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Supply chains come under the spotlight

05 June 2014 #Bus and Coach #Logistics #News #Top Stories

A new white paper commissioned by DHL, has claimed that the engineering and manufacturing (E&M) supply chainsis lagging at least a decade behind other industries.

It claims that the sector has been slow in responding to change globally, and risks critically damaging their market share and their bottom line, if they don’t adapt their supply chains.

The report named ‘The Resiliency Challenge’, written by LHarrington Group, highlights that the sector needs to improve its approach dramatically in order to stay competitive in an increasingly volatile environment. It highlights the automotive supply chain as being ahead of many other parts of the engineering and manufacturing sector but with challenges that still need to be addressed.

Lisa Harrington, President of the 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.”

Some of the older members of the industry accept that change is needed, even though it will mean breaking habits of a lifetime, some thing that, Edwin O’Neil, Director of Integrated Logistics Services at Caterpillar Inc concurs with.

“Our ability to become more adaptive is a cultural change for us,” he says. “We’ve always been long and lumbering. But our demand cycles are moving much faster, so we need to adapt and become more agile.”

One area considered to be a key motivator to drive change in the supply chain is the emergence of new competition and the cost pressures. In many cases these factors have switched the focus to the service on offer.

PricewaterhouseCoopers (PwC)explains that new entrants to market are able to be more innovative and having a leaner cost structure due to the old fashioned methods still used by the mature players in the sector, adding: “Many a business initiative launches with the call that ‘if we don’t do it, someone else will’. The central challenge for CEOs today is the increased likelihood that someone else is no longer a well-understood competitor. That changes everything, signalling above all that the economics of the business are evolving.”

Part of the white paper suggests that the industry looks at developing its sustainable lifecycle, which means making the supply chain centre of all strategic operations.

Carol Burke, Managing Director of Unipart Manufacturing Group, says the supply chain will be ‘absolutely critical’ in the future. She emphasises that companies need to recalibrate theirs in order to capitalise on opportunities,  anticipating future growth markets, and moving swiftly to service them.

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