Manufacturing CIOs Prioritise On Reducing Supply Chain Costs

by CXOtoday Staff    Jul 03, 2012

As the manufacturing landscape is growing ever more complex, a recent survey by IDC revealed that CIOs in the manufacturing sector are reducing their overall supply chain costs by harnessing information technology so as to improve their overall profitability.

Simon Ellis, IDC Manufacturing Insights Practice Director noted that CIOs in the manufacturing industry face increasing challenges with supply chain management owing to complex and extended global networks, volatile demand, growing regulation and the pressure to be more agile.

Over 80 percent respondents of the survey said the key supply chain priority is to reduce the supply chain costs in the next one year. Nearly 55 percent suggest supply chain agility that comes second in the order of importance and 52 percent noted that improving product quality and safety is the third most important priority.

In terms of technology adoption when asked to rate the level of importance of new technology that can help them in reducing supply chain costs, most manufacturing sector CIOs name mobility, cloud computing, big data, software as a service (SaaS) and social business tools.

To address the challenges in supply chain, Ellis recommended that CIOs should revisit the profitable proximity sourcing approach and how that concept, supported by IT, can ensure sourcing decisions to create a competitive edge.

The survey noted that most manufacturers view their supply chains as focused primarily on product quality, yet their supply chain priorities usually start with reducing costs, followed by responding to supply or demand changes, ahead of product quality and customer service.

With IT-based solutions for demand planning and forecasting and production scheduling viewed as key to manufacturers’ business performance over the next year, this could signal a genuine shift to a more holistic approach to truly integrated business planning, inclusive of fulfillment excellence. Cloud, big data and mobility are the key emerging technologies for manufacturers’ supply chains. Ellis believes there is substantial value to how manufacturers can use these to improve their agility and customer service.

“According to our findings, the key supply chain challenge facing manufacturers today is the juxtaposing of complex and extended supply networks with increasingly fast and volatile demand networks,” said Ellis, who believes that 2012 may indeed represent the most challenging time in the history of the manufacturing supply chain.

However Ellis believes that manufacturing CIOs also have an opportunity to redefine their core relationship with the consumer through mobile and social media tools. Moreover, they can also apply next-generation analytics to massive new sources of data that includes both structured and unstructured.