Trucks at Work

How about that: supply chains still matter

Here’s a non-shocker from the survey world: how manufacturers develop, produce, and then deliver products to their customers around the world – in essence, how well their supply chains function – is a hinge point upon which their firms will live or die.

You don’t say?

Pardon me for seeming cynical here, but it continues to amaze me just how often the supply chain – and by extension the freight transport connections within it – continues to be taken for granted.

Let’s just take the ongoing truck driver shortage as one example. Trucks by themselves deliver close to 70% of the freight in this country alone, outside of their role in first-mile/last-mile connections to railheads, airport tarmacs, ports, consumers at their homes, and the like.

Yet driving a truck not only remains an often low-paid endeavor – especially for rookies – drivers themselves continue to be treated like third-class citizens, often by warehouse and freight dock personnel who should know better.

And such workers in the manufacturing world should especially know better because their senior executives continue to busily strategize on ways to make supply chains more efficient and reliable; the very logistics networks that ultimately – surprise, surprise! – rely on those truck drivers that end up being treated so shabbily at the dock.

OK, enough ranting on my part – let’s dig into some of the findings from the 2015 Global Manufacturing Outlook (GMO) survey conducted by consulting firm KPMG.

Some 386 senior manufacturing executives from around the world participated in KPMG’s poll and found that 44% plan to allocate more than 20% of their total technology spend on systems to improve the pace and value of innovation – especially in engineering, manufacturing and, here it is, their supply chains – over the next year.

U.S. respondents are even more bullish on such investment strategies, KPMG found, with 62% percent of them planning to allocate more than 20% of their technology spend on those areas.

In order to improve speed-to-market and lower innovation costs, the KPMG’s poll found that manufacturers are increasingly looking to, and collaborating with, suppliers, customers and third party research organizations – especially when it comes to supply chain issues.

Indeed, 81% of all the respondents and 78% of U.S. executives are adopting more collaborative business models with suppliers and customers to improve the value of their innovation investments – up from 68% in the firm’s 2014 survey, noted Jeff Dobbs (seen at left), KPMG's global head of industrial manufacturing.

“The focus on new product development, collaborative innovation and speed-to-market all require new strategies and business models. If manufacturers hope to grow by driving new innovations to market, they need to focus on improving the agility and integration of their supply chain models," he stressed

Looking into supply chains, almost half of all KPMG’s GMO survey respondents cite lowering costs and working capital levels as their top strategic supply chain priorities.

When asked to rate their top supply chain challenges, respondents noted that a lack of flexibility and responsiveness to changes in demand or product mix remains the most frequent issue, followed by concerns relating to supplier performance (in terms of risk, reliability and quality) and ensuring sufficient supplier capacity to meet demand and best support new product launches.

Just 8% of U.S. respondents in KPMG’s GMO poll said they currently have complete visibility into their supply chain. In fact, U.S. respondents are almost twice as likely to say their supplier data is not reliable enough and that their technology is not sophisticated enough for greater integration.

"Our survey respondents report they are addressing the challenges and investing in new supply chain technologies that offer lower costs, better planning and improved enterprise collaboration," noted Dobbs. "More than a third of our GMO survey respondents say they will place significant investment into improving their procurement systems and one third say they will allocate significant supply chain technology spend on integrated business planning (IBP) systems."

He stressed, too, that “sensing and truly understanding unmet needs faster than the competition” will be the key to winning in the marketplace.

"Innovation waits for no one. Those who fail to embrace the new reality of the accelerating innovation cycle will quickly be left behind," Dobbs pointed out. "Investing more in R&D [research and development] is certainly helpful, but manufacturers need to also focus on continuously enhancing and adapting their innovation models if they hope to survive."

Guess truck drivers and their role in supply chain efficiency matters a lot more than many might think, eh?

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