Survey Finds Conflicting Goals for Manufacturing Supply Chain
Can you focus on product quality and still cut costs? U.S. Manufacturers seem to think so: Both goals topped the list of goals in the latest IDC Manufacturing Insights Supply Chain survey.
IDC asked over 350 U.S.-based manufacturers about the state of their supply chain, how they’re adapting and improving, and the role technology at their organization. In the past, IDC’s Manufacturing Insights pointed out that service-centricity is a growing concern for manufacturers, while cost control remained a priority.
What’s interesting is the latest survey turns that assertion on it’s head, revealing manufacturers are first and foremost focused on product quality. Is it possible to do all three? Maybe. Whether or not you actually try may depend upon how large your organization is.
Although most of the organizations employed over 10,000 (58 percent), IDC points out a correlation between larger companies and a smaller gap between product quality versus costs. For smaller companies, it’s the product itself that makes the manufacturer competitive, so product quality becomes more important.
What’s more, as the companies move up the revenue range, then IDC saw more focus on cost cutting and creating a more efficient supply chain.
Still, the survey suggested more focus on product quality than IDC’s experience suggests, according to Industry Week. But when push comes to shove, the report does suggest reducing supply chain costs is a key focus area, with more than 80 percent of the companies selecting it as a priority, even though it fell in the minority when asked about the manufacturers’ central priority. IDC explains it this way:
“So, is there inconsistency between the strategic aspiration in the supply chain (what we say we want to be) and the tactical/operational realities (what we do). To a degree, the answer is yes, although one can make the argument that product, cost and service are not mutually exclusive, but in fact all necessary to varying degrees as ‘table stakes’ for the successful manufacturer.”
The bottom line is that 50 percent of companies actually want to do all three: Provide better customer service, while improving product quality and reducing costs.
How, exactly, does one cut costs without cutting quality in either service or product? The respondents see this as a business, rather than IT, challenge and say they’ll focus on procurement and broader deployment of lean principles, as well as transportation.
Meanwhile, a KPMG survey of European manufacturers shows a growing concern about regulation risk, particularly in light of the U.K. Bribery Act. This legislation requires companies to access third parties for bribery and reputation risk.
KPMG research found risk, flexibility, and reliability are the main supply chain challenges for 37 percent of European manufacturers. Another 37 percent are concerned about the price volatility of key cost input and pricing.