Report points to shortfall in global supply chain leaders

18 June 2003
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19 June 2003 | Robin Parker

Only half of global manufacturers have a senior executive who is in charge of their entire worldwide supply chains, a major study has found.

Despite increasing globalisation, most manufacturers are still designing and running their supply chain networks on a local basis, according to consultancy Deloitte & Touche.

Its report, The Challenge of Complexity in Global Manufacturing, highlights a series of "paradoxes" in which manufacturers' global supply chains run counter to their organisations' goals of reducing costs, developing new markets and rapidly launching new products.

The findings, drawn from a study of almost 500 global organisations, are the first stage in a benchmarking study that Deloitte will publish in September, which will include detailed analysis and case studies.

Running supply chains on a local basis - by product, function, country or region - makes large-scale efficiencies hard to achieve, the report says.

Deloitte also expressed concern that only around 8 per cent of firms collaborate with customers in areas such as forecasting and inventory management despite ranking customer responsiveness as their second-highest supply chain priority.

Similarly, while product innovation is manufacturers' top priority for driving revenue growth, it ranks last on their supply chain agenda.

Those polled rated forecast error as their biggest obstacle to supply chain flexibility, followed by long supplier lead times and product proliferation.

Julian Thomas, manufacturing sector leader at Deloitte and one of the report's authors, said: "Most companies now recognise the necessity of managing their supply chains on a global basis, but there are too many internal boundaries to putting a global director in place.

"It's a matter of timing. Until they can run a truly global organisation, most will have no organisational structure to support such a role."


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