24 June 2008 | Paul Snell
Companies will increasingly focus on making their supply chains more flexible over the next three years.
A study by consultancy PRTM found the ability to maintain a network of multiple suppliers in many different countries would supplant improved product quality as the main driver of supply chain strategy by 2010.
Companies will increasingly look at supply and demand forecasting, better integration of suppliers and stronger enforcement of service level agreements with vendors to improve adaptability.
A lack of flexibility was cited as the biggest barrier to globalisation by 60 per cent of firms. Other problems included delivery times taking too long and a lack of capability to manage suppliers.
The study also found although companies are able to make average savings of 26 per cent on labour costs and 18 per cent on procurement costs, the increasing complexity of supply chains mean management cost savings are far lower than expected, at around 8 per cent.