Procurement Professional is the official publication of CIPS Australasia

Supply chain strain changing business

17 Aug 2010

Source: Money Morning

As growing demand boosts production in the second half of 2010, some companies will fail to meet output due to struggles in the supply chain.  Earnings season has shown industrial companies' surging profits in the first half of the year and increased optimism for the months to come. Emerging market strength and stable raw material prices have helped the manufacturing boost.

However, smaller suppliers that cut capacity to the bone when things got tough are now hindering a robust ramp up in production for companies like Siemens. As a result, the manufacturing sector has developed a trend of outsourcing suppliers, increasing the likelihood of blips in the supply chain. About 51% of big U.S. manufacturers experienced significant disruptions in the second quarter, and 42% of small and medium-sized suppliers received queries from bigger companies needing urgent assistance, according to a survey by MFG.com.

It still remains while many manufacturers are scrambling to fix their supply chain problems, others companies that developed close relationships with suppliers before demand increased are enjoying a smoother transition back to booming production.

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