Supply system failures

Citation

(2004), "Supply system failures", International Journal of Productivity and Performance Management, Vol. 53 No. 7. https://doi.org/10.1108/ijppm.2004.07953gaf.003

Supply system failures

A recent survey from PMP Research suggests that the vast majority of companies fail to achieve the expected benefits from their supply chain and manufacturing systems. In fact, only a tiny minority of companies are happy with the results of their investments in supply chain and manufacturing software.

For the survey PMP Research polled a range of UK-based organisations, 60 per cent of which are active in the manufacturing sector.

Just 2 per cent of those polled feel they have realised all the benefits they expected to gain from their current systems. Of course, these systems may be complex and take time to come to maturity. So, although a third (32 per cent) of respondents report no success so far, most of them are hopeful of seeing benefits in the future. However, a worrying 10 per cent state that they have identified no benefits to date and feel they are very unlikely to do so.

The relevance of these findings is that the challenges of operating faster and more flexibly than ever before emerge as key issues for most companies. Compared to two years ago, 40 per cent of the sample say that the product lifecycle of their best-selling items is shorter than it was.

A third of companies have a typical product lifecycle of less than two years, with 9 per cent updating products every six months. Added to this, 60 per cent of organisations say their products are now more customised or personalised and that they are offering a greater choice of options.

The impact of this is evident in the survey’s finding that 38 per cent of companies describe re-engineering their supply chain as an “ongoing process”, with 46 per cent expecting to be re-engineering on a continuous basis in the future.

Lack of enthusiasm for online services amongst suppliers and customers is cited by more than half the sample as the reason why collaborative working along the supply chain has been slower to take off than predicted.

Organisations are also worried about the accuracy and reliability of the information in their core systems, with one in five indicating they are “unhappy” about poor data and 68 per cent reporting that they have projects in place to address this.

Despite disappointing results to date, companies indicate that they intend to keep up their spending in this area. Half (48 per cent) reckon they are currently putting about the same amount of money into supply chain and manufacturing systems as they did three years ago, while 37 per cent claim to be spending considerably more.