the fact that 70 percent of suppliers said at least half of the customers they supply do not have a strong system and process in place for buyer and supplier collaboration. This coordination gap is potentially costing customers millions in efficiency and development opportunities.
There is some good news on the horizon for suppliers seeking better collaboration. Sixty percent of organizations are in the process of making major changes and upgrades to their systems and technology to become more connected to customers, according to 3M’s report. Major technology upgrades – which allow suppliers and their customers to communicate via a cloud system, among other benefits – are helping suppliers efficiently serve their partners. Fifty-eight percent of organizations already have fully modern systems in place to achieve this.
However, only 29 percent of organizations currently have a strong system in place for two-way demand planning. While most suppliers agree the newly digitized system is beneficial to their partner relationships, one-fourth of respondents said organizations they supply make them use technology or systems that negatively impact productivity and collaboration.
One area that nearly everyone can agree is good for business is sustainability. Seventy-six percent of suppliers equate operating a sustainable operation to positive business outcomes. The next biggest drivers for sustainability and CSR: suppliers’ desire to create a more socially responsible supply chain (69 percent), compliance (64 percent) and brand reputation (62 percent).
3M’s research also uncovered some interesting data as it pertains to current risks throughout the supply chain. According to the research, sixty-one percent of respondents identified volatile commodity and supply prices as their primary concern. Other top risks included:
· Uncertain policies of new U.S. administration (15 percent)
· Regulatory compliance (8 percent)
· The performance of tier two and tier three suppliers (7 percent)
· Natural disasters and supply disruptions (6 percent)
· Cybersecurity (3 percent)