Asian Business Leaders Differ Sharply From U.S. Execs on Supply Chain Practices
SHANGHAI, Oct. 25, 2005 – By a margin of almost 3-to-1 compared to their counterparts in the United States and Europe, business leaders in Asia say they have turned to outside experts to manage their supply chains, a new survey shows.
Moreover, having embraced the outsourcing of supply chain management, the Asian business leaders are much less likely to view “customer loyalty” as a business problem. Some 14% of the U.S. and European executives surveyed listed “customer loyalty” as the most important business issue they faced compared to only 2% of the Asian executives. The latter say a much more important business issue facing them is “expanding to new markets.”
The Asian leaders addressed those and other business issues in a survey conducted by Harris Interactive® for UPS. The executives, more than three-quarters of whom are director- or vice president-level managers, attended a special symposium here last week co-sponsored by UPS known as Longitudes ’05. Their answers then were compared to those of business leaders who attended three earlier Longitudes conferences in Chicago, Paris and New York City.
In discussing their embrace of outside expertise in running supply chains, a full 29% of the Asian executives said they had moved “very extensively” or “completely” to outsourcing. In contrast, only 11% of the U.S. and European executives had gone so far.
Indeed, some 27% of the U.S. and European business leaders said their embrace of supply chain outsourcing was “not extensive at all.” The corresponding number for Asian executives was just 9%.
The survey results suggest that executives who have made the leap to reliance on outside supply chain partners are able to focus on a different set of business problems and challenges. For example, when asked what was the most important business issue facing their company today, all executives surveyed were most likely to mention “revenue growth.” But then they diverged sharply.
Where the Asians next focused on “expanding to new markets,” the U.S. and European executives focused on “profitability.”
On another question, some 7% of the U.S. and European executives said their No. 1 supply chain objective was to “improve working capital.” Not a single Asian executive surveyed saw that as their No. 1 problem.
Similarly, a surprising 23% of the Asian respondents said their No. 1 supply chain objective was to “improve product cost,” while only 7% of the U.S. and European executives ranked this objective as high.
“Asian business leaders clearly understand that effective supply chain management addresses a number of strategic issues and can be a competitive differentiator,” observed UPS Chairman and CEO Mike Eskew. “They also appear much more willing to turn to outside supply chain service providers while focusing instead on their core competencies.”
There was one topic on which all the executives, regardless of location, agreed: whether you manage your own supply chain or rely on outside expertise, the most common problem with supply chain management right now is “difficulty accurately forecasting demand.” Some 77% of the Asian leaders listed this as a problem, just as did 76% of the U.S. and European leaders.
“The most commonly cited problem in effective supply chain management is forecasting,” added Eskew. “And overwhelmingly, these executives understand that collaboration between customers, vendors and suppliers is key. We believe technology can solve these problems when it’s backed by a trusted partner with the necessary intellectual capital and experience.”
In another interesting finding, almost three-quarters of the Asian executives view China not only as a “very” or “extremely important” source of manufacturing (71%) but also as a “very” or “extremely important” domestic market opportunity (72%).
The Longitudes conferences are designed to stimulate dialogue about the future of global trade, including its human and cultural aspects, as well as the supply chains and technologies that shape commerce. Longitudes Shanghai was co-sponsored by Harvard Business School Publishing, the China Europe International Business School and UPS (NYSE:UPS).
The just-completed Asian conference featured a variety of speakers including Dr. Victor K. Fung, the group chairman of Li & Fung; Gang Yu, vice president of worldwide supply chain operations for Amazon.com; Larry Wilk, vice president of logistics and operations services for Hong Kong Disneyland; Joe Hatfield, CEO of Wal-Mart China, and Thomas Friedman, the noted book author and foreign affairs columnist for The New York Times.
UPS is the world’s largest package delivery company and a global leader in supply chain services, offering an extensive range of options for synchronizing the movement of goods, information and funds. Headquartered in Atlanta, Ga., UPS serves more than 200 countries and territories worldwide. UPS’s stock trades on the New York Stock Exchange (UPS) and the company can be found on the Web at UPS.com.
About Harris Interactive
Harris Interactive Inc. (www.harrisinteractive.com) is the 13th largest and fastest-growing market research firm in the world, perhaps best known for The Harris Poll® and for pioneering and engineering Internet-based research methods. The Rochester, New York-based global research company blends premier strategic consulting with innovative and efficient methods of investigation, analysis and application, conducting proprietary and public research globally to help clients achieve clear, material and enduring results.
Blending science and art, Harris Interactive combines its intellectual capital and one of the world’s largest online panels of respondents, with premier Internet survey technology and sophisticated research methods to market leadership through its US, Europe (www.harrisinteractive.com/europe) and Asia offices, its wholly owned subsidiary, Novatris in Paris (www.novatris.com), and through an independent global network of affiliate market research companies. EOE M/F/D/V
Harris Interactive conducted an online survey on behalf of UPS between April 8 and 15, 2005, among 70 high-level business executives who attended Longitudes ’05 in Chicago in April, or who attended two similar conferences in 2004 in New York City in April or Paris in October. The same online survey was also completed by 35 high-level business executives between Sept. 22 to Oct. 6, 2005, who attended the Longitudes Shanghai ’05 conference (October, 2005). Data from each online survey administered were not weighted and are only representative of those business executives who replied.
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