New IDC Insights Survey Reveals Improving Product Quality Most Important Supply Chain Initiative in 2010

FRAMINGHAM, MA. – April 27, 2010 – IDC Manufacturing Insights and IDC Retail Insights today announced the results of a new survey, "Business Strategy and Supply Chain Innovation," designed to identify the top business and supply chain issues, as well as how manufacturers and retailers expect to leverage IT resources to address those objectives and challenges. The survey included 415 manufacturers and 179 retailers in the United States, with respondents from various roles across the organization, including Procurement, Supply Chain, Manufacturing/Operations, Merchandising, and IT.

Top Supply Chain Initiatives and Priorities

When manufacturers and retailers were asked about their top three supply chain initiatives over the next 12 months, not surprisingly, product quality was identified as the most important, a reflection of the growing number of recalls in categories such as automotive, toys, and grocery, and increasing pressure on brands from retail private label. Reducing costs was the top supply chain priority for respondents, and there was significant interest in improving forecasting capability and accuracy as well as improving responsiveness to demand changes. As companies begin to recover from the recession, managing the ability to respond to change and prepare for the return of demand is increasingly critical for business success.

Top Supply Chain Application Investments

When asked about the top three supply chain IT application investments planned for the next 12 months, Sales & Operations Planning (S&OP) topped the list for both retailers and manufacturers. This acknowledges the supply chain's need for better coordination with customer-facing departments. For manufacturers, investment in strategic sourcing was the second most frequently selected application investment, as many manufacturers plan to use this application as a means of controlling costs. Retailers selected advanced inventory management or inventory optimization (IO) as second most important. Of note, among manufacturing companies with more than 10,000 employees, manufacturing execution systems (MES) was the second most common response after strategic sourcing, which reflects the renewed interest among large manufacturers in standardizing how they run their factories.

According to Leslie Hand, research director, IDC Retail Insights, "The IT investment priorities for retailers reflect the current requirement to more effectively manage top and bottom lines, as well as sales growth in the web and mobile channels, making better synchronization critical in the coming year. It's also clear from our results that retailers have received the consumer message that quality, value, and transparency are all equally important by ranking product quality as the most important initiative this year."

IT Satisfaction Gap – Vendors Need to Deliver on Their Value Propositions

The survey also revealed that there is an "IT satisfaction gap" among manufacturers and retailers, particularly in their expectations of how IT can enable them to respond to unanticipated change. The results do not reflect dissatisfaction with IT departments, but rather underscore the need for IT vendors to do a better job delivering on their value propositions.

"These application investment results confirm our prediction emphasizing manufacturers' increasing interest in S&OP," said Kimberly Knickle, practice director, IDC Manufacturing Insights. "In addition, product quality will continue to be an important initiative in the wake of significant recalls to strengthen consumer trust and loyalty in the market."

To learn more about the results of the survey, please join the Web conference, Supply Chain Innovation in North America – Driving IT Investments to Support the Business, presented by Kimberly Knickle, Simon Ellis, and Leslie Hand, on Friday, April 30th at 12:00 pm U.S. Eastern time.

Follow the discussions online in the IDC Manufacturing Insights Community and the IDC Retail Insights Community to learn more. To set up a one-on-one briefing with an IDC Manufacturing Insights or IDC Retail Insights analyst, please contact Sarah Murray at 781-794-3214 or sarahbethmurray@gmail.com. In addition, full reports will be available to qualified members of the media. For more information on obtaining or purchasing reports, email info@idc-mi.com.

About IDC Manufacturing Insights

IDC Manufacturing Insights provides business and IT decision-makers with fact-based research and analysis to inform and support critical business decisions. The global independent research and advisory firm closely follows processes associated with the design, development and distribution of goods across markets including Discrete Manufacturing, Process Manufacturing, High Tech/Electronics Manufacturing, and Consumer Packaged Goods. IDC Manufacturing Insights' research and analysis is critical for end-users, as well as hardware and software suppliers, and technology service providers. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world’s leading technology, media, research, and events company. For more information, please visit www.idc-mi.com [http://www.idc-mi.com], email info@idc-mi.com, or call 508-988-7900.

About IDC Retail Insights

IDC Retail Insights provides research-based advisory services and custom research focused on market and technology developments in the retail industry. Staffed by senior analysts with decades of direct industry experience, IDC Retail Insights covers the entire retail value chain – from global sourcing and supply chain to demand-based merchandise planning, straight through to the consumer shopping experience – providing independent, timely, and relevant analysis focused on key business issues. IDC Retail Insights provides a portfolio of research and advisory services that are relevant to the needs of retailers and retail IT suppliers. International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology market. IDC is a subsidiary of IDG, the world’s leading technology, media, research, and events company. For more information, please visit www.idc-ri.com [http://www.idc-ri.com], email info@idc-ri.com, or call 508-935-4490.

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