Almost one third of supply chain processes are inadequate, new research has revealed.
A global cross-sector analysis of 1,000 assessments carried out by consultancy Crimson & Co showed 29 per cent of firms had poor supply chain processes.
Crimson & Co defined poor processes as instances where few people in an organisation understood business processes, where no processes existed and where there were technical deficiencies.
Drawing data from assessments the firm completed in 20 countries using its scprime technology, the report warned deficient supply chain processes represented a risk to the reliability of operations and allowed competitors to operate more effectively with greater responsiveness.
The findings also revealed that Europe and North America appeared to lag behind the developing world in terms of “process maturity” when comparing weighted averages, with fewer companies reaching the basic competency level. Some 32 per cent of firms’ processes in Europe and North America were found to be inadequate compared to 22 per in developing countries. This “surprising result” could reflect the tendency of processes to get worse over time and may also be a result of the move of manufacturing out of the old markets and the removal of good process discipline from those markets, the research suggested.
There were also “striking gaps” between industry types – life sciences had half as many inadequate processes as FMCG, the data showed. In addition, 87 per cent of processes in the life sciences sector achieved a “competent” or “proficient” score compared to 65 per cent in FMCG companies.
This was influenced by the majority of life science businesses being large and global with long lead times and an absolute requirement for reliability, the analysis deduced.
Helen Chiswell, scprime leader for Crimson & Co, claimed businesses were struggling to evolve their supply chain processes to match business needs, a result of a “business-as-usual” mindset where companies prefer to “maintain the status quo” instead of understanding the drivers of competitive advantage and adapting accordingly.
“This is a real risk to organisational performance,” she warned. “Every company needs to configure its processes to support priorities, allowing the supply chain to deliver against business objectives. The supply chain is increasingly recognised as a key enabler of competitive advantage but understanding requirements is a major challenge.”