Manufacturing supply chain lags 10 years behind other industries

Posted on 4 Jun 2014 by Victoria Fitzgerald

The manufacturing supply chain is up to 10 years behind other industries according to a DHL report released today.

The report showed the manufacturing industry has been slower to respond to changes in global industry, causing damage to market shares from competitors and ultimately jeopardising a firm’s bottom line.

The Resiliency Challenge: Constructing the Agile Supply Chain for Heavy Industry report advises manufacturers to respond to driving sector trends to stay competitive.

The report highlights migrating manufacturing, regionalisation, cost pressures, consumerism and life cycle sustainment as some of the key trends.

The paper revealed engineering and manufacturing companies have the most costly supply chains because they are the least mature. It showed firms could improve in resilence, flexibility, visibility and agility.

Author of the paper and president of 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.

“At the same time, demand for E and M products and services is migrating from established markets to rapid growth regions that are home to local, more agile, competitors.

“Heightened competition is being driven by consumerism whereby consumer demands and expectations that were formerly typical of the retail sector are now ‘bleeding’ into the heavy goods industry.

“Other drivers for regionalisation include speed to market, access to market in response to local regulation, and support for locally manufactured content.

“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.”

Andy Ramsden, VP global sector development, automotive, engineering and manufacturing, DHL supply chain 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.

“This will allow them to anticipate the emergence of new growth markets and move swiftly to service them with innovative solutions.

“Well designed, synchronized and executed supply chains will allow E&M companies to capitalise on opportunities where their competitors can’t, ultimately capturing sales and market share.

“We work closely with our customers to introduce supply chain agility, resiliency, capability and control that can quickly become the differentiators in this industry.

“Integrating supply chains so that all the upstream and downstream partners can see the full picture enables companies to plan ahead more accurately, manage demand more cost-effectively and support their customers more proactively.”