Opportunities are missed in supply chain efficiency

13 January 2012

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13 January 2012 | Adam Leach

Manufacturers have overlooked the impact supply chain efficiencies can have on overall profitability, according to DHL.

The Engineering & Manufacturing Supply Chain Survey 2011, published this week by Benchmark Research on behalf of DHL, found that just 54 per cent believe supply chain efficiencies can make a positive contribution to their business’ bottom line.

In addition, the report, which surveyed 120 senior supply chain managers, found that more than a fifth (22 per cent) believed the in-bound procurement and sourcing function at their company needed to be improved.

An anonymous respondent to the survey indicated one of the problems is that even though supply chain operations are discussed at board level, making changes or improvements is delayed in favour of more pressing matters. “Supplier management has been the key challenge for us. We agree in a board meeting that we need to improve our supply chain, but unfortunately it is always last on the priority list,” they said.

Ian King, business director of engineering and manufacturing at DHL, believes the results of the survey suggest that companies need to look more closely at the potential to generate efficiency savings in the supply chain. He said: “Manufacturers recognise that there is room for further improvement in their supply chain, but it seems that one area they might be overlooking is the impact that improving supply chain efficiency can have on their supply chain.”

The survey also found that the biggest impact on manufacturers’ supply chains as a result of the current state of the global economy is the buying of raw materials or components. Respondents to the survey, which used a sample of 120 supply chain managers, were asked to score areas out of five in order, according to how much they had been affected by economic factors. Raw material costs scored 461 out of a possible 600, followed by raw materials availability with 390 and stock levels scored 354.

Making the supply chain more environmentally friendly also emerged as an important area, with 50 per cent reporting that customers were demanding they reduce their carbon footprint and 38 per cent saying customers were calling for greener transport services.

Meanwhile, manufacturers’ organisation the EEF, has argued that the shortage of materials is now the biggest threat to manufacturers. It says materials in scant supply could be salvaged if the UK government adopts a more ambitious approach to waste management.

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