Survey: Disruption forcing larger enterprises to hold more stock

Photo by Mika Baumeister on Unsplash 

The research commissioned by cloud enterprise software developer IFS polled over 1,450 senior decision-makers at large enterprises across France, Germany, Nordics, USA, the UK and the UAE.

Further highlighting the impact of supply chain disruption, seven out of ten respondents polled for the survey (70%) said they had increased the number of suppliers of materials/products they use in response to recent supply chain issues. Moreover, nearly three-quarters (72%) of the survey sample claimed to have grown the proportion of materials/products they source from domestic suppliers as a result of these issues.

These measures are likely to add more complexity and waste into the supply chain, says IFS, at a time when increased regulatory burdens (highlighted by 15% as a primary contributor to their current business disruption) and the need to develop the circular economy is making supply chain management more complex. In line with this, it is positive that 93% of respondents said their organisation was either embracing the circular economy today or planning to in the future.

However, many are facing challenges in terms of delivering on their goals, with around 60% of those saying they are in the process; still developing objectives; yet to plan programs; or have their objectives on hold. Even among those respondents already embracing the circular economy, 23% felt their customers’ circularity expectations were either having no impact on the customer experience or were detrimental to it, although over time the benefits of circularity in delivering a better customer experience are likely to become ever clearer.

So far, as the survey indicates, many large enterprises have re-engineered their supply chain in innovative ways to reduce the risk of this disruption. These include: onshoring to improve security of supply; keeping more stock on hand to make certain they can always meet demand and increasing the number of suppliers they use to eliminate any chance of disappointing customers.

IFS global industry director for manufacturing Maggie Slowic, says: “Businesses urgently need to find a solution that can help them to manage this disruption, which with price volatility is escalating ever further, transition to a circular economy and address the supply chain complexities we are dealing with today. To do this, especially when skills are in short supply, they will ultimately need to invest in technology that delivers the agility and fast time to insight that they need to better forecast demand. By addressing it now efficiently and cost-effectively, they will put themselves in a great position to not only survive but also thrive long into the future.”