Executive Summary

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GEXSO_Study-ChartCompanies that experience an exceptionally strong technology change also globalize their supply chain to a greater extent.

This core statement of the current GEXSO study is also the conclusion of an article by the GEXSO partner LOGISTIK HEUTE titled “Technology as a catalyst” (cf. LOGISTIK HEUTE, issue 10/2014). Accordingly, technology change is experienced more strongly by companies that search for production sites and suppliers in different regions of the world.

Nearly 72 per cent of the GEXSO study participants notice a strong technology change in their company in one form or another. Almost a third of these companies have revenues of more than 1 billion euro. The strongest change is noticed in the usage of new materials and electronic components. These two areas are vastly affected by innovation and technological developments. At the same time, new production methods are most frequently mentioned as process technology-related innovation.

GEXSO_Study-ChartIn most cases, technological alterations are based on internal innovations. Partly, change is also driven by customers. Government institutions and suppliers are rarely seen as drivers for general technology change. Companies most frequently stated that they have implemented a general strategy for the identification and research of new technologies as well as an open business culture in order to successfully implement technical innovations. On the contrary, flexible and fast decision-making procedures are seen as deficiencies. Sufficient budgets are also mentioned less frequently.

The primary effects of technology change are an adjusted production infrastructure and new suppliers. Moreover, supply chain processes are also adjusted to a great extent. Therefore, innovations in process and product technologies have a direct impact on supply chains. In addition, companies that experience an exceptionally strong technology change also globalize their supply chain to a greater extent. Thus, companies that notice a significant technology change also expect a stronger shift in the global distribution of their production sites within the next five years:

In general, most interviewed companies are subject to a significant globalization process; more than 60 per cent of the companies serve half of their customers outside their home region, Western Europe.

While 37 per cent of the companies plan to increase the globalization degree of their production sites within the next five years, a further 73 per cent plan to increase the share of global procurement volume.

This so-called “global shift” confirms Western Europe’s decreasing significance regarding customers, suppliers and production sites, as well as procurement volumes within the next five years. In particular East Asian countries will benefit from this trend as well as East European countries in relation to procurement. This shift as repeatedly shown by GEXSO, permanently altered the supply chain structures of the companies.Due to increasing globalization degrees in procurement, there is a stronger focus on country analysis of potential procurement markets. Difficulties encountered by participating companies most frequently in the procurement process are exchange rate fluctuations, high levels of corruption and insufficient quality from suppliers.

Russia and China, followed by India, are seen as the most difficult countries. In China, the protection of intellectual property is considered as particularly difficult. In Russia, general political conditions and high levels of corruption are seen as obstacles. According to the participants, sourcing in India is hindered by insufficient infrastructure and a lack of quality standards of employees and suppliers. The East European countries of the EU, the USA and Turkey are regarded as highly attractive for procurement with only few difficulties experienced. Although China is seen as one of the most difficult procurement markets, participants assure its appeal is exceptionally high, thereby attesting to China‘s high potential in the future.

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