£1.2bn: the cost of fragmented supply chain data

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Companies are missing out on £1.2 billion of sales as a result of fragmented supply chain information, according to an Oracle study.

The survey, The Fragmented Supply Chain, covered 100 supply chain executives from large companies with 250 or more employees in the UK and found that one in two reported that fragmented information had resulted in missed sales opportunities.

Remarkably, executives said they spent 48 per cent of their time sifting through spreadsheets, emails and databases to get the information they needed to keep track of their supply chains.

Respondents cited a number of reasons for the fragmented flow of information across their supply chain operation:

*Heavy volume of information to manage (41 per cent)

* Information held in multiple, isolated databases and spreadsheets (37 per cent)

* Constant changes in the supply chain (34 per cent)

* Complex nature of the supply chain (34 per cent)

The study, which was carried out by Dynamic Markets for Oracle, also found that 88 per cent found their company unable to supply peaks in demand created by sales and marketing activities in the past 12 months, and on average, 22 per cent of campaigns resulted in an inability to supply demand.

One in three companies said the flow of information was so fragmented and slow that production took the same amount of time or was quicker than the transmission of a demand signal to the outer reaches of their key supply chains.

Three quarters of companies said they did not have a comprehensive and automated flow of information across their supply chain for all the information they need. Spreadsheets, isolated databases and paper trails dominate.

The study estimated that the total cost to British business in man-hours needed to manage this information manually is £77m a year.

Some 87 per cent of respondents said they would be able to reduce their inventory levels by an average of 22 per cent if they were able to understand better the risks inherent in their tiered supply chains.

If these supply chain managers were to invest in technology to improve their supply chain management and were able to demonstrate ROI within just 12 months, 92 per cent of them would make changes.

Andrew Spence, Oracle’s supply chain business development director, said: “The information management for many supply chains doesn’t reflect the way organisations operate today. Companies are working with systems set up and designed for an environment where a lot of the work is done within one company, rather than the vast network of suppliers, designers and partners companies that is the reality of the modern business.

“People are using spreadsheets and email to bring together disparate planning systems instead of a system that matches the 21st Century requirement for collaboration across the supply chain. The commercial impact of such inefficient ways of working is clear to see and can be mitigated with modern IT systems leveraging the power of the internet.”

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