Rapid
globalisation is stretching company supply chains beyond their
limits, says a global study by management consultancy PRTM.
As a result, only 4% of firms are fully achieving the benefits
of globalisation.
PRTM said 60% of participants in its annual Global Supply Chain
Trends Survey reported that their supply chains lack sufficient
flexibility to respond rapidly to customer demand changes and
supply interruptions.
More than 50% also admit they do not have the internal
competency required to adequately manage their external
partners.
Despite these challenges, more than 50% of participants plan to
have all manufacturing operations managed outside their home
country by 2010.
By this time, it is projected that offshoring of product
development will almost double.
More than 300 global manufacturing and service companies took
part in the survey.
Although average reported benefits of globalisation included an
18% reduction in material costs, and a 26% reduction in labour
costs, management costs only went down an average of 8%.
More than 40% of companies saw no reduction in management costs
or actually saw them rise.
"This is an indication of how difficult it is to globalise
without having a solid operational strategy in place, and a
tactical framework against which to execute," said Gordon Colborn,
lead director for PRTM's UK business.
"Even companies with significant collaboration experience are
struggling to develop and cultivate the right management skills to
deal with the complexity resulting from working with multiple
partners around the world," he said.