Dont Ignore Supply Chain

If there was any doubt about the importance to industry of closer connections with suppliers and customers, KPMG Peat Marwick LLP may have laid it to rest. Based on the results of two surveys of nearly 500 companies released Jan. 20, the consulting firm estimates that companies worldwide are losing millions of dollars each year because they fail to communicate efficiently with both customers and suppliers.

"Most companies think theyre more efficient than they really are," says Thomas Wilde, national partner in charge of KPMG Consultings manufacturing, retailing, and distribution practice. In fact, he says, companies are inefficient "because its either too painful to make the necessary organizational changes to become more efficient, or its not clear to them what the benefits are." Furthermore, many companies dont know the exact amount of goods they need to manufacture, transport, and store, yet are sluggish to adopt the very techniques and technologies that would solve the problem, according to the surveys results.

Among the findings:

  • Less than half of companies supply-chain software initiatives have been completed.
  • Supplier and customer involvement is essential for an efficient supply chain, but 29% of companies reported their suppliers had no involvement in their inventory management.
  • Another 22% of companies reported no involvement from their customers when planning manufacturing requirements.

The surveys of global logistics and consumer markets were conducted by KPMG Consulting in cooperation with the J.L.Kellogg Graduate School of Management and with a team of professors from the Massachusetts Institute of Technology, respectively. The global logistics survey included companies in nearly all sectors, including automotive, industrial, chemicals, pharmaceuticals, retail, consumer products, consumer electronics, food, and agriculture. Respondents were managers at 451 companies in 25 countries. The consumer markets poll tapped the views of a diverse group of executives, many from large corporations.

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