The globalization of markets and economies is forcing manufacturing firms to improve their SCM and ERP solutions in an effort to get products that satisfy customer demand to market faster.
Posted Feb 7, 2007
Supply chain management solutions are turning a corner in the manufacturing space. According to a new benchmark report from Aberdeen Group, 80 percent of the 105 automotive, aerospace, and defense industry companies surveyed indicated dissatisfaction with their existing supply chain technology. Seventy-six percent indicated they do not have full supply chain process automation and a common system company-wide. With the globalization of markets and economies, manufacturers will increasingly turn to enterprisewide ERP and SCM solutions to improve their ability to adjust to changing market conditions.
"A big part of this dissatisfaction lies in the fact that the vast majority of automotive, aerospace, and defense companies run major parts of their supply chain operations on custom or in-house developed technology," says Nari Viswanathan, research director for supply chain at Aberdeen. This problem causes many companies to turn to their ERP packaged software vendors for help. "They're trying to make their supply chains more flexible so they can adapt to changing business requirements," Viswanathan says.
Additional pressures for supply chain improvement include a major focus on rapid new product programs due to competition from global brands as well as shifts in consumer taste, such as vehicles with better gas mileage or Boeing's new airliner, the 787, Viswanathan says. "The automotive industry is feeling continued pressure to improve order-to-delivery lead times to customers and dealers and better match supply to short-term demand."
Best-in-class companies, the 20 percent of companies with the lowest average finished good inventory levels and the lowest supply chain costs, are more likely to have standardized on a common supply chain platform through ERP and SCM software, according to the report. These companies are two times more likely to be focused on how to react to changing market conditions versus their peers, and 1.3 times more likely to be focused on volume and program planning initiatives.
The report states that more than 30 percent of automotive, aerospace, and defense companies are seeking to partner with their ERP vendor or best-of-breed SCM vendor to solve these problems. Another 73 percent with revenue over $1 billion plan to spend more than $250,000 in 2007 for new SCM technology. Though data management and IT system inadequacies topped the reasons that automotive, aerospace, and defense companies say they are struggling to improve SCM performance, there are answers. "Those companies looking to overhaul their supply chain infrastructure should investigate enterprise applications that are flexible enough to adapt to different company business requirements through the use of SOA," Viswanathan says. "MDM should also be carefully looked at. These innovations are making packaged application-based SCM platforms a viable path for manufacturing firms."
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