Global supply chain pressures failing to bite

61% of manufacturers say they have transferred some production to lower-cost countries, the drive is for new products to deliver global revenue streams and supply chains are thus becoming increasing complex and global. But most optimisation is local and focused on individual functions factories and countries. These are among key findings of a global manufacturing survey, The Challenge of Complexity in Global Manufacturing: Trends in Supply Chain Management, unveiled by Deloitte & Touche. To date, more than 500 companies from the S and Europe have participated, and a second phase report is scheduled for this Autumn. The report identifies pressure to reduce costs intensifying at the same time as the drive to expand into new markets. Manufacturers are responding by shifting production and spreading supply chain and other operations, but with worrying results beyond the obvious sacrifice of home production. Deloitte & Touche refers to increasingly complex and fragmented supply chains, implications for other manufacturers and managerial challenges. “Our initial research confirms that manufacturer’s supply chains are becoming enormously complex,” says Dick Gabrys, global manufacturing leader. “These elements will continue to create an increasingly fragmented network as companies’ engineering and manufacturing activities become more dispersed.” The implications for increasing complexity are worrying, showing what should be an increasing dependence on sophisticated supply chain systems, but to date, with little progress. So far, only 50% of companies surveyed have a senior or board level executive in charge of global supply chain processes. Also, despite accelerating innovation, supply chains are not prepared to support the escalating pace of new product introductions. Although a key priority, flexibility is also becoming more difficult to achieve in the face of shorter product cycles, increased customer demands, pursuit of new markets and focus on cost reductions And while managing risk is a concern to the majority of survey participants, many are significantly increasing potential risks by fragmenting their supply chains While customer service is a top supply chain priority, fewer than 8% of companies report high levels of collaboration with customers on key initiatives. “These paradoxes strongly suggest that leading manufacturers are genuinely struggling to synchronise the pieces of their increasingly fragmented and global networks,” says Philip Johnson, UK manufacturing leader at Deloitte & Touche.