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27 September 2011 | Adam Leach
More than half of businesses will move to standardise production and processes in the supply chain over the next two years.
The global manufacturing outlook: growth while managing volatility, published last week by consultancy KPMG, reported that standardisation of production, such as the use of uniform components across product lines, is the most popular supply chain strategy over the next 12 to 24 months, with 55 per cent of respondents indicating they will take it on to save money and make operations more efficient.
The report, based on responses from 220 senior manufacturing executives from global companies with annual revenues of at least $1 billion (£643 million), also found 33 per cent will look to shorten the supply chain in order to close the gap between production and customers, while 31 per cent intend to acquire suppliers in order to increase control over supply price volatility.
Bob Kickham, senior vice-president for procurement at metal products manufacturer Luvata, told the study that communicating with suppliers openly was key to increase standardisation across products. “We’re trying to create more and more forums, not to beat up on suppliers on raw price, but to look at how we can take our costs jointly and share value on that,” he said.
The report also highlighted the greater importance companies are placing on risk management in the wake of the earthquake and tsunami in Japan. Just under half of respondents - 49 per cent - plan to use technology to improve supply chain visibility to make it easier for potential risks to be identified.
In terms of achieving growth, increasing production capacity (28 per cent) and entering into joint ventures or strategic partnerships (25 per cent) were the most popular strategies.