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Making the case for supply chain optimization: Focus on critical success factors

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Making the case for supply chain optimizationAutomating and optimizing your supply chain can help save money and facilitate growth. So what’s holding back companies from implementing a supply chain optimization (SCO) strategy?

Indeed, Grant Thornton research found more than a third (36%) of 375 manufacturing executives surveyed have yet to formulate such a strategy. According to the study, “The future of growth and the manufacturing industry: disrupting products, production and supply”, 44% of respondents cited supply chain complexity and inefficiencies as blockers, followed by growing regulatory, tax and political uncertainty (41%); compliance (37%); inability to source digital talent and skills (33%); and concern about ability to manage the tax implications of key growth strategies, such as acquisitions (19%).  The report warns that the gap between the leaders and other businesses will grow as technology widens the performance gap and makes it more difficult to catch up.

As Ward Melhuish, advisory manufacturing leader at Grant Thornton US, explained in the Grant Thornton International article “How your supply chain can give you a competitive edge”, the supply chain optimization challenge is a board-level issue rather than something for the procurement department. “If you’re looking at SCO end to end, then it’s a business strategy, not just a supply chain strategy,” he explained.

Melhuish suggested it’s important that companies consider differentiation and critical success factors when addressing supply chain optimization.  “Any enterprise should consider what the problem is that they’re trying to solve,” he said.  “Is it a market issue, are they losing bids, is it reliability, margin shrinkage, lead times or access to information? You have to have the outcome in mind first and apply the right solution.”

Failing to act will cost companies in the long run.  As the Grant Thornton report warns: “If a company does not want to be stranded on the wrong side of that chasm, it must initiate farsighted, strategic and profound change.”

Could supply chain optimization benefit your business?To find out more about how to set a supply chain optimization strategy, contact Ward Melhuish at Ward.Melhuish@us.gt.com.

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