Engineering and manufacturing supply chains 'lagging 10 years behind'

Will Green is news editor of Supply Management
24 June 2014

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24 June 2014 | Will Green

Engineering and manufacturing (E&M) firms globally are lagging 10 years behind other industries in terms of supply chain development, according to a study.

The report, The Resiliency Challenge: Constructing the Agile Supply Chain for Heavy Industry, said companies had been slow to respond to changing patterns of demand, cost pressures and the rise of consumer expectations in industrial sectors.

Report author Lisa Harrington, president of the lharrington group, said: “Change won’t come easily to an industry populated by companies which have been around for over 80 years and are used to ‘business as usual’. But it is imperative that they transform their supply chains in order to meet the demands of modern business with its onus on faster, leaner and more resilient operations. Those that do so can use their newly discovered logistical capability as an offensive weapon against competitors who fail to adjust.”

Harrington said demand for E&M products and services was “migrating from established markets to rapid growth regions that are home to local, more agile competitors” while consumer demands typical of the retail sector were now part of the heavy goods industry.

“A new business paradigm is emerging to serve this demand; a lean, resilient and regionalised supply chain model in which global companies’ goods are produced, sold and consumed in the same geographic region,” she said.

The report said E&M firms are “currently operating the least mature and therefore most costly supply chains in global industry”.

Andy Ramsden, vice president of global sector development for automotive, engineering and manufacturing at DHL Supply Chain, which commissioned the research, said: “The most forward-thinking E&M companies have a significant opportunity to leap-frog supply chain development by learning best practice from their automotive and consumer goods sector peers who have paved the way and already operate a regionalised model.”

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