Firms 'focusing on reducing supply chain disruption'

23 October 2012

Posted by Savir Bhullar

Companies are increasingly switching their focus when it comes to their supply chains in order to minimize disruption and ensure they are secure.

This is the claim made by one specialist, who explained "a change in procurement in the automotive industry began in the 1990s and rippled through the procurement world".

David Noble, Chief Executive of the Chartered Institute of Purchasing and Supply (CIPS), explained that this trend saw firms offshore and single source in order to reduce costs as far as possible.

However, he added the focus is now changing towards relationship management rather than simply looking at "total cost, quality and logistics", in order to secure and simplify logistics operations.

Speaking about global purchasing trends, Mr Noble pointed out that local sourcing is becoming more popular and the trend is towards understanding the "total cost" of supply chain activities.

He added that the use of technology is also changing the way in which suppliers are managed, adding: "E-payments have made transaction times quicker and easier. This is particularly beneficial for smaller suppliers who need a steady cash flow to keep their businesses running."

Global supply chains have experienced significant disruptions in recent years, with incidents such as the Japanese earthquake and tsunami in March 2011 and the devastating floods in Thailand last summer affecting supplies of components for manufacturers around the world.

A recent international study of 1,400 executives discovered that supply chain excellence is becoming increasingly important.

Carried out by SCM World, the Chief Supply Chain Officer Report 2012 showed businesses are realizing that effective logistics operations can add value and enhance their competitiveness.

"Those that still view supply chain management as a supporting function, or see it only as a way to reduce operating costs, have a lot of catching up to do. They are missing great opportunities," declared Dr Hau Lee, Chairman of SCM World.

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