83 Percent of Retail CEOs Believe Supply Chains are “Not Optimal” to Meet Omni-Channel Demands
Over 50 percent of retail CEOs see supply chain as strategic differentiator, but many are not making required transformation to take advantage of the pace of change. according to a recent survey by PwC titled CEO Viewpoint: The Strategic Role of Supply Chain in an All-Channel World.
Digitally connected consumers have turned retail models upside down as omni-channel has transformed supply chains. However, 83 percent of worldwide CEOs believe that their retail supply chains are currently “not optimal” for today’s changing retail environment.
As mobile commerce comes of age, one of the biggest challenges facing CEOs is managing the transformation to omni-channel retail. However, only 34 percent of CEOs consider the rise of omni-channel shopping to be an external threat, while only 22 percent said it will have a direct impact on their organization.
CEO Priorities Focused on “Traditional” Growth Areas
CEOs say their top priorities are centered on more traditional areas of growth – by entering into new regions and markets, by opening more stores, or through mergers and acquisitions. These priorities highlight potential missed opportunities for more than two-thirds of CEOs who failed to consider enhancing distribution capacity and supply chain as a key contributor to drive profitable growth.
Competitive Threats Tops List of CEO Concerns
CEOs think three fundamental risks will have the most impact on their organization over the next three years: increasing competitive threats (41 percent), margin erosion and cost reduction (39 percent), and attracting and retaining customers (24 percent).
These answers reveal a potentially sizable gap between recognized risk and a strategy to address that risk. While there are plenty of exceptions, maintaining a strong customer value proposition is directly tied to supply chain proficiency.
“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.”
CEOs Who Focused on Supply Chain Delivered Higher Margins at Lower Costs
The survey revealed that CEOs who focus on optimizing their supply chains have 15 percent lower supply chain costs, less than half the inventory levels and more than three times shorter cash-to-cash cycles.
“Supply chain has moved from the back office to the store front as consumers seek to seamlessly shop across virtual and brick-and-mortar channels,” says Bruce H. Rogers, chief insights officer, Forbes Media . “Our research highlights both the opportunities and challenges today’s retail CEOs face in mastering this all-important discipline. To do it well, CEOs are shifting their capital investments and business priorities, as well as applying innovations to drive a more strategic supply chain that’s aligned with their business growth.”
Only 15 percent 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.
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