Delivery Reliability and Security Worry Supply Chain Executives

Product recall is major problem according to PRTM study.

The majority of the respondents to PRTM Management Consultants' Global Supply Chain Trends 2008-2010 study reported experiencing issues with product safety and quality. More than one-fifth said these issues are frequent and serious.

Concern is also high over product quality and safety, as well as delivery reliability and security, when expanding the supply chain globally.

The study reveals that the product recall is more extensive than many realize, with the most frequent issues reported by companies in the automotive and industrial sectors.

"Companies are acutely aware of the risks posed by globalization and are taking this challenge very seriously," said Shoshanah Cohen, Director, PRTM's Global Supply Chain Innovation practice. Although globalization is accelerating, the study found that a company's supply chain can impede that acceleration if it is not sufficiently flexible or if the company lacks the internal competency to manage supply chain partners.

Sixty percent of survey participants indicated that their supply chains lacked the required flexibility to rapidly respond to changing customer demands and interruptions in supply. In addition, more than half said they lack internal competencies to adequately manage their external partners.

Managing supply chain flexibility to ensure efficient product flow and on-time delivery remains a major challenge, the study shows. By 2010, the need for greater supply chain flexibility will overtake product quality and customer service as the major driver for improving supply chain strategy.

To improve supply chain flexibility across continents, almost 90% of those surveyed plan to increase their focus on delivery performance. Four out of five companies plan to better integrate key suppliers, including tighter enforcement of service level agreements with their channel partners. And 65% plan to maintain higher buffer stocks along key supply chain functions.

Other survey highlights:

  • Offshore operations -- By 2010, more than half of companies total operations will be outside their original home country; and offshoring of R&D and technology development will almost double.
  • Planned/actual benefits gap -- Despite average cost reductions of 17% per globalization initiative, many companies have difficulty realizing savings in management costs.
  • Accelerated globalization -- Pressure to reduce cost and local market access are the key drivers.
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