Lack of IT integration hinders supply chain efficiency

31 January 2012

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31 January 2012 | Angeline Albert

A lack of integration between IT systems and processes is causing inefficiencies in the supply chains of construction and engineering companies.

In KPMG's Global Construction Survey 2012 of 161 engineering and construction firms around the world, businesses said IT optimisation is critical to improving procurement efficiencies but 50 per cent say overhauling systems takes too long and costs too much.

“Those who previously funded major IT enhancements are now reaping the rewards of centralisation and transparency across their supply chains,” said Geno Armstrong, international sector leader of KPMG's engineering and construction practice.

Almost 60 per cent of those quizzed for the surveysaid improvements in procurement would increase profits by mitigating risk. This is a major concern for most respondents, with 45 per cent saying their ability to quantify risks is the chief issue. “Despite considerable investment, risk management still comes up a bit short,” said Armstrong. “Nearly 54 per cent say they failed to identify upfront issues that later caused margin erosion and only 36 per cent believe that their project review processes are very efficient.”       

Cost cutting also remains a challenge. A total of 61 per cent blame the culture of their organisation for leading to the need to make cuts.

Forty-nine per cent expect backlogs of work to grow from 5 to more than 15 per cent in the next year because inefficiencies mean they are hindered in their ability to deal with the workload. And 71 per cent cite economic uncertainty as their biggest ongoing concern.

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