Not so much a tactic – more a way of life

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Most UK organisation are adopting short term tactics in the hope of keeping their supply chains ticking over – and only a minority are fully reorganising business operations to ensure that they are able to cope with volatile levels of demand.

The report, Supply Chain Agility, Managing Change, by KPMG, warns that now is not the time to batten down the hatches. Companies need to adopt an agile approach and accept that the “one size fits all” approach is no longer relevant in a multi-channel marketplace.

The report, which is based on the interviews with 80 supply chain directors in FTSE-100 companies, says UK executives are focused on four approaches to improving supply chain maturity:

1.  accepting that cost-cutting measures over the past four years has not gone far enough, with many now identifying and implementing additional opportunities for reducing costs within, and across, their supply chain

2.  adopting new, low-cost, technologies to enhance transparency for customers and facilitate collaboration among partners

3. making use of outsourcing and shared service centres to consolidate order taking, financing, logistics planning and wider elements of logistics execution

4. driving better collaboration across the supply chain by integrating sales and operations planning processes.

Of course, finding the cash to invest in the supply chain is an issue for many organisations in the current economic climate. And the report highlights fears of rising fuel costs, property increasing in value in emerging markets and labour costs mounting. As a result, it warns that companies’ ability to manage supply chain costs will be under threat for some time.

These are uncomfortable conclusions and suggest that there are a lot of organisations that need to think again about their supply chain strategies.

What is clear, particularly in the light of last week’s European Supply Chain Excellence Awards, is that organisations that have invested in their supply chains are seeing real business benefits.

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