Wednesday 28th Sep 2016 - Logistics Manager

Engineering supply chains are ten years behind

Supply chains in engineering and manufacturing lag ten years behind other industries, such as automotive, according a white paper commissioned by DHL.

The paper by Lisa Harrington of lharrington group, argues that engineering and manufacturing businesses must re-evaluate their approach to supply chain management and respond to their industry’s driving trends to remain competitive in today’s volatile business environment.

It highlights a number of trends that threaten to disrupt engineering and manufacturing businesses including; migrating manufacturing and regionalisation, cost pressures and consumerism, and lifecycle sustainment.

The paper is entitled “The resiliency challenge: constructing the agile supply chain for heavy industry”. It finds that engineering and manufacturing companies are currently operating the least mature and therefore most costly supply chains in global industry – with significant room for improvement in resilience, flexibility, visibility and agility.

And it warns that those that delay in responding are risking critical damage to their market share from new and more innovative competitors and, ultimately, jeopardising their bottom lines.

“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,” said Harrington.

“But it is imperative that they transform their supply chains 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.

“At the same time, demand for engineering and manufacturing products and services is migrating from established markets to rapid growth regions that are home to local, more agile, competitors. Heightened competition is being driven by consumerism whereby consumer demands and expectations that were formerly typical of the retail sector are now ‘bleeding’ into the heavy goods industry. Other drivers for regionalization include speed to market, access to market in response to local regulation, and support for locally manufactured content.

“A new business paradigm is emerging to serve this demand; a lean, resilient and regionalized supply chain model in which global companies’ goods are produced, sold and consumed in the same geographic region.”