Manufacturers cite growing concern over supply chain visibility

KMPG’s recently released 2014 Global Manufacturing Outlook report has highlighted a pressing need for the sector to improve supply chain integration, with challenges related to visibility rising up the agenda for manufacturing leaders.

Double the number of respondents (40%) admitted that they lack visibility across their extended supply chain compared to the previous year (20%), with one-third believing that this was due to either inadequate IT systems or a lack of skills.

This is not to say that visibility hasn’t improved significantly over the past 12 months for some manufacturers – the research also found that around 20% of respondents claim to have complete visibility, up from just 9% in 2013.

For these companies, many of these gains have resulted from stronger relationships between manufacturers and their top-tier suppliers, and the willingness to share more real-time data across the value chain.

More than three-quarters of respondents said that their relationship with top-tier suppliers is now strong enough for them to share real-time capacity and demand data. An even higher proportion (83%) stated that they felt their top-tier suppliers’ data was reliable enough to support closer relationships, effectively setting the stage for manufacturers to move from traditional supply ‘chains’ to supplier ‘networks’.

“You simply can’t build the type of relationship you need to share real time data without trust,” noted Osamu Matsushita, KPMG’s industrial manufacturing leader for Japan.

“Yet while there will always be an overarching issue of trust when suppliers feel they are being measured and evaluated based on their real time data, it is encouraging to see that suppliers and manufacturers are moving forward with setting the stage for real time information sharing.”

Traditionally, visibility programmes have been geared towards reducing supply chain risk and the report notes that resilience in this sector has greatly improved over the past year. All respondents claimed to be capable of assessing the impact of an unexpected event within their supply chain operations in less than a month; 63% said it would take them less than a week – up from 45% last year.

Manufacturers now indicate that the focus of their visibility initiatives has shifted towards better managing costs. More than half of respondents said that costs were their greatest motivation for improving visibility, with those in the UK and US reporting a much higher focus on costs (68% and 72%, respectively).

Maxine Perella