A new whitepaper has revealed that the engineering and manufacturing (E&M) industry's supply chains are lagging up to ten years behind other industries including the automotive sector, having been slower to respond to changes in global industry.
Those that delay in responding are risking critical damage to their market share from new and more innovative competitors and, ultimately, jeopardizing their bottom lines.
"The Resiliency Challenge: Constructing the Agile Supply Chain for Heavy Industry" whitepaper by Lisa Harrington, President of the lharrington group LLC, has been commissioned by logistics company DHL to identify the challenges and opportunities facing the E&M sector globally.
The paper argues that E&M businesses must dramatically reevaluate their approach to supply chain management and effectively respond to their industry's driving trends in order to remain competitive in today's volatile business environment. A number of key trends have been exposed which are threatening disruption to E&M businesses including; migrating manufacturing and regionalization, cost pressures and consumerism, and lifecycle sustainment.
Lisa Harrington, President, lharrington group LLC, said, "Change won't come easily to an industry populated by companies which have been around for over 80 years and are used to 'business as usual'. But it is imperative that they transform their supply chains in order to meet the demands of modern business with its onus on faster, leaner and more resilient operations. Those that do so can use their newly discovered logistical capability as an offensive weapon against competitors who fail to adjust.
"At the same time, demand for E&M products and services is migrating from established markets to rapid growth regions that are home to local, more agile, competitors. Heightened competition is being driven by consumerism whereby consumer demands and expectations that were formerly typical of the retail sector are now 'bleeding' into the heavy goods industry. Other drivers for regionalization include speed to market, access to market in response to local regulation, and support for locally manufactured content.
"A new business paradigm is emerging to serve this demand; a lean, resilient and regionalized supply chain model in which global companies' goods are produced, sold and consumed in the same geographic region."
The whitepaper finds that E&M companies are currently operating the least mature and therefore most costly supply chains in global industry - with significant room for improvement in resilience, flexibility, visibility and agility.
Andy Ramsden, VP Global Sector Development, Automotive, Engineering & Manufacturing, DHL Supply Chain said: "The most forward-thinking E&M companies have a significant opportunity to leap-frog supply chain development by learning best practice from their automotive and consumer goods sector peers who have paved the way and already operate a regionalised model.
This will allow them to anticipate the emergence of new growth markets and move swiftly to service them with innovative solutions. Well-designed, synchronised and executed supply chains will allow E&M companies to capitalize on opportunities where their competitors can't, ultimately capturing sales and market share.
We work closely with our customers to introduce supply chain agility, resiliency, capability and control that can quickly become the differentiators in this industry. Integrating supply chains so that all the upstream and downstream partners can see the full picture enables companies to plan ahead more accurately, manage demand more cost-effectively and support their customers more proactively."