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Report exposes high cost of poor information flow in the supply chain

By Guy Montague-Jones , 19-Nov-2010
Last updated on 19-Nov-2010 at 14:14 GMT

New research suggests that stunted information flows in the supply chain are leading to significant missed sales opportunities and reduced productivity.

A lot of work goes into the development of more efficient and leaner manufacturing processes but a new report published by IT firm Oracle indicates that little has been done to improve the efficiency of information flows.

 

Research conducted for Oracle by the consultancy Dynamic Markets in the UK indicates that for one in three companies information management is so poor that physical products actually flow faster than, or as quick as, information across supply chains.

 

Missed sales

 

The consequences for businesses can be significant in terms of missed sales opportunities, customer satisfaction, productivity and failure to meet peaks in demand.

 

The new report estimates the loss resulting from inefficient information flows at £1.2bn in missed sales opportunities each year in the UK.

 

Looking to explain the information weakness, Andrew Spence, Oracle’s supply chain business development manager said: “The information management for many supply chains doesn’t reflect the way organisations operate today.

 

“Companies are working with systems set up and designed for an environment where a lot of the work is done within one company, rather than the vast network of suppliers, designers and partner companies that is the reality of the modern business.”

 

Supply chain executives therefore spend a lot of their time gathering data from different sources, sifting through different spreadsheets, emails and databases in an effort to keep track of information.

 

Food pressures

 

Spence told FoodProductionDaily.com that for food companies this can hamper their ability to keep up with demand in an environment where new launches and promotions are increasingly important.

 

If marketing does not give enough advance notice on its plans to the supply chain the result can be empty shelves and lost sales.

 

Spence added that the danger of this happening is increased in today’s economic climate because companies do not want to be weighed down by excess inventories.

 

Suggesting how companies can overcome supply chain problems, he said there are technological solutions that can help speed up information flows. This involves using internet and IT technologies to inform suppliers quickly of changes in demand and to pull information from point of sales accurately and quickly so demand changes can be monitored in a timely and accurate fashion.