New Research Uncovers Wave of Supply Chain Disruption

Sunbury, United Kingdom – 15 December 2010 – GXS™, the world’s leading provider of business-to-business (B2B) e-commerce solutions, has announced that the world’s 500 largest companies are driving a new wave of disruptive innovation in their supply chains and the effects of this are quickly rippling downstream to their suppliers, some of whom are struggling to manage the complexity resulting from these changes.

The reality of this disruptive innovation was a major finding in recent global research sponsored by GXS. The research was led by Martin Christopher, Emeritus Professor of Marketing and Logistics at the UK’s Cranfield School of Management and carried out by SCM World. Over 800 businesses took part from a broad range of industry sectors across the world. More information on the research, video, blogs and best practices can be found at http://www.gxsinsights.eu/4th_edition/.

One of the research’s starkest findings was that this complexity is set to become a challenge for many companies in the very near future. Some 84% of companies taking part in the research said they anticipated that the level of supply chain complexity will increase inside the next three years.

The sheer pace of this innovation and its concomitant complexity are spurring demand for new technology solutions, according to Martin Christopher who noted: “An increasing number of suppliers are enlisting the help of a combination of new cloud-based technology platforms and specialised B2B outsourcing providers to wage war against complexity. The manufacturing companies that master complexity in their demand chains will be the long-term winners in the marketplace.”

73% of participants agreed that the number of requests from large customers for customised processes have been on the increase in the past three years as the top 500 companies have aggressively pursued supply chain optimisation in order to maximise their performance. The research discovered that these companies are introducing radical customisation, touching almost every aspect of their business operations – where they manufacture, how they order and pay suppliers for parts and components, where and how they transport and stock products, and how they get them to the shop-floor.

“We are standing on the cusp of a potentially major shift in the balance of power between very large customers and their suppliers,” commented Steve Keifer, industry and product marketing vice president at GXS. “Suppliers are faced with more customisation as they struggle to comply with the unique support services requested from their largest customers. As a result, suppliers are forced to support a myriad of different order forecasting, fulfillment and logistics processes and a wide variety of technology standards for visibility, collabouration and synchronisation. These manufacturers are in a battle against the growing complexity in their demand chains.”

There is a broad consensus among suppliers and manufacturers that commoditisation has become an accepted fact of life. Among its findings, the research indicated that:

  • 65% of respondents across many different sectors – including high-tech, food and beverage, automotive and pharmaceuticals – admitted there was a general trend towards ‘commoditisation’ in their markets, with product differentiation becoming weaker.
  • 9 out of every 10 people quizzed in the survey agreed with the proposition that, increasingly, companies will compete as much through superior processes and service solution as they used to do via superior products.

Finally, the research found that a growing number of companies are now focused on the opportunity to differentiate based less upon product quality and more upon process excellence and superior service. The leaders in tomorrow’s supply chain will be companies which harness the potential of technology to master complexity and begin to differentiate based on service and process.

About GXS
GXS is the world’s leading provider of B2B e-commerce solutions. The company’s software and services simplify and enhance how networks of businesses integrate business processes and collabourate among trading partners. Organisations worldwide, including more than 75 percent of the Fortune 500, use GXS solutions to extend their supply chain networks, optimise product launches, automate warehouse receiving, manage electronic payments and gain supply chain visibility. Based in Gaithersburg, Maryland, GXS has operations and offices around the world. For more information, see http://www.gxs.co.uk, http://blogs.gxs.com/ and http://twitter.com/gxs.

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Media Contact:
Denise Oakley
Marketing Programmes International, GXS
Tel: +44 (0) 1932 776408 / +44 (0) 7768 537 481
denise.oakley@gxs.com