Do European companies have the supply chain capabilities to meet global challenges?
The findings from PRTM’s latest Global Supply Chain Trends Survey indicate that “by 2010, the need for greater supply chain flexibility will overtake product quality and customer service as the major driver for improving supply chain strategy”.
Should we be surprised by this? I think the answer is probably no. However, I worry when I start to piece together a number of findings from this year’s study. Let’s take a look at a few of the headline findings:
1. Globalisation is accelerating; leading to large structural shifts for global supply chain organisations.
2. Many companies are struggling to realise the planned benefits from globalisation initiatives.
3. Major barriers to globalisation include limited supply chain flexibility and the lack of internal competency to manage partners.
4. Acceleration of supply chain maturity*, enabled by advanced supply chain practices, appears to have reached a plateau.
For me the results pose a wider question and spotlight an emerging concern; do UK and European companies have the supply chain skills and capabilities to meet these global challenges?
Are we losing the ability to structure high performing supply chains? Over the last five years this study has seen a gradual increase in supply chain maturity (*a term we use to measure the practices that organisations are deploying across their supply chain) among UK and European companies. However this is the first year that has bucked the trend. Are we seeing these practices plateau?
For many companies, especially where there is limited opportunity to differentiate elsewhere, the ability to create a responsive, agile supply chain is worth its weight in gold. This capability allows the company to respond quickly to changing market conditions – whether it be customer demand, technological development or something else outside its control. An integrated, global supply chain which is responsive to external changes can be the difference between success and failure.
The loss of manufacturing to off-shoring and outsourcing is one factor behind this issue. Once at the core of the supply chain, manufacturing forced companies to consider every element of the supply chain process (plan, source, make and deliver). These skills were embedded in every manufacturing company. With the emergence of the Far East as the ‘manufacturing centre for the world’, Asian companies – once associated with long lead-times and large batch sizes – are now starting to develop more agile, competitive supply chains.
With growing competition and added complexity, the ability to construct a responsive, flexible, multi-partner supply chain is harder than ever. Are we doing enough to develop and maintain the skills and capabilities to do this within our companies? Or are we losing the skills to design, implement and manage supply chain strategies that are necessary for success in today’s world?
Can we use the opportunities from globalisation without handing over the crown-jewels?
Gordon Colborn is Lead Director for PRTM’s UK business