Managing supply chain risk a challenge, study finds

KPMG report shows few manufacturers have visibility in their supply chains


Global manufacturers are putting their supply chains at the center of their business strategies to serve as the foundation for operational efficiency and collaborative innovation, according to KPMG's 4th annual Global Manufacturing Outlook. “Competitive Advantage: Enhancing Supply Chain Networks for Efficiency and Innovation,” which surveyed 335 C-level executives globally—including 95 in the U.S.

Ironically though, many manufacturing executives (49% globally; 54% U.S.) admit that their companies currently do not have visibility of their supply chain beyond Tier 1 suppliers. Moreover, only 9% of the 335 global respondents of the 2013 KPMG 2013 survey say they have complete visibility of their supply chains. That number is even lower among U.S. executives, with only 7% claiming complete supplier visibility.

Only 9% of the 335 global respondents of the 2013 KPMG 2013 survey say they have complete visibility of their supply chains. That number is even lower among U.S. executives, with only 7% claiming complete supplier visibility. Courtesy: KPMG

“Obtaining real-time visibility across all tiers in the supply chain can significantly increase speed to market, reduce capital expenditures and manage risk,” said Jeff Dobbs, Global Sector Chair, Diversified Industrials and a partner with KPMG in the U.S. “Moving toward a demand-driven supply chain is probably the single most important step a global manufacturer can take today.”

However this could prove challenging, as Dobbs points out that “much of the supply chain technology is outdated.” In fact 44% of respondents overall say they still use email, fax and mail as the means to communicate issues about demand in the supply chain.

“The winners will be the ones who can network real-time across their entire supply chains, reducing the information lag that costs companies significant time and money,” Dobbs added.

When asked about their ability to assess the impact of an unplanned supply chain disruption, a similarly small percentage of executives, (9% global; 7% U.S.) say they are able to assess the impact within hours. However, the most frequent response among global executives was between one and six (36%) and U.S. respondents most frequently said between one and two weeks (32%).

To help manage supply chain risk and continuity in the event of unanticipated disruptions, executives (58% globally; 71% U.S.) say they plan to regionalize or localize their supply chains.

Overall, China and the U.S. remain the top sourcing locations, but the report shows that many will keep sourcing closer to their major markets over the next two years. Nearly 90% of U.S. respondents will increase sourcing in the U.S. followed by Canada (18%) and China tied with the U.K. at 13%.

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