January 21, 2004—Many companies do not have sufficiently robust and effective supply chain controls and procedures in place to deal with volatile economic conditions, according to a new survey by business advisers Ernst & Young, which questioned leading consumer products, retail and food & beverage companies in 10 countries.
Commenting on this, E&Y’s Howard Martin said: “The supply chains of many companies have become more connected and collaborative in an attempt to increase operational effectiveness, customer service, and profitability. However, with greater connectivity comes greater risk.”
The survey also found that, as more and more companies built collaborative relationships with customers and suppliers, over 20% of vendors were still not monitored on delivery performance. Only 45% of consumer products companies review performance of ‘on time in full’ deliveries from suppliers, and only 47% of retailers document their competitive bidding processes.
Overall, surprisingly small proportions of the companies questioned ever conducted internal reviews of their processes and controls: only 29% of retailers, 29% of food & beverage companies, and 18% of consumer products companies. Similarly, most were not certain whether optimal controls existed to support disaster recovery.
Ernst & Young worries that, at least in these sectors, supply chain decisions tend to be made on limited information and then, in essence, forgotten.
—Elliott Chase
Reprinted with permission; copyright 2004 i-FM
