Study: Poor Technology Infrastructure Costs Manufacturers Millions

Jan. 13, 2005
The annual cost of inadequate supply-chain infrastructure in the automotive and electronics industries approaches some $9 billion, according to a new study commissioned by the National Institute of Standards and Technology. That's more than $5 billion ...

The annual cost of inadequate supply-chain infrastructure in the automotive and electronics industries approaches some $9 billion, according to a new study commissioned by the National Institute of Standards and Technology. That's more than $5 billion for the automotive industry and nearly $3.9 billion for the electronics industry. According to the study conducted by RTI International, Research Triangle Park, N.C., "almost all of this cost could be eliminated if firms implemented true interoperability, which we have termed 'ideal supply-chain integration.'" The study, "Economic Impact of Inadequate Infrastructure for Supply Chain Integration," says just a handful of firms "have come close" to achieving true interoperability with their supply-chain partners. However, ample evidence exists to show that "ideal information system integration is not evolving," including: widespread use of manual data entry; necessity of human intervention to maintain supply-chain information flow; nearly universal use of translators to convert data from one format to another; and the use of "informed" estimates rather than actual production data in scheduling, materials management, and expediting. The study is part of NIST's strategic planning process for implementing the 2002 Enterprise Integration Act. The act authorizes NIST to help improve supply-chain integration. A pdf of "Economic Impact of Inadequate Infrastructure for Supply Chain Integration" can be downloaded at www.nist.gov/director/prog-ofc/report04-2.pdf.

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