Supply chains in engineering and manufacturing lag ten years behind other industries. So says research by Lisa Harrington of lharrington group, who argues that engineering and manufacturing businesses must re-evaluate their approach to supply chain management and respond to their industry's driving trends to remain competitive in today's volatile business environment.
A recent TAKE Supply Chain survey indicated that the primary reason companies choose to outsource some or all of their manufacturing or distribution activities is cost reduction. This was the number one reason chosen by 61 percent of survey respondents across all global regions. However, a frequent issue faced by companies after the outsourcing project goes live is that they're not achieving their expected cost savings. Two common causes for this disconnect are vague contract terms or metrics, and manual processes.
Most firms have already invested in business intelligence, supply chain management (SCM), and modeling tools that claim to make it possible to drill deeper into their supply chain data in search of savings. These tools are often marketed with vague promises that they will harness the organization's 'big data' and/or provide 'end-to-end' visibility.
Supply chain executives want to invest in powerful new technologies and business innovations to improve their supply chains, but are hampered by a shortage of qualified talent and never-ending pressure to cut costs, according to a new study by MHI and Deloitte Consulting LLP titled "The 2014 MHI Annual Industry Report – Innovations That Drive Supply Chains."
Analyst Insight: Supply chain risk management is an evolution of business processes, techniques and focus over a multitude of elements. As supply chains have evolved to value chains, so too have the methods for supply chain risk management. Value chain risk management requires a broader integrated strategy, focused on reducing the risk at each point in the value chain, while balancing risk and resiliency. – Mickey North Rizza, BravoSolution
Analyst Insight: The industry finds itself in the eye of a perfect storm. Profits are falling from the patent cliff, pressuring companies to adopt new supply chain value propositions. Regulatory compliance and the Affordable Healthcare Act create process and cost pressure. The cold chain manages the Cs: challenges from complexity, connectivity, compliance and continuum of care. And, above all is the shift from fee-based services to outcome-based care and payment. - Rich Sherman, Principal Essentialist, Trissential
Analyst Insight: Supply chain transformation requires a business-aligned supply chain strategy and change management prowess. At its core, it is about change. Gartner defines supply chain transformation as a step function change in supply chain performance that is sustained for more than one year. Data from 30 in-depth interviews, hundreds of inquiries and interactions with Gartner clients during the past 18 months revealed the key drivers of supply chain transformations. - Michael Dominy, Research Director, Gartner Supply Chain Leaders
Analyst Insight: For both B2C and B2B, cloud technology is nothing new, but for supply chains the adoption has assumed a more guarded pace. That is to be expected: supply chain professionals are accustomed to operating in a world built on legacy applications and bolt-on point solutions. The promise of the cloud had been elusive, but supply chain systems are beginning to take advantage of the business model changes afforded by cloud solutions. - Guy F. Courtin, Vice President, Research, SCM World