Supply chain not up to par-yet
By Staff -- Modern Materials Handling, 5/1/1999
If 91% of North American manufacturers rank supply chain management as critical or significantly important to their company's success, why then, do only 2% rank their own supply chains as world class?A study conducted by Deloitte Consulting found that one major reason for slow supply chain progress is that nearly 50% of the companies surveyed have not yet developed a formal supply chain strategy. Many companies are launching isolated supply chain initiatives that prohibit them from reaching world-class performance levels.
Companies understand the importance of the supply chain, but the study suggests that the problem lies with performance barriers including the ability to leverage and integrate technology, compete with higher priorities, major changes in process, and cross-functional barriers.
Another barrier that companies face is the inability to measure supply chain performance. A significant percentage of companies have not aligned measurement metrics with corporate objectives, making it difficult to devise the right performance measurement tools. This is an issue that could be alleviated with a formalized strategy.
Survey respondents believe that partnering with customers and suppliers is an important factor in improving competitive advantage. On a five-point scale, respondents rated partnering with customers and suppliers a 4.5 and 4.3, respectively.
"Extending the supply chain is key in helping a company make decisions around procurement, production, inventory, and order fulfillment," says Jim Schuets, co-leader of Deloitte Consulting's supply chain results practice. "A company's commitment to optimizing cross-enterprise relationships is paramount."
One-third of respondents are currently using the Internet to share information with strategic supply chain partners. This number is expected to double in the next few years as the supply chain expands into e-commerce, e-procurement, and e-business.
"The supply chains of today and tomorrow must be capable of optimizing the performance of the supply chain across multiple dimensions: customer service, costs, investments, profits, and speed," says Jim Kilpatrick, senior manager in Deloitte's supply chain results practice. "Companies need to break down barriers with partners and use technology to share information."
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