Tainted tomato: Senior management ranks product quality and safety the highest-ranking SC concerns
By Manufacturing Business Technology Staff -- Manufacturing Business Technology, 6/17/2008 12:00:00 PM
Senior managers at global companies are concerned most with product quality and safety—as well as delivery reliability and security—when expanding the supply chain globally, according to Global Supply Chain Trends 2008-2010, a study recently released by PRTM Management Consultants. The majority of the 300-plus survey respondents experienced issues with product safety and quality, while more than one-fifth said these issues are frequent and serious.
While product recalls in the consumer goods segment always receive widespread attention—namely last week's recall of certain raw red tomatoes, which sparked an editorial in the June 12 edition of The New York Times, claiming food-safety bills have been moving along far too slowly on Capitol Hill—the PRTM study says issues are most frequently reported by companies in the automotive and industrial sectors.
"Companies are acutely aware of the risks posed by globalization and are taking this challenge very seriously," says Shoshanah Cohen, director of PRTM's Global Supply Chain Innovation practice.
The sixth annual study provides critical insight to how industry leaders are globalizing their supply chain operations to achieve competitive advantage. Data was collected between December 2007 and February 2008.
Although globalization is accelerating, a company's supply chain can impede that acceleration if it is not sufficiently flexible, or if the company lacks the internal competency to manage supply chain partners. In fact, 60 percent of survey participants say their supply chains lack the required flexibility to rapidly respond to changing customer demands and interruptions in supply. In addition, more than half lack internal competencies to adequately manage their external partners.
"This is an indication of how difficult it is to globalize without having a solid operational strategy in place, and a tactical framework against which to execute," says Cohen. "Even companies with significant collaboration experience are struggling to manage the complexity resulting from working with multiple partners around the world."
Managing flexibility to ensure efficient product flow and on-time delivery remains a major challenge, the study shows. By 2010, the need for greater supply chain flexibility will overtake product quality and customer service as the major driver for improving supply chain strategy.
Almost 90% of those surveyed plan to increase their focus on delivery performance, and four out of five companies plan to better integrate key suppliers, including tighter enforcement of service-level agreements with their channel partners. Further, 65 percent plan to maintain higher buffer stocks along key supply chain.
