Demand surge could catch out supply chains, study finds

24 June 2010

25 June 2010 | Andy Allen

Most companies are optimistic about economic recovery but are ill prepared to meet an upturn in demand because of supply chain weaknesses, according to a study.

Consultancy PRTM’s latest Global Supply Chain Trends 2010-2012 survey of 350 executives worldwide found optimism among respondents, who on average predicted revenue growth of 8.3 per cent between now and 2012.

The report added: “However, this widespread optimism may be premature. Our findings indicate that many companies lack the capabilities critical for meeting growing demand or for managing an increasingly complex and global supply chain.”

The report found that 74 per cent of respondents cited volatility as the most important issue facing the supply chain.

This was followed by lack of visibility to current market demand (33 per cent), increasingly demanding customers (31 per cent) and lack of integration between supply chain and product (30 per cent).

Many companies interviewed admitted they lacked the flexibility and processes needed to cope with volatility in the supply chain, according to the report.

“Recent shortages, such as those in electronic components and selected raw materials, indicate that many companies do not have the flexibility to meet an increasingly volatile demand,” the report said.

It also noted that loyalty to suppliers has significantly decreased in the past 12 months leading products to become more commoditised, reducing the ability of the market to respond to unexpected demands.

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