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The challenge of complexity in global manufacturing

Critical trends in supply chain management - benchmark survey


According to initial results of global manufacturing benchmark survey, intense pressure to reduce costs and expand into new markets has manufacturers worldwide shifting production and spreading out supply chain and other operations well beyond their home geography.

The preliminary data from Deloitte & Touche's survey identified several key complexity drivers for global manufacturers:

  • Pressure to reduce costs - 61 percent of manufacturers have moved production to lower-cost geographies
  • Pursuit of new markets - The majority of manufacturers have spread supply chain and other operations worldwide, leaving them with more assets in foreign lands than in their own countries and further stretching the supply chain
  • Product innovation - Manufacturers are counting on increased revenue streams driven by new products.

The implications for increasing complexity are staggering. The report uncovered four emerging paradoxes as a result of supply chain complexity:

  • Despite globalization, most supply chain optimization is local and focused on individual functions, facilities (such as plants and warehouses), services and countries. In face, only 50 percent of companies surveyed have a senior or board level executive in charge of global end-to-end supply chain processes.
  • Despite accelerating innovation, supply chains are not fully prepared to support the escalating pace of new product introductions; supply chain execs ranked this as the lowest priority.
  • Although a key priority, flexibility is becoming more difficult to achieve in the face of trends such as shorter product cycles, increased customer demands, the pursuit of new markets and focus on unit cost reductions.
  • While managing risk is a concern to the majority of survey participants, many companies are significantly increasing potential risks by fragmenting their supply chains.

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