supplychainforesight 2015 Report

Embracing Change for a Sustainable Future: The Barloworld Logistics 12th annual supplychainforesight report
Businesses of all sizes and across sectors are undoubtedly operating in a vastly different paradigm. While many market watchers have failed to capture the essence of this new paradigm, Barloworld Logistics’ 12th annual supplychainforesight report has identified, named and explored the key elements that are affecting organisations today – and that will continue to do so tomorrow. All of these elements are coloured by the overarching theme of rapid and deep-seated change. Indeed, while change and progress have always characterised business, few could argue that the pace and extent of change has reached dizzying heights – and therefore requires a vastly different type of response.
With the only certainty being “uncertainty” or “business unusual”, this year’s survey - conducted by research group Frost & Sullivan on behalf of Barloworld Logistics - sought to understand how South African companies are dealing with change. The report, “Embracing Change for a Sustainable Future”, garnered the views of over 370 professionals representing companies across South Africa - providing a statistically accurate representation of South Africa’s business and industry leaders.
More than two thirds (66%) of the respondents hold a director level position, demonstrating the relevance that supply chains play in business today. The widespread industry representation and the variety of senior roles and positions of respondents also reveals how the supply chain is seen more and more as a critical backbone of business  - and is no longer a mere support function. Respondents to this year’s survey represented a broad variety of companies by size, ranging from those turning over R1bn per annum or more, right through to smaller entrepreneurial businesses with a turnover of less than R50m. Views of respondents from a broad cross-section of traditional industry sectors were received, and there was a noticeable increase from respondents in the “other” category - representing new and emerging industries such as solar energy, waste management and humanitarian sectors.
Minding the Leadership Gap
One of the most important findings was an impending shortage of leadership, visionary and change management skills within organisations.
Whilst in all the previous supplychainforesight surveys the lack or shortage of skills has been viewed as a major business constraint, it is the first time that a lack of necessary leadership and visionary skills has been identified as a skills gap at managerial level.”
With greater investment in skills being identified as one of the smartest approaches for long term gains, it is imperative for organisations to identify what skills they currently have in their organisation, understand the trends that will impact the business and then identify the types of skills and abilities they will need to best adapt to and evolve with market shifts.
Top Ranking Strategic Objective
Across the board, change is firmly on the agenda with respondents selecting identifying and managing change as the top ranking strategic business objective for 2015. Growth and expansion into new markets, ranked second, is a continuing theme from last year, as opportunities in Africa and abroad become potentially more lucrative and diversification proves to be a smart strategy.
The cost of doing business is the top ranked constraint by respondents, up from second place in last year’s survey. With most input costs increasing, high levels of uncertainty, competition from low cost producing nations and a relatively stagnant economy, companies are focusing on cost effectiveness to remain competitive. The cost of doing business is typically only a factor where a company has a competitive disadvantage in relation to its competitors.
With regards to supply chain objectives over the next 5-10 years, the top three rankings in this section are consistent with last year’s survey: Improvement of service levels to customers remains the foremost supply chain objective, while the integration of technology, improving the flow of business intelligence, lowering procurement costs, and reducing order lead times are also focus areas.
When questioned about supply chain challenges, respondents ranked the top supply chain challenge as the willingness to change/breaking old habits/relationships, which is invariably a leadership, management or communication issue. The issue may well be identifying the need to change before being forced by circumstances to do so -which relates to the role of seeking change for continuous improvement. Interestingly, seven out of the top ten ranked supply chain challenges relate to people.
These views support the fact that change is difficult - and the greatest obstacle is to change people. Leaders are required to create the context and environment for change in order to effect change seamlessly and successfully.
This year’s survey also endeavored to understand respondents’ views on the emerging megatrends, and their potential impact on supply chains, businesses and industries. The major observation is that all the megatrends are viewed as opportunities and less so as threats. The greatest perceived opportunity is from technology innovation, and the greatest threat is seen as the rise of Asian economies.
Short Term Focus
Worryingly, it appears there is little faith in the ability of organisations to identify and respond to trends. Only 42% of respondents said their organisations are constantly in touch with anticipated shifts in the market and predicting game changing trends. With the current speed of change and rising trends, this response supports the view that most companies do not yet see the need to raise the profile of managing, predicting and creating change (or are too busy with existing challenges to take the time to do so). This results in a short-term, tactical focus rather than strategically anticipating and planning for the future.
With regards to capabilities to implement change within organisations, 45% of respondents believe it is well executed but needs improvement, and only 7% responded that it is extensive and comprehensive. With these activities being vital to the success and sustainability of businesses in today’s environment, mediocrity or the lack of high levels of competence is concerning. Furthermore, 68% of respondents believe that the health of their companies is at risk in the face of current and potential changes in global market structures and transformational technologies.
Supply Chain Disconnect
When viewing change in the supply chain, 36% of respondents said there is a controlled and deliberate process to managing change in their supply chains, whilst the remaining 64% said their companies either react or change when required to respond to market needs) or see little or no development potential of their supply chains).
These responses suggest that the supply chain and overall strategic leadership functions of organisations are somewhat disconnected, and reflects a lower level of strategic importance to the supply chain function. Respondents rated customer demands, needs and expectations as the strongest response for driving the need for change in the supply chain, supporting the concept of customer centricity.
Leadership is Key
Since the very first supplychainforesight report, we have recognised that supply chains are a key element and integral part of commercial, industrial and national strategies  - and ultimately, economic wellbeing. It remains the sole aim of the supplychainforesight reports to help countries, companies and individuals to determine the best strategies and tactics to adapt to and respond effectively to changing market dynamics.
Taking its cue from one of the core findings of this year’s survey, the report emphasises the extent to which strong and visionary leadership will be key to managing the changing landscape. We hope that this finding will inspire and motivate SA’s business decision-makers to take the necessary steps that will allow them to build a successful and sustainable future for all.
The full report can be downloaded at:
Contributed by: Kate Stubbs, Executive: Marketing & Communications at Barloworld Logistics.
More about the supplychainforesight programme:
Since its inception in 2003, the supplychainforesight  survey has grown annually in size and stature, achieving a thought provoking mechanism that has found favour with businesses, academia and public enterprises. It has also provided a measure of performance and identification of trends and opportunities for South African businesses and their supply chains. It has grown to include specialised studies on issues such as Africa, and more recently the Middle East, exploring the changes taking place in supply chain management in the Gulf Corporation Council (GCC) states.