Chain Reaction

STRETCH YOUR SUPPLY CHAIN MUSCLES!

“U.S. Manufacturers' 2004 Supply Chain Mandate,” a report from Forrester Research Inc., advises companies looking to boost sagging output and quality to invest in IT projects that develop supply chain agility.

As unplanned events become more common, flexibility should supplant efficiency as the most important operational goal, the Forrester researchers say. Yet only 4% of U.S. manufacturers cite agility as their top objective. Few can adapt their processes to create made-to-order products, although 47% of consumers that Forrester Research surveyed want to pay for custom merchandise.

Relinquishing arcane supply chain practices involves going from “stovepiped” to cross-functional operations; integrating back-office and customer-facing activities; tying performance measures not to cost cutting but to customer satisfaction and revenue gains; and making the appropriate technology investments. But most U.S. manufacturers are nowhere close to deploying these strategies, and are disappointed with their supply chain applications as a result. In the Forrester survey, 54% of the respondents say their programs fall short of expectations, largely because of rigid internal processes and lack of support from users; 71% believe that fixing IT projects by paying attention to change management is a high priority.

Although U.S. manufacturers are set to spend $35 billion on upgrading supply chain processes in the next five years, their IT spending is below average: 4.1% of revenue versus 5.8% for other sectors. This could seriously hamper supply chain flexibility. For more information, call analyst Navi Radjou at (617) 613-6000 or visit www.forrester.com.