14 September 2010 | Lindsay Clark
Contract manufacturing on a global basis has bolstered the status of procurement and supply chain professionals, according to independent research firm Gartner.
In 2010, 68 per cent reported to the CEO and just 8 per cent report to manufacturing. This is compared to 2005, when 39 per cent of supply chain executives reported to the manufacturing organisation and 30 per cent reported to the CEO.
Kevin O’Marah, group vice-president of supply chain research at Gartner, was due to present the findings in London at Gartner’s Supply Chain Executive Conference which runs on 13-14 September.
“Supply chain organisations have become extremely mature all around the world – they are very powerful and control large budgets,” O’Marah told SM.
“The transition was down to the trend to contract out manufacturing on a global basis. If you have your manufacturing done in-house, then the manufacturing management is very important, but the supply chain is not a big deal, as long as enough widgets are coming in the back of the factory and you make sure the trucks are fully loaded to the customer.
“Once a third party does your manufacturing – 80 per cent of it is done in China, and assembly done in the UK – then the supply chain is responsible for negotiating the contract and managing the relationship with the manufacturer in China.”
O’Marah said that this meant supply chain executives would become more business-like in negotiating and collaborating with marketing, product development and engineering teams.