Survey reveals inefficient supply chain management

19 May 2004

A mere 7pc of companies are effectively managing their supply chain, according to the latest global benchmarking study of supply chain management by Deloitte. The study found that companies that do manage their supply chain effectively are likely to be 73pc more profitable than their peers.

Deloitte’s study looked at the performance of nearly 600 manufacturers throughout Western Europe, North America and Central and Eastern Europe in a variety of manufacturing sectors, including telecoms, consumer products, pharmaceuticals, aerospace and defense. The study looked at strategies, operations and performance metrics.

The study found that amongst the Irish organisations surveyed there was a considerable lack of emphasis on end-to-end supply chain and a tendency to put important information in ‘silos.’

“The survey clearly indicates that effectively managing a complex, global supply chain has a positive impact on a company’s financial performance,” said Ann Potter, senior manager in consulting at Deloitte. “Those companies who manage their supply chains well are, on average, 73pc more profitable than their peers.

“There are many examples of world-leading SCM excellence in Ireland,” Potter continued. “However, a large proportion of Irish organisations under-emphasise the importance of their end-to-end supply chain in favour of a functional focus on ‘silos’ such as inventory, sales, production, distribution and purchasing.

“These Irish organisations may struggle to compete in a world of dispersed global value chains with production and sourcing and increasingly R&D, shifting to lower cost locales,” she said.

By John Kennedy