Cost Is Less Kingly

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INDUSTRIAL ENGINEER – Volume 43 Number 1

 Risk worries have companies changing supply chain strategies.

Even though cost still reigns as the prime priority when it comes to industrial companies’ supply chain, a KPMG International survey recently found that new approaches to logistics are taking hold.

The survey, Global Manufacturing Outlook – Relationships, Risk and Reach, polled 196 senior-level executives from the aerospace, metals, engineering and conglomerates sectors across North America, Western Europe and Asia-Pacific. Although 66 percent labeled cost the leading consideration of their supply chain models, 38 percent said their acute focus on cost has harmed relationships with suppliers. And 63 percent agreed that they should pay more attention to nonfinancial elements of the supply chain.

Some companies surveyed are shaping stronger relationships and engaging in collaborative innovation with suppliers. They strategically investing in key suppliers or bringing parts of the supply chain back in-house, and also applying a mix of both regional and global supply sources to achieve the best combination of speed, quality, and cost.