Complexity and risk make supply chains inflexible – survey

29 July 2015

Supply chains are being held back by the effects of globalisation, according to a survey.

A study of cross-industry supply chain executives by Barloworld Supply Chain Software (Barloworld SCS), found 83 per cent of respondents reported average or poor business performance. Around 60 per cent said this was mainly due to the number of partners in the supply chain, the risks this creates, and the resultant limit to their flexibility.

Barloworld SCS said the strategies to mitigate the risks and costs associated with globalisation centred around collaboration, visibility and performance management capabilities.

More than half (54 per cent) of executives felt collaboration needed to be cross-functional and cross-enterprise.

While better visibility of demand was seen as fundamental by 26 per cent of respondents, having accurate inventory and replenishment insights was important for 33 per cent. Building flexibility and elasticity in the logistics network was important for 49 per cent of respondents.

Barloworld SCS chief executive Richard Forrest said globalisation of the supply chain was largely unavoidable and that companies had to adapt.

“In many cases, global companies are having to manage multiple supply chains,” he said. “In response, companies must tailor and respond to divergent customer and supplier expectations. For this reason, improved performance requires the development of new capabilities which enable large international organisations to use the supply chain to achieve competitive advantage.”

The survey also showed while 89 per cent of respondents were confident in articulating a business case for investment, 64 per cent felt the benefits were seen as disproportionate to the cost of the technology and other parts of the business would be prioritised for the budget.

Forrest said: “The feedback from this survey raises the question of how good supply chain is at articulating its own value, and whether the reliance on ERP vendors to provide rich and flexible supply chain management solutions has been overstated. Instead, the complex extended supply chain requires integrated, best-of-breed solutions.”

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